By Nathalie Tadena
Fitch Ratings raised its ratings on the Republic of Cameroon one notch
closer to investment grade, pointing to the Central African country's
improvement in domestic debt management.
Fitch upgraded its long-term foreign currency issuer default rating to
B, five levels away from investment grade, from B-minus. The outlook is
stable.
The firm said Cameroon's rating is supported by the economy's
continued recovery from the global financial crisis, helped by rebound
in oil production and revenues and higher public investment.
Fitch also noted that the issuance of T-bill and bonds in the domestic
market since late 2010 and no recorded delays in interest payments have
helped forge a track record of stronger sovereign debt service.
Cameroon's public debt is low compared to its peers, reflecting
substantial debt alleviation obtained in 2006.
Fitch noted that Cameroon's economic growth has historically been low
compared to other sub-Saharan African countries due to insufficient
investment in energy and transport infrastructure.
However, economic
growth improved to 4.2% last year as several large infrastructure
projects were launched and oil prices rose. Growth is expected to reach
4.7% this year, Fitch said.
The firm also noted that Cameroon's economy, though largely informal
and heavily reliant on agriculture and commodities, is more diversified
towards manufacturing than many sub-Saharan countries. The firm noted
that oil production, which had been declining over the past decade,
represented 7.1% of the country's gross domestic product and 35.8% of
exports last year. Fitch said output is expected to increase this year, a
trend that will continue in the coming years.
Fitch said Cameroon's ratings would benefit from a longer track record
of sound sovereign debt service, as well as improved public financial
management. The firm said a prolonged increase in oil output and greater
investment in infrastructure would also help its ratings.
-DOW JONES NEWSWIRES
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