(Business in Cameroon) – Cameroon plans to increase its domestic debt repayments from CFA 947.3 billion to CFA 1,427.3 billion in 2024. This CFA 480 billion rise represents 90% of the overall budget increase, which has grown from CFA 6,679.5 billion to CFA 7,212.5 billion, an increase of CFA 533 billion.
Specifically, repayments of structured domestic debt will rise by CFA 163 billion to CFA 648.5 billion. Additionally, funds allocated to settle outstanding invoices at the Public Treasury will increase by CFA 317 billion, reaching CFA 537 billion. This marks a 144% increase in provisions for pending payments.
“The goal is to break the cycle of accumulating arrears over 90 days,” a finance ministry insider explained. In recent years, unpaid bills have accumulated. Pending invoices at the Public Treasury increased by nearly 90% in one year, reaching CFA 743.6 billion by the end of March 2024. Of this amount, 21.7% are over three months old, according to provisional data published by the National Sinking Fund (CAA) on April 25. This is pending the consolidation of the outstanding amounts by the General Directorate of the Treasury, Financial, and Monetary Cooperation.
IMF Program
If budget forecasts are met, outstanding invoices will decrease by more than 72%. This would provide cash flow to state contractors, many of which are small local businesses, shorten public spending payment delays, and ensure proper execution of the 2024 budget.
“Eliminating arrears is a key objective of the economic and financial program Cameroon is implementing with support from technical and financial partners, including the IMF,” said a source from the Technical Committee for Monitoring Economic Policies (CTS). “It was essential to secure additional resources to clear these arrears and free up the 2024 budget.”
On June 3, the IMF announced that Cameroon would adopt a plan to clear domestic arrears. This is a prerequisite for the disbursement of new funds by international financial institutions to finance the 2024 budget. The June 20 ordinance indicates that Cameroon expects additional budgetary support totaling CFA 139 billion this year from the IMF (CFA 55 billion), the World Bank (CFA 36 billion), and the African Development Bank (CFA 48 billion).
CFA 125 Billion Already Raised
To settle outstanding invoices, the presidential ordinance authorizes the government to borrow up to CFA 467 billion from international banking markets. A senior finance ministry official cited the limitations of the local financial market, stating, “The domestic market lacks the depth to mobilize large volumes of resources over long maturities, hence the reliance on international financial markets.” He said this move would not increase the debt but convert commercial debt (outstanding invoices) into financial debt.
A similar ordinance on June 2, 2023, allowed the government to raise up to CFA 200 billion from international banking markets. However, by January 2024, only CFA 131 billion had been raised from the African Export-Import Bank (Afreximbank), largely due to high interest rates on international capital markets.
While finalizing the operation, the finance ministry opted for a bridge loan from the money market. On June 24, 2024, it raised over CFA 125 billion through a 26-week Treasury bond issue at an interest rate of 6.58% to start clearing outstanding invoices. Using a “non-competitive bidding” technique, the treasury department could potentially raise up to CFA 135 billion.
