Moody's Investors Service ("Moody's") has changed the outlook on the Government of Cameroon's issuer local and foreign currency ratings to negative from stable and affirmed the B2 ratings.

The decision to change the outlook to negative reflects a rising likelihood that Cameroon's fiscal strength will continue to weaken due to persistent spending pressures to fund its infrastructure investment program to support growth. Recent fiscal overruns and weak financial health of a number of state-owned enterprises (SOEs) have contributed to a rapidly increasing debt ratio, albeit from a low level, and higher than targeted recourse to external financing. Meanwhile, intensifying political unrest in the Anglophone regions and spending pressures in the run-up to the presidential and parliamentary elections in October 2018 increase the risk of further fiscal slippage. The materialization of contingent liabilities in the SOE sector or delays in IMF disbursements during the course of the 3-year program in the case of persistent fiscal deficit or funding deviations from the program targets would heighten government liquidity risk.

Moody's decision to affirm the rating at B2 balances the economy's diversification, which has helped to contain the impact of the oil price shock in comparison with fellow Central African Economic and Monetary Union (CEMAC) member countries, and a highly affordable debt stock, with a weak institutional framework, low revenue generation capacity and an increasing reliance on external borrowings to fund the public infrastructure investment program.

The foreign-currency and the local-currency bond and deposit ceilings remain unchanged at Ba2.

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