Clearing Internal Debts: This Economic Stimulus!

Jubilations within government circles following Cameroon’s strides in the money market recently are yet to die down. Understandably so as mobilising approximately FCFA 335 billion through a bond issue on international investors is not an easy task especially within the context of a morose global economic environment where the fear of the unknown is rife. This explains why the government’s press release of July 31, 2024 announcing the ‘big catch’ after the closure of the bond issue operation in London from July 29-31 underlines that: “Despite the volatile market conditions, the confidence shown by the international financial market once again demonstrates Cameroon’s credibility and ability to mobilise the investor community to finance its National Development Strategy.” This sounds reassuring indeed! Even as critics pick holes with what they say is “celebrating debts”, the euphoria is at least logical, judging from the framework under which such results are recorded and what government says the money would be used for. Making it clear that the, “mobilised resources will significantly contribute to clearing domestic debts, boosting SMEs activities, strengthening economic growth, enhancing private sector confidence in the State and improving the business climate,” tells of clearly outlined objectives for the freshly contracted debt. Although those who hope against hope see in the new loan what they qualify as “robbing Paul to pay Peter,” the indicated sectors in which the money would be used at least raise hopes in some citizens that the economy could breathe if the resources are not later diverted to other uses. Going by the recent Monthly Review of Cameroon’s Public Debt published on July 19, 2024, the unsettled domestic debt of the Central Government (excluding outstanding payments of more than three months) is valued at FCFA 3,611 billion, or 12.0 per cent of Gross Domestic Product. This represents increases of 3.0 per cent compared with the first quarter of 2024 and 12.0 per cent compared with the same period in the previous year. Intensified borrowing then! Servicing the internal debt is therefore a salutary move, looking at the package and what such a move would mean to the local economy. For, it is a strategic move to revive the economy. Contractors, for instance, whose bills are paid by the State will be capable of refunding loans contracted sometimes with credit unions or other saving and loan schemes, subscribe again and execute more projects as well as keep their companies functional. In fact, if one goes by the government’s commitment, it would be clear that more money is expected to flow in the local economy in the days or weeks ahead. With such a scenario, the local economy booms and executed projects are capable of lifting the living conditions of the beneficiary population. Clearing the internal debts, as government puts it, will certainly enhance the private sector confidence in the State and boost their activities through which jobs are created for the population. Cognisant of the fact that job creation begets wealth generation, there is every reason to hope for a better economic environment when the public and private sectors go hand in hand. A serious push to the much-needed partnership between the public and private sectors for better economy where the input of all and sundry is visible. This ties well with the Head of State’s incessant calls for conditions to be made conducive for the private sector to contribute to the growth of the national economy. For example, in his 2022 end-of-year message to the nation, President Paul Biya said, “As you are aware, it is by observing personal discipline in our daily behaviours that we will be able to build the modern Cameroon to which we all aspire. A prosperous Cameroon united in its diversity, a Cameroon where every actor has his or her own place. In this regard, I wish to acknowledge the crucial role played by the private sector in the implementation of our development policy. For my part, I will continue to do everything possible to ensure our country’s progress. I know I can count on each and every one of you to achieve that.” And ...