Moody’s Affirms Cameroon’s Caa1 Ratings, Keeps Stable Outlook
Moody’s Ratings has affirmed the Government of Cameroon’s local and foreign currency long-term issuer ratings and foreign currency senior unsecured rating at Caa1 and maintained the stable outlook.
According to Moody’s Ratings, the rating affirmation reflects constrained liquidity conditions on the Central African Economic and Monetary Community (CEMAC) regional government securities market, which have increased the possibility of a liquidity-driven default event.
Additionally, political risks, such as a potentially disorderly power transition, have grown more acute and are unlikely to be mitigated by the upcoming presidential election.
Ratings analyst stated that despite these risks, Cameroon’s resilient economy and its modest and declining debt burden support the Caa1 rating. Moody’s analysts said improving debt, treasury, and liquidity management since the 2023 downgrade also reduces the risk of default due to administrative delays.
“Cameroon’s stable outlook reflects our baseline scenario, which foresees constrained liquidity conditions and lingering uncertainties over political transitions alongside resilient growth, a modestly declining debt burden, and gradually strengthening institutions under a renewed IMF programme”.
The risks are balanced as Moody’s noted that recent institutional reforms and fiscal discipline may enable Cameroon to better adhere to its debt payment schedule, enhancing creditor sentiment through a reliable track record of timely debt servicing.
However, bureaucratic delays and fiscal risks could obstruct reform and consolidation efforts, while financing constraints risk triggering a default. Cameroon’s local currency (LC) and foreign currency (FC) country ceilings remain unchanged at B1 and B3 respectively.
The three-notch gap between the local currency ceiling and the sovereign rating reflects the large role of the government in the economy via its numerous state owned enterprises and weak institutions set against limited external imbalances.
The foreign currency ceiling maintains a two-notch gap to the local currency ceiling to reflect some transfer and convertibility risks stemming from the region’s external vulnerability to periods of lower oil prices, notwithstanding the French Treasury guarantee of the peg between the CFA franc and the euro.
Cameroon’s liquidity position has become increasingly fragile due to constraints in the regional CEMAC government securities market.
The market is under pressure from increasing financing requirements from sovereigns in the region, as demonstrated by rising interest rates, falling subscription rates and shorter borrowing maturities.
Cameroon’s continued fiscal arrears accumulation despite improving public financial management also indicates persistent liquidity pressures. While Cameroon has secured some alternative financing, potential gaps remain in its 2025 and 2026 financing plans given constrained regional liquidity.
With refinancing needs of about 6% of GDP annually and access to external funding also constrained, Cameroon faces the risk of a liquidity-driven default, albeit with likely minimal losses for investors. Cameroon’s debt burden is moderate and declining, suggesting liquidity pressures may eventually subside as refinancing pressures decline.
Moody’s ratings analysts expect general government debt to fall below 40% of GDP by the end of 2025, a level that compares favourably to Caa-rated peers.
Incremental institutional reforms under the 2021–2025 IMF programme have yielded improvements in public financial management, including enhanced revenue mobilization, reduced off-budget spending, and better oversight of state-owned enterprises.
The rating noted revealed that the government has also taken steps to streamline external debt payments and improve liquidity planning, contributing to a nascent track record of meeting payment obligations.
Cameroon faces elevated political risks, particularly ahead of the October 2025 presidential election. President Paul Biya, in power since 1982 and now 92, has confirmed his candidacy for an eighth term, but the absence of a clear succession plan and centralized power heighten the risk of a disorderly transition.
Deep societal divisions and widespread public frustration over corruption and limited opportunities further destabilize the political landscape. The electoral process is tightly controlled, with opposition figures disqualified and civic space shrinking, raising the risk of a contested or poorly managed outcome and popular pushback.
Additionally, ongoing conflicts in the Anglophone regions and the Far North continue to strain public resources and erode trust in institutions, contributing to a volatile pre-election environment and sustaining long-term governance and security risks.
Cameroon’s stable outlook reflects our baseline scenario, which foresees constrained liquidity conditions and lingering uncertainties over political transitions alongside resilient growth, a declining debt burden, and gradually strengthening institutions under a renewed IMF program.
To the upside, Cameroon’s recent reforms under its completed IMF programme—particularly in public financial management—have begun to yield results. The government has improved its debt and treasury operations, reduced off-budget spending, and enhanced revenue collection.
However, downside risks remain significant. Bureaucratic delays, centralized decision-making, security risks, and persistent liquidity constraints could hinder reform momentum, weigh on economic and fiscal outcomes below our current projections.
The weak financial position of state owned enterprises could result in the crystalization of significant contingent liabilites for the government. Political uncertainty and potential fiscal slippages—especially related to security spending and fuel subsidies or other social spending—may also weigh on the credit profile and create additional liquidity pressures. #Moody’s Affirms Cameroon’s Caa1 Ratings, Keeps Stable Outlook Nigeria Sets 2.5mbpd Oil Production Target for 2026 -NUPRC
