Cameroon’s ’B’ rating reaffirmed by Fitch, negative outlook persists

Investing.com -- On May 9, 2025, Fitch Ratings confirmed Cameroon’s Long-Term Foreign-Currency Issuer Default Rating (IDR) at ’B’, maintaining a Negative Outlook. The rating affirmation is backed by resilient GDP growth, a manageable debt maturity schedule, and the expectation of moderate debt levels being supported by non-oil revenue mobilization and spending restraint.

The negative outlook is influenced by political risks related to potential succession issues and structural weaknesses in public finance management (PFM), including weak liquidity management, late external debt payments, and accumulation of domestic arrears. Political instability and potential transition risks are heightened by the upcoming presidential election in October 2025, the lack of a succession plan, and internal divisions within the ruling party.

Fitch noted that Cameroon has been late in making external debt payments to one commercial creditor in March 2024. Additional delays in non-commercial external debt payments were also reported, all of which were settled within the grace periods. The World Bank’s budgeted financing for 2024, amounting to $200 million or 0.4% of GDP, was postponed to Q1 2025 due to delays in implementing structural reforms.

Cameroon has made some progress in reducing domestic arrears, clearing XAF732 billion (2.3% of GDP) in 2024 using an Afreximbank loan (0.5% of GDP) and external commercial borrowing. Total (EPA:TTEF) arrears stood at XAF342 billion (1.1% of GDP) at the end of 2024, comprised entirely of longer-dated arrears (90 days or over). However, the risk of arrears accumulation persists due to weak public finance management.

Cameroon’s market access remains stronger than other countries in the regional market, and it faces an easier amortisation profile. Cameroon’s regional local-currency marketable debt was 6.1% of GDP in 2024, unchanged from 2023, with only 1.6% of GDP amortising within one year.

Fitch projects that Cameroon’s fiscal financing needs will decline to 4.7% of GDP in 2025, from 5.7% of GDP in 2024, due to a narrower cash deficit and lower arrears repayment. However, fiscal financing needs are expected to rise to 5.4% of GDP in 2026 as domestic debt amortisation will amount to 2.6% of GDP from 2.1% in 2024.

The fiscal deficit on a commitment basis deteriorated to 1.4% of GDP in 2024, from 0.6% in 2023, due to a drop in oil revenue. The fiscal deficit is expected to remain at around 1% in 2025-2026.

Real GDP growth increased to 3.9% in 2024 from 3.2% in 2023, and is forecasted to remain broadly stable at 3.9% in 2025 and 4.1% in 2026. The current account deficit (CAD) is expected to continue to narrow to 3% of GDP in 2025 and 2026, from 4.1% in 2023 and an estimated 3.4% in 2024.

Fitch stated that any evidence of persistent public finance management weaknesses or heightened political instability could lead to a negative rating action or downgrade. Conversely, sustained improvements in public finance management or a significant easing of political and security risks could lead to positive rating action or upgrade.

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