|The following item is a Letter of Intent of the government of Cameroon, which
the policies that Cameroon intends to implement in the context of its request for financial support
from the IMF. The document, which is the property of Cameroon, is being made available on the
IMF website by agreement with the member as a service to users of the IMF website.|
May 23, 2000
Mr. Horst Köhler
International Monetary Fund
700 19th Street, N.W.
Washington, D.C. 20431
Dear Mr. Köhler:
1. In the context of its adjustment efforts to promote rapid and sustainable
economic growth and reduce poverty, the government of Cameroon embarked on a medium-term
economic and financial program (July 1, 1997–June 30, 2000),
supported under a three-year arrangement under the Poverty Reduction and Growth Facility
(PRGF).1 This letter, which supplements the one dated
August 9, 1999, reviews Cameroon's performance under the program supported by the third
annual PRGF arrangement, approved by the IMF Executive Board on
September 7, 1999, and outlines the government's objectives and policies for the
second half of fiscal year 1999/2000 (July–June). In addition, Cameroon requests an
extension of the three-year commitment period under the three-year arrangement to December
Performance during the first half of the fiscal year 1999/2000
2. The satisfactory performance under the first two annual PRGF arrangements
in both the macroeconomic and the structural areas continued broadly during the first half of
year 1999/2000 despite the worrisome development observed during the first quarter. The
government has remained fully committed to the implementation of its reform program, and
corrective measures were taken. Notably, a new, reinforced monitoring mechanism was set up to
ensure a regular and timely transfer of oil revenue to the government budget, and a cash-flow
management committee was created to strengthen budgetary execution. Thus, all quantitative
performance criteria and benchmarks for end-December 1999 were met, with the exception of the
benchmark related to the ceiling on bank credit to the nonfinancial public sector, which was
missed by a small margin because of a bank credit of CFAF 6 billion extended to the national oil
refinery company (SONARA). The government continued its satisfactory implementation of
structural reforms. The two structural performance criteria for end-December 1999 and
end-January 2000 have been met, namely, the completion of an audit by end-December 1999 of
the procurement system and of the ten largest transactions in 1998/99, and the conclusion of an
economic and financial study of the forestry sector. Also, the five structural benchmarks set at
end-December 1999 have been respected.
3. Notwithstanding the improvement in the terms of trade, owing mainly to
higher oil prices, there were signs that the pace of economic activity slowed during the first half
the year as a result of the decline in timber, rubber, and other non-oil commodity exports and the
weakening of domestic demand. Inflation, measured by the average consumer price index (CPI),
remained low, leveling off at 1.9 percent in December 1999. The budget performance was
better than projected: total revenue was CFAF 33 billion higher than expected, owing to the
transfers of the CFAF 30 billion oil windfall and higher non-oil revenue. Total expenditure was
CFAF 65 billion lower than envisaged, mainly reflecting lower external interest payments and
underspending on both foreign-financed and domestically financed public investments. The fiscal
primary balance increased to CFAF 171 billion, compared with a target of CFAF 144
billion for the first half of 1999/2000. Monetary developments during the first half of the year
showed a slowdown in the expansion of credit to the private sector, a net repayment to the
banking system by the central government amounting to CFAF 6 billion, a larger
contribution from Cameroon (CFAF 45 billion) to the improvement of the net foreign assets
position of the regional central bank, and signs that deposits were beginning to recover, although
at a slower pace than programmed.
Macroeconomic and budgetary framework for the second half of the year
4. In view of developments in the first half of the year, notably the non-oil
commodity price and volume prospects, real GDP growth, which was initially projected at
4.8 percent, has been reduced to 4.2 percent, reflecting a downward revision in non-oil
exports during the first half of 1999/2000. The new average oil price for Cameroon for
is projected at US$22.8 a barrel, US$7.5 a barrel higher than anticipated. On this basis,
preliminary projections point to an improvement in the external current account deficit, including
grants, to 2.7 percent of GDP, compared with the 3.2 percent initially projected for 1999/2000.
5. The fiscal program for 1999/2000 has been revised to take account of the
more favorable oil prices; oil revenue is now projected to be 2.3 percent of GDP higher, boosting
total revenue to 19 percent of GDP. As a result, the primary surplus for 1999/2000 is expected to
increase to 7.1 percent of GDP, compared with the target of 5.2 percent, and the overall
deficit, excluding grants, should narrow from 2.9 percent of GDP to 0.3 percent of GDP.
Part of the additional oil revenue will be used to accelerate the clearance of domestic arrears
audited and validated by an independent, internationally recognized firm, as well as the payments
of agreed debt (dette conventionnée) and bank debt, in consultation with IMF
6. The government will continue to strengthen its capacity to mobilize non-oil
revenue through measures to improve customs and tax administration efficiency and combat
fraud, including a broadening of the tax base and the strengthening of value added tax (VAT) and
forestry tax collection. To this end, a World Bank-sponsored study of the forestry sector has been
carried out by an independent, internationally recognized firm. In consultation with donors and
lenders, the recommendations of the study will be implemented by the government starting in
2000/01. In addition, the authorities plan to enhance the operational efficiency of the forestry
revenue protection program by stepping up field inspections (work sites, checkpoints, factory
entrances, and ports) and by strengthening cooperation between the agencies involved in the
program. The decree establishing selection criteria and procedures for choosing bidders for
forestry licenses was recently revised to make the process of awarding forestry concessions more
transparent. The supplementary measures concerning forestry revenue are indicated in the annex.
In the meantime, all the prior measures for release of the World Bank floating tranche in support
of the forestry sector, particularly regarding the forestry development plans, the establishment of
an effective guarantee system, and the revision of the by-laws of ONADEF, should be
implemented by end-June 2000.
7. In domestic taxation, the authorities will ensure the systematic and
transfer of self-assessed taxes (impôts à versement spontané),
especially the VAT collected by the electricity company SONEL, the water company SNEC, the
telecommunications company CAMTEL, and the other public enterprises. In particular, the
government will endeavor to collect existing VAT arrears, estimated at CFAF 4.3 billion.
Moreover, steps will be taken to (a) ensure control over the tax base and tighten fiscal
audits; (b) simplify procedures; (c) modernize tax directorate management tools; and (d)
strengthen VAT enforcement based on the recommendations of the IMF technical assistance
mission of November 1999. To increase the efficiency of the tax directorate, the government
establish a unit to monitor tax compliance by the 200 largest enterprises by end-June 2000. The
supplementary measures are indicated in the annex.
8. In the customs area, a customs reform committee has been created as
recommended by the IMF technical assistance mission, and an action plan has been drawn up. A
timetable has been established for implementation of the key recommendations in the second half
of the financial year, including the definition of procedures for enhanced coordination with the
agent responsible for revenue protection and preshipment inspections, simplification of customs
clearance and export procedures by end-March 2000, and closer monitoring of the transit trade
between Douala and neighboring countries. In addition, the government will transform the joint
unit of the customs and tax departments into a unit responsible for the collection and analysis of
tax data by end-May 2000. The government will also take steps to make the computer system
secure for the entry of all customs declaration, and to ensure that the required information is
provided and that it is both consistent and plausible, by end-May 2000. IMF technical assistance
will be required for monitoring the implementation of customs reforms. Finally, all the remaining
import surcharges will be eliminated by end-June 2000, in accordance with the tax and customs
reform. Moreover, the government, in concert with the other members of the Economic and
Monetary Community of Central Africa (CEMAC), will undertake a further reduction of the
common external tariff. The government will support the progress made toward adopting a
common investment charter. The other steps to be taken to boost tax yield, as well as measures to
restructure and modernize the customs administration, are indicated in the annex.
9. On the expenditure side, after normalizing its relations with other countries,
the government plans to step up its efforts toward the social sectors, particularly health and
education. Detailed strategies for the health and education sectors are being prepared by the
government with World Bank assistance, and they will include quantifiable targets in the context
of a three-five year medium-term expenditure framework, to be reflected in the budget starting in
2000/01. Quarterly budget execution reports will be strengthened by an improved analysis of
operating and investment expenditure on a commitment, settlement, and payment basis beginning
in 2000/01, and by closer monitoring of transferred appropriations (crédits
délégués). To further enhance accountability in key spending
ministries, the government agreed to extend the practice of issuing quarterly reports to eight
additional ministry departments. To address weaknesses in the Ministry of Education, the
government will implement the corrective actions identified with World Bank assistance, as
discussed in paragraph 23. Regarding the civil service, a physical census of all civil servants and
compendium of relevant regulatory texts are to be completed by end-May 2000, to provide a
more accurate basis for assessing appropriate staffing and salary levels beginning in
10. The government will continue its efforts to improve public expenditure
management. To this end, the following initial actions have been taken: (a) simplification of
procedures and reduction of the number of steps and players involved in budget execution; (b)
increase in the responsibility of financial comptrollers in spending ministries;
(c) systematization of control by the Ministry of Finance and external audit agencies; and
(d) improved monitoring of transferred appropriations. Also, a committee composed of
directorates has been formed to improve by end-May 2000 the quality of data and facilitate the
production of treasury balances on a continuing and comprehensive basis, while ensuring the
consistency of the detailed table for government financial data monitoring (tableau de
bord) with these balances. To strengthen cash-flow management in the context of budget
execution, a cash-flow committee has been formed, consisting of representatives of all concerned
departments in the Ministry of Finance and the autonomous debt agency (CAA).
11. The government is aware that reform of the procurement system is urgent,
and it will take the necessary measures for its successful implementation. In line with the
recommendations of an internationally recognized firm following its audit of the procurement
system, the government will issue a decree to (a) introduce new procurement thresholds,
proposed by the auditor; (b) limit the splitting up of procurement contracts; and (c) ensure control
of procurement commissions. To this end, the government is planning to overhaul the existing
system to make it more transparent through the adoption of (a) an action plan by end-May
2000; (b) a procurement code by end-June 2000, which will require the participation of an
independent observer in the procurement commission and an expost audit mechanism by an
independent and internationally recognized company; and (c) an institutional mechanism by
end-June 2000. In addition, by end-June 2000, the government will implement a procurement
monitoring system in the form of a simple information system providing a statistical assessment
the status of contracts.
12. Regarding domestic arrears, the government has established an inventory
commission to identify all arrears not yet included in the stock of government arrears and backed
by the necessary supporting documents for submission to an independent firm for validation. The
government has completed this inventory by March 15, 2000, the deadline beyond which no new
claim could be considered. It nearly completed the validation by mid-April 2000, at which time it
determined the bulk of the official amount of government arrears and adopted a comprehensive
multiyear settlement plan for the validated arrears. The government will complete the validation
process of the remaining domestic arrears by end-May 2000, including the settlement plan. In the
meantime, the government will ensure that no unaudited arrears are paid and will inform all
holders of audited claims included in the inventory but not validated that their claims have been
13. The financial program for 1999/2000 has been revised based on monetary
developments in the first half of the financial year and the improvement in the terms of trade.
program for the second half aims at enabling Cameroon to contribute CFAF 77 billion to the
increase in the net foreign assets position of the regional central bank (BEAC). As a result of the
more favorable budget outturn, net bank credit to the central government will be reduced by
CFAF 81 billion during the second half of 1999/2000. To this end, the government will ensure
that export earnings are repatriated by economic agents and surrendered to the BEAC within 30
days of collection, in accordance with the regional foreign exchange regulations. Money growth,
which was slower than expected in the first quarter of the year, is expected to recover, and the
average velocity for the year 1999/2000 as a whole will decline to 6.8.
Structural and sectoral policies
14. The government is determined to consolidate the ongoing reforms in the
agro-industry, public utilities, transport, petroleum, and financial sectors, with a view to
stimulating private sector investment, enhancing the competitiveness and efficiency of the
economy, and boosting production.
15. In the agro-industrial sector, reforms are well under way: the selection of
the successful bidder for the sale of the palm oil company (SOCAPALM) has recently been
validated; negotiations are proceeding with the bidder for the successful conclusion of the
transactions. However, The second round of bids for the privatization of the Cameroon
Development Corporation (CDC), which was to occur by end-December 1999, has been delayed
owing to technical and legal considerations. The government is aware of the need to speed up the
process, and appropriate actions will shortly be taken to (a) minimize the delay in the issuance of
an invitation to bid which was initially envisaged for April 2000; and (b) select
successful bidders by end-September 2000.
16. With regard to public utilities, the government will conclude their
privatization within the next 6–12 months. In the telecommunications sector, the
newly created cellular company began operating on January 15, 2000; meanwhile, the selection
the successful bidder for the government-owned cellular company, CAMTEL-Mobile, was
confirmed in mid-January 2000, and its privatization was finalized by the adoption of the
presidential decree by mid-March 2000. Also, the second round of bidding for the privatization
CAMTEL was launched in December 1999. The final invitation to bid was issued in
May 2000 and the provisional successful bidder will be selected by end-September 2000.
the electricity sector, the invitation to submit prequalification bids for SONEL, was launched in
October 1999; the final invitation to bid is to be issued by end-June 2000 and the provisional
successful bidder will be selected by end-November 2000. In the water sector, the second round
of bidding for the privatization of SNEC took place in October 1999; the provisional successful
bidder was selected in May 2000 and, following validation, entered into negotiations in May
2000. This is expected to clear the way for disbursement of the World Bank's Third Country
Assistance Strategy (CAS III) privatization tranche. The government is taking all the steps
necessary to conclude without delays the privatization of SNEC, SONEL, and CAMTEL. If
necessary, the government will appoint temporary administrators for each of these companies, in
compliance with the modalities specified in Section 3 of the annex.
17. The government is engaged in far-reaching reforms of the transport sector,
aimed notably at improving the competitiveness of the economy. In the port sector, all measures
necessary for completion of the institutional and regulatory reform will be taken by end-May
2000, including (a) for the ports of Kribi, Tiko-Limbé, and Garoua, the establishment of
management bodies, as well as consultative steering committees; (b) the transfer of ONPC assets
and liabilities to the autonomous ports, the APN, and the government, based on the recently
completed inventory; and (c) the liquidation of the ONPC. A detailed timetable for the transfer of
the industrial and commercial activities currently carried out by the Port of Douala to the private
sector through competitive bidding, which was to be prepared by end-March 2000 in accordance
with the provision of CAS III, was delayed. The bidding documents will be prepared shortly with
the assistance of an internationally recognized firm and the World Bank, with a view to
completing the transfers by March 2001.
18. The objective of the reform of foreign trade procedures is to make the
one-stop window fully operational by July 1, 2000, based on a detailed action plan recently
prepared with the technical assistance of the European Union. The government will take the
necessary steps to implement all of its recent decisions on the establishment of a single
at the Port of Douala, the nothing-to-declare lane (canal vert), and customs clearance at
the place of business (dédouanement à domicile) of goods eligible for
such procedures. Lastly, the government will prepare an action plan to complete, by end-May
2000, the implementation of the recommendations of the legal audit of foreign trade procedures
recently carried out with financial assistance from the European Union. These reforms will be
closely coordinated with the recently initiated customs reforms. Together, these measures should
go a long way toward achieving the goal of further reducing delays to seven days for imports and
two days for exports, in accordance with the provisions of the CAS III.
19. In the area of programming road maintenance work and operations of the
Road Fund, the government will: (a) carefully prepare the maintenance of unpaved rural roads
urban roads in accordance with Article 3(3) of Decree 98/1962; (b) complete, by end-May 2000,
the technical audit of road maintenance work financed by the Road Fund in fiscal year
(c) complete, by end-June 2000, the first financial audit of the Road Fund for fiscal year
1999/2000 in accordance with the provisions of Decree 98/1962; and (d) systematically
publish the reports and resolutions of the Management Committee.
20. In the petroleum sector, the authorities reaffirm their pledge to conduct
annual audits of the national oil company, SNH. In this connection, the government has
implemented fully the key recommendations of the first two audits regarding computerization,
internationally accepted accounting standards were adopted in May 2000. The ongoing third
financial audit of the SNH, covering fiscal year 1998/99, will be completed shortly. In addition,
organizational and operational audit of the SNH, primarily to examine the cost structure of the
sector, will be carried out by an independent, internationally recognized firm by end-June 2000.
Finally, a global strategy defining the respective roles of the SNH and the private sector in the
production and distribution of petroleum products is being prepared with assistance from the
World Bank and will be completed in June 2000. This strategy will provide the basis for the
further deepening of the reform and liberalization of the sector. As a first step, the distribution
segment of the market has been liberalized, and a majority of the shares in, and management of,
the petroleum storage facility (SCDP) will be transferred to the private sector by end-September
21. In the financial sector, the government will continue to support actions to
strengthen the Central African Banking Commission (COBAC) and enhance its independence.
Consistent with the government's policy of withdrawing from the banking system, the
privatization of the recently restructured bank (BICEC) was concluded on January 7, 2000. Also,
the financial market law was adopted by the National Assembly in December 1999, and the
strategy for the reform of the social security system was approved by the Interministerial
Committee and adopted by the government. Studies aimed at accurately defining the stages and
the process of implementing the social security reform will be undertaken by end-June 2000 and
effectively under way in fiscal year 2000/01. In the insurance sector, the government was to
complete the transfer of SOCAR's portfolio of fire, accident, and miscellaneous risks policies to
the provisional successful bidder in April 2000; it was to appoint a liquidator for the CNR by
end-April 2000. All liquidation operations managed by the SRC, with the exception of the
BMBC, will be audited by end-June 2000, with completion scheduled for end-September 2000.
Efforts to register savings and loan cooperatives (COOPEC) for licensing purposes continue, and
the documentation received from the existing cooperatives will be forwarded to the COBAC for
approval by end-June 2000. The government will support the efforts made to adopt a single
community-wide bank licensing system within the CEMAC. Finally, the government is
participating in the Financial Stability Assessment Program (FSAP) pilot project, with a view to
identifying potential vulnerabilities in the financial system and the capacity for crisis response.
government is ready to implement any corrective measures that will emerge from this exercise to
strengthen the financial system and ensure its viability and resilience.
Social and poverty reduction policies
22. The main focus of the government's social policies is to ensure that
strengthened economic performance translates into tangible results in terms of poverty reduction,
job creation, and genuine improvement in the economic welfare of the population as a whole.
strategies being developed for the education and health sectors, rural road infrastructure, and safe
drinking water will constitute the core elements of the government's fight against poverty and
aim at correcting the malfunctions of the current system for delivery of the corresponding
government services, to increase their efficiency.
23. In the education sector, the government is undertaking the following
corrective measures identified with the assistance of the World Bank:
(i) elimination of the textbook distribution monopoly, as agreed by the government, the
World Bank, and the Fund;
(ii) establishment of a textbook approval unit to define and publish, by mid-April 2000, a list
of criteria for the selection of textbooks, and, by end-May 2000, to publish a list of textbooks
approved for academic year 2000/2001;
(iii) elimination, by passing a law by end-June 2000, of the contributions required of parents
of primary school students, following the decision of the President of the Republic;
(iv) elimination of the management committees of primary schools and revision of their
makeup in secondary institutions to increase the representation of parents by April 30, 2000;
(v) publication of a medium-term strategy to decentralize the administrative management of
teaching staffs by June 30, 2000.
The government will take the necessary measures to liberalize the distribution of textbooks
through an instruction of the Prime Minister to the Minister in charge of Education.
24. The government is aware that the health sector needs to be restructured and
that this will take a long time to accomplish. To this end, a sectoral strategy is being prepared to
achieve the following objectives: (a) reduce mortality and morbidity rates at birth and following
diseases and/or infections; (b) reduce the incidence of communicable diseases (such as malaria,
onchocerciasis, leprosy, and trypanosomiasis) and especially, diseases with the potential to
become epidemics (e.g., meningitis, cholera, and bacillary dysentery); and (c) slow the spread of
the HIV/AIDS virus and other sexually transmissible diseases (STDs). The government is also
aware that attaining these objectives will require focusing on preventive medicine. It follows,
that an intersectoral health strategy is needed, addressing such issues as access to drinking water,
sewerage, nutrition, and public education. By June 2000, the authorities will have (a) completed
preparation of the sectoral strategy, which will serve as the basis for the sector's medium-term
budget framework and the monitoring of health care expenditure; (b) completed the institutional
audit of the health sector; (c) prepared a framework for dialogue with NGOs, the private sector,
and representatives of health care providers (seminars, workshops, and participatory
(d) begun surveying beneficiaries concerning the supply of health services; and (e) initiated a
on costs and financing, as well as studies on the health map and the viability of the health
25. The government is aware that HIV/AIDS is no longer just a public health
issue but also a threat to Cameroon's development, with the potential to decimate the work force,
splinter society, plunge families into poverty, and create millions of orphans. To combat this
scourge, the government will take various steps with support from the international community:
(a) it will develop a communications strategy to explain the seriousness of this epidemic; (b) it
arrange for NGOs and specialized agencies of the United Nations (UNAIDS) to have free access
to public radio and television in order to broadcast special programs and information about
AIDS—in particular, specific programs will be developed for the most vulnerable sectors
populations to minimize risk; and (c) the government will head up appropriate actions to
systematize AIDS screening by health centers and psychological and social services for patients.
With the assistance of the World Bank and other donors, pilot projects will be initiated in the six
health districts covered by the PSFN project, with a view to developing anti-AIDS community
26. The poverty reduction strategy prepared in April 1999 with World Bank
assistance is being revised on the basis of comments from the World Bank and IMF missions that
visited Cameroon in November 1999. Based on the preliminary outline and timetable for
preparation of the Poverty Reduction Strategy Paper (PRSP) agreed with the World Bank and the
IMF, the participatory process, which will cover ten provinces, began in early April 2000, with a
view to finalizing the preliminary PRSP by end-September 2000 and the final PRSP by in the
27. The government is determined to enhance transparency and accountability
in its operations and to fight corruption. To this end, its actions will focus on public expenditure
management, transparency in oil sector operations, and the privatization of public enterprises. In
the first half of 1999/2000, the government conducted a number of audits: (a) an audit of
SNH accounts for the fiscal year 1998/1999; (b) an audit of the government contract award and
monitoring of the procurement system; (c) an economic audit of the forestry sector; and
(d) technical and financial audits of the Road Fund. In the context of the action plan to
improve public expenditure, the government has required the Ministries of Education, Health,
Public Works to prepare quarterly reports on the execution of their respective budgets. It has also
established a procedure for monthly and quarterly monitoring of oil operations to ensure the
transparency and automatic transfer (automaticité) of oil revenue to the treasury.
The program for the second half of the year calls for implementation of most of the
recommendations from these audits and enhanced monitoring of the management of social
spending through physical and financial audits of investment and nonwage expenditure. To
reinforce these measures, the government will prepare a comprehensive strategy aimed at
improving governance and reducing corruption based on the National Governance Program,
which was developed with assistance from the United Nations Development Program (UNDP).
This strategy will be adopted by end-June 2000. The government plans to take the steps
to correct deficiencies in the legal system, the proper functioning of which is essential to the
development of the private sector, particularly the financial system.
External sector policies and debt management
28. A key objective of Cameroon's external policy remains to enhance external
competitiveness, in order to achieve external viability and strengthen growth prospects. On the
basis of the improvement in oil prices, the current external account deficit for 1999/2000 is now
projected to narrow to 2.7 percent of GDP, against the anticipated 3.2 percent. The government
is aware that the pursuit of prudent fiscal and credit policies, as well as the implementation of the
envisaged efficiency-enhancing structural reforms, will be key to achieving this objective.
29. The government is determined to continue efforts undertaken in the context
of its three-year program to regularize its relations with the international financial community.
However, contrary to expectations, progress in reaching an agreement with commercial creditors
has been rather slow, mainly because of protracted efforts to recruit a legal advisor and the need
to have a debt- and debt-service-reduction operation that is as comprehensive as possible. Work
continues to complete the reconciliation process and to assess the legal validity of the nonbank
claims. Based on the current schedule, the operation could be completed by end-2000. The
government will strive to obtain relief from its commercial creditors that will meet the test of
comparability of treatment with the terms Cameroon would receive under the enhanced Initiative
for Heavily Indebted Poor Countries (HIPC Initiative).
30. Initial work on the preparation of a loan-by-loan debt sustainability
shows that Cameroon is eligible for assistance under the HIPC Initiative. The government has
contacted all its external creditors, with a view to reconciling each individual loan. All the
multilateral loans and a large number of bilateral loans have already been reconciled. The
government intends to complete the reconciliation process by end-May 2000. However, if there
are still some unreconciled loans by that date, the government will seek the assistance of the
World Bank and the Fund in order to expedite the process. The government is aware that, in
order to reach the HIPC Initiative decision point, Cameroon will have to satisfactorily complete
the third year of the program, strengthen expenditure management, develop detailed strategies for
the social sectors, improve governance, and begin implementing key measures to reverse the
current deterioration in the fields of education and health. The government is also aware that it
will have to demonstrate its ability to use additional resources effectively in the health and
education sectors and in the fight against poverty. To that end, the capacities of these sectors will
be enhanced to better monitor expenditure.
Program monitoring and review
31. To monitor policy implementation under the program, a number of
quantitative benchmarks have been proposed for end-March 2000, as well as quantitative
performance criteria and benchmarks for end-June 2000 (see Table 1).
The proposed benchmarks will comprise the following: (a) a ceiling on the increase in net claims
of the banking system on the central government; (b) a floor on the primary balance; (c) a
minimum for the net reduction of public sector external payment arrears; (d) a ceiling on new
medium- and long-term nonconcessional external loans contracted or guaranteed by the
government; (e) a ceiling on the net disbursement of external loans with a maturity of less than
one year; (f) a ceiling on the increase in net claims of the banking system on the nonfinancial
public sector; and (g) a minimum for the total revenue of the central government. The
established in items (a)-(e) will serve as performance criteria for end-June 2000. In addition, the
reform measures indicated in Table 2 have been adopted as performance
criteria or structural benchmarks for the second half of the year.
32. In view of the uncertainties about external debt relief, privatization
proceeds, and oil prices, the program contains a built-in contingency mechanism for the
adjustment of the quantitative benchmarks and performance criteria. The mechanism will be
triggered if petroleum receipts differ from the projections. Transfers of government oil revenue to
the budget are programmed for the second half of the year as follows: CFAF 109 billion in the
third quarter and CFAF 79 billion in the fourth. Disbursement of the third tranche under the third
annual arrangement will be subject to observance of the end-June 2000 performance criteria and
completion of the final review no later than end-September 2000. The review will focus mainly
budgetary non-oil revenue performance and on the customs reform, public expenditure
management, detailed strategies in the education and health sectors, and progress in the
privatization program and in the liberalization of the petroleum and transport sectors, as well as
33. As in the past, program implementation will be regularly examined in
cabinet meetings chaired by the Prime Minister, the Head of Government. An Interministerial
Supervisory Committee, chaired by the Minister of Economy and Finance and comprising the
economic and social sector ministers, will continue to coordinate program implementation with
the assistance of a technical monitoring committee. The committee will, on a timely basis,
Fund staff with all the data necessary to effectively monitor the program. To this end, the
government will continue to improve data quality, coverage, and timeliness, in the context of the
General Data Dissemination System (GDDS).
Cameroon: Quantitative Performance Criteria and Benchmarks During the Second Half of the
Third Annual Arrangement Under the Poverty Reduction and Growth Facility, July 1,
1999–June 30, 2000|
| (In billions of CFA
francs; cumulative from July 1, 1999, except where indicated)|
2000 June 30, 2000|
|Ceiling on the increase in net claims of the banking
system on the central government2 3 4
| Floor on the primary budget balance2 5
|Floor on the net reduction of the external
arrears of the public sector2
| || Ceiling on new medium- and
nonconcessional external loans contracted
guaranteed by the government2 9
| ||Ceiling on the net disbursement of external
with a maturity of less than one year2 9
| ||Ceiling on the increase in net claims of the
system on the nonfinancial public sector3 4 5 11
| ||Floor on total revenue of the central government11 13
| Of which: non-oil revenue11
Assumed external debt relief
| External program
| Privatization proceeds
| Stock of net credit to the central<
| Stock of credit to the nonfinancial public
|Sources: Cameroonian authorities; Bank of Central African
States (BEAC); and staff estimates.|
1Cumulative since end-June 1999.
2These targets will constitute performance criteria for end-June 2000.
3These targets will be adjusted (a) upward for a shortfall in program financing
external debt relief up to an amount equivalent to 50 percent of the shortfall (for a total
cumulative shortfall of CFAF 35 billion); (b) downward for the full amount of any excess in
program financing and external debt relief and privatization proceeds in excess of the amount
programmed; and (c) downward by the full amount of any shortfall in the reductions of domestic
arrears in comparison with the program. See Section III of the technical annex (EBS/99/153;
4 The flows have been constructed on the basis of projected end-June 1999 data;
they will be adjusted on the basis of the actual outturn.
5 The targets will be adjusted upward/downward for 50 percent of the
windfall/shortfall in oil revenue. For a windfall/shortfall beyond a threshold of CFAF 35 billion,
the authorities will consult with Fund staff to formulate policies to adjust performance criteria.
See Section III of the technical annex (EBS/99/153; 8/11/99).
6 Defined as government revenue (excluding privatization proceeds) minus
noninterest expenditure (excluding foreign-financed investment and restructuring
7Excluding reschedulable external arrears. The targets will be adjusted for
deviations from projected program financing. No new external payments arrears will be
accumulated during the program period.
8 The original program documents called for a reduction in
nonreschedulable external payments arrears of CFAF 22 billion. However, all existing
external payments arrears are reschedulable and thus the target should have been zero.
(The CFAF 22 billion figure referred to the expected clearance of reschedulable arrears contained
in the fiscal program).
9 In millions of U.S. dollars. Nonconcessional loans defined as loans with a grant
element of less than 35 percent, using discount rates based on the commercial interest reference
rates (CIRRs). Exception will be made during 1999/2000 for the contraction of a
IBRD loan in an amount of US$65 million contracted by the government of Cameroon in the
context of the Chad-Cameroon pipeline construction.
10Excluding normal, import-related credit. To be monitored on a continuous
11These benchmarks will not constitute performance criteria.
12Net for the central government and gross for the others.
13These targets will be adjusted for the full amount of
higher/lower-than-programmed oil revenue. See Section III of the technical annex (EBS/99/153;
14Excluding privatization proceeds.
15 Including IMF disbursements.
16 The original program documents indicate external program financing of
47 billion. The amount of CFAF 64 billion includes grants of CFAF 17 billion as shown in the
fiscal program (Table 6) that were omitted in the original documents.
|Table 2. Cameroon: Structural Performance
Criteria and Benchmarks|
for the Second Half of the Third Annual PRGF
|Completion of an operational and managerial audit of the
national oil company (SNH)
by an internationally recognized
|Adoption of a new procurement code providing for the
following, inter alia:
(a) participation of an independent observer in the
award committee; and
(b) a mechanism for ex post external audit by
|End-June 2000 |
|Implementation of all necessary measures to facilitate the
privatization of SNEC,
the national power company (SONEL), and
(CAMTEL), as specified in Section III
|Starting end-April 2000 |
|Preparation of a strategy for the health sector.
||End-June 2000 |
|Preparation of a strategy for the education sector.
||End-June 2000 |
|Launching of call for bids for the privatization of SONEL.
||End-June 2000 |
|Launching of call for final bids for the privatization of CAMTEL.
||End-May 2000 |
|Adoption by the government of a comprehensive strategy to improve
governance and reduce corruption.
|End-June 2000 |
Expand the taxpayer master file by assigning a taxpayer identification number (TIN) to
economic agents, starting with those in the files of customs, budget, and the treasury, which
should be required to use the TIN in their dealings with taxpayers effective May 1, 2000.
Establish computer interfaces between finance departments to facilitate information
exchanges by end-December 2000.
Generalize the self-assessment system so that each taxpayer can assess on his return and
pay simultaneously all his taxes beginning in fiscal year 2001/02 (July-June), by
(a) simplifying the profit tax return (BIC/IS, BNC, and BA); (b) revising the
tax assessment and settlement payment procedure; and (c) in connection with the general income
tax, replacing the progressive surcharge with a single, proportional single-rate tax applicable to
schedular incomes, with harmonized filing dates.
Improve performance in the tax audits by enhancing the role of intelligence division (tax
investigation teams and the Joint Tax/Customs Unit) in the programming of audits, facilitating
circulation and use of information within the Tax Directorate, and granting tax departments
access to the data contained in the files of other finance departments (PADOGE—the
computerized customs system—in particular).
In connection with the 2000/01 Budget Law, prepare a tax procedures manual
inter alia, provisions aimed at streamlining audit procedures, harmonizing penalties and dates for
filing returns and paying taxes, and allowing tax investigation.
Improve collection by strengthening cooperation between the Tax Directorate and the
Treasury, complete the inventory of tax arrears, and implement a plan for an effective recovery of
tax arrears and the write-off of the unrecoverable amounts by end-June 2000.
Strengthen the staff of the departments in charge of tax collections and provide training
for their staff by end-March 2000.
Develop a program to strengthen and modernize the Tax Directorate by end-June 2000,
specifically to: (a) increase the number of assessment and collection agents; (b) upgrade
management tools; (c) create a large enterprise unit; and (d) organize tax offices following the
model of the specialized tax offices.
Make the Forestry Revenue Protection Program operational by stepping up field
inspections (establishment of checkpoints at mandatory entry/exit points—factory and port
entrances); use information from inspections to create an interactive database to make DF 10
declarations more reliable; and identify and adopt new inspection technologies specifically
designed to improve timber tracking, by end-December 2000.
Require full payment of the bidding amount in the first year of the provisional agreement
to eliminate the risk of excessive biddings and subsequent nonpayment of the annual royalty,
ensuring the credibility of the competitive bidding process, by end-July 2000.
Transform the security money deposited with the Treasury (CFAF 200 per hectare) into a
bank bond and make it at least equal to the royalty for new and previously granted forestry
licenses in order to better guarantee the concession holders' compliance with their long-term
forestry management and tax obligations, by end-July 2000.
By March 22, 2000, exclude from all bidding procedures any bidder who has committed
at least one of the violations referred to in Article 9 of Decree 758/MINEF of June 16, 1999.
By end-March 2000, and after giving notice, revoke the operating licenses of enterprises
that have not fulfilled their tax obligations.
For the four following measures, establish a parallel dialogue with economic agents or
conduct studies to determine the requirements for implementation under the 2000/2001 Budget
Law: (a) adopt a system to auction log export rights in order to recover a portion of the
forestry economic rent associated with these activities and later eliminate the export surcharge;
(b) eliminate the system of export processing enterprises (points francs); (c)
export duties and taxes on processed goods with a timber tax at the factory entrance; and (d)
create an intercommunity equalization fund financed by a portion of the annual forestry royalties
with a view to making better use of these resources for specific projects of all communes in the
Budgetary and Privatization Measures
I. Revenue-enhancement Measures
To enhance tax revenue performance and reform the customs administration, as indicated in
paragraphs 6, 7, and 8 of the letter of intent, the government intends to take the following
A. Domestic Taxation
- By June 2000, complete the task of cleaning up the taxpayer master file, with
given to locating and updating the tax records of all previously registered enterprises; finalize this
work by end-December 2000 for enterprises subject to the impôt
libératoire2 and employees.
B. Customs Administration Reform
- By end-May 2000, perform a quick audit of the operational and functional status of
the PAGODE system, to eliminate breakdowns and safeguard the computer system.
- The remaining customs reform measures are those mentioned in the annex to the letter of
Intent of August 9, 1999 (EBS/99/153;8/11/99), with their completion dates extended to
II. Measures to Improve Expenditure
The authorities are determined to pursue actions aimed at improving expenditure
through the following measures, as indicated in paragraphs 9–12 of the letter of
- Continue to prepare sectoral policies and strategies, which will serve as a basis for a
medium-term budgetary framework for the health and education ministries, and issue documents
analyzing the current status of sectors, objectives, priorities, and strategic decisions, by end-June
- Continue to provide the ongoing institutional support to priority ministers for the
establishment and implementation of sectoral policies in the following fields: education, health,
public works, and supply/distribution of drinking water.
- Establish an operational mechanism for investment management (identification of
projects; programming or budgeting; monitoring of physical, financial, and budget execution;
report on execution) by end-June 2000.
- Submit the detailed quarterly budget execution reports of ten ministries (Social Affairs,
Agriculture, Education, Justice, Economy and Finance, Public Investments, Mines and Energy,
Health, Transportation, and Public Works) to be disseminated to the authorities beginning with
the quarter of January–March 2000.
- Improve the monitoring and management of the budget by (a) presenting a unified
classification of public administrations by end-June 2000; (b) introducing the concepts of
objective and function in the budget preparation circular for the budget of 2000/01 by
end-February 2000; (c) preparing a first draft budget nomenclature to be unitary, harmonized,
based on administrative and economic classifications by end-June 2000, in order to implement it
the budget of 2001/02; (d) reforming the Budgetary Framework Law of 1962 (Ordonance of
1962) and the subsequent texts concerning the budget structure by end-June 2001;
(e) producing an improved budget execution law by end-June 2000; and (f) preparing the
tables and documents required by the statutes in force by end-June 2000.
- Make budget execution simpler and more efficient by (a) shortening the deadlines for
implementing priority projects and (b) reducing the number of participants in the expenditure
process by eliminating those who are redundant and issuing the ex post audit reports of budget
auditors by end-June 2000.
- To contain the wage bill, adopt a management program for government employees by
(a) completing the fieldwork for the general census of government employees by end-June
2000; (b) auditing the human resources management system for the presentation of an
Government Employee Management Plan, including an employee master file and decentralized
management at the central and local levels, by end-September 2000; (c) after the census,
updating the payroll file by end-September 2000; (d) reactivating the SIGIPES (payroll
software) system project by end-September 2000; and (e) auditing the organization and functions
of the payroll system (ANTILOPE, the civil service management software), with a view to
reorganizing the staff and simplifying and safeguarding administrative and financial procedures
- Strengthen the computer systems of the Ministry of Economy and Finance by
(a) drawing up specifications for the establishment of interfaces between the computer
systems of finance departments by end-June 2000; (b) redefining the mandate of CENADI
(government computer center) by end-June 2000; and (c) establishing interfaces between finance
departments to exchange fiscal data by end-December 2000.
- Improve the public expenditure audit procedures by (a) adopting an audit program by
end-March 2000; and (b) making the data collection network reliable for the presentation of
treasury accounts on budget execution.
- Make operational the cash-flow committee, which is responsible for developing
cash-flow plans based on potential revenue and priority expenditure, beginning in March
- To ensure the permanent coherence of the current operations treasury balance with the
operations of the Budget, Tax, Customs and Treasury Departments and Autonomous Debt
Amortization Fund (CAA) and the broad budget execution table (Tableau de bord) by
end-June 2000, (a) harmonize the budget and treasury nomenclatures; (b) respect the rules,
methods and time frames; (b) follow up budget audits; (c) strengthen the comprehensiveness of
the public accounting by including the operations of accounting units at the diplomatic and
consular missions through reorganization and improvement of the technical level of the cashiers
by geographic zones, by end-March 2000; (d) improve gradually the accounting of the treasury
operations to enable government budget execution to be distinguished (revenues/expenditures)
budget year; (e) incorporate operations executed by the CAA into the government
operations; (f) establish the payment arrears based on treasury accounts by budget year; and (g)
introduce the first module of the auxiliary accounting for expenditures/treasury beginning July 1,
- Respect rigorously the 1999/2000 budget (operating and investment) closing dates for
expenditure commitments, payment orders, and adjustments and notify those responsible for
managing appropriations that expenditure committed but not ordered for payment by the closing
dates will have to be recommitted and settled from the 2000/2001 budget appropriations.
- Establish the broad budget execution table (tableau de bord) and the consolidated
central government operations table (TOFE) based on authorized/payment-ordered expenditure
(i.e., settled commitments), starting with fiscal year 2000/2001.
- By end-March 2000, rearrange the tableau de bord: Table M10, the statement of
payment-ordered expenditure and delegated appropriations, should distinguish between
settlements and appropriations transfers by fiscal year, that is between preceding and prior fiscal
years and current fiscal year.
- Achieve a satisfactory rate for expenditure commitments and settlements in the budget of
1999/2000 at March 31, 2000 and June 30, 2000 (equipment expenditure and investment
expenditure), as well as for priority expenditure (subsidies of all kinds, scholarships, drugs, etc.),
and submit a cash-flow plan taking this pace of execution into account.
- Identify expenditure commitments without any payment order before the close of
1998/1999, as well as payment arrears from the budget 1998/1999 and prior fiscal years at the
level of government accountants, in order to monitor budget execution separately; then present a
cash plan by end-June 2000.
III. Provisions Pertaining to the Privatization
To facilitate the privatization of major public enterprises, it will be essential to ensure the
- full access to financial data, and audits by international audit firms, without
reservations on the part of the auditors;
- free access to technical data and sites;
- prudent management, without taking measures that bind potential buyers, without
signing new collective agreements, and without launching new investment initiatives other than
those related to maintenance; and
- cooperation with the authorities and with the buyer.
If any of the goals listed above are not achieved because of the manager of the enterprise to
be privatized, the authorities shall immediately appoint an interim manager.
1By decision of the IMF Executive Board of November 1999, the Enhanced
Structural Adjustment Facility (ESAF) was replaced by the Poverty Reduction and Growth
2Tax benefiting local governments, paid in lieu of the business license tax, personal
income tax, and turnover tax.