IMF Staff Completes Mission for Second Reviews of Extended Credit Facility and Extended Fund Facility for Cameroon

End-of-Mission press releases include statements of IMF staff teams that convey preliminary findings after a visit to a country. The views expressed in this statement are those of the IMF staff and do not necessarily represent the views of the IMF’s Executive Board. Based on the preliminary findings of this mission, staff will prepare a report that, subject to management approval, will be presented to the IMF’s Executive Board for discussion and decision.

• IMF staff and the Cameroonian authorities have reached a staff-level agreement on policies that could support the Executive Board’s approval of the second reviews of the program under the ECF and EFF arrangements and lead to the disbursement of SDR 55.2 million (about US$73.6 million).
• Growth in 2021 is estimated at 3.6 percent, slightly higher than envisaged.
• The authorities are revising the 2022 budget in response to the surge in fuel and food import prices.

Washington, DC: An International Monetary Fund (IMF) staff team led by Amadou Sy, concluded hybrid discussions with the Cameroonian authorities during June 15-29 on the Second Review under the Extended Credit Facility (ECF) and the Extended Fund Facility (EFF) arrangements.

At the conclusion of the discussions, Mr. Sy, issued the following statement:

“The IMF team has reached a staff-level agreement with the Cameroonian authorities on the economic and financial policies that could support the approval of the Second Review of theprogram under the ECF and EFF arrangements. The agreement is subject to approval of the IMF Executive Board in late July 2022, which would enable the disbursement of SDR 55.2 million (about US$73.6 million).

“Economic growth slowed to 0.5 percent in 2020 affected by the COVID-19 pandemic and security tensions in the region. Growth rebounded in 2021 and reached 3.6 percent for the year, supported by a domestic recovery and the general global economic recovery. Inflation for the year averaged 2.3 percent and the current account deficit (including grants) widened to 4.0 percent of GDP.

“The economic outlook for 2022 remains positive and the economy is expected to grow by 3.8 percent. However, the outlook is clouded with considerable uncertainty arising from the sharp increase in international commodity prices-especially for oil, fertilizer, and foodstuffs-accentuated by the war in Ukraine, and tightening conditions in international financial markets. Average inflation is expected to rise to 4.6 percent, while higher oil export receipts should further improve the current account deficit to 2.1 percent of GDP. The authorities are committed to a fiscal policy anchored on a gradual reduction of the deficit and are revising the budget to maintain the deficit (cash basis, including grants) at 2.5 percent of GDP-much the same as in the original budget. This should bring the stock of public debt down to around 44 percent of GDP by end-2022.

“The impact of higher international oil prices on the budget is mixed as the higher oil revenues are more than offset by substantially higher fuel subsidies (estimated at 2.9 percent of GDP from 0.5 percent in 2021) aimed at maintaining the administered retail fuel prices unchanged. The higher subsidy costs are therefore being accommodated by reducing other spending, including spending on investment projects. The high cost of fuel subsidies would be difficult to sustain under current international oil price projections. However, the gradual phasing out of fuel subsidies would need to be accompanied by a substantial scaling-up of the social cash transfer mechanism.”

“The team shared the authorities’ concern with the rise in food prices and welcomed the authorities’ effort to ensuring adequate supplies of fertilizer so that the next harvest will be plentiful.”

“The medium-term outlook remains positive, though facing considerable uncertainties. The economic strategy remains focused on rebuilding fiscal and external buffers to sustain macroeconomic stability. At the same time, the pace of structural reform needs to be accelerated for the country to meet its development goals. The business environment needs to be improved for the private sector to take the lead role in supporting growth. The team welcomed the authorities’ continued efforts to improve public financial management and governance, including the accountability of budget execution. The team also welcomed the authorities’ efforts to strengthen the financial management of state enterprises, including recent progress on SONARA’s restructuring. The completion of key infrastructure projects, especially for energy and transport, should boost economic growth and support the replacement of imported with domestically produced goods.”

“The team acknowledged the authorities’ commitment to implementing policies consistent with the stability of the region’s monetary arrangement, which includes rebuilding foreign exchange reserves at the Bank of Central African States (BEAC). To this end, the authorities are working to strengthen compliance with the foreign exchange regulations notably regarding the repatriation of export earnings, while not impeding legitimate payments overseas.

“”The IMF staff team met with the Prime Minister, Joseph Dion Ngute, the Minister and Secretary General of the Presidency, Ferdinand Ngoh Ngoh, the Minister of Finance, Louis Paul Motaze, the Minister of the Economy, Planning and Regional Development, Alamine Ousmane Mey, the National Director of the BEAC, Eugene Blaise Nsom, and other senior officials. The mission also met with representatives of development partners, the diplomatic community, the private sector, and civil society.”

“The team wishes to thank the Cameroonian authorities for their excellent cooperation and for the frank and constructive dialogue.”

Table 1. Cameroon: Selected Economic and Financial Indicators, 2021-27

(CFAF billion, unless otherwise indicated)

Sources: Cameroonian authorities; and IMF staff estimates and projections using updated nominal GDP.

1/ Percent of broad money at the beginning of the period.

Sources: Cameroonian authorities; and IMF staff estimates and projections using updated nominal GDP.

1/ Percent of broad money at the beginning of the period.