Moody's Affirms Cameroon's Caa1 Rating, Cites Constrained Liquidity and Elevated Political Risks

Strategic Insights -

Moody's Investors Service has affirmed the Government of Cameroon's local and foreign currency long-term issuer ratings at Caa1, maintaining a stable outlook. The rating affirmation reflects concerns over constrained liquidity conditions in the regional Central African Economic and Monetary Community (CEMAC) government securities market, which increase the possibility of a liquidity-driven default event. Additionally, Moody's cites elevated political risks, including a potentially disorderly power transition ahead of the October 2025 presidential election.

Key Takeaways:

  • The Government of Cameroon's local and foreign currency long-term issuer ratings have been affirmed at Caa1, with a stable outlook.
  • Constrained liquidity conditions in the CEMAC region increase the possibility of a liquidity-driven default event.
  • Elevated political risks, including a potentially disorderly power transition, are unlikely to be mitigated by the upcoming presidential election.
  • Cameroon's resilient economy and modest, declining debt burden support the Caa1 rating.
  • Improving debt, treasury, and liquidity management since the 2023 downgrade reduce the risk of default due to administrative delays.
  • Cameroon's stable outlook reflects Moody's baseline scenario, which foresees constrained liquidity conditions, lingering uncertainties over political transitions, and resilient growth.
  • The three-notch gap between the local currency ceiling and the sovereign rating reflects the large role of the government in the economy and weak institutions.
  • 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 lower oil prices.

Statistics:

  • GDP per capita (PPP basis, US$): 5,548 (2024)
  • Real GDP growth (% change): 3.6% (2024)
  • Inflation Rate (CPI, % change Dec/Dec): 5% (2024)
  • Gen. Gov. Financial Balance/GDP: -1.3% (2024)
  • Current Account Balance/GDP: -3.2% (2024)
  • External debt/GDP: 27.7% (2024)

Sources:

  • Moody's Investors Service
  • Central African Economic and Monetary Community (CEMAC)
  • International Monetary Fund (IMF)
  • Bank of Central African States (BCAS)
  • World Bank
  • African Development Bank