Cameroon: The total amount of domestic public debt securities quadrupled to reach XAF 1,013 billion between 2015-2020 (CAA)

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(Business in Cameroon) – In its recent report on Cameroon’s public debt, the CAA national sinking fund explains that one of the reasons why the public debt increased by 5.6% on December 31, 2020 (to 10,334 billion XAF) is the significant increase in the volume of government securities issued by the country.

According to figures compiled by the CAA, over the 5-year period between 2015 and 2020, the country almost increased the volume of its public securities by about four.

This increase is particularly noticeable at the level of securities issued on the BEAC public securities market, of which Cameroon has been the main promoter since its launch in 2011. Indeed, initially, on this market, the country focused on issuing short-term securities (maturing in a maximum of 52 weeks). However, in 2019, it moved its issuance of long-term securities (maturity between one and ten years) from the BVMAC financial market (the costs of which were deemed prohibitive) to the BEAC government securities market.

Concretely, at the end of 2020, the outstanding amount of government securities issued by Cameroon was CFAF 1,013 billion. In 2015, it was XAF 265 billion, XAF 370 billion in 2016, XAF 307 billion in 2017, XAF 440 billion in 2018 and XAF 706 billion in 2019.

The CAA gives no reason for such an increase but in February 2021, the Minister of Finance gave clues as to how the funds were being used.

Investments

In fact, in February 2021, during a meeting with financiers in Douala, Louis Paul Motaze explained that in 2020, the proceeds of Treasury bills issued were used to mitigate periodic drops in income.

Also, thanks to the funds raised by the issuance of long-term securities, the country has continued the implementation of numerous investment projects, namely XAF 80 billion for road infrastructure, XAF 70 billion for sports infrastructure and buildings. assimilated, and XAF 45 billion for the implementation of the coronavirus response program,Added the manager. It should be noted that part of the funds raised were also used to amortize maturing securities issued on the BEAC market.

On observation, it appears that the increase in the volume of the country’s government securities issues is due to three factors. First, there is the security expense. Indeed, since 2013, Cameroon has been fighting the Boko Haram insurgency, thus incurring additional security costs. In addition, at the end of 2016, the country was forced to deploy the army in the North West and South West to deal with pro-independent fighters. To this day, these security threats still require significant monthly financial resources.

In addition, in 2015, the country launched major infrastructure projects ahead of the African Cup of Nations (CAN), which will start in January 2022. Another factor that has required additional funding from the government is the coronavirus pandemic which began in March 2020. As part of its response program, the country had to discuss significant financial resources but, with its cash flow problems, it was forced to resort to loans, short and long term.

Brice R. Mbodiam


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