Coming to Terms with Reality. Evaluation of the Belgian Debt Relief ...

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Annexes
We conclude that during the HIPC interim period the effects of debt relief on total debt in
nominal terms were not quite clear. Nominal debt increased in 2002 and 2003 when debt relief
was granted, but decreased in 2004 and 2005, after Cameroon had failed to fulfil the conditions
for the Completion Point. But the data show very clearly the impact of debt cancellation upon
reaching the Completion Point on the nominal value as well as on the NPV of debt.
4.2 The Evolution of the Debt Service
Figure 13 shows the evolution of the total debt service and of its components. From 1996
(two years after the devaluation) to 2000, the total debt service paid, expressed in US
dollars, increased slightly, from around 500 million US$ to over 550 million US$. But
because the FCFA weakened compared to the US dollar, the debt service in FCFA
increased much more, going from 270 billion FCFA in 1996 to over 400 billion FCFA. The
debt service fell steeply in 2001, after the country had reached the Decision Point. But in
subsequent years it increased again. We observe the same evolution for interest payments
and for amortization.
Figure 13 Total Debt Service Due (on external debt), between 1988 and 2006, in US
Dollars:
US Dollars
900.000.000
800.000.000
700.000.000
600.000.000
500.000.000
400.000.000
300.000.000
200.000.000
100.000.000
0
1988
Source: GDF 2008
1989
1990
1991
1992
1993
1994
1995
Interest payments (INT), total (US$)
Total debt service paid (TDS) (TDS, US$)
Total Debt Amortization (Service-Interests) (US$)
In the years 2004 and 2005 there was a steep increase in debt service, caused mainly by a
sharp rise of amortization. This can be explained by the fact that Cameroon was supposed
to reach Completion Point in 2004. But because the country failed to fulfil all the
conditions it stood on schedule with its debt service, including repayments of existing
debts. This was possible because of the increase in oil revenues.
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Coming to Terms with Reality
Finally figure 13 shows clearly a decreasing debt service, interest payments as well as
amortization, in 2006 when the country reached the Completion Point.
4.3 Arrears on external debt
Figure 14 shows the evolution of arrears on external debt. Between 1990 an 1996 arrears
amounted to between 400 and 600 million US$. After 1996 arrears dropped as a result of
payments, consolidations and securitization of part of the arrears. Even under the IMF
adjustment programme, the arrears increased again between 1998 and 2000. After 2000
new agreements with the London and Paris Clubs enabled the country to reschedule and
abolish part of the remaining arrears. From 2003 till 2006 arrears have fluctuated around a
level of 100 million US dollars. After 2006, with the Completion Point under the HIPC
Initiative, the arrears decreased again. The evolution of arrears between 1988 and 2006 is
shown in figure 14.
Figure 14 Principal Arrears to official and private creditors, 1988-2006, in million US$:
Millions US$
700
600
500
400
300
200
100
0
1988
1989
1990
Source: GDF 2008 data
1991
1992
1993
1994
1995
1996
Principal arrears on LDOD (millions US$)
We conclude that the problem of high arrears was solved first by agreements with creditors
before the HIPC Initiative was applied to Cameroon. In the years immediately following
the Decision Point the arrears declined substantially, but thereafter they were fairly stable.
After the Completion Point the arrears continued on their negative trend.
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
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