To reassure investors after the double downgrading of Cameroon’s sovereign rating by rating agencies, employers are setting out a set of urgent actions to be taken by the government.
The Cameroon Inter-Employer Group (Gicam) fears major risks for the Cameroonian economy following the downgrading of the sovereign rating of Cameroon’s debt by two rating agencies: moodys and standard and poor’s. The latter has in fact downgraded Cameroon’s long and short-term sovereign currency rating by six notches, moving it from “B-/B”, a “very speculative” category, to “SD/SD”. , or a partial defect. This, a few days after Moody’s lowered Cameroon’s rating by two levels from “B2” (very speculative) to “Caa1” (high risk).
For Gicam, the country finds itself in the category of borrowers for whom the perception of the risk of non-repayment on the international capital market is high. According to employers, this will lead to high interest rates when seeking financing on the capital market. This, while Cameroon needs the resources to finance its development. For Gicam, this situation is essentially due to poor management of public finances. Notably the fuel subsidy, slowness in implementing reforms, ever-increasing off-budget spending, particularly exceptional spending linked to the security crisis.
For Gicam, it is urgent that the government reacts. In a document that it has just made public, the employers formulate proposals for actions to be taken immediately to reassure investors. First, a government communication to demonstrate awareness of the situation and present the actions implemented in the face of this deterioration. Secondly, the acceleration of public finance reforms for its progressive clearance. The third proposal concerns the re-examination of debt policies in order to assess the relevance of certain choices. Gicam then recommends holding expanded consultations with economic players to examine Gicam’s proposals and encourage greater involvement of private sector players in financing development, relying in particular on PPPs.
For the Employers, it is important that these measures are quickly implemented. Because there is a risk of payment default like that recorded in 1983, but also a risk of a multiplication of defaults. Given that limiting access to financing could lead to an accumulation of arrears. Gicam also fears an austerity policy with a tightening of tax policy.
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