Who are we ?

A notation decided on the initiative of the Agency itself - not the Yaounde authorities - which comes a little less than a year after issuance by Cameroon of its first international bond issue: USD 750 million at the rate of 9.5% for a maturity of ten years. 

Stable Outlook

The country's obligations in local currency and in foreign currencies are rated "B2" with a stable outlook. This rating corresponds to the obligations of the category called "highly speculative", in line with the "B" grade granted to the countries of Central Africa by the two other major international agencies Standard & Poor's and Fitch Ratings.

If the agency's report reminds the risk involved in the country's exposure to the oil sector (50% of exports and 23% of tax revenues by Moody's estimates), it highlights the potential "largely underdeveloped of natural resources in agriculture, natural gas, hydropower and minerals sector".

As such, Moody's believes that "by focusing on removing bottlenecks in ports, electricity and transport infrastructure", Cameroon’s Growth and Employment Strategy (Vision 2035) and 2015-17 three-year investment emergency Plan "support the increased potential growth prospects for the country, with a projected growth of real GDP to 5% on average over the next five years." Cameroon Real GDP grew by 5.8% in 2015, against 5.9% in 2014 according to the National Institute of Statistics.

Indebtedness

Moody's stresses, however, the increase in public sector debt. According to its estimates, it is expected to reach 34.3% of GDP in 2017, partly because of planned investments by the government, against 22.3% in 2014 and 9.7% in 2008 - in the wake of the cancellation part of Cameroon's debt under the Heavily indebted poor countries Initiative (HIPC) of the Bretton Woods institutions.

Among the factors that could cause upward revision of the rating of Cameroon listed by Moody's: stronger than expected growth and higher revenue thanks to Vision 2035 and the three-year plan, as well as a more moderate increase in the country’s debt.

However, a more marked deterioration in fiscal and debt indicators, a negative impact on the terms of trade (the purchasing power of exports) and a deterioration of the security situation - Cameroon is exposed to the threat of terrorist group Boko Haram - could result in a downgrade of the country.

Source: adapted from the article “L’agence Moody’s attribue sa première notation au Cameroun”, Jeune Afrique www.jeuneafrique.com