IMF Executive Board Concludes 2013 Article IV Consultation with Cameroon

Public Information Notice (PIN) No. 13/74
July 1, 2013

Public Information Notices (PINs) form part of the IMF's efforts to promote transparency of the IMF's views and analysis of economic developments and policies. With the consent of the country (or countries) concerned, PINs are issued after Executive Board discussions of Article IV consultations with member countries, of its surveillance of developments at the regional level, of post-program monitoring, and of ex post assessments of member countries with longer-term program engagements. PINs are also issued after Executive Board discussions of general policy matters, unless otherwise decided by the Executive Board in a particular case.

On June 26, 2013, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Cameroon.1


The economic recovery strengthened in 2012, with growth reaching 4.4 percent (compared to 4.2 percent in 2011), reflecting an increase in the value of oil exports. Average inflation moderated to 2.4 percent (from 2.9 percent in 2011), helped by stable food prices. The current account deficit (including grants) widened from 2.9 percent of gross domestic product (GDP) in 2011 to 3.7 percent of GDP in 2012 following a decrease in net income owing to higher profit repatriation by local subsidiaries of international companies. Although Cameroon has had robust growth in the past few years, there has been little growth in per capita income, despite a relatively diversified and well-endowed economy.

The fiscal situation eased in 2012. Non-oil revenue was higher than expected, mostly because of a stronger yield of the corporate income tax. Oil revenue increased slightly, as the dip in international oil prices was compensated by higher production. On the expenditure side, budget execution was close in nominal terms to that of the year before, and thus represented a contraction of expenditure in terms of GDP. As a result, the overall deficit (including grants) on a cash basis narrowed from 3.6 percent of GDP in 2011 to 2.0 percent of GDP in 2012.

The banking system has stabilized, but remains a cause for concern. Two of the five commercial banks in financial distress appear to be in the process of re-establishing their financial soundness; but the other three show few signs of progress. Moreover, commercial banks remain exposed to excessive concentration in bank credit, payment difficulties of the national oil refinery, and weaknesses in the framework for dealing with troubled banks.

Cameroon’s debt burden remains low, thanks in part to debt relief under the Heavily Indebted Poor Countries (HIPC) and Multilateral Debt Relief (MDR) Initiatives. However, external financing in 2012 increasingly relied on nonconcessional borrowing. On current trends, the updated debt analysis points to a deterioration of debt sustainability indicators by 2018. The stock of debt would rise from 16 percent of GDP in 2012 to 34 percent of GDP in 2018.

Economic growth is expected to increase moderately under current policies, which would imply a modest per capita growth in 2013. Staff projects real GDP to increase gradually to 5½ percent by 2018. Non-oil growth is projected to be supported by major public investment projects; ongoing efforts to boost agricultural productivity and competitiveness; and measures to improve the business environment. The oil sector is also expected to contribute to growth, following successful exploration efforts and new extraction techniques. Meanwhile, inflation is expected to remain below the regional convergence criterion of 3 percent.

However, fuel subsidies are slated to increase in 2013 and crowd out more productive expenditure. Their level is expected to reach 3.2 percent of GDP in the absence of efficiency gains or retail price adjustments. High subsidies, increasingly nonconcessional external financing, and an unpropitious business environment fuel macroeconomic vulnerabilities.

Executive Board Assessment

Executive Directors welcomed the recovery of economic activity in a low inflation environment, but noted that the economy still faces vulnerabilities and impediments to private-sector-led growth. They encouraged the authorities to renew efforts on fiscal, financial, and structural reforms needed to meet Cameroon’s growth potential.

Directors emphasized the need to address the significant fiscal challenges. They noted that the fiscal deficit in 2012 was contained mainly by higher oil revenue and under-execution of the investment budget. Going forward, risks to fiscal sustainability arise from fuel subsidies, which are crowding out developmental expenditure and contributing to outstanding payment obligations. Directors urged the authorities to contain the 2013 budget deficit and to rebuild fiscal space over time. They called on the authorities to wind down fuel subsidies gradually, clear outstanding payment obligations, and develop mitigating programs for the neediest segments of the population. They also saw a need to reduce tax exemptions and strengthen revenue mobilization.

Directors welcomed efforts to implement program-based budgeting. They encouraged the authorities to consolidate reforms in public financial management, including public procurement, and strengthen expenditure execution and control. Directors noted Cameroon’s low risk of debt distress. Nevertheless, they urged caution in tapping nonconcessional financing and advised the authorities to be prudent in their selection of externally financed projects, focusing on investments with a high return.

Directors noted that risks to financial sector stability have abated. They emphasized that decisive action is needed to put financial intermediation back on a sound footing, and called for swift action to restructure distressed banks. They also recommended close supervision of the important microfinance sector.

Directors stressed that achieving higher, private-sector-led growth will require stronger efforts to improve the business environment and address infrastructure and energy bottlenecks. They encouraged the authorities to work with Central African Economic and Monetary Community (CEMAC) member countries to ensure adequate external buffers and foster regional integration in order to support trade and diversification of the economy.

Directors also encouraged the authorities to strengthen economic and financial statistics.

Cameroon: Selected Economic and Financial Indicators, 2011–14
2011 2012 2013 2014
  Act. Est. Proj. Proj.
(Annual percentage change, unless otherwise indicated)

National income and prices





GDP at constant prices

4.1 4.4 4.8 5.0

Oil GDP at constant prices

-7.3 3.5 15.2 7.4

Non-oil GDP at constant prices

4.6 4.5 4.4 4.9

GDP deflator

3.7 2.3 2.0 2.2

Consumer prices (average)

2.9 2.4 2.5 2.5

External trade


Export volume

-4.4 0.1 8.9 7.7

Of which: non-oil sector

-3.5 -1.5 7.4 6.6

Import volume

15.6 1.0 7.8 9.0

Terms of trade ("-" is a deterioration)

10.8 1.4 -2.0 -0.4

Money and credit


Net domestic assets1

18.0 4.6 6.2 7.8

Net credit to the public sector1

6.0 4.3 1.5 1.4

Credit to the private sector

28.3 2.6 8.5 10.9

Broad money (M2)

10.6 1.4 5.3 7.3
    (Percent of GDP, unless otherwise indicated)

Central government operations


Total revenue (excluding grants)

18.2 18.4 19.4 19.4

Non-oil revenue (percent of non-oil GDP)

14.1 14.3 15.5 15.5

Total expenditure

21.6 20 23.5 23.9

Overall fiscal balance (cash basis)


Excluding grants

-4.1 -2.5 -6.2 -4.6

Including grants

-3.6 -2 -5.8 -4.3

Non-oil primary balance (percent of non-oil GDP)

-8.6 -6.7 -9.2 -9.5

External sector


Current account balance (including grants)

-2.9 -3.7 -3.7 -3.7

Imputed reserves (percent of broad money)

52.9 53.7 50.0 46.2

Public debt



13.4 15.9 19.2 22.5


7.3 9.0 9.7 11.1

Sources: Cameroonian authorities; and IMF staff estimates and projections.

1 Percent of broad money at the beginning of the period.

1 Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country's economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board. At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country's authorities. An explanation of any qualifiers used in summings up can be found here:


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