Fitch renews Cameroon's “B” rating on diversified economy, GDP growth
TLDR
- Fitch Ratings reaffirms Cameroon's "B" credit rating with a negative outlook, highlighting resilient GDP growth and low budget deficit.
- Analysts anticipate Cameroon's debt-to-GDP ratio to decrease below 40% by 2025, supported by improved debt management and robust GDP expansion.
- Despite projected decline in oil production, economic growth in Cameroon is expected to be driven by non-oil sectors like agriculture, forestry, transport, and energy infrastructure.
Fitch Ratings has reaffirmed Cameroon's "B" credit rating with a negative outlook, citing resilient GDP growth, a low budget deficit, and a slowdown in the debt level of the largest CEMAC economy.
The American rating agency anticipates Cameroon's debt-to-GDP ratio to decline below 40% by 2025, reflecting improved debt management and robust GDP expansion. Fitch's analysts forecast Cameroon's economy to grow by 3.9% in 2024 and 4.1% in 2025, compared to an estimated 3.8% in 2023.
Despite a projected decline in oil production in 2024 and 2025, growth is expected to be propelled by non-oil sectors such as agriculture, forestry, transport, and energy infrastructure.
Key Takeaways
Credit ratings by agencies like Fitch are crucial as they assess a country's creditworthiness and ability to repay debt. They influence borrowing costs, investment decisions, and overall economic confidence, making favorable ratings desirable for attracting investments and ensuring financial stability. Fitch's credit rating is more optimistic compared to ratings from Moody's and Standard & Poor's. While Cameroon has cleared its external arrears and remains current with debt service obligations, the country faces challenges in cash management. These issues include inflexible security spending, incomplete fuel subsidy elimination, and the accumulation of domestic arrears, which reached 1.6% of GDP by March 2024.
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