Debt Dynamics and Fiscal Sustainability in the CEMAC Zone: Structural Constraints and Policy Trade-offs

By Dr. Wirajing Muhamadu Awal Kindzeka

Executive summary

Public debt dynamics in the CEMAC zone have become a central macroeconomic concern as governments’ repayment obligations increasingly outpace revenue growth, constraining their capacity to finance development priorities. Since the 2007–2009 financial crisis, fiscal pressures have intensified, with debt servicing absorbing a rising share of public resources and reducing states’ budgetary flexibility. This brief contributes by linking debt dynamics to concrete fiscal trade-offs in CEMAC economies, showing how rising debt servicing directly constrains social spending, infrastructure investment, and policy credibility. It shows that several member states, notably the Republic of Congo and Gabon, exceed the regional debt ceiling of 70% of GDP, while others, such as Cameroon, face growing exposure to external debt. Weak domestic revenue mobilization, combined with heavy dependence on volatile oil revenues, has further widened the region’s fiscal deficits. It recommends a sequenced policy response: protecting priority social and investment expenditures in the short term; strengthening domestic revenue mobilization in the medium term; and promoting economic diversification to reduce structural dependence on resource revenues in the long term. Without structural fiscal reforms and economic diversification, debt dynamics in the CEMAC zone risk undermining long-term development prospects.

Key messages

• Public debt levels in several CEMAC countries have risen rapidly, with Congo and Gabon exceeding the 70% debt-to-GDP threshold, signalingworsening fiscal risks.
• Debt servicing is absorbing an increasing share of government resources, shrinking fiscal space and crowding out essential social and investment spending.
• Weak domestic revenue mobilizationand heavy reliance on volatile hydrocarbon revenues continue to undermine fiscal sustainability across the region.
• The region faces growing exposure to external shocks, amplified by a high share of external debt denominated in foreign currencies.
• A sequenced policy response, protecting priority spending in the short term, strengthening revenue systems in the medium term, and promoting economic diversification long term, is essential to reverse current debt trajectories.

1. Introduction

Fiscal fragility with increasing external debts has re-emerged as a central macroeconomic concern in many Sub-Saharan African economies, particularly in resource-dependent and fiscally constrained states. The member states of the Economic and Monetary Community of Central Africa (CEMAC) have experienced renewed debt accumulation over the past two decades. This has been so, particularly after the 2014 oil price shocks. These shocks contributed significantly to the shrinking of the region’s fiscal space, due to its heavy reliance on natural resource revenues for financing state expenditures.. While increasing borrowing is aimed at stabilizing public finances and supporting the state’s development priorities, its rising pace in the CEMAC region has raised questions about the region’s capacity to sustain current fiscal policies without undermining growth and priority investments. In context, a state’s fiscal position is considered sustainable when governments can finance their current and future spending obligations without accumulating debt at a pace that compromises macroeconomic stability or forces sharp reductions in essential public services and the state’s priority investments. In the CEMAC zone, this balance has become increasingly fragile as debt growth has outpaced revenue expansion, tightening fiscal space and heightening vulnerability to shocks.. This therefore, directs the objective of the study, to examine the evolving structure of public debt in CEMAC countries, highlight the fiscal constraints it creates, and discuss policy trade-offs facing the governments seeking to reconcile development needs with fiscal discipline.

2. Context and Recent Debt Trends

CEMAC’s current debt structure reflects fiscal fragility (unsustainability), as the increasing state’s repayment obligations are outpacing revenue growth. This progressively constrains governments’ ability to finance productive development priorities. This has worsened since the beginning of the 21st century, and following the 2007-9 financial crisis and the 2014 oil price shocks, CEMAC’s fiscal capacity continues to shrink due to persistent debt servicing. Recent statistics from the World Bank and IMF illustrate widening fiscal deficits, worsening debt ratios and a decline in revenues between 2023 and 2024.. CEMAC’s average public spending-to-GDP ratio is reported to have increased from 19.0% in 2023 to 19.8% in 2024, while the average revenue-to-GDP ratio declined from 19.2% to 18.6% over the same period. Between 2024 and 2025, regional public debt remained very high at around 52–53% of GDP, indicating a sign of sustained fiscal stress. Several countries, notably the Republic of Congo and Gabon, exceeded the regional convergence ceiling of 70% of GDP.

In Cameroon, public debt stood at about 43% of GDP, nearly 68% of which was external. These worsening trends reflect both cyclical and structural factors. First, on the cyclical side, oil price volatility has repeatedly weakened fiscal balances, given the region’s heavy reliance on hydrocarbon revenues. Second, on the structural side, the region’s narrow tax bases and weak administration have constrained non-oil revenue mobilization. As a results, these shocks have negatively affected GDP per capita growth which is forecasted to remain negative for half of CEMAC economies in 2025-2026. Compared with other African sub-regions that have diversified their revenue sources more rapidly, CEMAC remains highly exposed to commodity price fluctuations, which complicates fiscal planning and debt management.

3. An Analytical Perspective: Debt Dynamics and Fiscal Sustainability

The contemporary financial and monetary economics literature considers debt dynamics to be shaped by the interaction between three core variables: economic growth, interest rates, and primary fiscal balances. In situations where economic growth and revenues increase faster than debt service obligations, governments can stabilize or reduce debt ratios with time. Conversely, when borrowing rises faster than revenue and economic output, debt becomes increasingly difficult to service without crowding out productive spending. In CEMAC, this second scenario has gradually taken hold in recent years, particularly during the Covid-19 period, when governments’ revenues decreased considerably as economic activities contracted, forcing states to borrow to finance priority public investments. This pattern weakens fiscal sustainability because debt accumulation is no longer matched by commensurate gains in productive capacity or fiscal buffers. The region’s debt structure further amplifies these risks. A significant share of CEMAC debt is external and denominated in foreign currency, exposing countries to exchange-rate and global interest-rate shocks. As a result, the coexistence of vulnerability to increasing external debt servicing and domestic financial pressure narrows the corridor for CEMAC’s fiscal policy while limiting governments’ ability to respond counter-cyclically during economic downturns.

4. Fiscal Sustainability and Development Trade-offs

The deterioration of debt indicators has direct implications for the region’s fiscal sustainability. As debt service obligations rise, governments are obliged to allocate a large share of their budgets to debt repayment rather than to productive investment, aimed at maintaining a good relationship with lenders. This results in a reduction in fiscal space and the financial resources available to finance development priorities. Three main trade-offs emerge.

First, higher debt service constrains social spending. In several CEMAC countries such as the case in Gabon after the 2014 oil prices shocks and Cameroon’s high external debt share (68% of total debt), their budgets associated to financing education and health were increasingly squeezed due to rising debt repayment needs, undermining long-term human capital accumulation.

Second, the region’s infrastructure investment need faces greater competition from recurrent expenditure and interest payments, slowing progress in closing critical development gaps.

Third, fiscal credibility diminishes as high and poorly structured debt raises concerns among investors and development partners regarding policy credibility and sustainability, with Republic of Congo being an example after as their debt-GDP ratio approaches 100% in recent estimates.

These pressures help explain the weak growth outcomes observed in the CEMAC member states. Although fiscal consolidation efforts have been implemented under various adjustment programs with established policy thresholds, their effectiveness has been limited by structural revenue weaknesses and continued exposure to external shocks.

5. Structural Constraints behind Debt Accumulation

Several underlying constraints explain why debt has become a persistent feature of fiscal management in the CEMAC zone:

• States’ dependence on natural resource wealth:The over-reliance on oil and mineral revenues brings about volatility in periods of price shocks, like the case of the 2014 oil price shocks.
• Public financial management challenges:Weak project selection and poor monitoring reduce the growth impact of debt-financed investment, lowering the capacity of borrowing to “pay for itself” through higher future revenues.
• Fragmented debt management frameworks:Inconsistent reporting and limited coordination between fiscal authorities and debt offices complicate risk assessment and long-term strategy.

6. Conclusion and policy implications

The analysis of fiscal and debt dynamics in the CEMAC zone reveals an increasing fiscal fragility, particularly after the 2007-2009 financial crisis, the 2014 oil-price shocks and the Covid-19 pandemic. The findings reveal that this is rooted in a poor debt structure, low revenue mobilization, over-reliance on oil-revenue, and exposure to external shocks.. Therefore, the main policy challenge of CEMAC member states is not about reducing debt, but to realign the states’ borrowing with productive investments and durable revenue mobilization that brings about long-term sustainable development. This can be achieved by protecting priority spending, strengthening domestic revenue systems, and promoting diversification and efficient investment. As a policy implication, it is noted from CEMAC debts and growth trajectories that the current debt situation does not necessarily imply an imminent crisis, but it does signal a narrowing of policy and fiscal space. Without reforms to address these challenges, governments may be forced into increasingly pro-cyclical policies, such as cutting priority spending, investments or raising taxes during downturns, which further exacerbates economic recession and social vulnerability.

7. Policy Recommendations

A credible strategy for restoring fiscal sustainability in CEMAC must balance short-term stabilization needs with long-term structural transformation. This implies sequencing reforms across time horizons.

Short term 

Safeguarding development priorities: Priority expenditures including those in sectors like health, education, and core infrastructure should be protected from being crowded out by debt service. This will be achieved with proper resource management and a transparent debt reporting and publication system. This would help preserve essential social and investment spending necessary for sustaining economic stability and human capital development.

Medium term 

Strengthening domestic revenue mobilization: Governments should broaden their tax bases, improve compliance, and rationalise exemptions to increase non-oil revenues. This would help with digitalising the tax administration and integrating the informal sector actors into simplified tax regimes to enhance efficiency without imposing excessive burdens on growth. This would reduce dependence on volatile oil revenues and improve fiscal resilience.

Long term

Promoting diversification and productive borrowing: There should be a reduction in over-reliance on natural resource revenues in the CEMAC zone, particularly on oil revenue. Policies that promote agro-industry, manufacturing, and services should be encouraged to create more stable revenue streams and increase growth potential of public investment. This would expand the region’s productive base and strengthen the long-term sustainability of public finances.