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Moody's changes outlook on Cameroon to negative

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Moody's changes outlook on Cameroon to negative

Moody's revised the outlook on Cameroon's local- and foreign-currency issuer ratings to negative from stable while affirming the ratings at B2, citing an increased likelihood of a continued deterioration in the country's fiscal strength.

The rating agency said Cameroon's fiscal strength is expected to continue to decline because of persistent spending pressures to finance its infrastructure investment program, which is meant to support growth. Moody's expects the country's debt ratio to increase gradually to over 38% of GDP by 2021 from just 11.7% in 2008.

Cameroon's 2017 deficit stood at 4.3% of GDP, higher than budgeted and than the 3.1% targeted in the IMF's three-year, $683.5 million extended credit facility for the country. Fiscal overruns reflected a considerable rise in spending at the end of 2017 in the run-up to the October 2018 presidential and parliamentary elections, as well as investment spending pertaining to Cameroon's hosting of the 2019 Africa Cup of Nations tournament, Moody's said, citing the IMF.

The outlook could improve if fiscal consolidation and financial governance reforms are implemented according to the IMF program's guidelines, Moody's said.

The affirmation reflects the diversification of Cameroon's economy, which helped limit the impact of the oil price shock on the country, and a highly affordable debt stock.