Cameroon: International Monetary Fund Approves US$73 Million Disbursement
By Boris Esono Nwenfor
BUEA, March 9, 2023 – The Executive Board of the International Monetary Fund (IMF), has approved the disbursement of US$73 Million to the Central African Nation, following the Third Reviews of the Extended Credit Facility (ECF) and the Extended Fund Facility (EFF) arrangements.
IMF Executive Board equally approved waivers of nonobservance for two performance criteria with the floor on the non-oil primary balance in end-December 2022 missed due to higher oil prices and currency depreciation leading to higher spending on the fuel subsidy; and the continuous zero ceiling on the accumulation of new external payments arrears which was missed following delayed debt service payments due to end-year cash management issues, which have already been cleared
“Cameroon’s economy proved resilient to the COVID-19 pandemic, and the recovery has continued. However, the country is now faced with increased challenges in an uncertain global environment, underscoring the need for resolute reform implementation,” said Antoinette Sayeh, IMF Deputy Managing Director and Acting Chair.
“The Fund-supported arrangements have enabled the authorities in sustaining macroeconomic stability and growth in a challenging context. Structural reforms need to be accelerated to strengthen medium-term external and fiscal sustainability and move Cameroon toward inclusive and resilient growth through a diversified economy. The country’s medium-term outlook remains favourable.
According to the IMF, Cameroon’s recovery is underway amid increased challenges in an uncertain global environment. Growth is estimated at 3.4 per cent in 2022, supported by higher oil prices and non-oil production. Headline inflation is estimated at 6 per cent at end-2022.
The IMF Deputy Managing Director added: “Cameroon’s performance under the program is mixed. Two of the six quantitative performance criteria in end-December 2022 and three of the five indicative targets in end-June and end-September 2022 were missed. While important steps have been taken to advance long-delayed structural reforms, progress is lagging in some key areas. The authorities have resolved to implement corrective measures to address missed targets and accelerate reforms more broadly.”
“The authorities are committed to sustaining their fiscal consolidation to help achieve macroeconomic stability while building the foundations for inclusive and resilient growth. They have decided to reduce fuel subsidies accompanied by measures to mitigate the social impact. Mobilizing additional domestic non-oil revenue, improving public financial management, and further efforts to reduce fuel subsidies will make additional room for productive investment and social spending. Mitigation measures to protect the vulnerable will be critical. Resolving and preventing external and domestic arrears and seeking concessional financing is also important,” Antoinette Sayeh said.
For several years, the Cameroonian economy has been facing numerous crises that affect its macroeconomic stability both internally and externally. Internally, economic growth has been seriously affected by the socio-political crisis in the northwest and southwest regions, but also by other important factors such as drought in the North and growing insecurity, particularly in the far North and Eastern regions of the country, which have led to massive migration.
In January 2023, the Cameroonian government took several measures to strengthen the resilience of the economy to various shocks. Among other things, the government recognized the need to reduce subsidies on petroleum products, which represent six times the budget allocated to agriculture, four times that of health, and more than three times that of energy and water
To unlock Cameroon’s abundant growth potential, Antoinette Sayeh says effective and resolute implementation of structural reforms in the National Development Strategy is essential. “In this regard, further steps are needed to enhance investment efficiency, strengthen financial inclusion, and improve the business climate. This should be accompanied by strengthening transparency, governance, and the anti-corruption framework, as well as ensuring financial sector stability.”