Economy on Free Fall: Cameroon’s Foreign Debt Hits 489% in 13 years, Raising Concerns of Over Indebtedness

Between 2009 and 2022-a period of 13 years, Cameroon’s foreign debts rose exponentially, rising from CFA 1904 billion to CFA 11,2016 billion. This represents a rise of 489%.

In other words, Cameroon multiplied its stock of external debts by six times. But because the country’s Gross Domestic Product continued to rise within the same period, the incidence of the increasing public debt was somehow mitigated: it jumped from 16.3% of the GDP in 2009 to 40.5% in 2022.

The external debt of Cameroon as that of any other country is reported as the total international obligations of the country as a percentage of its GDP. External debt of less than 60 percent of GDP is not a problem. At higher levels, paying the interest on the debt may start to become difficult.

Cameroon’s external debt figures were made public on February 16 in the economic capital, Douala by the Autonomous Sinking Fund, CAA, – the structure in charge of managing Cameroon’s public debt.

It was during an event in which Finance Minister, Louis Paul Motaze presented Cameroon’s 2023 financing program to investors.

The CCA explained that the rather exponential rise in the amount of Cameroon’s external debt is caused by continued spending on projects contained in the Strategy Document for Growth and Employment, and the 2020-2030 National Development Strategy.

Additionally, the CCA says Cameroon’s public debt has been rising as a result of the issuance of treasury bonds to fund the State budget and fluctuations in exchange rates. For instance, Cameroon mobilized over CFA 4,940.9 billion from the financial market between 2010-2022. Variations in currency exchange rates have also been blamed for the rising debt. For instance, between June 2021 and June 2022, the rise in the exchange rate between the US Dollar and the CFA led to a CFA 420 billion rise in Cameroon’s public debt.

Despite this rise, Cameroon’s public debt remains sustainable, according to the CCA, because it has not reached 70% of the GDP which is the threshold set by CEMAC.

The International Monetary Fund agrees the country’s debt is still sustainable but warns it’s already running a high risk of debt distress.

Attached is historical data on the evolution of Cameroon’s debt. Source: The World Bank

Cameroon External Debt – Historical Data