On June 29, the Board of Directors of the International Monetary Fund (IMF) approved the fourth review of the medium-term economic and financial program supported by this institution under the Extended Credit Facility (ECF) and the Extended Credit Facility. (MEDC). According to the press release made public by the Minister of Finance, Louis Paul Motaze, this approval paves the way for an immediate disbursement of approximately 73.6 million dollars, or approximately 45 billion FCFA in favor of Cameroon. This amount, the statement reveals, brings total disbursements under the said program to 372.6 million SDRs, or about 300 billion FCFA, to which are added budgetary support from other partners.
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According to IMF Deputy Managing Director and Acting Chairman of the Board, Kenji Okamura, “Cameroon’s results under the program are mixed. Thus, the authorities are determined to pursue fiscal consolidation in line with program objectives. In addition, efforts to mobilize non-oil domestic revenue, improve investment efficiency, public financial management, and phase out fuel subsidies while mitigating the impact on vulnerable people will create space to finance productive investments. Moreover, in order to avoid the accumulation of external and internal arrears, the authorities are determined to limit recourse to non-concessional financing.
In general for the IMF, Cameroon is showing resilience in a context of domestic and global uncertainty. Its economic growth is estimated at 3.8% for 2022, supported by production outside the oil sector. Inflation, year-on-year, is estimated at 7.3 at the end of 2022. The overall budget deficit improved from 3% of GDP in 2021 to around 1.1% of GDP in 2022, thanks to increased oil and non-oil revenues. Consequently, the country’s medium-term outlook remains positive, subject, indicates the IMF, to the continuation of the above-mentioned reforms and above all to a more favorable external environment.
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Indeed, the expected growth of real GDP should reach 4% in 2023 and average 4.4% in the medium term. This improvement is due to agro-industry, forestry and the service sector, as well as to the production of liquefied natural gas, which in the latter case should partially offset the drop in oil production. Finally, inflation should fall back below 3% in the medium term. While praising these efforts, the administrators of the IMF who did not fail to make a certain number of suggestions to the country of Paul Biya.
Sonara rehabilitation
The Bretton Woods authorities are urging Cameroon to speed up the process of rehabilitating Sonara in order to reduce the impact of imports of petroleum products on government finances. In the same vein, the IMF encourages Cameroon to pursue structural reforms, to have more budgetary space for public investments and social expenditure.
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In addition, in order to unleash its immense growth potential, Cameroon, says the IMF, must take steps to stimulate private sector-led growth, including the launch of the financial inclusion strategy, as well as the recent measures to improve governance, in particular the launch of a broad diagnosis of economic governance and the plan to strengthen the Audit Bench of the Supreme Court, are welcome.
Improving the business climate
Much more additional measures are needed to improve the business climate, in particular to strengthen the stability of the financial sector and promote inclusion. Such measures should be accompanied by actions aimed at strengthening governance, transparency and the anti-corruption framework, in particular by remedying the shortcomings identified in the fight against money laundering and the financing of terrorism highlighted by the Financial Action Task Force (FATF).
Source: Current Challenges n°782 of Monday July 3 to 5, 2023
