News Brief: IMF Completes Review Under Cameroon's PRGF Arrangement and Approves US$21 Million Disbursement
September 18, 2002
The Executive Board of the International Monetary Fund (IMF) today completed the third review of Cameroon's performance under the three-year Poverty Reduction and Growth Facility (PRGF) arrangement. The Board also granted a waiver for the non-observance of a structural performance criterion. As a result, Cameroon will be able to draw an amount equivalent to SDR 15.92 million (about US$21 million).
The PRGF is the IMF's concessional facility for low income countries. 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. This is to ensure that PRGF-supported programs are consistent with a comprehensive framework for macroeconomic, structural and social policies to foster growth and reduce poverty. 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.
Following the Executive Board's discussion on Cameroon, Anne Krueger, First Deputy Managing Director and Acting Chair, stated:
"During the last five years, the Cameroonian economy has benefited from improved macroeconomic performance and the progress made in implementing key structural reforms. Overall, macroeconomic stability has strengthened, reflecting substantial progress toward fiscal sustainability. Looking ahead, however, Cameroon will need to achieve much higher real GDP growth rates on a sustained basis, in order to reduce poverty substantially. With a revenue outlook weakened by declining oil output, the key challenge facing Cameroon is to allocate more resources for the development of key social sectors and investment in basic infrastructure, while maintaining an overall fiscal position that is consistent with macroeconomic stability.
"Our discussions today have underscored the need for the authorities to continue to enhance non-oil revenue mobilization and to strengthen further public expenditure management. On the revenue side, priority should continue to be given to broadening the tax base, restricting VAT exemptions, and pursuing the personal income and property tax reforms. Also, it is crucial for Cameroon to complete as scheduled, the programmed third stage of the implementation of the action plan to introduce, by September 2003, an integrated computerized fiscal and accounting information system to manage government revenue and expenditure.
"Turning to the main elements of the reform agenda, it is critical to intensify the efforts to improve governance, including implementation of concrete actions to address the abusive recourse to the saisie-attribution procedure and timely completion of the audit of the judiciary system. It is also essential to complete the privatization program and implement the reforms in the forestry and transport sectors; continue to reform the petroleum sector; and strengthen financial sector supervision.
"Additional short-term challenges facing Cameroon are to address the substantial delays that have been incurred in implementing HIPC-related programs and projects; complete the ongoing work on the preparation of a high-quality PRSP before the end of 2002; support more actively regional initiatives in the areas of trade, customs liberalization, and banking supervision; and take steps to participate in the UN anti-money laundering initiative," Ms. Krueger said.