Moody's Investors Service ("Moody's") has assigned first-time local and foreign-currency issuer ratings of B2 to the Government of Cameroon. The ratings carry a stable outlook.
The rating assignment is based on the following key drivers:
(1) Low (+) economic strength balancing the country's exposure to the oil shock—albeit more contained than for regional peers—and our expectation of a stronger potential growth outlook supported by the infrastructure investment strategy aimed at unlocking the country's vast resource potential. This assessment also takes into account the gradually slowing oil production outlook and the lower for longer commodity price environment which dampens incentives for the development of the country's significant natural gas resources;
(2) Very low institutional strength, challenged in particular by weak control of corruption and public financial management, but supported by membership of the Central African Economic and Monetary Union (CEMAC) which affords a high degree of monetary policy credibility;
(3) Moderate (+) fiscal strength constrained by the large, mostly externally funded public investment program over the next five years which contributes to the deterioration in the fiscal profile, although the debt burden and affordability metrics will remain consistent with B2 peers over the forecast horizon;
(4) Moderate (+) susceptibility to event risk reflecting: credit strengths, such as CEMAC membership with a convertibility guarantee from the French Treasury providing a strong balance of payments backstop despite recurrent current account deficits; credit constraints, such as political succession risk, in addition to tightening funding conditions amid lower oil receipts and a profitable but thinly capitalized banking system with high concentration risk.
Concurrent with the first-time rating assignment, Moody's has also assigned a Ba2 ceiling for local-currency bonds and deposits as well as for foreign-currency bonds and deposits.