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Cameroon L-T Ratings Raised To ‘B-’ |
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Article posté par Arise1Always vu 624 fois.
[ London - Royaume-Uni ] ( 05/05/2006) Sarah N'Sonde
On May 3, 2006, Standard & Poor’s Ratings Services raised its long-term foreign and local currency sovereign credit ratings on the Republic of Cameroon to ‘B-’ from ‘CCC’. At the same time, the ‘C’ short-term foreign and local currency ratings on Cameroon were affirmed. The outlook is stable. The upgrade reflects the country’s arrival at the completion point under HIPC initiative, which qualifies Cameroon for additional debt cancellation under the Multilateral Debt Relief Initiative (MDRI). As a result, general government debt is expected to decrease to 37.7% of GDP at year-end 2006, from 56.0% at year-end 2005, reducing the debt servicing burden significantly. If Cameroon accelerates structural reforms and further improves public sector governance, its credit standing could rise again.
Republic of Cameroon L-T Ratings Raised To ‘B-’ On Improved Public: Finances; Outlook Stable
Rationale
On May 3, 2006, Standard & Poor’s Ratings Services raised its long-term foreign and local currency sovereign credit ratings on the Republic of Cameroon to ‘B-’ from ‘CCC’. At the same time, the ‘C’ short-term foreign and local currency ratings on Cameroon were affirmed. The outlook is stable. The upgrade reflects the country’s arrival at the completion point under the Heavily Indebted Poor Countries (HIPC) initiative, which qualifies Cameroon for additional debt cancellation under the Multilateral Debt Relief Initiative (MDRI). As a result, general government debt is expected to decrease to 37.7% of GDP at year-end 2006, from 56.0% at year-end 2005, reducing the debt servicing burden significantly. The upgrade also reflects an improvement in the government’s debt servicing record, notably with respect to domestic debt, and a commitment to improve the management of public finances. A positive step in this regard was the transfer to the regional Central Bank, Banque des Etats d’Afrique Centrale (BEAC), of a number of state bank accounts that had previously been with commercial banks, a move that will enhance the transparency of the fiscal accounts.
The government has also improved transparency regarding management of its oil revenues, notably by adhering to the international Extractive Industries Transparency Initiative. Progress in the restructuring or privatization of loss-making public companies has also contributed to the improvement in the country’s credit standing. The privatization of national airline company CAMAIR, for example, has gained momentum, with four foreign companies short-listed in the on-going tender process. Nevertheless, the credit ratings on Cameroon are constrained by the low level of economic development, which remains depressed despite the country’s natural resource endowment, with GDP per capita estimated at $1,048 in 2006
. Economic growth is hampered mainly by a low level of investment, underdeveloped infrastructure, and institutional shortfalls. These shortfalls include governance problems, and a relatively weak policymaking environment, which remains characterized by a high degree of centralization.
Despite recent efforts by the authorities to address governance weaknesses, the perceived level of corruption in Cameroon, which also extends into business practices, remains high. Moreover, the lack of a clear potential successor to the long-serving President Paul Biya raises political stability concerns over the medium term.
Outlook
The stable outlook balances the improvement in public finances as a result of HIPC completion, better fiscal management practices, and structural reform, against the country’s low level of development and poor track record on fiscal discipline, including debt repayment problems in the recent past. If Cameroon accelerates structural reforms and further improves public sector governance, its credit standing could rise again. Conversely, if the fiscal position deteriorates or if structural reforms were delayed, then the ratings on Cameroon could come under downward pressure.
Ratings List
Sovereign credit ratings
From CCC/Stable/C
To B-/Stable/C
© 2006 Standard & Poor’s Ratings Services
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