State authorizes new grants for public finance

The government has authorized a loan of about 1700 billion FCfa on behalf of the 2015 fiscal year.

An official at the Ministry of Finance (Minfi) in Yaoundé ensured that "there are difficulties with the implementation of the emergency plan as well as with the technical plan, particularly owing to the fact that it was adopted after the State budget.”

The challenge is to integrate the cost of these achievements to the 2015 budget envelope. This is apparently not easy because "banks are not comfortable with extra budgetary borrowing," explained one of our sources.

In order to solve the problem, the president of the Republic issued an order on August 13, 2015 for “amending and supplementing certain provisions of the budget law of the Republic of Cameroon for the year 2015.”

The presidential order stated that "the government is authorized to negotiate and possibly, to conclude in 2015fiscal year, concessional and non-concessionnal borrowing amounting to 500 billion FCfa and 1 200 billion FCfa respectively.”

Thus according to our sources, "we will have to raise the nation's maximum debt in order to finance the emergency plan.”

Yet Minfi, Alamine Ousmane Mey, warned "investment programmes in such infrastructure incurred by Cameroon would give rise to a level of debt that would experience an increasing.”

However, one might worry about the amount of non-concessional loans (1 200 billion FCfa) on the understanding that they are contracted at rates of interest that is much higher than those of concessionary loans, commercial. Minfi explained that, “compared to the investment needs, resources at low interest rates are particularly rare.”

Our source indicated that "the IMF can only finance our projects if we are under programme with them and the authorities do not accept that we should again.

China, where we had the most conceded and virtually more concessional loans; today takes all kinds of precautions and assurances that greatly increase the rate of release of its loans. Cameroon is thus forced to comply with the requirements that apply.

That said the level of debt of Cameroon which currently stands at 22% is largely below the sub-regional standards which is set at 70%. This indicates to economists that despite the order of the head of State which revises upward the country's debt ceiling, it remains sustainable.

Moreover, says our source, "even if it gets into debt beyond the standards, the real question is whether projects will generate enough resources to allow the refund when the time comes". The emergency plan is in principle in this logic.