Narrative
Full Description
Project narrative
On May 15, 2010, China Eximbank and CAMTEL — a state-owned telecommunications and Internet service provider in Cameroon — signed a $31,832,494 buyer’s credit loan (BCL) agreement for the Additional 350,0000 Lines CDMA Project. The BCL carried the following borrowing terms: a 10 year maturity, 3 year grace period, an interest rate of 6-month LIBOR plus a 2.5% margin, and a 0.5% commitment fee. According to the Government of Cameroon’s Caisse Autonome d'Amortissements, the BCL is backed by a repayment guarantee from the Government of Cameroon. The purpose of this project was to enable CAMTEL’s acquisition of wireless (CDMA) phone technology and facilitate the installation of 350,000 additional CDMA lines. Project implementation reportedly commenced on January 1, 2010. However, it is not clear whether or when this project reached completion. There are some indications that the China Eximbank loan for the Additional 350,0000 Lines CDMA Project may have financially underperformed vis-a-vis the original expectations of the lender. In January 2019, Cameroon unilaterally withheld debt service payments to China Eximbank. The lender responded by withholding new loan disbursements. Then, in July 2019, China Eximbank and the Government of Cameroon signed a debt rescheduling agreement (as captured via Record ID#88213). Under the terms of the agreement, China Eximbank agreed to reschedule 18 loans previously contracted by the Government of Cameroon — with scheduled principal repayments between July 2019 and March 2022 — by allowing the borrower to defer scheduled principal repayments between July 2019 and March 2022 to later dates but without any maturity extensions. The total amount of restructured debt was equivalent CFA 148 billion ($253 million) — or 70% of the loan principal that was scheduled for repayment between July 2019 and March 2022. Under the terms of the agreement, the Government of Cameroon agreed to repay 30% of the loan principal according to the original July 2019-March 2022 schedule (i.e. without any payment deferrals). The lender and the borrower also agreed to cancel the committed but undisbursed loan balances worth approximately CFA 10 billion (for certain loans with disbursement deadlines that had already passed). Then, in January 2020, the International Monetary Fund (IMF) classified the Government Cameroon as facing a high risk of debt distress. Eighteen months later, during an address before Cameroon’s National Assembly on June 28, 2021, the Minister of Water and Energy (MINEE) Gaston Eloundou Esommba provided an update on the ICBC-financed Bini à Warak Hydroelectric Power Plant Project. He noted that the project had been 'on hold' since November 2019 because ICBC suspended the loan agreement, even though the Government of Cameroon had already mobilized XAF 22 billion of counterpart funding. He also explained that 'the reason for this suspension is that Cameroon did not settle some of its debts towards China on time, so, it is in a cross-default situation.’
Staff comments
1. In 2007, China Eximbank provided another loan for CAMTEL’s acquisition of wireless (CDMA) phone technology and to facilitate the installation of an initial set of 350,000 additional CDMA lines (captured via Record ID#11939). Additionally, China Eximbank issued a separate $31.832 million loan (with different borrowing terms) to CAMTEL in 2012 (captured via Record ID#91746). According to the Government of Cameroon’s Caisse Autonome d'Amortissements, the $31,832,494 buyer’s credit that China Eximbank issued in 2010 is backed by a repayment guarantee from the Government of Cameroon, but the $31,832,494 loan that China Eximbank issued in 2012 is not. 2. AidData has estimated the all-in interest rate by adding 2.5% to the average 6-month LIBOR rate in May 2010 (0.519%). 3. The borrowing terms of the loan are drawn from a March 2021 publication of the Government of Cameroon’s Caisse Autonome d'Amortissements. 3. The $31,832,494 loan that China Eximbank issued to CAMTEL in 2010 is not included in the database of Chinese loan commitments that SAIS-CARI released in July 2020. Nor is it included it in the China’s Overseas Development Finance Dataset that Boston University's Global Development Policy Center published in December 2020.