Cameroon plans to raise $761.4 million (CFA467 billion) from international capital markets, according to a decree signed by President Paul Biya. The funds are needed to meet IMF requirements and boost regional foreign exchange reserves.

The decree, which modifies the 2024 Finance Law, states that the money will be sourced from “external banking markets.” This move was not initially part of the 2024 state budget. The funds will be used to clear domestic debt arrears from 2000 to 2019. These arrears include unpaid salaries (CFA303 billion), tax refunds (CFA216 billion), and various commercial debts (CFA122 billion).

The government had adopted a repayment plan over three to seven years, but the IMF pressured for quicker action. Resolving this issue is crucial for Cameroon to receive an additional CFA240 billion in budget support from various donors.

Local capital markets could not provide the necessary liquidity due to high demand from other CEMAC states. Thus, Cameroon will reduce its issuance of Treasury bonds in the regional market by CFA95 billion.

By turning to global capital markets, Cameroon aims to satisfy IMF requirements, secure a three-to-seven-year repayment window, and strengthen foreign exchange reserves with an additional CFA707 billion ($1.15 billion).

The operation may involve a syndication or private deal. For example, Senegal recently raised $500 million at a 7.75% interest rate under similar conditions. Cameroon will need to choose a financial institution to arrange the deal, with options like JP Morgan or Citi.

Once finalized, Cameroon will join other African countries like Benin, Côte d’Ivoire, Kenya, Senegal, and Zambia, which have raised funds in 2024. Investor reactions are uncertain, especially since rating agencies downgraded Cameroon due to technical delays, not actual defaults. Moody’s, for instance, assigned a stable outlook but such ratings often affect international borrowing costs.

Source: Business in Cameroon