Cameroon Pays Its Interest On Eurobond Despite COVID-19 Fears

The government of Cameroon has been able to pay the last quota of its Eurobond interest amounting to 21 billion FCFA (about US$42 million).

This is despite earlier fears that the country may not be able to acquit itself of the obligation because of the negative effects of the COVID-19 on the global economy.

The quota, which was due on May 19, 2020, is the interest on a Eurobond debt of 450.4 billion FCFA (about US$1 billion) contracted in 2015. The next quota is due on November 19, 2020.

Cameroon pays an interest of over 42 billion FCFA (about US$84 million) annually on the Eurobond debt and this amount is due to drop by 50b per cent in 2023 when the country is expected to have paid off half of the debt owed.

The acquittal of this financial obligation has been positively welcomed by the Moody’s notation agency which has just reclassified Cameroon’s standing from “negative” to “stable”.

This comes at a time when lending agencies and international financial institutions had begun speculating whether Cameroon would ask for an extension of its debt repayment obligations towards private lenders in the G20, one of the beneficiaries of which the country is.

The doubts so expressed have been couched on the difficult economic moments the country is currently going through due to the security situation in the nation’s English-speaking Northwest and Southwest Regions as well as the Extreme North Region and the challenges imposed on the economy by the coronavirus pandemic.

This disquieting situation was last week further aggravated by serious floods in the economic capital Douala and other towns in the country causing destruction tallied at billions of FCFA.

Besides everything else, the assistance given by the G20 falls far short of demand previewed by the World Bank.

The Bretton Woods institutions had estimated that the country would need 155 billion FCFA (about US$310 million) to meet up with the exigencies of its current economic and security situation.

However, the nation’s budget which was modified on June 3, 2020 by decree envisages 118 billion FCFA (about US$236 million).

Sources within the international investment community hint that the Cameroonian authorities are mooting the possibility of negotiating a refinancing of the Eurobond debt with the International Monetary Fund (IMF).

The goal here is to extend the reimbursement period of the 450.4 billion FCFA debt.

Effective November 19, 2023, Cameroon is expected to make the first payment of 150 billion FCFA (about US$300 million) on the principal debt. But, with a drop in exports, it is not certain the country would be in a position to make this payment.

Apart from the Eurobond debt, Cameroon also has other international debt engagements notably the debts contracted to finance infrastructures and other obligations of the African Nations Cup which it is due to host.

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