Press Release: IMF Executive Board Completes Second Review Under Cameroon's PRGF Arrangement and Approves US$4 million Disbursement
December 22, 2006Press Release No. 06/300
The Executive Board of the International Monetary Fund (IMF) completed the second review of Cameroon's economic performance and a financing assurances review under a three-year Poverty Reduction and Growth Facility (PRGF) arrangement. Completion of the reviews enables the release of an amount equivalent to SDR 2.65 million (about US$4 million), bringing total disbursements under the arrangement to an amount equivalent to SDR 7.95 million (about US$12 million).
The three-year PRGF arrangement for Cameroon was approved by the Executive Board in October 2005 (see Press Release No. 05/236) in an amount equivalent to SDR 18.57 million (about US$28 million).
Following the Executive Board's discussion on Cameroon, Mr. John Lipsky, First Deputy Managing Director and Acting Chair, stated:
"The Cameroonian authorities are to be commended on their satisfactory program implementation, including in the areas of fiscal policy and public finance management, which has contributed to macroeconomic stability. Progress was also made, after some delay, in public enterprise reform. In the period ahead, a return to sustained growth and poverty reduction will depend on strategy implementation, with a focus on preserving fiscal sustainability and improving the business environment.
"The authorities' ability to mobilize additional revenues in the face of the expected depletion of oil reserves, and to resist pressures for excessive expenditures, especially ahead of parliamentary elections in 2007, will be critical to the maintenance of fiscal sustainability. Safeguarding priority spending will be key to boosting growth and lowering poverty. Given this, efforts to expand the tax base should be accelerated, including, if necessary, additional measures at the level of tax policy to safeguard fiscal objectives.
"The authorities should pursue a prudent debt management strategy in the post-HIPC period. Borrowing over the medium term should continue to be on concessional terms.
"Public expenditure management should continue to focus on monitoring budgets and tracking expenditures, building on recent progress. Improved transparency in the use of budget resources, including oil and debt relief, remains a priority.
"Strengthening the business environment requires concrete improvements in the areas of governance, public enterprise, financial and trade sector reforms. Governance reforms, in particular efforts to reduce corruption, are a key priority. Strengthening the judiciary and ensuring the effective and consistent application of laws are essential for attracting investment and overcoming negative perceptions of governance.
"Public enterprise reforms, including the privatization of the national airline, should be completed in 2007, in a transparent manner. This will be essential for limiting the burden on public finances and enhancing efficiency and growth prospects.
"Financial deepening is essential for accelerating growth and steps should be undertaken to implement the recommendations of the recently completed regional Financial Sector Assessment Program (FSAP)," Mr. Lipsky said.
The PRGF is the IMF's lower cost loan facility for low-income countries. PRGF-supported programs are based on country-owned poverty reduction strategies adopted in a participatory process involving civil society and development partners and articulated in the Poverty Reduction Strategy Paper (PRSP). This is intended 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 5½-year grace period on principal payments.