Press Release: IMF Executive Board Completes Fourth Review Under the PRGF Arrangement with Cameroon and Approves US$4.1 Million Disbursement
December 19, 2007Press Release No. 07/296
The Executive Board of the International Monetary Fund (IMF) today completed the fourth review of Cameroon's economic performance and the review of financing assurances under a three-year Poverty Reduction and Growth Facility (PRGF) arrangement. The Executive Board also approved Cameroon's request for a waiver of the non-observance of a performance criterion pertaining to the preparatory work for the establishment of a financial subsidiary for the Cameroon Postal Services Company (CAMPOST) on the basis of corrective action taken.
The completion of this review enables the release of an amount equivalent to SDR 2.65 million (about US$4.1 million), bringing total disbursements under the arrangement to SDR 13.25 million (about US$20.7 million).
The three-year PRGF arrangement for Cameroon was approved by the Executive Board on October 24, 2005 (see Press Release No 05/236) in an amount equivalent to SDR 18.57 million (about US$29.1 million).
The PRGF is the IMF's concessional facility for low-income countries. PRGF-supported programs are based on country-owned poverty reduction strategies designed in a participatory process involving civil society and development partners. 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.
At the conclusion of the Executive Board's discussion, Mr. John Lipsky, First Deputy Managing Director and Acting Chair, stated:
"The Cameroonian authorities are to be commended for their commitment to their reform agenda, whose steadfast implementation will be crucial to achieve the economic growth rates needed to significantly reduce poverty. Fiscal performance has been favorable and structural measures to strengthen public finance management have been implemented. These efforts should be complemented by determined implementation of reforms to improve investment execution, rural finance, and public enterprise performance.
"Mobilization of non-oil revenues in the context of the expected decline in oil and trade-related revenues will be critical to finance priority spending and preserve fiscal sustainability. In this regard, efforts to expand the tax base will need to be accelerated.
"High priority needs to be given to improving the execution and quality of public spending. Gradual elimination of subsidies to public enterprises will help over time to create more fiscal space for priority spending. The authorities should continue efforts to strengthen public expenditure management and transparency, notably by better monitoring budget execution.
"Prudent debt management remains a priority in the post-debt-relief period to safeguard debt sustainability. In this regard, it will be important that borrowing continues to be on concessional terms.
"Strengthening the business environment requires decisive action to improve infrastructure, deepen financial intermediation, liberalize trade, reform public enterprises, and tackle corruption. In the period ahead, the authorities will implement the recommendations of the Financial Sector Assessment Program to strengthen the financial sector. Also, trade liberalization within the Central African Economic and Monetary Community is being advanced with the lowering of the common external tariff. Perseverance with public enterprise reforms and anti-corruption efforts will be essential to consolidate gains in economic efficiency and enhance the climate for private investment," Mr. Lipsky stated.