News Brief: IMF Completes Review Under Cameroon's PRGF Arrangement and Approves US$20 Million Disbursement
January 30, 2002
The Executive Board of the International Monetary Fund (IMF) today completed the second review of Cameroon's performance under the three-year Poverty Reduction and Growth Facility (PRGF)1 arrangement. As a result, Cameroon will be able to draw up to SDR 15.92 million (about US$20 million) immediately.
Cameroon's three-year PRGF arrangement was approved on December 21, 2000 (see Press Release No. 00/86) for SDR 111.42 million (about US$139 million). So far, Cameroon has drawn SDR 31.84 million (about US$40 million) under the arrangement.
After the Executive Board's discussion on Cameroon, Anne Krueger, First Deputy Managing Director and Acting Chair, stated:
"The implementation of the first annual program under the Poverty Reduction and Growth Facility (PRGF) arrangement has been broadly satisfactory. Cameroon met all the quantitative performance criteria and benchmarks but one at end-September 2001. Fiscal performance was in line with targets, despite some slippages in the final quarter of the program year. Overall, economic and financial conditions have strengthened further, and inflation has remained contained. These achievements on the macroeconomic front deserve credit. However, the slow pace in improving public expenditure management, strengthening governance, and implementing structural reforms are areas of concern.
"Prospects for the second annual program and beyond remain worrying with the expected decline in oil output and a less favorable external environment. Thus, for sustained economic growth and lasting poverty reduction to materialize, it is crucial for Cameroon to consolidate the gains obtained so far in the fiscal area and structural reforms. To that end, enhancing non-oil revenue mobilization, notably by limiting tax exemptions and reforming the income tax system, improving public expenditure management, and strengthening the procurement system will be critical. It is also essential to continue tackling the weaknesses in governance, notably in the judiciary system, so as to help foster investor confidence and prevent a possible deterioration of the financial health of the banking system.
"The 2001/02 budget envisages a cautious fiscal stance, while being appropriately tailored toward poverty reduction. Projects financed by savings resulting from the enhanced HIPC Initiative assistance have started to be implemented, in line with the priorities set by the national consultative committee for the follow-up of the implementation of the enhanced HIPC Initiative.
"The preparation of a full-fledged Poverty Reduction Strategy Paper (PRSP) is progressing toward possible completion by mid-year, based on a commendably broad-based participatory process," Ms. Krueger said.
1 It is intended that PRGF-supported programs will in time be based on country-owned poverty reduction strategies adopted in a participatory process involving civil society and development partners, and articulated in a Poverty Reduction Strategy Paper (PRSP). This is intended to ensure that each PRGF-supported program is consistent with a comprehensive framework for macroeconomic, structural, and social policies to foster growth and reduce poverty. Cameroon's full PRSP is expected to be finalized by June 2002. PRGF loans carry an annual interest rate of 0.5 percent and are repayable over 10 years with a 5 ½-year grace period on principal payments.