Rating agency upgrades Cameroon’s credit worthiness.

S&P Global Rating Agency clarified its decision by stating that it weighed risks arising from public financial management, terms of trade volatility and the fragile security situation with factors such as access to concessional financing and the potential for stronger economic growth.

Despite continuous weak governance, the agency expressed optimism that risks to the country’s treasury liquidity position and payment discipline have eased, in its justification of the improved rating.

“Our position is based on measures contained in the IMF’s ongoing programme to improve the cash management framework. This should alleviate the technical challenges that led to Cameroon´s default in 2022,” the experts stated.

They further reaffirmed that the new treasury rating for Cameroon also takes into account the budgetary savings that would result from the partial elimination of fuel subsidies.

On a macroeconomic level, the Agency stated that the weather is rather good as Cameroon’s Gross Domestic Product, GDP is expected to witness an average real growth of 4.2 %. 

This positive trend is expected to run all through the 2024-2027 period, driven by increased investments in major infrastructure projects linked to energy, communications and transport, according to the evaluators.

They reiterated that these giant projects are expected to facilitate access to electricity and improve the country’s transportation network, thereby enhancing overall productivity. 

For example, they averted that the Nachtigal Hydroelectric Dam that has started production could provide 30% of the country’s electricity consumption once fully operational by the end of 2024.

The S&P Global Ratings agency nevertheless notes some dark spots, notably the security risks in the English-speaking part of the country and around the Lake Chad Basin, as well as other thorny questions linked to the succession of President Paul Biya, which the assessors say, considerably increase uncertainty.

S&P Global Ratings is an American credit rating agency and a division of S&P Global that publishes financial research and analysis on stocks, bonds, and commodities.

It is considered the largest of the Big Three credit-rating agencies, which also include Moody's Investors Service and Fitch Ratings.