Information Document on the Issuance of Treasury Assimilable Bonds (OTA) by the State of Cameroon - 2020 Fiscal Year

REPUBLIC OF CAMEROON
MINISTRY OF FINANCE
INFORMATION DOCUMENT
ISSUANCE OF TREASURY ASSIMILABLE BONDS (OTA) BY AUCTION FISCAL YEAR 2020

2 | Information Note
TABLE OF CONTENTS
I. LISTS OF TABLES AND FIGURES.................................................................................................. 3
A. LIST OF TABLES ........................................................................................................................ 3
B. LIST OF FIGURES............................................................................................................................. 3
C. LIST OF CHARTS.................................................................................................................... 3
II. DEFINITIONS AND ABBREVIATIONS ........................................................................................................ 4
III. DISTRIBUTION METHODS OF THIS DOCUMENT ................................................................ 5
IV. DISCLAIMERS AND RESTRICTIONS .............................................................................................. 6
A. DISCLAIMERS ............................................................................................................................... 6
B. RESTRICTIONS...................................................................................................................................... 6
V. PREAMBLE............................................................................................................................................... 7
VI. RESPONSIBLES FOR THE INFORMATION NOTE AND ACCOUNT AUDIT........... 8
VII. PRESENTATION OF THE ISSUER AND THE OPERATION ............................................................. 9
A. MACROECONOMIC PERSPECTIVES..................................................................................... 9
B. 2020 BUDGET PROJECTIONS ............................................................................................. 11
C. BANKING SECTOR ........................................................................................................................ 13
D. MICROFINANCE SECTOR ............................................................................................... 13
E. FINANCIAL MARKET....................................................................................................................... 13
F. CAMEROON’S PUBLIC DEBT SITUATION.................................................... 17
G. MEDIUM-TERM DEBT STRATEGY 2020-2022 ............................................... 19
H. ECONOMIC AND FINANCIAL PROGRAM 2017-2020....................................................... 20
I. FRAMEWORK OF THE OPERATION............................................................................................................... 21
VIII. STATE INTERVENTION BALANCE ON THE CAPITAL MARKET........................ 29
IX. SOME INVESTMENT PROJECTS..................................................................................... 30

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I. LISTS OF TABLES AND FIGURES
A. LIST OF TABLES
Table 1: List of Approved Treasury Value Specialists in Cameroon.............................................................................. 5
Table 2: Sectoral Distribution of GDP....................................................................................... 9
Table 3: Key Indicators Table....................................................................................... 10
Table 4: Budget Projections (in billions)....................................................................... 12
Table 5: Summary of Securities Issued via Syndication .................................................................... 15
Table 6: History of Emissions on the Free Subscription Public Securities Market by BEAC between 2018 and 29/02/2020 ................................................................................................ 16
Table 7: Evolution of Public Debt................................................................................... 17
Table 8: Distribution of New Commitments 2020 Internal Debt........................ 20
Table 9: List of Eligible Projects by Sector..................................................................................... 22
Table 10: OTA - 2 Years .............................................................................................................. 23
Table 11: OTA - 3 Years .............................................................................................................. 24
Table 12: OTA-5 Years ................................................................................................................ 25
Table 13: Convergence Criteria ........................................................................................... 26
Table 14: Amortization (in millions of FCFA) of a 2-year Maturity Bond............ 26
Table 15: Amortization (in millions of FCFA) of a 5-year Maturity Bond............ 26
Table 16: Amortization (in millions of FCFA) of a 5-year Maturity Bond............ 26
B. LIST OF FIGURES
Figure 1: Issuer Organogram ........................................................................................ 28
C. LIST OF CHARTS
Chart 1: Distribution of External Debt ........................................................................... 18
Chart 2: Distribution of Internal Debt ........................................................................... 18
Chart 3: Composition of External Debt by Currency.................................................................. 18
Chart 4: Distribution of Projects by Sector....................................................................... 22
Chart 5: Distribution of Projects by Sector. ............................................................... 29

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II. DEFINITIONS AND ABBREVIATIONS
Adjudication: Procedure by which BEAC ensures, on behalf of the Treasury, the material organization of free subscription public securities issuances and their distribution among approved credit institutions submitting bids. Assimilation: Attachment of a newly issued security to a prior loan line with identical characteristics. BEAC: Central Bank of Central African States (Banque des Etats de l’Afrique Centrale). BTA: Treasury Assimilable Bonds (Bons du Trésor Assimilables). BTP: Buildings and Public Works. BVMAC: Central African Securities Exchange (Bourse des Valeurs Mobilières de l’Afrique Centrale). CEMAC: Economic and Monetary Community of Central Africa (Communauté Economique et Monétaire de l’Afrique Centrale). CRCT: Clearing and Securities Conservation Unit (Cellule de Règlement et de Conservation des Titres). DGTCFM: General Directorate of the Treasury, Financial and Monetary Cooperation (Direction Générale du Trésor, de la Coopération Financière et Monétaire). DOB: Budgetary Orientation Debate (Débat d’Orientation Budgétaire). DTS: Special Drawing Rights (Droit de Tirages Spéciaux). DSX: Douala Stock Exchange. FCFA: CFA Franc (Franc de la Coopération Financière en Afrique Centrale). FEC: Extended Credit Facility (Facilité Elargie de Crédits). MINEPAT: Ministry of Economy, Planning and Spatial Development (Ministère de l’Economie, de la Planification et de l’Aménagement du Territoire). MINFI: Ministry of Finance (Ministère des Finances). MINREX: Ministry of External Relations (Ministère des Relations Extérieures). OHADA: Organisation for the Harmonisation of Business Law in Africa (Organisation pour l’Harmonisation en Afrique du Droit des Affaires). OT: Treasury Bonds (Obligations du Trésor). OTA: Treasury Assimilable Bonds (Titres négociables émis lors d’un emprunt public et représentatifs d’une créance à moyen ou long terme sur l’Etat). PEF: Economic and Financial Program (Programme Economique et Financier). PIB: Gross Domestic Product (Produit Intérieur Brut). SVT: Treasury Value Specialists (Spécialistes en Valeurs du Trésor). SEMT: Medium-Term Debt Strategy (Stratégie d’Endettement à Moyen Terme). TIAO: Interest Rate on Call for Bids (Taux d’Intérêt des Appels d’Offres).

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III. DISTRIBUTION METHODS OF THIS DOCUMENT
This Information Document is prepared for Treasury Value Specialists, as part of preparing a program for the issuance of Treasury Assimilable Bonds (hereinafter referred to as the Operation), by Auctions organized by BEAC in collaboration with CRCT. It will be delivered or sent in paper or electronic format, free of charge, to all Treasury Value Specialists approved by the Ministry of Finance of Cameroon and listed below:
Table 1: List of Approved Treasury Value Specialists in Cameroon

Establishment	Address
Afriland First Bank	P.O. Box 11834 Yaoundé (Cameroon)
Banque Internationale du Cameroun pour l’Epargne et le Crédit (BICEC)	Avenue du Général de Gaulle, P.O. Box 1925 Douala (Cameroon)
Banque Internationale pour le Commerce et l’Industrie du Gabon (BICIG)	P.O. Box 2241 Libreville (Gabon)
Banque Sino-Congolaise pour l’Afrique	Brazzaville – Congo
BGFIBANK Gabon	1295, Boulevard de l’indépendance, P.O. Box 2253 Libreville (Gabon)
CCEI-GE Guinée Equatoriale	[Address]
Commercial Bank Cameroun (CBC)	Douala – Cameroon
Commercial Bank Centrafrique (CBCA)	Bangui (CAR)
Commercial Bank Tchad (CBT)	N’Djamena (Chad)
Crédit du Congo	P.O. Box 2470 Brazzaville (Congo)
Ecobank Cameroun	Boulevard de la Liberté, P.O. Box 582 Douala (Cameroon)
Ecobank Centrafrique	Place de la République, P.O. Box 910 Bangui (CAR)
ORABANK TCHAD	N’Djamena (Chad)
Société Commerciale de Banque (SCB) Cameroun	530, Rue du Roi Georges, P.O. Box 300 Douala (Cameroon)
Société Générale (SG) Cameroun	78, Rue Joss, P.O. Box 4042 Douala (Cameroon)
Société Générale (SG) Tchad	BP: 461, Rue Du Commandant Galyam Negal N’Djamena (Chad)
Standard Chartered Bank Cameroon (SCBC)	P.O. Box 1784 Douala (Cameroon)
Union Bank of Cameroon Limited (UBC)	P.O. Box 15569 Douala (Cameroon)
Union Gabonaise de Banque (UGB)	Avenue du Colonel Parant, P.O. Box 315 Libreville (Gabon)
United Bank for Africa Cameroon (UBA)	1144, Boulevard de la Liberté, P.O. Box 2088 Douala (Cameroon)
United Bank for Africa Gabon (UBA)	Libreville (Gabon)
Source: MINFI/DIRTRE

This Document will also be downloadable on the websites of Cameroonian Administration, namely:
www.minfi.gov.cm www.dgtcfm.net www.minepat.gov.cm In view of the success of the Operation, Treasury Value Specialists (SVT) are authorized to make this Document available to any investor, resident or non-resident, whom they approach regarding the placement of securities acquired through auction.

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IV. DISCLAIMERS AND RESTRICTIONS
A. DISCLAIMERS
The attention of potential investors is drawn to the fact that investment in financial instruments involves risks, and the value of the investment is subject to fluctuate upwards or downwards under the influence of internal or external factors to the Issuer. BEAC does not express an opinion on the advisability of the auction operations, nor on the success of the contemplated operation. BEAC’s visa applies exclusively to the quality of the information provided and its compliance with applicable legislation and regulations. B. RESTRICTIONS This Information Note is not addressed to persons whose residence laws do not permit the subscription (or purchase) of the securities subject to this note. Persons in possession of this Information Note are invited to inform themselves and comply with the regulations governing them regarding public fundraising. Each subscribing SVT will offer the securities subject to this Information Note for sale only in compliance with the laws and regulations in force within the CEMAC zone.

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V. PREAMBLE
Regulatory Framework:

• Regulation No. 03/08/CEMAC/UMAC/CM of October 6, 2008, relating to free subscription public securities issued by CEMAC member States, which specifies the provisions governing the issuance, placement and management of said securities;
• Law No. 2018/012 of July 11, 2018, establishing the Financial Regime of the State and other Public Entities;
• Law No. 2019/023 of December 24, 2019, establishing the Finance Act of the Republic of Cameroon for fiscal year 2020;
• Decree No. 2020/132 of March 18, 2020, empowering the Minister of Finance to resort to public securities issuances up to a maximum amount of FCFA 320 billion, intended for financing development projects registered in the Finance Act of the Republic of Cameroon for fiscal year 2020;
• Circular No. 00008349/C/MINFI of December 30, 2019, establishing Instructions relating to the execution of the Finance Act, monitoring and control of budget execution for the State and other public entities for fiscal year 2020.
  Purpose and Objectives of this Note:
  The main purpose of this note is to inform SVT on:
• the recent evolution of the economic and financial situation of the State of Cameroon;
• the state of public finances;
• the evolution of key macroeconomic growth aggregates;
• the debt situation and medium-term strategy;
• the execution status of the Program with the International Monetary Fund supported by the Extended Credit Facility (FEC);
• the characteristics of securities to be issued;
• the use of funds raised on the money market;
• the COBAC weighting of contemplated loans.
  The present Document is enriched with information collected from Administrations involved in the execution of the State Budget

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VI. RESPONSIBLES FOR THE INFORMATION NOTE AND ACCOUNT AUDIT
Authorization of the Minister of Finance, representing the Issuer.

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VII. PRESENTATION OF THE ISSUER AND THE OPERATION
The issuer of the securities is the State of Cameroon. With an estimated population of 26,000,000 inhabitants in 2020, the Republic of Cameroon is a Central African country located between Nigeria, Chad, the Central African Republic, the Republic of Congo, Gabon, Equatorial Guinea and the Gulf of Guinea. With its 10 Regions and 58 Departments, the country is populated by 280 ethnic groups who coexist peacefully regardless of origin. Thus, due to its great climatic, mineral, geographical, cultural and human diversity, Cameroon is qualified as "Africa in miniature". A. MACROECONOMIC PERSPECTIVES In 2020, macroeconomic prospects remain favorable. The overall objective of economic policy remains the sustainability of major macroeconomic balances, despite a volatile and uncertain international context. This objective translates into seeking sustained and job-creating growth, continuing to control inflation, strengthening the profile of public finances and improving external accounts. The economic growth rate is thus projected at 4% in 2020, after an estimated 3.9% in 2019. This growth would be supported essentially by the non-oil sector. Indeed, the oil sector would progress by 0.6%, driven by gas production, while the non-oil sector's growth should improve to reach 4.2% in 2020 (against 3.6% in 2019). By sector of activity, primary sector growth should accelerate to stand at 3.6% against 2.1% in 2019, mainly due to the recovery of agricultural activity, following a relative easing expected in regions facing insecurity. In the secondary sector, growth should stand at 3.1% after 5.1% in 2019, due to a slowdown in the hydrocarbon sub-sector. Excluding hydrocarbons, the sector should benefit from the strong performance of manufacturing industries, taking advantage of a better supply of electrical energy. The tertiary sector should progress by 4.6% in 2020, after 3.8% in 2019, thanks to the two upstream sectors (primary and secondary), the development of Kribi's deep-water port activities and the induced effects of CAN 2021.
Table 2: Sectoral Distribution of GDP

	2016	2017	2018	2019	2020	2021	2022
Primary Sector	5.0	3.2	5.1	2.1	3.6	4.2	4.7
- Food crops agriculture	5.8	4.8	5.1	3.7	4.7	5.3	5.4
- Industrial & export agriculture	6.6	-3.1	3.9	0.4	2.3	3.1	5.1
- Forestry & forest exploitation	1.2	6.3	7.3	-2.4	1.0	2.2	2.0
Secondary Sector	3.6	1.3	3.1	5.2	3.1	2.7	3.8
- Extractive industries	-3.4	-16.1	-2.6	10.4	0.6	-5.6	-4.8
- Agro-food industries	5.7	7.5	4.0	3.4	3.8	4.6	4.8
- Other manufacturing industries	4.4	5.6	3.3	3.0	2.0	4.1	5.2
- Buildings and Public Works	10.4	8.9	7.6	5.8	6.0	6.1	7.8
Tertiary Sector	4.9	4.3	4.4	3.8	4.6	4.8	4.6
- Vehicle trade & repair	5.6	4.5	5.1	4.4	4.4	6.3	6.1
- Restaurants & hotels	6.6	5.3	4.3	4.0	4.8	7.0	4.0
- Transport, warehouses & communications	2.2	4.2	4.0	4.7	5.0	5.8	4.9
- Information & telecommunications	6.0	5.7	-2.3	-0.7	1.5	3.0	1.9
GDP at factor cost	4.5	3.3	4.1	3.9	4.0	4.1	4.4
GDP	4.6	3.5	4.1	3.9	4.0	4.1	4.4
Source: MINFI/DP

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After 2.4% in 2019, the inflation rate should not exceed the threshold of 3% in 2020, linked to measures taken by the Government to control prices on one hand, and to improve local supply of consumer goods on the other. As for external accounts, projections indicate a progressive reduction in the current account deficit which should stand at 2.7% in 2020.
Table 3: Key Indicators Table

	Historical	Estimates	Projections
	2017	2018	2019	2020	2021	2022
Real Sector
GDP at current prices (billions FCFA)	20,328	21,493	22,692	23,925	25,029	26,452
Oil GDP	718	1000	1140	1093	973	907
Non-oil GDP	19,610	20,493	21,551	22,832	24,056	25,545
GDP at constant prices	15,629	16,264	16,904	17,584	18,312	19,110
Oil GDP (constant)	846	823	908	914	863	822
Non-oil GDP (constant)	14,783	15,441	15,996	16,670	17,449	18,288
Annual growth (%)
GDP at constant prices	3.5	4.1	3.9	4.0	4.1	4.4
Oil GDP (constant)	-16.4	-2.7	10.4	0.6	-5.6	-4.8
Non-oil GDP (constant)	5.0	4.4	3.6	4.2	4.7	4.8
Prices
GDP Deflator	1.5	1.6	1.6	1.4	0.5	1.3
Consumer prices (inflation)	0.6	1.1	2.4	2.2	2.0	2.0
Terms of trade	3.4	4.9	0.6	-3.2	-3.8	-2.0
Demand Components (% of GDP)
Consumption	81.1	81.6	81.0	80.7	80.2	81.1
Gross Fixed Capital Formation (GFCF)	23.0	22.8	23.5	23.8	24.3	24.0
Exports B&S	18.6	19.3	19.8	19.3	18.4	17.8
Imports B&S	22.6	23.7	24.3	23.7	23.0	22.4
Public Sector (% of GDP)
Total Revenues & Grants	15.0	15.7	16.4	15.2	15.1	14.9
- Non-oil Revenues (Tax Pressure)	12.3	12.6	13.6	13.0	13.2	13.5
Expenditures	18.8	18.5	18.7	17.4	16.7	16.4
- Capital Expenditures	7.2	6.5	6.3	6.3	5.9	6.0
Global Budget Balance (commitment basis)
Excluding grants	-4.1	-2.9	-2.7	-2.6	-2.0	-1.9
Including grants	-3.8	-2.5	-2.3	-2.1	-1.6	-1.9
Reference Budget Balance (CEMAC)	-3.3	-2.9	-2.9	-2.2	-1.3	-1.0
Non-oil Primary Budget Balance	-4.9	-3.9	-3.4	-2.8	-1.7	-1.1
External Sector
Current Account Balance	-3.4	-3.5	-2.8	-2.7	-2.6	-2.8
Monetary Situation (nominal growth)
Money Supply (M2)	5.9	14.4	5.9	5.9	6.0	5.2
Net Foreign Assets	15.5	5.2	6.2	2.5	5.1	0.7
Credit to the Economy	2.6	12.1	5.7	6.0	6.0	5.6
Source: MINFI/DP

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B. 2020 BUDGET PROJECTIONS
The budget policy objective for fiscal year 2020 remains the reduction of the global budget deficit in accordance with the economic and financial reform program concluded with the IMF and with criteria set within the framework of stability and convergence policies for CEMAC sub-region countries. The budget framework shows a reduction in the global budget deficit (commitment basis), moving from 2.3% of GDP in 2019 to 2.1% in 2020, driven by improved mobilization of non-oil revenues and greater control and effectiveness of public expenditures. In terms of fiscal policy, the Government's objective remains optimal mobilization of internal non-oil revenues, with a view to supporting economic recovery. In 2020, the tax pressure rate should stand at 13%. Revenue mobilization will be driven by: (i) broadening the tax base, (ii) securing revenues, (iii) combating fiscal fraud and evasion, and (iv) promoting tax civism. It is thus envisaged the following measures:
In terms of optimizing internal fiscal revenues: (i) the establishment of a reduced VAT rate on certain basic goods hitherto exempt; (ii) readjustment of the VAT liability threshold; (iii) dedication of an appropriate taxation device for electronic transactions; (iv) strengthening the mechanism to combat illicit profit transfers; (v) modernization of certain stamp duty collection methods; In terms of improving the business climate: (i) easing taxation procedures for SMEs; (ii) reducing the number of taxes and levies; (iii) rationalizing the fiscal policy for labor placement companies. In terms of optimizing border fiscal revenues: (i) readjustment of the excise duty rate on products harmful to health, morality and the environment; (ii) gradual restoration of customs duties on tax-exempt products (rice, wheat, fish, etc.); (iii) adjustment of export taxation rates according to the degree of transformation or local value-added of exported products, notably wood, cocoa, etc.; (iv) revision of common external tariff rates in conjunction with CEMAC; (v) establishment of a specific taxation regime for vehicles intended for public passenger transport; (vi) rationalization, simplification and harmonization of logistics chain and customs clearance procedures. The budget resources include internal revenues, loans and grants. Internal revenues comprise oil revenues and non-oil revenues. Oil revenues include SNH royalty and tax on oil companies, to which 2020 revenues from natural gas exports will be added. The consolidated oil revenues amount to 443 billion in 2020, down by 88.8 billion compared to 2019 fiscal year estimates. The expected SNH oil royalty is 293.2 billion. Gas revenue forecast is 48.3 billion FCFA, and the tax on oil companies is 101.5 billion. Non-oil revenues are assumed to increase at the same rate as nominal non-oil GDP, plus the impact of new fiscal and administrative measures. In 2020, expected non-oil revenues amount to 3,174.2 billion, including 2,103 billion in taxes and levies, 859.2 billion in customs revenues and 212 billion in non-tax revenues.

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Loans and grants are forecast at 1,334.5 billion. They are distributed as follows: 767 billion in project loans, 115.5 billion in budget support, 320 billion in public securities issuances, 102 billion in grants and 30 billion in banking finance. Regarding expenditures, the Government intends to guarantee the sustainability of public finances through rationalization of public spending. Envisaged measures concern notably: (i) continuation of efforts to reduce the State's cost of living; (ii) continuation of payroll file cleanup; (iii) effective implementation of the SIGIPES II application to ensure integrated and decentralized management...