Cameroon accused of 5-day delay in external debt payment

By Eratus Ndueh

The International Monetary Fund, (IMF) and Moody, an America agency have revealed that Cameroon has accumulated between August and September 2023, delayed payment of up to five days on its debt owed to the European Investment Bank.

According to Henri Kouam, the founder of the Cameroon Economic Policy Institute (CEPI) whose mission is to improve the quality of economic policies through fact-based research, debates and advocacy to encourage free market ideas and entrepreneurship, “the delay can be due to technical errors which are considered minor and temporary and that reflect the country’s default in terms of cash management.”

However, these events will not have an impact on the continuation of the program because the IMF has decided to apply a period of 30 days after the due date before considering delayed payments as external arrears.

“We do not consider these debt payment delays as cases of default on which our issuer ratings relate, because they concerned a multilateral creditor and not private creditors,” Moody explained in a press release published on February 26.

The American agency, however however, explains that the missed payments are indicative of the cash flow tensions the Cameroon government is facing at the moment.

Tensions aggravated as a result of external and internal factors, like the increase in security spending to deal with the situation in the English-speaking and Far North regions. The volatility of oil revenues, the high level of subsidies for fuels; all in a context of tightening global financial conditions are some of the issues on the agenda of the government.

While the authorities receive technical assistance from the IMF to improve debt monitoring capacity, this situation could be sending bad signals to international partners as confirmed by Henri Kouam: “When we make late payments, all investors and international partners see is that, that developing market economy is not organized, they don’t make their payments on time, which implies that there are possible financial risks.”