S&P Affirms Cameroon Ratings with Stable Outlook
S&P Global Ratings has affirmed its ‘B-/B’ long- and short-term local and foreign currency sovereign credit ratings on Cameroon with outlook accorded as stable.
The stable outlook balances risks from Cameroon’s dependency on oil and gas exports, global geopolitical uncertainty, and still-weak–albeit improving–public finance management against signs of economic resilience in key sectors including mining, forestry, and agriculture, and continued donor support, S&P Global said in its rating note.
“We could lower the ratings on Cameroon in the next 12 months if government liquidity pressure were to build up–for example, from a large decline in hydrocarbon prices or fiscal slippage”.
The global rating agency said it could also lower the ratings if institutional stability were to deteriorate materially, which could impede policymaking and the government’s capacity to repay its commercial debt on time and in full.
“We could raise our ratings on Cameroon if the country’s external position improves beyond our expectations or stronger fiscal performance results in a steeper decline of net general government debt as a share of GDP”.
Analysts explained that any positive rating action would hinge on improvement in governance and public finance management.
Despite gradually declining oil production, Cameroon’s economy continues to post solid GDP growth from rising gas production, ongoing industrialization, resilient exports of cocoa and timber, and an average expected population growth of 2.5%.
At the same time, underinvestment in the electricity grid, still-limited private investment in the non-commodity sector, and climate shocks – including flooding- pose risks to Cameroon’s growth prospects, particularly per capita.
Under its Extended Credit Facility (ECF) and Extended Fund Facility (EFF) with the IMF, Cameroon has made notable progress on increasing non-oil revenue and limited expenditure pressures including by phasing out fuel subsidies.
“We project that over 2025-2028, absent renewed shocks, budget deficits should remain relatively low, at about 1% of GDP. We also expect the country’s engagement with international donors to continue, underpinning its low average cost of financing”.
The country’s GDP per capita is noted to be low, at an estimated $1,940 in 2025, and Cameroon remains vulnerable to negative terms of trade shocks to commodity prices, especially oil, which still makes up over one-third of merchandise exports.
Climate-related events, the internal security situation, and rapidly increasing global geopolitical uncertainties pose risks.
In addition, and despite progress, public finance management remains weak, decision-making highly centralized, and the transfer of power untested. It significantly increases uncertainty and tensions could flare up ahead of the 2025 presidential election.
S&P Global ratings said social tensions could increase around the October 2025 presidential election. President Paul Biya, who is 92, has held office since 1982 and is expected to run for an eighth consecutive term.
The country’s institutional settings are highly centralized; under the current political framework, the transfer of power has yet to be tested. For budgetary reasons, authorities decided to delay legislative elections until early 2026.
Ethnic tensions in the western English-speaking region seem to have declined, also reflecting improving regional economic activity.
Nevertheless, the situation remains fragile and increase security expenditure, which crowd out productive investments; and the risk of attacks remains high.
S&P forecasted real GDP will expand about 4.4% annually over 2025-2028, slightly higher than the 3.6% yearly average growth of 2021-2024.
It noted that Cameroon’s oil output will continue declining as most fields are mature, but liquefied natural gas (LNG) production will increase, thanks to the Sanaga 2 gas platform and the liquefaction capacities at the Hilli-Episeyo floating plant.
Mining has large potential, but low prices have dampened the sector’s dynamism for now. Agribusiness, manufacturing, construction, and services should remain dynamic.
Several large hydroelectric dam projects have started production–notably the Nachtigal project in 2024, which analysts said should reach its capacity of 420 megawatts (MW) and provide 30% of the country’s electricity–or are ongoing, namely the Grand Eweng, with 810 MW expected in 2028; and Kikot Hydro Power, with 1,200 MW in 2030.
The Kribi deep seaport’s expansion has made significant progress and will alleviate congestion and facilitate trade.
The rehabilitation of the national refinery (the SONARA) is ongoing, but S&P expects it will take time to complete.
Beyond infrastructure investment, structural reforms to improve the relatively poor business environment will be key to boosting private sector growth and support ongoing industrialization and diversification efforts in the context of the national development plan, in our view.
Global geopolitical tensions and potential trade war could disrupt supply chains and lower growth in Cameroon’s trading partners – notably China and the EU.
The country is also vulnerable to swings in commodity prices, mainly oil and gas, but also cocoa and coffee. In addition, other CEMAC members are significantly less diversified and, except for the Central African Republic, rely heavily on oil with aging fields and underinvestment.
In a December 2024 summit, President Biya warned that corrective measures should be taken to preserve the union’s external viability. Cameroon is also exposed to climate-related events such as flood and drought.
“These can adversely affect agriculture, which employs two-thirds of the population”, S&P Global said in the rating note. Analysts think donor support is key in providing concessional financing and supporting reform implementation.
“We expect the $838 million IMF program, signed in 2021 and extended by 12 months, to end in the coming months”. A staff-level agreement for the seventh review of the ECF and EFF and the second review of the Resilience and Sustainability Facility was reached in January.
IMF approval is expected lead to a disbursement of about $120 million. Analysts think it is likely that the country will negotiate a new program, but only after the October 2025 election, with a potential agreement in 2026.
Other international partners are also active with project financing and budget support. The World Bank is expected to approve a $200 million budget support loan soon. In addition to concessional financing, these donor programs provide support to reform implementation and provide technical assistance.
Uncertainty concerning the future of USAID financing poses risks to health and humanitarian projects. This could crowd out other investment if the government steps in, or negatively affect the population if projects are cancelled.
“We expect the current account deficit will decrease slightly over 2025-2028, but the balance of payments remains highly vulnerable to fluctuations in commodity prices”, S&P said. Oil and gas are still key factors in foreign currency inflows, at about half of the country’s exports, along with cocoa, wood products, and cotton.
Government efforts to bolster the non-oil sector, along with its import substitution strategy, should gradually reduce the current account deficit to near 3% of GDP by 2028.
The ratings agency also expect LNG and mining outputs to increase, offsetting declining oil revenue from maturing fields.
Further upside potential exists if industrialization happens faster than we expect and from gas projects, notably the Yoyo-Yolanda field, which is a joint project with Equatorial Guinea and could substantially boost LNG exports.
On the other hand, pressure on oil prices from the recent OPEC decision to raise output, lower economic activity in China, or higher production in the U.S., and significantly lower mining prices pose risks.
In addition, a decline in CEMAC’s foreign exchange reserves, given the important reliance on oil in five of its six members, could add risks for Cameroon if regional measures are not implemented.
The budget deficit should remain below the historical average thanks to lower subsidies and revenue-boosting reforms, S&P Global said.
The ratings firm forecast the general government deficit will average 1% of GDP over 2025-2028, thanks to solid growth and the significant decline in fuel subsidies–from Central African CFA franc (XAF) 1 trillion or about $1.6 billion in 2022 to below XAF15 billion this year–following the decision to significantly hike pump prices.
Analysts expect government revenue to increase if authorities continue with reforms. Notably, the expansion of the unique taxpayer identity number for individuals and companies has yielded results, with the number of professional taxpayers increasing to 395,000 in 2024 from 135,000 in 2021.
Authorities are also working with banks and water and electricity companies to further expand the tax base. The full implementation of electronic invoicing could support higher revenue.
In addition, authorities are enacting higher taxes and tariffs with their import substitution and export promotion strategy. Ongoing digitalization could improve control, communication, and tax collection.
“In our view, the materialization of higher non-oil revenue is key to meet the government’s ambitious investment plan and manage the still-high risk from oil revenue volatility”.
Cameroon’s debt to GDP should marginally decline thanks to a low deficit and solid nominal growth, and costs remain manageable, S&P said.
“We anticipate general government net debt will decline to 31.5% of GDP in 2028 from 35.3% in 2024, while interest payments will average 6% of revenue over 2025-2028.
“As of end-2024, external debt represented 71% of the government’s debt. Almost 50% of foreign currency debt is denominated in euros when accounting for special drawing rights, limiting foreign exchange risks given the XAF’s peg to the euro”.
The ratings note revealed that 85% of external debt comes from multilateral and bilateral partners. The regional debt market is showing signs of saturation, with banks being heavily exposed to sovereigns in the currency union and other members issuing significant amounts at high rates. It limits the country’s capacity to run significantly higher deficits.
Analysts said they understand that the government intends to continue strengthening public finance management to prevent payment delays.
An XAF15 million per quarter cap on treasury advances spending through exceptional budgetary procedures and the National Hydrocarbons Corp.’s direct intervention have been introduced. Although reform progress will take time, S&P Ratings expects technical assistance from partners to support further policy steps.
“In our view, CEMAC membership mitigates external risks”, S&P said im the ratings note. Cameroon has access to CEMAC’s pooled stock of international reserves, which limits country-specific risks associated with balance of payments, although the region as a whole relies heavily on oil.
We estimate that Cameroon contributes more than 40% of the CEMAC zone’s GDP, making it the largest economy in the region.
In addition, the XAF’s peg to the euro–supported by the French currency exchange guarantee –contains exchange rate volatility risks. Confidence in the peg also helps contain inflation.
This was the case even during political crises and commodity price shocks, unlike in many other sub-Saharan African countries. S&P expects inflation in Cameroon to average 3.3% a year over 2025-2028. #S&P Affirms Cameroon Ratings with Stable Outlook#
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