YAOUNDÉ, Cameroon — President Paul Biya signed a decree on Tuesday authorizing the government to borrow up to 930 billion CFA francs ($1.7 billion) from domestic and international capital markets, marking a significant escalation in Cameroon's efforts to address mounting fiscal pressures.
The proceeds will be used for development projects and the payment of debt arrears, according to the presidential decree. The decision comes as the country grapples with slow disbursement of external financing and revenue shortfalls, particularly in non-oil tax collection.
Breakdown of Borrowing Strategy
The 930 billion CFA francs will be raised through multiple channels:
- CFA 350 billion domestically through treasury bond issues on regional capital markets
- CFA 250 billion through direct loans from domestic private institutions
- CFA 330 billion from international banking markets, including a planned eurobond issuance
The government has indicated that Cameroon is planning to issue a fresh eurobond as part of this broader capital-raising initiative, representing the country's return to international debt markets after previous sovereign bond issues.
Addressing Fiscal Pressures
The decision comes as the country grapples with slow disbursement of external financing and revenue shortfalls, particularly in non-oil tax collection. The borrowing plan specifically targets the clearance of government arrears, including unpaid Treasury bills that have accumulated over recent months.
Officials say the borrowing move signals market confidence and aims to boost liquidity while aligning with the country's development priorities for 2025. The funds are earmarked to settle what are known locally as "RAP" (Restes à Payer) - unpaid state bills that have created cash flow challenges for government operations.
Building on Previous Borrowing Measures
This latest authorization represents a significant expansion of Cameroon's borrowing activities in 2025. Earlier in May, President Biya had authorized the finance minister to raise up to 200 billion CFA francs ($348 million) from international financial markets to shore up government cash flows, indicating the ongoing nature of the country's fiscal challenges.
Regional Context
Cameroon's economic situation mirrors challenges faced by several countries in the Central African Economic and Monetary Union (CEMAC), where member states have encountered similar pressures from global economic volatility, commodity price fluctuations, and the lasting impacts of recent global disruptions.
The country's strategic position as a regional hub for trade and commerce makes its economic stability particularly significant for broader regional prosperity and integration efforts.
Looking Forward
The authorization represents a proactive approach to managing Cameroon's fiscal challenges while maintaining momentum on development projects essential for economic growth. The success of these borrowing efforts will depend on market conditions and investor confidence in Cameroon's economic prospects.
As the government moves forward with implementing this substantial borrowing plan, stakeholders will be watching closely to see how effectively the funds are deployed for development projects and whether the debt clearance helps stabilize government operations and restore confidence among creditors and suppliers.
On paper, Cameroon’s borrowing is meant to finance infrastructure, cover budget shortfalls, and pay off arrears—but in reality, several structural problems make these loans far less beneficial to the average citizen.
Here are reasons why the borrowing may not truly help the country:
Corruption and Mismanagement
A large share of public funds in Cameroon is diverted into private pockets of politicians, elites, and contractors. Projects are often over-invoiced or left unfinished, while loans continue to accumulate interest. According to Transparency International, Cameroon consistently ranks as one of the more corrupt countries in Africa.
Debt Servicing Over Development
A significant portion of borrowed funds goes to paying back old loans rather than creating new value. This leads to a debt trap: borrowing to pay back borrowing, without real improvement in economic productivity. For instance, in 2025, part of the CFA 930 billion loan was earmarked simply to clear arrears.
Heavy Dependence on External Financing
Constant borrowing makes Cameroon vulnerable to the conditions of lenders (IMF, World Bank, Eurobond investors, China, Afreximbank, etc.). This often comes with austerity measures—cutting subsidies, raising taxes—that hit ordinary citizens the hardest.
Neglect of Productive Sectors
Instead of investing heavily in agriculture, manufacturing, and job creation, borrowed money often goes to prestige projects (stadiums, ministerial buildings, luxury cars for officials). The country remains dependent on raw materials like oil, cocoa, and timber, which are vulnerable to price shocks.
Borrowing isn’t inherently bad—many countries use debt wisely to stimulate growth. But in Cameroon’s case, corruption, mismanagement, and lack of productive investment mean the loans mostly enrich a few while leaving the public with the burden of repayment. The country risks a vicious cycle: more borrowing, more debt, little development.
No comments:
Post a Comment