Fitch maintains Cameroon at “B” but lowers its outlook to negative
Fitch Ratings has revised the outlook on Cameroon's rating from "stable" to "negative." This adjustment is attributed to "increased pressure on liquidity" stemming from challenging financing conditions in both domestic and international markets, along with identified structural weaknesses in the management of public finances. Fitch's decision suggests a potential risk of downgrading Cameroon's rating in the next six months if there is no improvement in the economic situation.
Despite the change in outlook, Fitch Ratings has maintained Cameroon's rating at "B," demonstrating a degree of optimism compared to other rating agencies. In August, both S&P and Moody's had downgraded the country's rating to the "Ultra-speculative" category.
This downgrade was a result of delayed payments on a debt owed to Deutsche Bank Spain. Fitch clarified that they did not classify this as a default because they applied a 30-day grace period. Furthermore, Fitch noted that all of Cameroon's external arrears, amounting to 0.2% of GDP, have been settled.
Cameroon's authorities have taken measures to enhance debt payment capacity, such as making transfer orders available to the regional central bank (BEAC) earlier to facilitate payments and improving communication and coordination among all intermediaries. However, the American agency expresses concern about the continued challenges in public finance management, particularly evident in "poor cash management." Additionally, there has been an increase in public subsidies and security expenditure, attributed to the tense security situation in three regions of the country. These factors have contributed to the escalation of the stock of external arrears equivalent to 0.9% of GDP as of the end of August 2023. Yaoundé had initially planned to execute a syndicated loan of 200 billion FCFA on the international market to clear this arrearage, but due to deemed prohibitive costs, the operation has been postponed until 2024.