## 1cmrea2020001

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### Program status and performance
- Program implementation over the first nine months of 2019 was mixed and faces challenges.
- All June 2019 quantitative performance criteria (PCs) were met but four out of the five indicative targets (IT) were missed.
- Continuous PC on external arrears accumulation was missed due to CFAF 43.4 billion in arrears (related to a loan on-lent to SONARA); arrears repaid in full before end-November.
- Out of 9 September 2019 ITs, three were missed:
  - Floor on non-oil revenue breached by 0.8 percent of GDP.
  - Ceiling on net accumulation of domestic payment arrears exceeded by 0.5 percent of GDP.
  - Targeted share of spending executed through exceptional procedures breached by 1.6 percent of total authorized expenditures.
- Structural benchmarks: 5 out of 13 SBs due January−November met; 2 implemented with delay; 6 in progress. Revision of fuel price structure yet to be met; TSA reform and several financial sector reforms pending.

### Recent developments and macro outlook
- Growth and inflation:
  - Growth estimated at 3.9 percent in H1-2019 (4.1 percent in 2018).
  - Non-oil growth in the CEMAC reached 1.8 percent in 2018 and projected to increase to 2.2 percent in 2019.
  - GDP growth projected to decline to 3.8 percent in 2020, before improving from 2021; non-oil growth expected to gradually rise to 5.4 percent in 2024.
  - Inflation (period average): 0.6 (2017 Act.), 1.1 (2018 Est.), 2.4 (2019 Proj.), 2.4 (2020 Proj.), 2.0 (2021 Proj.), 2.0 (2022 Proj.).
- External and reserves:
  - Current account deficit remained stable at 4.7 percent of GDP in H1-2019.
  - Regional reserve cover projected to increase to 3.3 months of imports by end-2019.
- Monetary and credit developments:
  - Broad money growth estimated at 12.9 percent at end-September 2019 (y/y).
  - Credit to the economy slowed to 2.8 percent at end-September 2019 (y/y) from 7.7 percent at end-March 2019.
  - Increase in NFAs in Q2 largely reversed in Q3, partly due to delayed donor budget support.

### Fiscal outturn Q1–Q3 2019 and 2019 supplementary budget (percent of GDP)
- Total revenue and grants: 10.7 (4th review projection 11.4) — Deviation -0.7
- Total revenue: 10.4 (projection 11.2) — Deviation -0.8
- Oil sector revenue: 1.9 (projection 1.8) — Deviation 0.1
- Non-oil sector revenue: 8.5 (projection 9.3) — Deviation -0.9
- Total grants: 0.3 (projection 0.2) — Deviation 0.1
- Total expenditure: 12.0 (projection 12.9) — Deviation -0.9
- Current expenditure: 7.5 (projection 8.5) — Deviation -1.0
- Capital expenditure: 4.2 (projection 4.5) — Deviation -0.3
- Net lending: 0.3 (projection 0.0) — Deviation 0.3
- Overall balance (payment order basis): -1.4 (projection -1.6) — Deviation 0.2
- External financing, net: 1.8 (projection 1.2) — Deviation 0.6
- Domestic financing excluding IMF, net: 0.7 (projection 0.7) — Deviation 0.0
- Primary balance (payment order basis, incl. grants): -0.7 (memo)
- Non-oil primary balance (payment order basis, incl. grants): -2.6 (projection -2.8) — Deviation 0.2
- Supplementary budget: overall deficit (payment order basis) targeted at 2 percent of GDP; fiscal outturn and adjustments point to a projected overall deficit of 2.3 percent of GDP for end-2019.

### Revenue mobilization and 2020 budget measures
- SONARA suspension led to SONARA’s tax shortfall estimated at 0.3 percent of GDP.
- New 2020 revenue measures (14 new measures; Prior Action) broaden non-oil tax base and reduce exemptions, including:
  - Broadening VAT to goods and services via foreign or local electronic commerce platforms.
  - Extending excise duties to digital audiovisual programs and content.
  - Strengthening forestry taxation; reforming registration of judicial documents.
  - New customs measures: broaden export duties to semi-finished products, timber, rice, crude palm oil; new import duties on cosmetics, tobacco, certain motorcycles, confectionary and chocolates.
- Projected revenue impact: CFAF 60 billion or 0.25 percent of GDP increase in total revenue.
- 2020 budget projections (percent of GDP):
  - Total revenue and grants: 16.2 (4th Review) and 16.4 (5th Review)
  - Non-oil sector revenue: 13.5 and 13.6
  - Total expenditure: 18.2 and 18.6
  - Overall balance (payment order basis, incl. grants): -2.0 and -2.3
  - Overall balance (cash basis, incl. grants): -3.0 and -3.2

### SONARA, SOEs, contingent liabilities, and fuel pricing
- SONARA debt (over CFAF 795 billion or 3.5 percent of GDP at end-September):
  - Local bank debt: CFAF 293 billion, of which CFAF 228 billion are arrears.
  - External arrears: about CFAF 368 billion.
  - Fiscal debt to the government: CFAF 84 billion.
- SONARA actions and authorities’ short-term plan:
  - (i) reimburse SONARA monthly for fuel price–related losses and clear arrears within 90 days;
  - (ii) require regular payments from SONARA of taxes and customs duties;
  - (iii) ensure SONARA’s market share adequate to meet obligations;
  - (iv) facilitate reprofiling of SONARA’s debt to banks and suppliers before end-2019.
- Fuel subsidies and pricing:
  - Fuel subsidy estimated at CFAF 168 billion in 2018.
  - Projection for 2019 fuel subsidies raised from CFAF 124 billion to CFAF 140 billion after SONARA incident.
  - Staff recommends revising pump price structure for SONARA’s switch from producer to marketer and introducing auction-based refined oil imports; medium-term flexible prices to be accompanied by targeted program for vulnerable households.

### Public debt, SENDs, and borrowing limits
- Public debt contracted and disbursed: 41.5 percent of GDP as of end-September 2019 (from 39.5 percent at end-2018).
- Stock of contracted but undisbursed debt (SENDs): decreased to 16.1 percent of GDP at end-September 2019 from 18.8 percent at end-2018; memo shows SENDs: 20.0 (Dec-16), 21.8 (Dec-17), 18.8 (Dec-18 Est.), 16.1 (Sep-19 Est.).
- Selected public debt entries (percent of GDP): Total public debt: 33.3 (Dec-16), 37.7 (Dec-17), 39.5 (Dec-18 Est.), 41.5 (Sep-19 Est.); SONARA debt: 2.4 (Dec-16), 2.6 (Dec-17), 2.8 (Dec-18 Est.), 3.1 (Sep-19 Est.); Unpaid government obligations (float and arrears): 3.4 (Dec-16), 4.1 (Dec-17), 2.3 (Dec-18 Est.), 2.1 (Sep-19 Est.).
- Non-concessional borrowing policy and ceilings:
  - Disbursement limit for non-concessional financing: CFAF 312 billion for end-March.
  - Ceiling for new non-concessional borrowing set at CFAF 0 through June 2020, adjustable upward up to CFAF 300 billion exclusively for projects specified in Text Table 1 of the TMU.
  - Authorities’ debt strategy ceilings: CFAF 350 billion for new non-concessional borrowing for 2020 and CFAF 300 billion for concessional borrowing.
- SENDs target: reduce existing stock of SENDs to 2.1 percent of GDP by end-2023.

### Debt sustainability assessment and risks
- DSA summary:
  - Risk of external debt distress: High.
  - Overall risk of debt distress: High.
  - Public debt projected to peak in 2020 at 40.8 percent of GDP and decline thereafter.
  - Present value of external debt-to-GDP and PV of public-debt-to-exports remain below thresholds over the horizon.
- Debt service vulnerabilities:
  - Debt service-to-revenue ratio breaches threshold in first two years by up to 6 percentage points driven by SONARA short-term supplier debt; again slightly in 2023 due to Eurobond maturities.
  - Debt service-to-exports ratio breaches threshold continuously until 2025.
- Stress-test outcomes and key scenario indicators:
  - Under combined contingent liabilities, PV of debt-to-GDP peaks at 47 percent of GDP; PV of debt-to-revenue jumps to 289 percent in 2020; debt service-to-revenue peaks in 2021 at 84 percent.
  - Exports shock can raise PV of debt-to-exports up to 270.0 percent in 2026.
- Main risks to baseline:
  - External: trade tensions, slowdown in China, softer commodity prices, sluggishness in CEMAC adjustment.
  - Domestic: socio-political tensions, fiscal/financial/debt sustainability risks related to SONARA and other SOEs, faster execution of SENDs increasing debt pressure.
  - Upside: faster resolution of security crisis, higher oil and gas prices.

### Monetary and financial stability
- FX repatriation and reserves:
  - Foreign exchange repatriation reached CFAF 2,313 billion during Q1–Q3 2019, a 44 percent increase y/y.
  - NFAs at BEAC: CFAF 1,995 billion at end-September 2019; projected to rise in Q4 supported by delayed donor budget support and enforcement of regulations.
- Banking sector metrics and vulnerabilities:
  - Capital adequacy ratio: 10.2 percent at end-2018 (regulatory minimum 10.5 percent; CEMAC average 16.3 percent).
  - Ratio of liquid assets to short-term liabilities: 160 percent.
  - NPLs share increased for fourth consecutive year; credit to real economy declined by -0.5 percent between end-May and end-August 2019.
  - Full provisioning for SONARA exposures would require CFAF 150 billion provisioning within two years, out of total regulatory capital CFAF 280 billion.
- Financial sector policy actions:
  - Banks urged not to pay dividends; restructuring plans for two ailing banks to be submitted by end-2019; NPL reduction plan requires foreclosure enforcement, operationalization of Courts of Commerce law, expansion of movable collateral registry.

### Program modalities, conditionality, and IMF financing
- Staff supports completion of the fifth review, a waiver of nonobservance of one continuous PC (external arrears), and modification of one December 2019 and one 2020 PC.
- Upon completion of the review, disbursement of SDR 55.2 million (20 percent of quota) will be made available, for cumulative SDR 427.8 million or 155 percent of quota.
- ECF disbursement schedule (SDR Millions):
  - 6/26/2017: 124.2 — 45 percent of quota
  - 12/15/2017: 82.8 — 30 percent of quota
  - 6/30/2018: 55.2 — 20 percent of quota
  - 12/15/2018: 55.2 — 20 percent of quota
  - 6/15/2019: 55.2 — 20 percent of quota
  - 12/15/2019: 55.2 — 20 percent of quota
  - 5/31/2020: 55.2 — 20 percent of quota
  - Total: 483.0 SDR million — 175 percent of quota
- Program financing and budget support:
  - Program fully financed through May 2020.
  - Budget support of CFAF 271 billion for 2019 from World Bank, AfDB, France and EU on track.
  - Only IMF budget support expected in H1-2020.
  - Repayments under ECF-supported program will remain less than 0.3 percent of GDP during the program period.

### Policy recommendations and priority reforms
- Fiscal and revenue policy:
  - Build fiscal buffers and strengthen fiscal discipline.
  - Continue broadening non-oil revenue base, reduce discretionary tax exemptions, combat tax fraud and evasion, enhance tax and customs administration.
  - Finalize TSA reform and improve cash management; target deposit accumulation at BEAC of at least CFAF 80 billion relative to 2018.
- SONARA and SOEs:
  - Urgently address SONARA short-term debt problems to preserve financial stability and minimize fiscal costs.
  - Complete audits of four large SOEs with World Bank cooperation; inventory and plan to clear audited cross-debts between SOEs and the government.
  - Phase out fuel subsidies gradually and accompany by targeted protection for vulnerable households.
- Debt management:
  - Prioritize concessional borrowing; limit non-concessional borrowing to projects lacking concessional financing and within program ceilings.
  - Prepare quarterly disbursement plans for investment projects to manage SENDs.
- Financial sector:
  - Strengthen contract enforcement, resolve NPLs and ailing banks, operationalize collateral registry, and implement NPL reduction plan.
- Governance and business climate:
  - Strengthen AML/CFT and EITI compliance; enact anti-corruption law; improve public-private partnership frameworks; promote IT investments and export diversification.

### Public investment and major projects (Annex I summary)
- First-generation major projects (11 listed, including Lom Pangar dam, Memve’ele hydroelectric plant, Kribi port complex, Wouri second bridge, Yaoundé-Douala highway, Kribi gas plant, optical fiber extension, and others).
- Financing of first-generation projects as of June 2019:
  - Financing support contracted from partners: at least 1195 billion CFA
  - Cameroon own funding: 348 billion CFA
- Project status highlights (as of June 2019):
  - Lom Pangar dam: Completed.
  - Wouri second bridge: Completed.
  - Kribi gas plant: Completed (phase 2 in progress).
  - Kribi port complex (phase 1): Completed.
  - Memve’ele hydroelectric plant: Almost completed; expected completion by end 2019.
  - Yaoundé-Douala highway (phase 1): 68 percent of 60 km completed.
  - Extension of optical fiber network: 12,000 kilometers installed.
  - Several projects not started: chemical fertilizer factories, aluminum smelters, agricultural complexes, 1000 km of railway.
- Implementation constraints: procurement delays, poor feasibility studies, weak stakeholder coordination, public financing constraints, accumulation of arrears to local contractors.
- Authorities’ recommendations for 2020–2030: improve project preparedness, promote PPPs, create independent feasibility validation committee, simplify administrative procedures, prioritize completion of first-generation projects.

### Data reporting, monitoring, and conditionality calendar
- Data reporting obligations summarized with specific periodicities and lags (e.g., TOFE monthly — 6 weeks; monthly accounting statements on cash advances — 3 weeks; publish oil product price structure monthly — First week of the current month).
- List of projects eligible under the 2020 non-concessional borrowing adjustor (Text Table 1) includes 15 projects such as Olembe Sports Complex, East Entrance Douala road (phase II), various transmission lines, road rehabilitation projects, and port logistics development.

*Cameroon: IMF staff report extracts and IMF staff estimates and projections (January 7, 2020; Supplementary Information and Letter of Intent material).*

### 3.8 percent in 2019), driven by increased investment in infrastructure and energy sectors

### 3.8 percent in 2019), driven by increased investment in infrastructure and energy sectors

### Program status
- Program implementation over the first nine months of 2019 was mixed and faces challenges.
- All June 2019 quantitative performance criteria (PCs) were met but four out of the five indicative targets (IT) were missed.
- The continuous PC on external arrears accumulation and three September ITs were missed.
- Structural reforms are advancing but with delays.

### Key Policy Recommendations
- Urgently address the short-term debt problems at SONARA to preserve financial stability and minimize current and future fiscal costs;
- Revise and simplify the existing fuel price structure;
- Continue shifting into concessional loans and prudently manage contracted-but-undisbursed loans (SENDs);
- Complete an inventory of cross-debts between state-owned enterprises (SOEs) and the government and among SOEs themselves and adopt a plan to clear audited cross-debts between SOEs and the government;
- Finalize the audits of four large SOEs in close cooperation with the World Bank;
- Continue to support CEMAC’s regional reform strategy through strict implementation of the new foreign exchange (FX) regulations;

### Staff views and financing
- Staff supports the authorities’ requests for completion of the fifth review, a waiver of nonobservance of one continuous performance criterion and modification of one December 2019 and one 2020 performance criterion.
- Upon completion of the review, a disbursement of SDR 55.2 million (20 percent of quota) will be made available, for a cumulative amount of SDR 427.8 million or 155 percent of quota.

*Approved By David Owen and Ashvin Ahuja. Discussions took place in Yaoundé during October 28-November 8, 2019.*

### Recent developments (selected)
- Non-oil growth in the CEMAC reached 1.8 percent in 2018 and is projected to increase to 2.2 percent in 2019.
- Cameroon’s non-oil primary fiscal deficit is expected to decline to 6.8 percent of non-oil GDP in 2019, from 8 percent in 2018.
- Regional reserve cover is projected to increase to 3.3 months of imports by end-2019.
- A National Dialogue was launched; on December 20th, Cameroon’s parliament granted special status to the two Anglophone regions.
- Growth is estimated at 3.9 percent in H1-2019 (4.1 percent in 2018).
- End-June 2019 inflation (p.a.) reached 1.9 percent, from 0.8 percent in June 2018.
- Following a fire incident at four of its 13 units on May 31, 2019, SONARA suspended production, stopped servicing part of its debt, and experienced difficulties paying its tax obligations.

### Fiscal outturn Q1–Q3 2019 (Text Table 1; In percent of GDP)
- Total revenue and grants: 10.7 (4th review projection 11.4) — Deviation -0.7
- Total revenue: 10.4 (projection 11.2) — Deviation -0.8
- Oil sector revenue: 1.9 (projection 1.8) — Deviation 0.1
- Non-oil sector revenue: 8.5 (projection 9.3) — Deviation -0.9
- Total grants: 0.3 (projection 0.2) — Deviation 0.1
- Total expenditure: 12.0 (projection 12.9) — Deviation -0.9
- Current expenditure: 7.5 (projection 8.5) — Deviation -1.0
- Capital expenditure: 4.2 (projection 4.5) — Deviation -0.3
- Net lending: 0.3 (projection 0.0) — Deviation 0.3
- Overall balance (payment order basis): -1.4 (projection -1.6) — Deviation 0.2
- External financing, net: 1.8 (projection 1.2) — Deviation 0.6
- Domestic financing excluding IMF, net: 0.7 (projection 0.7) — Deviation 0.0
- Primary balance (payment order basis, incl. grants): -0.7 (memo)
- Non-oil primary balance (payment order basis, incl. grants): -2.6 (projection -2.8) — Deviation 0.2

### Monetary and external developments
- Increase in NFAs in Q2 was largely reversed in Q3, in part due to delayed donor budget support.
- Broad money growth estimated at 12.9 percent at end-September 2019 (y/y), down from 13.7 percent in 2018.
- Credit to the economy slowed to 2.8 percent at end-September 2019 (y/y) from 7.7 percent at end-March 2019.
- Current account deficit remained stable at 4.7 percent of GDP in H1-2019.

### Public debt and contracted-but-undisbursed loans (Text Table 2)
- Public debt contracted and disbursed: 41.5 percent of GDP as of end-September 2019 (from 39.5 percent at end-2018).
- Increase driven by disbursements on foreign-financed projects and domestic bond issuance.
- Stock of contracted but undisbursed debt (SENDs) decreased to 16.1 percent of GDP at end-September 2019 from 18.8 percent of GDP at end-2018.
- Selected entries (percent of GDP):
  - Public debt contracted and disbursed: 27.5 (Dec-16), 30.9 (Dec-17), 34.4 (Dec-18 Est.), 36.2 (Sep-19 Est.)
  - External debt: 20.4 (Dec-16), 22.9 (Dec-17), 26.3 (Dec-18 Est.), 27.2 (Sep-19 Est.)
  - Domestic debt: 6.7 (Dec-16), 7.8 (Dec-17), 7.9 (Dec-18 Est.), 8.9 (Sep-19 Est.)
  - SONARA debt: 2.4 (Dec-16), 2.6 (Dec-17), 2.8 (Dec-18 Est.), 3.1 (Sep-19 Est.)
  - Unpaid government obligations (float and arrears): 3.4 (Dec-16), 4.1 (Dec-17), 2.3 (Dec-18 Est.), 2.1 (Sep-19 Est.)
  - Total public debt: 33.3 (Dec-16), 37.7 (Dec-17), 39.5 (Dec-18 Est.), 41.5 (Sep-19 Est.)
  - Memo: Stock of contracted but undisbursed debt: 20.0 (Dec-16), 21.8 (Dec-17), 18.8 (Dec-18 Est.), 16.1 (Sep-19 Est.)

### Program performance (summary)
- All June 2019 quantitative PCs were met but four out of five end-June ITs were missed:
  - Floor on non-oil revenue breached by about 0.2 percent of GDP.
  - Ceiling on net accumulation of domestic arrears exceeded by 0.2 percent of GDP.
  - Floor on social spending missed by 0.1 percent of GDP.
  - Targeted share of spending executed through exceptional procedures exceeded by 2.8 percentage points.
- Continuous PC on external arrears accumulation not met due to incurrence of CFAF 43.4 billion in arrears since the fourth review (related to a loan on-lent to SONARA); arrears repaid in full before end-November.
- Out of 9 September 2019 ITs, three were missed:
  - Floor on non-oil revenue breached by 0.8 percent of GDP.
  - Ceiling on net accumulation of domestic payment arrears exceeded by 0.5 percent of GDP.
  - Targeted share of spending executed through exceptional procedures breached by 1.6 percent of total authorized expenditures.
- Structural benchmarks: 5 out of 13 SBs due in January−November met; 2 implemented with delay; 6 in progress. Revision of existing fuel price structure yet to be met. Draft terms of reference of project implementation units pending approval. Reform of the Treasury Single Account (TSA) yet to be completed. Several financial sector reforms pending, including restructuring plans of two ailing banks and the business model of the SME bank.

### Outlook and risks
- GDP growth projected to decline to 3.8 percent in 2020, due to anticipated deceleration in oil-related activities, before improving from 2021 onwards, supported by a rebound in non-oil activity.
- Non-oil growth expected to gradually rise to 5.4 percent in 2024, driven by increased investments in infrastructure and energy projects.
- Text Table 3 (selected projections and historical entries):
  - Real GDP (Act./Est./Proj.): 3.5 (2017 Act.), 4.1 (2018 Est.), 4.2 (2019 4th Review), 3.9 (2019 Proj.), 4.5 (2020 4th Review), 3.8 (2020 Proj.), 4.1 (2021 4th Review), 4.2 (2021 Proj.), 4.5 (2022 4th Review), 5.0 (2022 Proj.)
  - Inflation (period average): 0.6 (2017 Act.), 1.1 (2018 Est.), 2.1 (2019 4th Review), 2.4 (2019 Proj.), 2.2 (2020 4th Review), 2.4 (2020 Proj.), 2.0 (2021 4th Review), 2.0 (2021 Proj.), 2.0 (2022 4th Review), 2.0 (2022 Proj.)
  - Current account balance (percent of GDP): -2.7 (2017 Act.), -3.6 (2018 Est.), -3.4 (2019 4th Review), -3.6 (2019 Proj.), -3.3 (2020 4th Review), -3.6 (2020 Proj.), -3.4 (2021 4th Review), -3.4 (2021 Proj.), -3.3 (2022 4th Review), -3.2 (2022 Proj.)
  - Public debt (1/2/): 37.7 (2017 Act.), 39.5 (2018 Est.), 39.5 (2019 4th Review), 40.8 (2019 Proj.), 39.0 (2020 4th Review), 40.8 (2020 Proj.), 40.3 (2021 4th Review), 39.7 (2021 Proj.), 38.9 (2022 4th Review), 38.0 (2022 Proj.)
- Risks to baseline:
  - External: continuing trade tensions, potential slowdown in China, softer commodity price outlook, sluggishness in CEMAC regional adjustment.
  - Domestic: socio-political tensions, fiscal/financial/debt sustainability risks related to SONARA and other SOEs, faster execution of contracted-but-undisbursed debt leading to debt sustainability pressure.
  - Upside: faster resolution of security crisis via National Dialogue; higher-than-projected oil and gas prices stimulating exploration.

### Policy discussions — A. Building Fiscal Buffers
- Review focused on need to build fiscal buffers, strengthen fiscal discipline, reduce contingent liabilities from SONARA and other SOEs, safeguard debt sustainability, preserve monetary and financial stability, and enhance governance and the business climate.

*Cameroon: IMF staff report (Extracted content, January 7, 2020).*

### 14.      Revenue mobilization is facing

### 14.      Revenue mobilization is facing

### Revenue developments and 2019 fiscal outturn
- SONARA suspension led to delays in honoring tax obligations; SONARA’s tax shortfall relative to Q3 projections is estimated at 0.3 percent of GDP.
- Subsidies increased by 0.5 percent of GDP due to recognition in the budget of the fuel support to marketers.
- Net lending has been revised upward by 0.3 percent of GDP to reflect recent government borrowing and on-lending to SONARA.
- The authorities tightened tax controls and improved recovery of arrears in the last quarter; recognition in the budget of previously unrecorded customs duties due by marketers of petroleum products is expected to increase non-oil revenue to 13.6 percent of GDP by end-2019.
- The overall deficit is projected at 2.3 percent of GDP for end-2019, above the 4th review target of 2 percent of GDP; the authorities requested lowering the December 2019 floor of the non-oil primary deficit from -3.3 to -3.8 percent of GDP.

Key fiscal projections (Text Table 4; percent of GDP)
- Total revenue and grants: 16.2 (4th Review) and 16.4 (5th Review)
- Non-oil sector revenue: 13.5 and 13.6
- Total expenditure: 18.2 and 18.6
- Current expenditure: 11.8 and 12.0
- Wages and salaries: 4.6 and 4.5
- Goods and services: 3.6 and 3.5
- Subsidies and transfers: 2.7 and 3.2
- Capital expenditure: 6.6 and 6.3
- Net lending: -0.1 and 0.3
- Overall balance (payment order basis, incl. grants): -2.0 and -2.3
- Overall balance (cash basis, incl. grants): -3.0 and -3.2

### 2020 budget measures and revenue mobilization
- The 2020 budget incorporates 14 new measures that broaden the non-oil tax base and reduce the scope for exemptions (Prior Action).
- New tax measures include:
  - Broadening VAT to sales of goods and services provided through foreign or local electronic commerce platforms.
  - Extending excise duties to digital audiovisual programs and content.
  - Reducing tax deductibility of provisions for bad debts.
  - Strengthening forestry taxation regime.
  - Reforming registration of judicial documents.
- DGI plans a special program to improve recovery of tax arrears and tackle disputed taxes.
- New customs measures broaden export duties to semi-finished products, timber, rice, crude palm oil, among others; new import duties on cosmetics, tobacco, video and board games, certain motorcycles, confectionary and chocolates.
- The new revenue measures are projected to increase total revenue by CFAF 60 billion or 0.25 percent of GDP. Without them, the overall deficit would have been 2.3 percent of GDP.
- The 2020 budget envisages savings on goods and services and subsidies equivalent to 0.3 percent of GDP to partly offset SONARA and EPA tariff impacts.

### Fiscal discipline, cash management, and reforms
- Staff advised targeting deposit accumulation at the BEAC of at least CFAF 80 billion relative to 2018 to meet the December PC on net central bank financing.
- Repaying domestic debt and containing new bond issuance at the budget level would help meet the December PC on domestic financing.
- Authorities suspended new commitments early (prior to usual end-November 2019 deadline) to contain spending.
- Treasury single account (TSA) reform:
  - Balances on dormant accounts totaling CFAF 44.5 billion will be transferred to the TSA by end-2019.
  - Transferred funds expected to reach CFAF 150 billion by end-2020.
  - Authorities will centralize counterpart funds for joined projects in a single basket fund and publish the annual cash management plan as an annex to the 2020 budget.
- Civil service payroll reform (SIGIPES 2) aims to tighten wage payment controls; individualized bank transfers realized savings of CFAF 200 million a month.
- Improvements in investment efficiency: new guidelines to ensure budget projects are advanced and high-return; standardized performance contracts for project managers.

### SONARA, contingent liabilities, and fuel pricing
- SONARA’s total debt amounts to over CFAF 795 billion (3.5 percent of GDP) at end-September.
  - Local bank debt: CFAF 293 billion, of which CFAF 228 billion are arrears.
  - Regulatory capital of the banking sector at end-2018: CFAF 280 billion.
  - External arrears: about CFAF 368 billion.
  - Fiscal debt to the government: CFAF 84 billion.
- SONARA declared force majeure and stopped servicing part of its debt; plans to restructure.
- Authorities’ short-term plan for SONARA includes:
  - (i) reimburse SONARA monthly for its fuel price–related losses and clear arrears within 90 days;
  - (ii) require regular payments from SONARA of taxes and customs duties;
  - (iii) ensure SONARA’s market share is adequate to meet financial obligations;
  - (iv) facilitate reprofiling of SONARA’s debt to banks and suppliers before end-2019.
- Fuel subsidies and pricing:
  - Recovery in international oil prices raised fuel subsidies to an estimated 168 billion CFAF in 2018.
  - Projection of fuel price subsidies for 2019 was raised from CFAF 124 billion to CFAF 140 billion after SONARA’s incident.
  - Staff recommends revising the pump price structure to account for SONARA’s switch from producer to marketer and introducing an auction-based process for refined oil imports.
  - Introducing flexible fuel prices in the medium term should be accompanied by a targeted program for vulnerable households; authorities plan a time-bound plan to phase out fuel subsidies with World Bank support.

### SOEs, arrears, and contingent liability management
- SOEs’ performance deteriorates partly due to overhang of government arrears; planned audits of four SOEs with World Bank cooperation to inform performance contracts (December SB).
- Authorities will complete an inventory of cross-debts with SOEs and adopt a plan to clear cross-debts (proposed March SB).
- Authorities will prepare an audit of government arrears accumulated prior to 2019 and transfer audited arrears to the Debt Management Agency (CAA) for management (proposed May SB).
- Staff recommended focusing arrears clearance on priority arrears with significant growth impact, high interest costs, and reputational or legal risks.

### Debt sustainability and borrowing limits
- Updated Debt Sustainability Assessment indicates Cameroon remains at high risk of debt distress; update integrates rescheduling of debt service with China and projected impact of the SONARA fire.
- Public debt projected to peak in 2020 and decline thereafter; debt stock indicators remain below thresholds though external debt service thresholds breaches under the baseline have become more severe.
- Disbursement planning and non-concessional borrowing limits:
  - Disbursement limit for non-concessional financing set at CFAF 312 billion for end-March.
  - Ceiling for new non-concessional borrowing set at CFAF 0 through June 2020, adjustable upward up to CFAF 300 billion exclusively for projects specified in Text Table 1 of the TMU.
  - In authorities’ debt strategy, ceilings set at CFAF 350 billion for new non-concessional borrowing for 2020 and CFAF 300 billion for concessional borrowing, focusing on critical projects and shifting towards concessional financing.

*Source: Cameroon: IMF staff report text (Revenue mobilization and related fiscal sections).*

### 38.      The authorities agreed with the need to shift towards concessional financing and

### 1cmrea2020001 - 38.      The authorities agreed with the need to shift towards concessional financing and

### Preserving Monetary and Financial Stability
- Foreign exchange repatriation reached CFAF 2,313 billion during Q1-Q3 2019, a 44 percent increase from the 2018 figures (y/y).
- Cameroon’s NFAs at the BEAC stood at 1,995 billion at end-September 2019 and are projected to rise in Q4, supported by delayed donor budget support and strict enforcement of the regulations.
- The authorities transmitted contracts that grant FX exemptions to mining and oil companies to the BEAC (Prior Action) and committed to align the new Cameroon Petroleum Code with the BEAC FX regulation (MEFP ¶31).
- Banking system metrics and risks:
  - Capital adequacy ratio: 10.2 percent at end-2018 (below the CEMAC average of 16.3 percent and the regulatory minimum of 10.5 percent).
  - Ratio of liquid assets to short-term liabilities: 160 percent, close to CEMAC's average, but liquidity concentrated in foreign banks.
  - Nonperforming loans (NPLs): share in total loans has continued to increase for the fourth consecutive year.
  - Credit to the real economy declined by -0.5 percent between end-May and end-August 2019.
- SONARA-related vulnerabilities:
  - SONARA declared a unilateral moratorium on its debt following the fire that destroyed its refinery; future banking exposures to SONARA are uncertain.
  - A full provisioning of exposures to SONARA in accordance with COBAC’s regulation would require 150 b illion provisioning requirements within two years, out of a total regulatory capital of 280 b illion for the entire banking system.
  - The mission supported banks’ decision not to pay dividends this year; reprofiling with repayment over five fiscal years is proposed by SONARA and an agreement is expected before end-2019 (MEFP 30).
- Banking sector remediation and reform:
  - Authorities tasked a committee to submit restructuring plans for two private ailing banks to the Minister of Finance by end-2019; options minimize costs to the State and preserve financial inclusion.
  - Existing shareholders to be invited to recapitalize, subject to COBAC’s "fit and proper" criterion; NPL portfolio transfers and injection of public funds only after shareholders fully absorb losses.
  - National asset management corporation (SRC) mandates for NPL recovery remain outstanding for some portfolios; absence of a mandate reduces recovery incentives and value of NPLs over time.
  - National NPL reduction plan requires full implementation: enforcement of bank foreclosure, operationalization of Courts of Commerce law, and expansion of the registry of movable collateral reporting (registry contains more than 23 billion entries but only one bank currently reports).
  - Government planned recapitalization of the loss-making SME bank in the 2020 budget: CFAF 5 billion; new business model to reorient toward indirect financing and co-financing; final version to be submitted to the bank’s Board (reprogrammed March 2020 SB).

### Enhancing Governance and the Business Climate
- Structural reform priorities identified to promote private development and jobs-rich growth:
  - Strengthen fight against corruption, diversify exports, improve public-private partnership frameworks, facilitate access to agricultural credit, promote IT investments, attract FDI, reduce subsidies and arrears, improve education and healthcare.
  - Modernize legal framework, including enacting an anti-corruption law, to promote foreign investment and private sector development.
- Transparency and compliance measures:
  - Strengthen compliance with Extractive Industries Transparency Initiative (EITI) and AML/CFT international standards to attract private foreign investment.
  - A new EITI validation round will start by end-2019; authorities encouraged to implement remaining EITI recommendations.
  - A national AML/CFT risk assessment was launched in November 2018 with World Bank support; staff recommended mobilizing AML/CFT to support anti-corruption efforts, including guidance on politically-exposed persons, supervising high-risk sectors, and timely access to beneficial ownership information.

### Program Modalities, Debt, and Financing
- Continuous program conditionality and adjustments:
  - Waiver requested for nonobservance of one continuous PC: external arrears accumulation related to unbudgeted debt service on a loan on-lent to SONARA totaling CFAF 43.4 billion since the fourth review; arrears were repaid in full before end-November.
  - Modifications supported to the end-December 2019 PC on the non-oil primary balance to mitigate SONARA shock impacts.
  - Modification of the continuous PC on contracting new non-concessional external debt for 2020: allow adjusting the zero ceiling up to CFAF 300 billion for critical projects lacking concessional funding.
- Prior actions and benchmarks:
  - Two prior actions for the fifth review completed: (i) submission of a 2020 budget in line with program objectives; (ii) transmission of contracts signed with oil and mining companies to the BEAC.
  - Missed SB on resolution plans of two ailing banks proposed to be reprogrammed at end-January 2020; other missed SBs reprogrammed at end-March 2020.
  - New SBs for March 2020 to (i) facilitate evaluation of SONARA’s restructuring options; (ii) identify SOEs’ cross-debts and develop a plan to clear cross-debts with government; (iii) audit and plan to clear audited government arrears prior to 2019.
  - Recurrent SBs on quarterly reconciliations of import declarations and scanner images and on quarterly reports of balances payable and arrears proposed to be moved to the TMU data requirements.
- Non-concessional borrowing policy:
  - 2020 program ceiling on contracting new non-concessional loans set at CFAF 0 for 2020, adjustable up to CFAF 300 billion on an exceptional basis for projects critical to national development (MEFP and Text Table 8).
  - Authorities identified a list of key projects where concessional loans are not available and committed to contract only loans for these key projects (TMU Text Table 1).
- Regional monetary policy and safeguards:
  - BEAC and COBAC implemented policy commitments from updated June 2019 Follow-up to the Letter of Support; BEAC’s tight monetary stance and fiscal consolidation by CEMAC member states helped exceed the end-June 2019 NFA projection by about € 800 million.
  - BEAC commits to maintain tight monetary policy and to start liquidity absorption operations in January 2020.
  - BEAC progressing toward full transition to IFRS for FY 2019 and accelerating revisions to secondary legal instruments for alignment with the BEAC Charter.
- Financing and repayment capacity:
  - Program fully financed through May 2020.
  - Budget support of CFAF 271 billion for 2019 from the World Bank, AfDB, France and EU is on track (Text Table 9).
  - Only budget support from the Fund is expected in H1-2020.
  - Repayments under the ECF-supported program will remain less than 0.3 percent of GDP during the program period (Table 10).

### Staff Appraisal — Key Findings and Recommendations
- Regional leadership and policies:
  - Cameroon’s leadership role in CEMAC’s regional adjustment is critical; staying the course on fiscal consolidation and strict enforcement of BEAC FX regulation will strengthen CEMAC resilience to commodity volatility.
  - Staff welcomes authorities’ commitment to share oil and mining contracts with BEAC and align the new Petroleum Code with BEAC’s FX regulation.
- Fiscal and revenue policy recommendations:
  - Maintain program’s consolidation path; continue broadening non-oil revenue base, reduce discretionary tax exemptions, combat tax fraud and evasion, enhance tax and customs administration, rationalize civil service payroll.
  - Finalize TSA reform to support active cash management and contain new arrears; streamline budget execution to strengthen fiscal transparency and credibility.
- SOE and contingent liability management:
  - Urge authorities to address short-term financial and fiscal risks associated with SONARA promptly; weigh costs and benefits of restructuring options.
  - Successful corporate restructuring and reform of the fuel price structure are key to SONARA’s medium-term viability.
  - Phase-out of fuel subsidies should be gradual and accompanied by targeted protection for vulnerable households.
  - Proceed with audits of large SOEs (with World Bank support) and resolve SOEs’ cross-debts to reduce contingent liabilities.
- Debt management and borrowing:
  - Limit non-concessional borrowing to safeguard debt sustainability; staff welcomes commitment to restrict new non-concessional borrowing to critical projects lacking concessional financing.
  - Anchor debt policies within a prudent medium-term debt management framework.
- Financial sector and NPLs:
  - Strengthen contract enforcement, accelerate resolution of NPLs and ailing banks to make financial intermediation an engine of growth and inclusion.
  - Further diversify exports and enhance investment efficiency to unlock long-term growth.
  - Improve compliance with EITI recommendations and AML/CFT standards to enhance governance and stimulate foreign private investment.

*Source: 1cmrea2020001 - 38.      The authorities agreed with the need to shift towards concessional financing and*

### 61.      Based on Cameroon's performance under the program, and the adequate

### 1cmrea2020001 - 61.      Based on Cameroon's performance under the program, and the adequate

### Program review, conditionality, and Fund staff recommendations
- Staff supports the authorities' request for the completion of the fifth review under the Extended Credit Facility (ECF).
- Staff supports the authorities’ request for a waiver of nonobservance of the continuous PC on the non-accumulation of new external payments arrears on the grounds of corrective actions taken by the authorities.
- Staff supports the authorities’ request for modifications of:
  - (i) the end-December 2019 PC on the non-oil primary balance; and
  - (ii) the 2020 continuous PC on new non-concessional external debt contracted or guaranteed by the government (modified definition).
- Staff proposes that the completion of the sixth ECF review be conditional on the implementation of critical policy assurances on NFAs at the union level, as agreed in the December 2019 union-wide staff report.

### Real sector developments (high-level findings)
- Growth remained resilient, led by the oil, construction and services sectors and supported by strong domestic investment.
- Inflation trending upward with strong regional variations (consumer prices, 2015M6–19M6).
- Export and import dynamics:
  - Oil exports have increased while imports have risen, particularly of oil products.
  - Export volume and import volume trends shown in figures for 2016M6–19M9.

### Fiscal developments and consolidation challenges
- Fiscal consolidation faces headwinds; non-oil revenue deteriorated in H1.
- Unpaid government obligations are shrinking, while reliance on net foreign financing persists.
- Public debt includes more concessional new external financing and capital spending began to decelerate.
- Selected fiscal indicators (percent of GDP, from Table 2b):
  - Overall balance (payment order basis) excluding grants: -5.2, -2.9, -2.5, -2.7, -1.9, -2.6, -2.1, -1.9, -1.7, -1.7 (series across 2017–24).
  - Overall balance (cash basis) including grants: -4.5, -3.3, -3.1, -3.2, -2.3, -2.6, -1.9, -1.6, -1.6, -1.6 (series across 2017–24).
  - Non-oil primary balance (payment order basis, percent of non-oil GDP): -6.1, -4.1, -3.5, -3.9, -2.6, -3.2, -2.5, -2.1, -2.1, -1.9 (series across 2017–24).
  - Stock of public debt (percent of GDP): 37.7, 39.5, 39.5, 40.8, 39.0, 40.8, 40.4, 39.8, 39.1, 38.2 (series across 2017–24).

### External sector and balance of payments
- Overall balance of payments remained positive and BEAC reserves are recovering.
- Trade balance projected to remain weak; mineral products drive import increases.
- Selected external indicators (from Table 3):
  - Current account balance excluding official grants (percent of GDP): -3.0, -4.0, -4.0, -4.1, -3.8, -4.1, -3.9, -3.8, -3.6, -3.5 (series across 2017–24).
  - Trade balance (percent of GDP): -0.6, -1.4, -1.3, -1.4, -1.4, -1.7, -2.0, -2.3, -2.4, -2.4 (series across 2017–24).
  - Oil exports (percent of GDP): 4.0, 4.8, 4.5, 5.3, 4.2, 4.9, 4.3, 3.8, 3.5, 3.2 (series across 2017–24).

### Monetary and financial sector developments
- Broad money growth continued in 2019 Q2 but credit to the economy slowed; banks' liquidity remains high and refinancing from BEAC has declined.
- Financial soundness (2014–18, selected indicators):
  - Capital/risk-weighted assets: 11.4, 10.1, 9.0, 10.3, 10.2 (2014–2018 series).
  - Non-performing loans/total loans: 9.7, 9.3, 10.7, 10.8, 12.4, 9.1, 14.8, 19.9 (panel shows deterioration by 2018).
  - Return on Assets (ROA) around 0.7–0.8 across years; Return on Equity (ROE) showed variability (table values).

### Key macroeconomic projections and indicators (selected series from tables)
- GDP at constant prices (annual percentage change): 3.5, 4.1, 4.2, 3.9, 4.5, 3.8, 4.1, 4.2, 4.5, 5.0 (series across 2017–24).
- Consumer prices (average): 0.6, 1.1, 2.1, 2.4, 2.2, 2.4, 2.0, 2.0, 2.0, 2.0 (series across 2017–24).
- Broad money (M2) annual change: 5.9, 9.8, 6.1, 7.1, 5.9, 7.2, 6.0, 6.2, 6.5, 6.6 (series across 2017–24).
- Public investment (percent of GDP): 8.6, 6.9, 6.6, 6.3, 6.3, 6.2, 6.2, 6.2, 6.2, 6.2 (series across 2017–24).

### Risk Assessment Matrix — main risks and recommended policy responses
- Rising protectionism and retreat from multilateralism (Relative Likelihood: Medium; Impact: High).
  - Recommended: Support CEMAC regional integration on free flow of goods and people; encourage further cooperation to remove obstacles for intra-regional trade; promote export diversification.
- Sharp tightening of global financial conditions / sustained rise in risk premium (Relative Likelihood: Medium; Impact: Medium).
  - Recommended: Improve CEMAC integration and economic relationship with Nigeria; improve business environment; implement structural reforms; support inclusive growth.
- Weaker-than-projected global growth (Relative Likelihood: Medium; Impact: High).
  - Recommended: Improve regional integration; implement structural reforms to improve business climate and competitiveness.
- Sizable deviations from baseline energy prices (Relative Likelihood: Medium; Impact: High).
  - Recommended: Widen the non-oil tax base, increase efficiency of the national oil refinery (SONARA) and spur competition in the oil import sector.
- Cyber attacks (Relative Likelihood: Medium; Impact: Medium).
  - Recommended: Enhance investment in IT system and increase awareness of cyber security.
- Spillovers from other CEMAC countries; regional security and refugee/IDP pressures; contingent risks from state-owned enterprises including SONARA; reform fatigue before elections — all identified as Medium–High risks with specific recommendations such as coordinating buffers, curtailing unproductive public investments, strengthening budget execution control, and enhanced monitoring and timely reporting of SOE risks.

*Source: Cameroonian authorities; BEAC; and IMF staff estimates, projections, and staff report excerpts contained in the provided content.*

### 1. Total financing requirement8871,1551,3301,3301,2471,3511,5171,627

### 1. Total financing requirement8871,1551,3301,3301,2471,3511,5171,627

### Total financing requirement (components)
- Current account deficit: 541778825866869902943961
- Debt amortization: 135210343302307366507514
  - Commercial banks
  - Corporate sector
- Repayment to the Fund (net): -151-70150003350
- Change in gross reserves (increase=+): 363237147161718334102

### Total financing sources (summary)
- Total financing sources: 8881,1551,0141,1681,2471,3511,5171,627
- Capital transfers: 6591282931333538
- Foreign direct investment (net): 458365404497528575620639
- Portfolio investment (net): 14-16131415151616
- Debt financing: 370640569627673728846934
- Public sector: 9201,036852767793818896964
- Short-term debt: -549-396-283-140-120-90-50-30
- Errors and omissions: -2076000000

### Total financing needs and identified sources (Table 8 aggregated items)
- C = A + B Total financing needs: 1,4859981,4451,2789878031,0531,071
- D. Identified sources of financing: 1,4769981,1301,1169888031,0531,071
- E = C - D Financing gap: 003161620000
- F. Exceptional external financing: 00271720000
  - Multilateral: 00205720000
  - Bilateral: 006600000
- E - F Residual financing needs: IMF -ECF 0045900000
- Expected financing (detailed): 27172
  - AFDB: 660
  - WB: 11756
  - France: 660
  - EU: 2316
- Residual financing gap: 4590
- IMF ECF financing: 4590

### Gross fiscal financing needs, 2017–2024 (selected line items from Table 8)
- A. Overall fiscal deficit (cash basis, including grants): 915708723630480440454485 (by year: 2017 2018 2019 2020 2021 2022 2023 2024)
- B. Other financing needs: 570290722648507363599587
- Amortization (including arrears): 206290722648507306541529
  - External: 151226358302307366540564
    - o/w Amortization (excl. IMF): 135210343302307366507514
    - o/w Repayment of IMF credit: 1715150003350
  - Domestic: 5564364346200-601-35
    - o/w Amortization of T-bills: 3664364346200-601-35
    - o/w Amortization of Bonds: 190000000
- Banking System items (selected): 3640000585858; Repayment of statutory advances: 00000585858; Other deposits: 3640000000

### Identified financing sources (Table 8 detail)
- External drawing (project financing (ext.)): 9201,036852767793818896964 with o/w Project financing (ext.) 742711852767793818896964
- Domestic financing components: 557-37278349195-15157107
  - Banking System: 558325429476367-1513392
  - BEAC Statutory advances: 3460000000
  - IMF withdrawal: 15070
  - Government deposits: 0135-85-3016-554240
  - Bank loans: 31118504508353409155
  - Other bank financing: 31310-2-200-3
  - Other non-bank financing: -1.1-362-151-127-17202415
  - Privatization receipts: 00000000

### Errors and omissions and exceptional financing
- Errors and omissions: 00000000 for financing gap reconciliation
- Exceptional external financing (F): 00271720000
  - Multilateral: 00205720000
  - Bilateral: 006600000

### Proposed Schedule of Disbursements Under the ECF Arrangement (Table 9, SDR Millions)
- 6/26/2017: 124.2 — 45 percent of quota — Executive Board approval of the ECF arrangement.
- 12/15/2017: 82.8 — 30 percent of quota — Observance of continuous and end-June 2017 performance criteria, and completion of the first review.
- 6/30/2018: 55.2 — 20 percent of quota — Observance of continuous and end-December 2017 performance criteria, and completion of the second review.
- 12/15/2018: 55.2 — 20 percent of quota — Observance of continuous and end-June 2018 performance criteria, and completion of the third review.
- 6/15/2019: 55.2 — 20 percent of quota — Observance of continuous and end-December 2018 performance criteria, and completion of the fourth review.
- 12/15/2019: 55.2 — 20 percent of quota — Observance of continuous and end-June 2019 performance criteria, and completion of the fifth review.
- 5/31/2020: 55.2 — 20 percent of quota — Observance of continuous and end-December 2019 performance criteria, and completion of the sixth review.
- Total: 483.0 SDR million — 175 percent of quota

### Capacity to Repay the Fund (Table 10 highlights, selected figures)
- Principal (SDR millions, selected years): 20.7; 19.9; -; -; 41.4; 63.5; 74.5; 74.5; 74.5; 33.1; 11.0; -; -; -; -
- Charges and interest (SDR millions, selected years): 0.6; 0.4; -; 1.3 (recurrent for multiple years)
- Outstanding Fund credit (SDR millions): 245.7; 336.2; 372.6; 483.0; 483.0; 483.0; 441.6; 378.1; 292.6; 196.0; 99.4; 44.2; 11.0; 0.0; 0.0; 0.0; 0.0
- Outstanding Fund credit (CFAF billions): 198.4; 259.5; 302.5; 393.0; 389.2; 386.3; 351.2; 298.5; 231.0; 154.7; 78.4; 34.9; 8.7; 0.0; 0.0; 0.0; 0.0
- Net use of Fund credit (SDR millions): 186.3; 90.5; 36.4; 110.4; 0.0; 0.0; -46.9; -69.0; -91.1; -96.6; -96.6; -49.7; -27.6; -5.5; 0.0; 0.0; 0.0
- Memorandum items (CFAF billions, selected series):
  - Nominal GDP: 20,328; 21,493; 22,714; 24,022; 25,370; 26,857; 28,497; 30,378; 32,487; 34,778; 37,278; 39,983; 42,914; 46,089; 49,526; 53,245; 57,272
  - Exports of goods and services: 3,794; 4,072; 4,270; 4,354; 4,370; 4,408; 4,490; 4,613; 4,795; 5,019; 5,268; 5,546; 5,853; 6,193; 6,568; 6,980; 7,433
  - Government revenue: 3,040; 3,451; 3,716; 3,651; 3,903; 4,118; 4,324; 4,613; 5,012; 5,391; 5,811; 6,212; 6,664; 7,145; 7,689; 8,258; 8,939
  - Debt service: 234; 262; 306; 314; 325; 351; 524; 548; 597; 507; 528; 522; 545; 561; 585; 629; 680
  - CFA francs/SDR (period average): 807.3; 771.6; 811.8; 813.6; 805.9; 799.9; 795.3; 789.5; 789.5; 789.5; 789.5; 789.5; 789.5; 789.5; 789.5; 789.5; 789.5

### Annex I — Major Projects in Cameroon’s Development Strategy (summary)
- Strategic context:
  - Government launched major infrastructural projects in 2010 under “vision 2035” with objectives: reduction of poverty, make Cameroon a middle-income and industrialized country, promote democracy, and improve governance by 2035.
- Definition and first-generation major projects:
  - Major project: investment cost at least 1 percent of annual budget spending and provides long-term growth spillovers.
  - Eleven main first-generation projects: (i) the Lom Pangar dam, (ii) the Memve’ele hydroelectric plant, (iii) the Kribi port complex, (iv) the Wouri second bridge, (v) the Yaoundé-Douala highway, (vi) the Kribi gas plant, (vii) construction of chemical fertilizer factories, (viii) extension of the optical fiber network, (ix) construction of new aluminum smelters, (x) development of agricultural complexes, (xi) construction of 1000 kilometers of railway.
- Financing of first-generation projects (as of June 2019):
  - Financing support contracted from partners: at least 1195 billion CFA
  - Cameroon own funding: 348 billion CFA
  - Note: amounts do not include the cost of the optical fiber network extension and costs of non-started projects.
- Project status (as of June 2019, Table 1):
  - Lom Pangar dam: Completed: operational since 2016.
  - Wouri second bridge: Completed: the bridge is open to traffic.
  - Kribi gas plant: Completed: The construction ended in 2013; phase 2 (114 Mw additional capacity) is in progress.
  - Kribi port complex (phase 1): Completed: phase 1 completed in 2016; highway to town 90 percent complete.
  - Memve’ele hydroelectric plant: Almost completed: distribution lines ongoing; expected completion by end 2019; test phase thereafter.
  - Yaoundé-Douala highway (phase 1): In progress: 68 percent of 60 kilometers completed; project likely requires an extension; at 95 percent of initial timeline.
  - Extension of the optical fiber network: In progress: 12000 kilometers installed.
  - Construction of a chemical fertilizer factories: Not started yet: no timeline or financing information.
  - Construction of new aluminum smelters: Not started yet: no timeline or financing information.
  - Development of agricultural complexes: Not started yet: no timeline or financing information.
  - Construction of 1000 kilometers of railway: Not started yet: no timeline or financing information.
- Implementation constraints observed:
  - Delays in procurements due to administrative procedures and lack of procurement law knowledge.
  - Poor quality of feasibility studies and lack of financing for studies.
  - Non-coordination among stakeholders, overlap of operational scopes, lack of information sharing.
  - Public financing constraints from budgetary unpreparedness and lower than expected public finance mobilization.
  - Accumulation of arrears to local contractors and weak supply from local contractor services.
- Authorities’ recommendations for second-generation projects (2020–2030):
  - Improve project preparedness.
  - Promote PPPs.
  - Create an independent committee for feasibility study validation.
  - Simplify administrative procedures related to population compensations.
  - Award contracts to local companies with capacity assistance agreements with foreign companies.
  - Allocate resources from government bonds to projects.
  - Target a realistic number of major projects in accordance with development priorities.
  - Prioritize completion and complementation of first-generation projects before launching second-generation projects.
  - Improve clarity and regulation on project selection, management, implementation, infrastructure usage and maintenance.
  - Improve governance, business climate, and address security-related risks.

*Source: IMF staff estimates and projections.*

### Appendix I. Letter of Intent

### Appendix I. Letter of Intent

### Program performance and recent compliance

- The Government of Cameroon continues implementing its Economic and Financial Program supported by a three-year arrangement under the IMF’s Extended Credit Facility (ECF) for the period 2017-2020.
- Overall performance under the ECF is described as "broadly satisfactory."
- All quantitative performance criteria for end-June 2019 were observed.
- The continuous performance criterion on external arrears was not met since July 18, 2019 due to liquidity pressures from revenue shortfalls and delays in budget support; arrears of 43.4 billion CFA (CFAF 43.4 billion) were repaid in full before end-November.
- Indicative targets performance: four of five June targets were not met. Specific misses included:
  - The floor for non-oil revenues not met due to a smaller than anticipated taxable base, persistent tax debt of public enterprises, and the impact of the SONARA fire on its tax obligations.
  - The floor for social spending was not met owing to delays in recording revenues earmarked for education and health.
  - The ceiling on net accumulation of domestic payments arrears was not met.
  - The share of total expenditures executed by exceptional procedures, excluding debt, was reduced by 1.5 percentage points but did not meet the program target.
- Implementation of structural reforms: completion of 5 of the 13 structural benchmarks for January to November 2019; two benchmarks implemented with delay; others in progress.

### Waiver and amendment requests

- The government requests a waiver for the failure to observe on time the continuous performance criterion on accumulation of external arrears.
- The government requests amendment of the quantitative performance criterion on the floor for the non-oil primary fiscal deficit (payment order basis) for December:
  - Original: CFAF 760 billion.
  - Requested revised floor: CFAF 851 billion.
  - Resulting overall deficit target: 2.3 percent of GDP (versus 2 percent indicated in the supplementary budget law).
- The government requests modification of the definition of the continuous performance criterion on contracting or guaranteeing non-concessional external debt for 2020, as indicated in Table 1 of the MEFP.
- The government requests conclusion of the fifth review of the arrangement under the ECF and the disbursement of SDR 55.2 million.

### Fiscal execution and 2019 outcomes

- Non-oil revenues in H1 2019 were 0.2 percent of GDP lower than projected in the fourth review due to weak activity in high-tax sectors, delayed tax measures, the SONARA fire, lower import growth after new foreign exchange regulations, and accumulation of government tax debt on imports under externally financed contracts.
- The revenue shortfall was more than offset by slower expenditure execution (goods and services and domestically financed investment), resulting in:
  - Overall deficit estimated at 0.2 percent of GDP (versus 0.9 percent in the program).
  - Cash flow deficit of 1.0 percent of GDP due to larger repayments of earlier arrears, primarily financed by net foreign borrowing.
  - Net deposits at the BEAC built up equivalent to 0.5 percent of GDP.
- Current account deficit remained around 4.7 percent of GDP in H1 2019 (versus 4.8 percent in H1 2018).
- Broad money increase accelerated to about 15 percent at end-June 2019 (versus 13.7 percent at end-2018).
- Net foreign assets rose 12 percent in the first half of 2019.
- Growth projections and sector outcomes:
  - Growth in 2019 expected to reach 3.9 percent (as against 4.1 percent in 2018).
  - Oil sector growth 6 percent in 2019.
  - Non-oil sector growth projected 3.6 percent in 2019 (down from 4.4 percent in 2018).

### Structural reforms and implementation status

- Progress on 13 structural benchmarks (January–November 2019):
  - 5 benchmarks met.
  - 2 implemented with delay.
  - Others progressing with targeted completion by end-March 2020.
- Specific reforms and actions in progress:
  - Revision and simplification of the fuel price structure; authorities opted for an import-based price structure after the SONARA fire.
  - Adoption of a resolution plan for two distressed banks; restructuring plans approved by Extraordinary General Meetings of Shareholders in November 2019 and submitted to COBAC.
  - Completion of diagnostic studies of four large public enterprises:
    - CAM S AIR-Co: opening of tender offers on December 20.
    - CAMWATER: draft tender dossier validated by CTR special procurement committee and sent to the Central Commission for Public Contracts Control (CCCMP).
    - SONARA: bids consulted and opening of offers on December 20, 2019.
    - PAD and CAMTEL diagnostic study processes noted as underway with World Bank-funded steps.
  - Expansion of the Treasury Single Account (TSA):
    - Circular by Minister of Finance referencing Article 79(1) of Law No. 2018/012 of July 11, 2018 mandating public resources be collected and managed and paid into a single account at the BEAC.
    - Summary report on government deposits in commercial banks produced.
    - BEAC requested in September 2019 to open subaccounts for centralizing accountants and some public entities; operating agreement for subaccounts forwarded to BEAC for signature.
  - Adoption of a business model by the SME Bank (BC-PME): study on SME financing needs completed; government will propose a viable economic model for BC-PME based on predominantly indirect financing by March 2020.

### Macroeconomic framework and medium-term outlook

- Growth outlook:
  - 2019 growth expected to reach 3.9 percent, driven by hydrocarbons (oil and gas).
  - Hydrocarbons production expected to grow by almost 6.0 percent in 2019 following the Kribi floating gas plant entry into service.
  - Over 2020–22, oil sector growth expected to slow due to declining oil production.
  - Non-oil sector growth expected to improve gradually to close to 5 percent in 2022.
- Drivers supporting non-oil growth include:
  - Performance of agri-food, manufacturing and chemical industries, and wood processing.
  - Road infrastructure rehabilitation and construction; completion of works for the 2021 Africa Cup of Nations.
  - Improvement in energy supply with hydroelectric dams and SONATREL distribution infrastructure.
  - Development programs for coffee, banana, cotton and rubber.
  - Measures to increase production and productivity of food crops.
  - Anticipated easing of tensions in regions with security problems.
- External and fiscal outlook:
  - Continued fiscal consolidation and repatriation of export proceeds expected to support current account improvement and rebuild international reserves over 2020-24.
  - Current account deficit expected to stabilize at around 3 percent of GDP in the medium term.
  - Net foreign assets expected to grow at an average annual rate of 1.4 percent.
  - Risks: rapid accumulation of non-concessional debt and limited fiscal/export revenue bases could make public debt trajectory unsustainable if slippage occurs.
- Risks to the outlook:
  - External risks: international trade tensions, slower global growth, commodity price volatility.
  - Domestic risks: deterioration of security problems in northwestern and southwestern regions, worsening socio-political climate around upcoming legislative and municipal elections.

### Government commitments and monitoring

- The government commits to:
  - Successfully implement the program for the remainder of the year and timely service all external loans, including on-lent loans to public enterprises.
  - Continue implementing structural benchmarks and respect amended quantitative benchmarks and criteria for end-December 2019.
  - Close monitoring of budget execution, control recourse to exceptional expenditure procedures and provisional commitments and cash advances, and identify contingent revenue and expenditure measures to meet fiscal targets for 2019 and improve fiscal transparency in 2020.
  - Make up delays in implementing structural benchmarks and ensure implementation of all planned measures for end-March 2020.
  - Support BEAC and COBAC efforts to improve compliance with new foreign exchange regulations and ensure repatriation of export proceeds, particularly oil revenues; all mining and oil contracts signed by the government have been forwarded to the BEAC.
- Reporting and transparency:
  - The MEFP attached to the letter describes the 2019 situation and policies for 2020 and establishes quantitative criteria, indicative targets and structural benchmarks through June 25, 2020.
  - The government undertakes to regularly report all required information to the IMF by established deadlines in accordance with the Technical Memorandum of Understanding (TMU).
  - The government confirms agreement with publication of this letter, the MEFP, the TMU, and the IMF Staff Report on this program.

*Source: Appendix I. Letter of Intent (Supplementary Memorandum of Economic and Financial Policies), January 7, 2020.*

### 11.      Given the fiscal outturn for the first nine months of this year, some of the initial

### 11.      Given the fiscal outturn for the first nine months of this year, some of the initial

### Fiscal outturn and 2019 supplementary budget
- Supplementary budget approved in June 2019 aims to limit the overall fiscal deficit, payment order basis, to 2 percent of GDP.
- Supplementary budget includes revenues equivalent to 15.7 percent of GDP, including 2.3 percent for oil revenues and 13.6 percent for non-oil revenues.
- Non-oil revenues collected through end-September 2019 show a shortfall equivalent to 0.8 percentage point of GDP, explained by weakness of the taxable base and accumulation of fiscal arrears by SONARA vis-à-vis the DGD and the DGI.
- Netting during Q4 2019 of cross-debts between the state and companies in the oil sector will help reduce this shortfall but operations require order entries (écritures d’ordre) that will lead to an increase in transfers and subsidies of 0.5 point of GDP.
- Fiscal regulation measures to contain other current expenditures and domestically financed capital expenditures will help limit the overall fiscal deficit (payment order basis) to 2.3 percent of GDP, in contrast to the 2.0 percent projected in the supplementary budget law.

### 2020 budget law: targets and constraints
- 2020 budget law calls for a fiscal deficit (payment order basis) of 2.1 percent of GDP.
- Law projects total revenues equivalent to 14.8 percent of GDP.
- Anticipated decline in oil production expected to lead to a drop in oil revenues of 0.5 percentage point of GDP.
- Total expenditures projected in this budget law are 0.8 percentage point lower than in 2019 (excluding the opérations d’ordre), owing to anticipated savings on the wage bill and reductions in subsidies and transfers.
- Capital expenditures will be held steady at about 6.3 percent of GDP.
- Given limited budgetary support expected in 2020, repayment of arrears will be reduced below the level anticipated in the fourth review.
- Authorizations for net issuance of public securities in the 2020 budget law total CFAF 320 billion.

### Budget execution controls and transparency measures
- Publish a 2019 budget execution report by end-June 2020 to ensure transparency in budget execution.
- During first three quarters of the year, the share of domestically financed expenditure (excluding debt service) executed using exceptional procedures totaled 6.6 percent.
- In 2020, total volume of expenditures executed by exceptional procedures will be limited to 5 percent of total domestically financed expenditures (excluding debt service). Operations involving imprest accounts (régies d’avances) should be excluded from this calculation.
- Government to speed up effective implementation of laws on the Code on Transparency and Good Governance in Fiscal Management in Cameroon and the Financial Regime for the government and other public entities in accordance with the CEMAC directives.
- Direct interventions will be maintained at a maximum of CFAF 140 billion in 2020; 2020 budget law includes appropriations to cover expenditures involving direct interventions.
- Expenditures to be regularized, including those paid through direct interventions, will be regularized monthly and recorded in the fiscal recording tables (TABORD).
- Commitments will be effectively closed by end-November 2020 and payment orders by end-December 2020. The complementary period will be limited to one month after the end of the budget year.

### Contingent measures and revenue-side actions
- Government will identify and quantify contingent measures to control downside risks for revenue and maintain expenditure within 2020 budget law appropriations.
- Improve collection of tax arrears, particularly those of public enterprises and establishments and those due by the government on imports under externally financed contracts and government imports.
- Take measures to clear cross debts, particularly by means of balancing operations (opérations d’ordre).
- DGI and DGD to continue measures to expand the tax base by strengthening audits of enterprises at risk of underreporting.

### Expenditure containment and wage bill reforms
- Continue efforts to reduce government goods and services costs based on Prime Minister’s 2017 circular: reduce mission expenses and commissions, strict application of reference price list, limit exceptional procedures.
- Control rate of budgetary commitments and align commitments with revenue flows to consolidate the primary deficit reduction profile.
- Civil service wage bill reform actions: (i) discussions on remuneration in a special committee with conclusions expected in 2020; (ii) work to introduce the SIGIPES 2 application; (iii) close monitoring of payroll database suspensions for deceased civil servants and retirees, and recovery of wages already paid to accounts of the deceased.

### Fuel price policy
- Government considers revising and simplifying the existing fuel price structure to make it more transparent and reduce the weight of petroleum subsidies in the budget.
- Short-term objective: increase transparency and reduce subsidy weight.
- Medium-term: communications campaign on costs and inequities of generalized subsidies; adopt flexible prices reflecting international oil product prices and develop a program of targeted subsidies for vulnerable populations with World Bank support.

### Social spending and 2020 floors
- Fiscal consolidation will continue while protecting priority social spending.
- For 2020, in adopting its Growth and Employment Strategy, government will take decisive measures to reduce poverty and inequality and continue to increase expenditure on health and education.
- Floor for social spending for 2020 will be maintained at 3.4 percent of GDP despite sharp decrease in resources, translating to an increase from CFAF 760 billion in 2019 to CFAF 772 billion in 2020.

### Medium-term fiscal objectives
- Medium-term budget framework aligned with fiscal consolidation objective and CEMAC convergence criterion.
- Overall fiscal deficit (payment order basis) to gradually reduce and stabilize at around 1.5 percent of GDP, allowing respect of CEMAC convergence criterion (reference fiscal balance) by 2022.
- Reduction driven by improved mobilization of non-oil revenues (particularly by continuing to reduce exemptions) and greater efficiency and control over public expenditure; gradual reduction in nonpriority expenditures and better prioritization of capital expenditures.

### Structural reforms and public finances: cash and treasury reforms
- Continue and deepen cash management reforms aiming to establish a Treasury Single Account (TSA).
  - Strengthen role of cash management committee to prepare credible monthly cash forecasts based on commitment plans underpinned by procurement plans; committee will also prepare annual cash forecasts to be attached to the budget law, starting with the 2020 budget.
  - Continue efforts to close and repatriate to the BEAC bank accounts eligible for inclusion in the TSA for government departments, public agencies and institutions, and certain Caisse Autonome d’Amortissements (CAA) accounts.
  - Government asked banks to close dormant accounts and transfer balances totaling approximately CFAF 44.5 billion for 2019.
  - Total resources that can be transferred to the TSA in 2020 are estimated at a minimum of CFAF 150.5 billion.
  - Actions taken for TSA expansion: (i) sign a management agreement for the single account with the BEAC; (ii) submit a list of government accounts (and balances), excluding counterpart funds; (iii) send letters to public entities holding these accounts explaining the TSA reform and prepare a timetable for closure and repatriation.
- Continue cleaning up and reducing balances of correspondent accounts; closing of dormant correspondent accounts completed (June 2019 SB); audit of remaining correspondent accounts will continue; prohibition against making budget appropriations on correspondent accounts and against opening new accounts remains in place.
- Strengthen government financial reporting system to ensure budgetary and accounting information is complete, reliable, and timely. The TOFE is now produced on the basis of automatic links with Treasury account balances and the table of payment authorizations, validated per provisions 953, 954, and 955 of the circular of December 28, 2018.
- Improve effectiveness of capital expenditure by continuing reforms to improve project selection, planning, and execution:
  - Implementation of the decree on maturation of investment projects permits restricting inclusion in the budget to projects that are mature and for which expropriation compensations have been paid.
  - Enhance accountability of project implementation units via standardized performance contracts linking remuneration to performance indicators; contracts include preparation of quarterly reports with physical and financial implementation indicators, revision of disbursement plan, and project management expenditures.

### Revenue administration reforms (DGI and DGD)
- DGI priorities:
  - Launch reform to deepen segmentation within the DGE, reorganize Center 1 and Littoral 1, and establish specialized units for taxation of individuals in CIMEs and CDIs.
  - Reform tax treatment of small and medium-sized enterprises, including raising the VAT liability threshold to improve yield.
  - Continue computerization of tax procedures, especially renovated CDIs, to enable electronic filing and payments.
  - Strengthen tax audits: targeted audits to reduce VAT returns with credit balances; introduce automated tracking of audit procedures; rely on local and international experts via Tax Inspectors Without Borders.
  - Identify, investigate, and audit noncomplying enterprises; begin sending reminders and recovering undeclared taxes.
  - Simplify and automate procedures: electronic payments for enterprises in DGE and CIME systems; electronic filing of Statistical and Tax Declarations (DSF); registration of judicial decisions for tax purposes; automation of dispute procedure; granting of stays of collection to reduce processing time.
  - Adopt strategy for settling tax arrears of public entities and strategy to reduce stock of private enterprises’ undisputed tax arrears.
- DGD priorities:
  - Secure customs revenues through quarterly reconciliation of DGD-SGS tax bases; require inclusion of RVCs, CIVIC, and BDTs in customs declarations.
  - Prepare monthly reconciliations of revenues collected by customs with revenues paid to the Treasury (via TABORD Committee operational team).
  - Improve revenue collection by simplifying procedures, expanding electronic payments, and harmonizing tax bases.
  - Enhance information system protection by securing user profiles and interconnections; evaluate modernization of CAMCIS with stakeholders prior to operationalization of certain modules on main sites.
  - Continue CAMCIS modernization work on pilot sites prior to full migration.
  - Introduce a customs release slip required for export and import enterprises in connection with public procurement.
  - Finalize legal framework for Authorized Economic Operator and continue implementation of green channel for declarations processing.
  - Reduce costs and delays in movement of goods via phased settlement of taxes, costs, and fees of supply chain participants indicated in detailed declaration.
  - Focus anti-fraud and anti-smuggling efforts through HALCOMI III operation involving products such as vehicles, sardines, alcohol, and fabrics.
  - Continue incorporation of agreements, specifications, and other derogatory regimes in the law on promotion of private investment in Cameroon (Law 2013/004 of April 18, 2013).
  - Finalize new procedure for taxation of telephones and other terminals.

### FUSION database and joint DGI–DGD actions
- Continue joint work on the FUSION application database to improve data collection and information sharing between DGI and DGD.
- Actions to continue:
  - Continue cleanup of taxpayer database using cross-checks between DGI and DGD databases.
  - Harmonize and simplify procedures.
  - Manage derogatory regimes by stepping up joint DGI–DGD audits of enterprises that benefited from tax exemptions.
  - Continue evaluation and reduction of tax expenditures and establish a communication strategy with World Bank assistance.
  - Ensure validity of exemptions by requiring immediate transmission of MINFI-approved document to Directorate of Legislation and Disputes for processing and registration in a database at DGD central offices.
  - Prepare a procedures manual to enhance joint audit and investigation operations.
  - Strengthen data analysis system by uploading a critical mass of DSF into FUSION to facilitate automated cross-checking and identify at-risk taxpayers.
  - Implement joint controls to address shared risks, particularly in the forestry sector.

*International Monetary Fund — Cameroon chapter (excerpts).*

### 23.      Our debt policy will continue to focus on the need to avoid debt distress risks and to

### 1cmrea2020001 - 23.      Our debt policy will continue to focus on the need to avoid debt distress risks and to

### Debt policy and borrowing priorities
- Priority: avoid debt distress risks and place public borrowing on a sustainable path.
- Concessional loans will be given priority; non-concessional borrowing limited to priority projects for which no concessional financing is available and subject to program limits defined by the public debt sustainability analysis.
- The National Public Debt Committee (CNDP) will systematically examine all project financing proposals (including public enterprises and PPPs) and approve only projects meeting maturity, urgency, priority, quality of financing, fiscal sustainability, and economic relevance criteria. Only an unconditional favorable CNDP opinion will permit signing new loan agreements.
- The CNDP will ensure observance of loan operation and public debt management procedures as specified in the new manual adopted in September 2019.
- The government remains committed to not contracting new collateralized loans.

### Recent debt developments and limits on non-concessional borrowing
- Total public debt to GDP increased from 27.9 percent in 2016 to 36.5 percent at end-September 2019.
- 2019 borrowing plan: total CFAF 818 billion (including CFAF 500 billion in non-concessional loans).
- By end-September 2019, 13 loans totaling CFAF 366 billion were contracted, including 5 non-concessional loans totaling CFAF 159.9 billion.
- Non-concessional borrowing for the first half of 2020 is capped at CFAF 300 billion and strictly limited to projects listed in the TMU’s Text Table 1 (including five carryovers from 2019 and two new non-concessional loans for Olembe sports complex and East Entrance to Douala Road). Concessional loans for these two projects are not currently available.

### SENDs (expenditure not disbursed) and debt strategy
- SENDs level at end-September 2019: CFAF 3,652 billion, or 16.1 percent of GDP.
- Revised plan target: reduce existing stock of SENDs to 2.1 percent of GDP by end-2023.
- Non-concessional disbursement ceiling: 312 billion for end-March (ceiling set after trade-offs considering absorption capacity and liquidity needed to service debt).
- The government will prepare quarterly disbursement plans for all investment projects in cooperation with project managers; these plans will underpin disbursement requests in accordance with the SENDs disbursement plan.
- Audit of all arrears prior to 2019 managed by the Treasury will be carried out; audited and validated arrears will be transferred to the CAA with a specific settlement plan to be implemented by 2021.

### Public enterprises, fiscal risks, and related actions
- Accelerate implementation of reforms under Laws 2017/011 and 2017/010 of July 12, 2017 (general by-laws of public enterprises and public establishments).
- Study viability of public enterprises using diagnostic studies of CAMTEL, CAMWATER, CAMAIR-Co, and the Autonomous Port of Douala; audits of other loss-making or highly indebted public enterprises.
- Treasury to continue quarterly payments for government utility consumption (ENEO, CAMWATER, CAMTEL, SONARA) based on annual budget appropriations; reconcile payments with actual consumption at year’s end. These entities must properly discharge tax liabilities.
- Inventory as at end-December 2019 of debts between the government and the 10 public enterprises with the largest tax debts (per the 2020 Budget Green Book), and between those public enterprises themselves, to be completed by end-March 2020 (new structural benchmark).
- Onlent loans: public enterprises that benefitted must discharge contractual obligations; government to discuss recovery plans for arrears and define monitoring arrangements; for new financing, the central government will introduce greater security requirements and provisions for timely recovery of debt service, preferably before due dates.
- Plan to amend PPP law to improve transparency and avoid projects not meeting government priorities (effort included in ongoing CEMAC discussion).

### SONARA restructuring and near-term measures
- Medium-term restructuring: will be based on comprehensive analyses of costs and benefits of available options; government-approved option must be based on a credible restructuring plan accounting for financial, tax, and social implications.
- Ongoing diagnostic study to propose strategic vision and national oil refining development/recovery scenarios; final report to specify costs and benefits of restructuring options. Study completion deadline: no later than end-March 2020 (new structural benchmark).
- Near-term measures to strengthen SONARA financial sustainability:
  a. Allow SONARA to market its OTZ (zero-interest bearing) securities to improve cash position.
  b. Clear shortfalls (manques à gagner - MAGs) monthly and settle amounts owed by the government within a maximum of 90 days.
  c. Require SONARA to regularly pay taxes collected and taxes and customs duties it owes the Treasury.
  d. Guarantee SONARA a volume of oil import authorizations in line with its financial obligations.
  e. Facilitate agreement on a plan for rescheduling SONARA debts to banks and suppliers by December 31 on that basis.

### Regional monetary policy, FX repatriation, and export proceeds
- Support stabilization and restoration of BEAC reserves; implementation of October 2018 Summit recommendations increased repatriation of foreign exchange to CFAF 2,313 billion for Cameroon at end-September 2019.
- Government undertakes to ensure transparency and surrender of export proceeds by public enterprises, especially in the oil sector.
- Accounts held abroad by public enterprises: deadline to comply with new FX regulation—until December 31, 2019 for non-oil sector accounts; until December 31, 2020 for oil sector accounts.
- Government shared mining and oil contracts with BEAC and will consult BEAC staff before signing new concession or revenue-sharing contracts to ensure compliance with foreign exchange regulations; will ensure new Petroleum Code compliance with CEMAC foreign exchange regulations in cooperation with BEAC.
- Ministry of Finance is creating a computerized platform for exchange of data between BEAC, banks, and Ministry (DGTCFM-DGD) to facilitate control and monitoring of repatriation of export proceeds; an agreement on exchange of foreign trade data (commercial banks, microfinance entities, currency exchange offices, DGD, DGTCFM, and BEAC) is being elaborated.
- BEAC to impose requirements on banks, microfinance institutions, and currency exchange offices for systematic monthly transfers and aggregation of annual information on foreign trade operations as provided in the 2018 Budget Law.
- A permanent cooperation framework between BEAC and the Ministry of Finance (DGTCFM and DGD) established per the exchange regulation to evaluate implementation.

### Banking system stability and financial sector reforms
- Resolution plans for two banks in difficulty approved in November 2019 by Extraordinary General Meetings and submitted to COBAC for validation (reprogrammed structural benchmark). Plans aim at financial inclusion and minimizing fiscal costs.
- Study on SME financing requirements completed; government will propose a viable economic model for SME financing based primarily on indirect financing by March 2020 (reprogrammed structural benchmark).
- Public bank: profitable in 2018; transfer of impaired loans to Société de Recouvrement des Créances du Cameroun (SRC) and their valuation under new methodology to be completed by December 2019.
- Competitive procedures to recruit directors for the public bank by end-December 2019 so majority of Board of Directors will be independent; Audit Committee to be chaired by an independent director from March 2020.
- Ministry of Finance to ensure strict enforcement of new microfinance regulations (in place since January 1, 2018); ensure microfinance establishments meet requirements for institutional conversion, governance, and control. Status report to COBAC by end-February 2020.

### Nonperforming loans, collateral registry, and legal reforms
- Training in banking disputes: 20 judges and 10 court clerks from four major business centers completed training in March 2019; deployment in commercial divisions and assignment of banking cases underway; annual follow-ups planned and initial training offered to new magistrates every two years.
- Register of movable property collateral is operational; registration of existing stock to be completed by March 2020.
- Updated survey of overdue claims completed. By end-2019, authorities will (i) discuss with each bank classification, write-off, or recording under profits of provisioned claims; and (ii) evaluate advisability of an exceptional measure to facilitate balance-sheet cleanup.
- National Credit Council (CNC) has prepared a draft law on penalties for nonpayment of credit; text being reviewed and to be submitted to Parliament.
- Draft laws on (i) appointment of a pretrial judge in civil and commercial matters; (ii) amending law organizing the judicial system to confirm establishment of commercial courts; and (iii) establishing deposit fees, confirming right of access to justice and processing times, to be submitted to Parliament.

### Competitiveness, trade facilitation, and private sector development
- Continue support for modernization of CEMAC legal framework and implementation of new CEMAC Customs Code (approved March 2019).
- Improve electronic payment platform at Douala Port to allow payments of duties and other fees in many regions; incorporate other fees and duties to create a single payment facility for international trade charges.
- Accelerate implementation of storage facility for used vehicles less than 10 years old.
- Improve cross-border trade performance by (i) continuing migration of customs information system with interconnections with neighboring countries; (ii) eliminating intermediary transportation controls on merchandise in transit at conventional checkpoints and proposing simplified cross-border trade procedures for small traders during the first half of 2020.
- Upgrade tax procedures: simplify, modernize, and reduce cost of tax obligations through online monitoring of legal dispute processing, online issue of payment deferrals, electronic transmission of tax payment receipts, online consultation of taxpayer tax status, and cash payment of taxes by small and microenterprises at bank windows.

### Transparency, EITI, AML/CFT, and financial investigation
- Follow up on 14 recommendations of the EITI Board so Cameroon can be declared as having made significant progress in EITI implementation after the 2019 validation cycle.
- National AML/CFT risk assessment launched in November 2018 with World Bank support; component of the GABAC assessment to be conducted this year.
- BEAC exchange regulations expected to improve AML/CFT compliance.
- Government will support National Financial Investigation Agency (ANIF) to increase reporting of suspicious transactions by designated non-bank institutions and to enhance follow-up and judicial proceedings; awareness activities targeted at different players will be conducted.
- Ministry of Justice to produce dedicated statistics; judicial authorities to produce dedicated information in their annual report.

### Program arrangements and monitoring
- Government will take all measures required to achieve objectives and meet criteria presented in Tables 1 and 2 of the Memorandum and the Technical Memorandum of Understanding.
- Program subject to semiannual review, performance criteria, indicative objectives, and structural benchmarks as set out in Tables 1 and 2 and the TMU (which sets out data reporting requirements to Fund staff).
- Sixth program review based on end-December 2019 targets and objectives and should be completed by June 25, 2019 (expiration date of current program).

*IMF staff report extract from 1cmrea2020001*

### 2. New concessional external debt contracted or guaranteed by the government 8/

### 2. New concessional external debt contracted or guaranteed by the government 8/

### Key figures (table sequence in source)
- 245
- 245
- 92
- 150
- 110
- 318
- 102
- 318
- 206
- 318
- 75

### Balance of the special account for the unused statutory advances (table sequence in source)
- 227
- 227
- 232
- 214
- 217
- 202
- 206
- 189
- 207
- 177
- 159

- Sources: Cameroon authorities; and IMF staff estimates and projections.
- Note: The terms in this table are defined in the TMU. 1/ Program indicators under A are performance criteria at end-December and end-June; indicative targets otherwise.4/ Excluding ordinary credit for imports and debt relief obtained in the form of rescheduling or refinancing.
- 5/ For 2019 the adjustment will be equal to the amount of non-concessional budget support approved up to a maximum of CFAF 132 billion. For 2020 the adjustment will be equal to the amount of non-concessional budget support approved up to a maximum of CFAF 66 billion.
- 6/ From January 22nd through the end of the arrangement, the ceiling will be set at zero with an adjustor of CFAF 300 billion for macrocritical projects specified in the list in Text Table 1 of the TMU.
- 7/ This refers to payments made by the Treasury without prior authorization (issuance of payment orders, such as cash advances and provisional budget commitments), excluding debt service payments.
- 8/ On a contracting basis in accordance with the IMF's debt limits policy: http://www.imf.org/external/np/pp/eng/2014/111414.pdf.

### Definitions and measurement rules from the TMU relevant to concessional external debt
- External debt is any borrowing or debt service in a currency other than the CFA franc; this also applies to debt between countries of CEMAC.
- The relevant performance criteria apply to external debt of the government, public enterprises that receive transfers from the government, and other public entities in which the government holds more than 50 percent of the capital stakes, or any other private debt for which the government has provided a guarantee.
- Guaranteed debt: any explicit legal obligation incumbent on the government to reimburse a debt in the event of payment default by the debtor (whether the payments must be made in cash or in kind).
- Variable interest external debt (from July 1, 2019): for new variable-interest-rate loans in the form of an interest rate plus a spread, the grant component will be calculated using a reference rate for the program plus the spread (in basis points) specified in the debt arrangement, or, if applicable, at the website of the World Bank/African Development Bank.
  - The reference rate for the program for six-month USD LIBOR is 3.26 percent and will remain unchanged throughout the term of the program.
  - The six-month EURIBOR spread over the six-month USD LIBOR is negative 250 basis points.
  - The six-month JPY LIBOR spread over the six-month USD LIBOR is negative 300 basis points.
  - The six-month GBP LIBOR spread over the six-month USD LIBOR is negative 200 basis points.
  - For the interest rate on foreign currencies other than euro, yen, and sterling, the spread in respect of six-month USD LIBOR is negative 100 basis points.
  - When the variable rate is linked to a reference interest rate other than those specified above, a spread reflecting the difference between the reference rate and the six-month USD LIBOR (rounded to the nearest 50 basis points) will be added.
- Concessional external debt: External debt is considered concessional if it comprises a grant component of at least 35 percent.
  - The grant component is the difference between the face value of the loan and its present value expressed as a percentage of the face value.
  - The present value of debt at the date on which it is contractually arranged is calculated by discounting the debt service payments at the date on which the debt was arranged.
  - A discount rate of 5 percent is used for that purpose.
- The calculation of concessionality reflects all aspects of the loan agreement, including the maturity, grace period, schedule of maturities, commitment fees, and management fees. Concessionality calculations for Islamic Development Bank (IsDB) loans will reflect the existing agreement between the IsDB and the IMF.

### Related financing definitions used for program monitoring
- Domestic debt: all government debts and obligations denominated in CFA francs (includes unreimbursed balances, advances from the Bank of Central African States, Treasury bills and bonds, structured debt, domestic payment arrears, and SONARA’s domestic debt).
  - Structured debt: debt subject to a formal agreement or securitization. Under the program, structured bank debt is included in net bank credit and structured non-bank debt is reflected in non-bank financing.
    - Structured bank debt: claims of local banks on government, excluding Treasury bills and bonds; stock at end-2016 was CFAF 86.36 billion, plus direct advance arrangements.
    - Structured non-bank debt: government balances payable to local non-bank institutions, individuals, or the CEMAC that have been securitized or subject to a formal reimbursement agreement.
- Net domestic financing of the government: sum of (i) net bank credit to the government; and (ii) net non-bank financing.
  - Net bank credit to the government: change in the balance between the government’s commitments and assets with the national banking system; calculated based on data from the Bank of Central African States and subject to monthly reconciliation between the Treasury and the BEAC.
  - Net non-bank financing: includes (i) change in outstanding government securities issued in CFA francs on the regional financial market not held by the local banking system; (ii) change in outstanding structured non-bank domestic debt; (iii) privatization revenue; (iv) change in balance of correspondent bank accounts (including Account 42) and consignment accounts; and (v) change in balance of outstanding claims on government abandoned by the private sector.

*Source: Attachment II. Technical Memorandum of Understanding — Provisions of the Extended Credit Facility (2017-2020).*

### 19. Domestic payment arrears are the sum of (i) payment arrears on expenditure; (iii)

### 19. Domestic payment arrears are the sum of (i) payment arrears on expenditure; (iii)

### Definitions and composition of arrears
- Domestic payment arrears comprise:
  - payment arrears on expenditure;
  - payment arrears on structured domestic debt; and
  - unstructured debt.
- Payment arrears on expenditure:
  - Defined as "balances payable" for which the payment lag exceeds the regulatory period of 90 days.
  - Balances payable reflect the government's unpaid obligations and are defined as expenditure items for which the normal expenditure execution procedure (commitment, validation, and authorization) has been followed until they were undertaken by the public treasury, but that are still pending payment.
  - Balances payable under 90 days represent payments in progress.
  - The Treasury will monitor this information on a monthly basis to identify expenditure arrears in the stock of balances payable.
- Payment arrears on structured domestic debt:
  - Defined as the difference between the amount due under a domestic debt arrangement (defined in paragraph 11) or the reimbursement of matured Treasury securities, bills, or bonds and the amount effectively paid after the payment deadline indicated in the agreement or after the maturity date of the Treasury securities, bills, or bonds.
- Unstructured debt includes:
  - i. Unstructured debt of the CAA:
    - Includes all balances payable and liabilities of the government transferred to the Caisse Autonome d’Amortissement (CAA) that have not been subject to a reimbursement or securitization agreement.
    - The stock of unstructured debt was CFAF 113.96 billion at end-2016.
  - ii. Domestic "floating" debt:
    - Includes all of the government’s commitments for which a service was provided by a public or private service provider but that has not been subject to any budget commitment.
    - These obligations include invoices payable and not settled to public and private enterprises, but exclude tax debt deriving from debt offsetting operations with public enterprises and the execution of externally financed public procurement agreements that have not been covered by the budget as a result of insufficient budget appropriations.
    - The Directorate General of Budget will conduct a monthly assessment of these commitments in collaboration with the public treasury.

### External payment arrears
- External payment arrears are defined as external debt obligations of the government that have not been paid when due in accordance with the relevant contractual terms (taking into account any contractual grace periods).
- This performance criterion excludes payment arrears on external financial obligations of the government that are subject to rescheduling.

### Quantitative program objectives — general
- Quantitative objectives (OQs) are as specified in Table 1 of the MEFP and, unless otherwise indicated, are assessed on a cumulative basis from the beginning of the calendar year to which the quantitative objectives apply.
- The quantitative objectives and details for their assessment are provided below.

### A. Non-Oil Primary Balance (Performance Criteria)
- A floor for the non-oil primary balance (based on a commitment undertaken by the Treasury) is defined as a quantitative objective in Table 1 of the MEFP.
- The non-oil primary balance is defined as the difference between the primary balance defined in paragraph 12 and oil revenue defined in paragraph 6.
- Data consistency requirement:
  - The cumulative level of financing discrepancies in the TOFE (including errors and omissions) for a given month should not exceed 5 percent of the cumulative expenditure for that month, in absolute value.
  - If exceeded, a comprehensive reconciliation exercise for all TOFE source data will be undertaken in consultation with IMF staff.
- Cutoff date:
  - Detailed data on government financial operations indicating the primary balance, oil revenue, and the level of miscellaneous expenditure not otherwise classified will be submitted on a monthly basis within six weeks from the end of the month.

### B. Net Domestic Financing of the Government Excluding Net IMF Financing (Performance Criteria)
- A ceiling on net domestic financing of the government excluding net IMF financing is defined as a quantitative objective in Table 1 of the MEFP.
- For program requirements, net domestic financing of the government excluding net IMF financing will be net domestic financing of the government defined in paragraph 17, not including net IMF financing.
- Adjustment:
  - The ceiling will be adjusted if the disbursements in connection with external budget support net of external debt service and the payment of external arrears are below the programmed levels.
  - At the end of each quarter, if disbursements of external budget support are below (above) the programmed amounts, the relevant quarterly ceilings will be adjusted upward (downward) commensurately, within the limit of CFAF 120 billion for each quarter of 2019. This ceiling may be reviewed depending on the rate of budget aid disbursements during the year.
- Cutoff date:
  - Detailed data on net domestic financing of the government (bank and non-bank) and the status of budget support disbursements, reimbursement of external debt service, and the status of external arrears will be submitted on a monthly basis within six weeks after the end of the month.

### C. Disbursement of Non-Concessional External Debt (Performance Criteria)
- A ceiling on disbursements of non-concessional external debt is defined as a quantitative objective in Table 1 of the MEFP.
- Applicable to debt contractually arranged to finance projects, based on external debt as defined in paragraph 14 and concessionality defined in paragraph 15.
- Cutoff date:
  - Detailed information on disbursements of external debt contracted by the government must be reported within six weeks after the end of the month, indicating the date on which the loans were signed and distinguishing between concessional and non-concessional loans.

### D. Net Claims of the Central Bank on the Central Government (Performance Criteria)
- A ceiling on net claims of the Central Bank on government is defined as a quantitative objective in Table 1 of the MEFP.
- Defined as the difference between the Central Bank’s claims on government, excluding IMF financing, and cash and total deposits of the Treasury with the Central Bank, including the balance of the special account of unused statutory advances.
- The balance of this special account will be regularly monitored to maintain the objectives in Table 1 of the MEFP.
- Adjustment:
  - The ceiling will be adjusted if disbursements in connection with external budget support are below the programmed levels.
  - At the end of each quarter, ceilings will be adjusted upward (downward) commensurately within the limit of CFAF 120 billion for each quarter of 2019 if disbursements of external budget support are below (above) programmed amounts.
- Cutoff date:
  - The BEAC must report the detailed information on all financing from the Central Bank to the government and the statement on the balance of the special account of unused statutory advances within six weeks after the end of the month.

### E. Non-Accumulation of External Payment Arrears (Performance Criteria)
- A ceiling of zero on the accumulation of external payment arrears is defined as a continuous quantitative objective in Table 1 of the MEFP.
- Applies to the accumulation of external arrears as defined in paragraph 19.
- The government undertakes not to accumulate any external payment arrears on its debt, with the exception of arrears subject to rescheduling.
- Measurement:
  - This performance criterion will be measured on a cumulative basis on approval of the program and observed on an ongoing basis.
- Cutoff date:
  - Data on balances, accumulation, and reimbursement of external arrears will be reported within six weeks after the end of each month.
  - Any new external arrears should be reported immediately to the Fund.

### F. Non-Concessional External Debt Contracted or Guaranteed by the Government (Performance Criteria)
- A ceiling on non-concessional external debt contracted or guaranteed by the government is defined as a continuous quantitative objective in Table 1 of the MEFP.
- The government undertakes on an ongoing basis not to contract or to guarantee any non-concessional external debt above the ceiling indicated in Table 1 of the MEFP.
- Applicable to external debt as defined in paragraph 14, using concessionality as defined in paragraph 15.
- Also applicable to any debt guaranteed by the government that constitutes a contingent public liability and to public enterprises receiving transfers from the government, municipalities, and other public sector entities.
- Not applicable to borrowing arranged in CFA francs, Treasury bills and bonds issued in CFA francs on the CEMAC regional market, regular short-term loans from suppliers, regular import credits, loans from the IMF, or debt relief or rescheduling.
- Definitions for assessment:
  - Debt relief: restructuring of debt with the existing creditor that reduces the net present value of the debt.
  - Debt rescheduling: operations with the existing creditor that spread the average weighted maturities of financial flows without increasing the net present value.
- The ceiling applies to any new debt contracted or guaranteed per calendar year and not on a cumulative basis from the date of program approval.
- Specific temporary restriction:
  - From January 22nd to June 25th, 2020, the ceiling on new non-concessional external debt contracted or guaranteed by the government will be set at zero.
  - This ceiling will be adjusted upward exclusively for the projects specified in the authorities’ first semester 2020 project list (Text Table 1), up to a maximum of CFAF 300 billion.
- Adjustment:
  - The ceiling will be adjusted upwards to accommodate non-concessional budget support from the AfDB and France for debt management operations.
- Cutoff date:
  - Detailed information on all loans (conditions and creditors) contracted by the government must be reported within six weeks after the end of the month. The same obligation applies to guarantees issued by the government. Any signing or guaranteeing of debt should be reported immediately to the Fund.

### II. Other indicative quantitative objectives
- G. Non-Oil Revenue:
  - A floor on non-oil revenue as defined in paragraph 7 is defined as an indicative objective in Table 1 of the MEFP.
- H. Accumulations of Domestic Payment Arrears:
  - A ceiling on net accumulations of domestic payment arrears is defined as an indicative objective in Table 1 of the MEFP.
  - Domestic payment arrears covered by the Treasury are defined in paragraph 18 and do not include unstructured floating debt not covered by the Treasury.
- I. Social Expenditure:
  - A floor on social expenditure pursuant to paragraph 11 is defined as an indicative objective in Table 1 of the MEFP. These expenditure items will be monitored regularly in connection with program implementation.
- Cutoff date for G–I:
  - The data on the government's financial position as presented in the table of government financial operations, the detailed listing of revenue highlighting oil revenue, domestic payment arrears, and the status of social expenditure execution must be reported within six weeks after the end of the month.
- J. Share of Exceptional Expenditure in Total Authorized Expenditure Not Including Debt:
  - A ceiling on the share of exceptional expenditure in total authorized expenditure not including debt is defined as an indicative objective in Table 1 of the MEFP.
  - Calculated as the ratio between exceptional expenditure (expenditure excluding debt service paid without prior authorization, including cash advances and provisional commitments) and total authorized expenditure, excluding debt service, that is domestically financed (including wages).
  - Exceptional expenditure will be monitored regularly as part of program implementation.
- Cutoff date for J:
  - Monthly accounting statements showing the amount of cash advances, provisional budget commitments, and advance funds must be reported to IMF staff within three weeks after the end of each month.
  - Authorized expenditure presented in Table M1 of the table of government financial operations will be used to compute this ratio.

*Source: 1cmrea2020001 - 19. Domestic payment arrears are the sum of (i) payment arrears on expenditure; (iii).*

### 47. The quantitative data on the government's quantitative and indicative objectives will be

### 47. The quantitative data on the government's quantitative and indicative objectives will be

### Data reporting obligations and responsibilities
- The quantitative data on the government's quantitative and indicative objectives will be reported to IMF staff with the periodicity described in Table 1.  
- All data revisions will be reported immediately to IMF staff.  
- The authorities undertake to report to IMF staff any information or data not specifically addressed in this TMU, but required for program implementation, and to keep IMF staff abreast of the situation in terms of achieving the program objectives.

### List of projects under the new non-concessional borrowing limit for 2020 (Text Table 1)
- 1 Completion of the Olembe Sports Complex in Yaounde  
- 2 Project for the interconnection of electricity network between Cameroun and Chad  
- 3 Project for the development of the value chain in livestock and fish breeding  
- 4 Project for the renovation of the national center for the rehabilitation of disabled persons  
- 5 Project 25 wagons  
- 6 Project for the construction and equipment of the annex building of the Mbalmayo regional hospital  
- 7 East Entrance Douala road (phase II)  
- 8 Construction of 225 KV transmission lines between N’Gaoundéré and Tibati  
- 9 Project to build the Ebolowa-Kribi (225 KV) and Mbalmayo-Mekin (90 KV) electric power transmission lines  
- 10 Construction of a bridge over the Tildé river (Route Mora-Dabanga – Kousserie)  
- 11 Road program phase 3 (Ring Road)  
- 12 National road rehabilitation project N ° 1: Ngaoundéré-Garoua  
- 13 Logistics area of the port of Kribi: Construction of the 225 KV electric power transmission line  
- 14 Feasibility and design studies for the drinking water supply project for the towns of Buea, Tiko and Mutenguene  
- 15 Logistics area of the port of Kribi: Development of the logistics area of the port

### Summary of data reporting requirements (Table 1 — selected entries and exact periodicities/reporting lags)
- Government Finance:
  - The table of government financial operations (TOFE) and customary annex tables; (data on execution of investments financed with external grants and loans must be available in a timely manner so that the quantitative objectives of the program can be determined in a timely manner. If information on physical execution of externally financed projects is not available, the information on requests to draw funds from the donors will be used). — Ministry of Finance (MINFI) — Monthly — 6 weeks
  - Domestic budget financing (net bank credit to the government, stock of Treasury bills and bonds pending reimbursement, domestic debt reimbursement status, privatization revenue, and abandoned claims). — MINFI/BEAC — Monthly — 6 weeks
  - Implementation status of social expenditure defined in Paragraph 1. — Ministry of Economy and Finance (MINEFIN) — Monthly — 6 weeks
  - Status of balances payable for the current fiscal year (orders unpaid) making the distinction between those over 90 days and others. — MINFI — Monthly — 6 weeks
  - Domestic debt reimbursement status. — MINFI/BEAC — Monthly — 6 weeks
  - Statistics on external debt contracted and guaranteed (detailed listing of external debt service matured/paid, list of new loans specifying the financial conditions, loans guaranteed and external arrears, and list of contracts in the process of negotiation). — MINFI/CAA — Monthly — 6 weeks  
  - The signing or guaranteeing of external debt, and the occurrence of external payment arrears must be reported immediately to the IMF.  
  - Monthly monitoring report on calls for funds and effective disbursements. — CAA/MINEPAT — Monthly — 2 weeks
  - A quarterly report on the consistency of (i) monetary statistics reflecting the net Treasury position with data from the TOFE on net domestic financing from the banking system and (ii) data on external debt produced by the CAA and on net external financing from the TOFE. — MINFI/BEAC — Quarterly — 8 weeks
  - Data on the implementation of the public investment program, including a detailed listing of financing sources. — MINFI/Ministry of Economy, Planning and Regional Development (MINEPAT)/CAA — Quarterly — 6 weeks
  - Monthly accounting statements showing the amount of cash advances, advance funds, and the balance of provisional budget commitments. — MINFI — Monthly — 3 weeks
  - Monthly report on the validation of the management indicators (TABORD) and the balance of accounts based on a mutually agreed itemized check by the different administrations. — MINFI — Monthly — 6 weeks
  - Publish the oil product price structure. — MINFI — Monthly — First week of the current month
  - Prices, consumption, and taxation of oil products, including: (i) the current price structure for the month in question; (ii) the detailed calculation of the price structure based on the free on board price (or the ex-refinery price from SONARA) to obtain the retail price; (iii) volumes purchased and distributed for consumption by the oil distributor (SONARA), with the distinction between retail sales and sales to industries; and (iv) a breakdown of tax revenue on petroleum products—customs duty, excise tax on petroleum products (TSPP), and value-added tax (VAT)—and unpaid subsidies. — MINFI — Monthly — 4 weeks
  - Monthly statement of the correspondent accounts (including Account 42) and consignment deposits with the Treasury broken down into major categories (administrative services, public enterprises, general government enterprises, international organizations, private depositors, and other). — MINFI — Monthly — 6 weeks
  - Provide revenue forecasts for the Directorate General of Taxes; Directorate General of Customs; and Directorate General of Treasury, Financial, and Monetary Cooperation by type of tax on an annual basis and on a monthly basis, and outturn as compared with forecasts. — DGI, DGD, DGTCFM — Monthly — 6 weeks
  - VAT refund balance (requests for refunds, payments made, and status of the VAT refund account). — MINFI/IMD — Monthly — 6 weeks
  - DGI/DGD collaborative joint quarterly reports identifying, inter alia, results in terms of the identification of fraud and additional revenue collected. — DGI/DGD — Quarterly — 6 weeks
  - Status of the SNH, including volumes exported, prices, exchange rates, operating costs, spending advances, commitments to the government, and the balance transferable to the Treasury. — MINFI — Monthly — 6 weeks
  - Include the total amount of oil receipts of the national oil company SNH and spending advances in the monthly table of government financial operations (TOFE). — MINFI — Monthly — 6 weeks
  - Budget and accounting statement showing the payment status of utility bills to the utility companies (ENEO, CAMWATER, CAMTEL, and SONARA). — MINFI — Quarterly — 3 weeks
  - Status of payments of any subsidies and tax liabilities of public enterprises. — MINFI — Quarterly — 6 weeks
  - Publish the quarterly budget execution reports. — MINFI — Quarterly — 6 weeks

- Monetary Sector:
  - Consolidated balance sheet of monetary institutions. — BEAC — Monthly — 6 weeks
  - Provisional data on the comprehensive monetary survey. — BEAC — Monthly — 6 weeks
  - Final data on the comprehensive monetary survey. — BEAC — Monthly — 10 weeks
  - Government net position. — BEAC — Monthly — 6 weeks
  - Statement on the balance of the special undisbursed statutory advance account. — BEAC — Monthly — 6 weeks
  - Intervention rate and borrowing and lending interest rates. — BEAC — Monthly — 6 weeks

- Balance of Payments:
  - Preliminary annual balance of payments data. — MINFI — Annual — 9 months
  - Foreign trade statistics. — MINFI/INS — Monthly — 3 months
  - Any revision of the balance of payments data (including services, private transfers, official transfers, and capital transactions). — BEAC/MINFI — On revision — 2 weeks

- Real Sector:
  - Provisional national accounts and any revision of the national accounts. — INS — Annual — 12 weeks
  - Quarterly National Accounts. — INS — Quarterly — 12 weeks
  - Disaggregated consumer price indices. — INS — Monthly — 8 weeks

- Structural Reforms and Other Data:
  - Any official report or study devoted to Cameroon's economy, from its date of publication or finalization. — MINEPAT — 2 weeks
  - Any decision, decree, law, order, or circular having economic or financial implications, from its publication date or effective date. — MINFI/MINEPAT — 2 weeks

### Debt sustainability analysis — key findings and risks
- Risk of external debt distress: High  
- Overall risk of debt distress: High  
- Granularity in the risk rating: Sustainable  
- Application of judgement: No

- Summary findings:
  - Cameroon remains at high risk of external and overall public debt distress, but debt remains sustainable.  
  - Breaches of the two thresholds for external debt service under the baseline are due to the state oil refinery’s (SONARA) service of short-term supplier debt, while later breaches of the debt service to export ratio are caused by the Eurobond’s maturation from 2023 to 2025.  
  - The outlook has worsened compared to the previous DSA on the back of continuing security challenges and SONARA’s suspension of production.  
  - Fiscal consolidation and structural reforms, coupled with the increasing share of concessional new borrowing, would improve the debt profile over time.

- Mitigating policy actions recommended:
  - (i) a resolute and effective fiscal consolidation;  
  - (ii) a shift in the composition of new borrowing towards concessional loans;  
  - (iii) implementation of policies to boost growth and non-oil exports;  
  - (iv) prudent management of SONARA’s import operation during the shutdown and long-term restoration of its financial viability;  
  - (v) further strengthening of public debt management, including careful management of new signing of loans, including at SOEs, and of already existing signed-but-undisbursed loans.

### Public debt coverage and contingent liabilities
- The debt perimeter of public debt has slightly expanded compared to the previous DSA (2017 DSA).  
- The debt stock covers the central government, the expenditure float, contingent liabilities linked to some of the external debt of SOEs, guarantees and SONARA’s debt (including unguaranteed debt), including its short-term supplier debt (Text Table 1).  
- The debt stock has been expanded to include "floating" domestic debt at the Treasury as defined in the TMU.  
- External debt is mainly defined based on currency but is adjusted for residency where data is available.

- SOE debt and contingent liability treatment:
  - SOE debt stood at 12.6 percent of GDP at end-2018 according to the annex to the 2020 budget law.  
  - About 1.5 percent of GDP are owed to the government and the DSA already includes SONARA’s debt.  
  - The existing stock of SOE debt not included in the debt stock amounts to at most 8.5 percent of GDP.  
  - Staff and the authorities agreed not to include other SOEs in the debt stock at the moment, pending clarification of certain liabilities and an audit of key SOEs expected to conclude in March 2020.  
  - The DSA does not cover local government debt or other elements in the general government due to lack of data; authorities are considering enhancing data collection on these sectors for 2020.

- Contingent liability stress test coverage (Text Table 2):
  - SOE's debt (guaranteed and not guaranteed by the government) — 8.5 percent of GDP (Estimate of SOE debt not included in debt stock)  
  - PPP: 35 percent of PPP stock — 1.9 percent of GDP (this reflects available information as of November 2019 and includes sectors covered by CARPA and the Nachtigal project)  
  - Financial market (default value): 5 percent of GDP — 5.0 percent of GDP  
  - Total (2+3+4+5) (in percent of GDP): 15.4

### Recent public debt developments and composition (key statistics and ratios)
- Public debt levels:
  - Public debt reached CFAF 8,488 billion at end-2018.  
  - Preliminary estimates suggest public debt increased to around CFAF 9,429 billion as of end-September 2019.

- Drivers of public debt increase:
  - Domestic debt increased due to large issuances of treasury bills (BTA) and government bonds (OTA) to offset lack of budget support in H1.  
  - SONARA’s shift towards import financing using letters of credits from domestic banks (in place of external suppliers’ credits).  
  - External debt increased on the back of disbursements of foreign-financed projects despite a temporary halt of disbursements subject to rescheduling negotiations with China and debt forgiveness of about CFAF 21 billion on interest-free loans from China.

- External debt composition and parameters:
  - External multilateral and bilateral Paris Club (PC) debt represents around one third of total debt.  
  - Bilateral non-PC debt is dominated by China.  
  - Almost half of commercial debt is due to a $750 million Eurobond issued in 2015 which will come due in three installments from 2023 to 2025.  
  - Around 40 percent of external debt is on concessional terms.  
  - Close to 40 percent of external debt is denominated in Euros (EUR 38% shown in currency breakdown).  
  - Average maturity for external debt (excluding SONARA’s debt) stood at 9.4 years.  
  - Average weighted interest rate for external debt stood at 2.4 percent.  
  - Around 26 percent of external debt has a flexible interest rate.  
  - Short-term supplier debt accounts for 57 percent of SONARA’s external debt.

- Domestic debt composition and parameters:
  - Treasury bills account for around 27 percent of domestic debt.  
  - BEAC statutory advances represent 20 percent of domestic debt.  
  - The share of float and arrears in domestic debt declined from 33 percent at end-2017 to an estimated 17 percent at end-September 2019.  
  - Average maturity of domestic debt (excluding the float and SONARA’s debt) stood at 4.4 years.  
  - Average weighted interest rate on domestic debt stood at 3.6 percent.  
  - 76 percent of SONARA’s domestic debt is short-term bank debt, of which 60 percent are letters of credit.

### Contracted-but-undisbursed debt (SENDs)
- The stock of SENDs decreased to CFAF 3,652 billion in the first nine months of 2019.  
- The ratio of external SENDs to total SENDs increased from 96 percent at end-2018 to 98 percent at end-September 2019.  
- The share of multilateral SENDs in total external SENDs grew to 46 percent with the signature of multiple IDA and AfDB projects.  
- The share of external commercial SENDs in total external SENDs declined slightly to 17 percent between end-2018 and end-September 2019 as disbursements offset new signatures.  
- China’s share in undisbursed external loans is 28.5 percent at end-September 2019.

*Prepared by the staff of the International Monetary Fund and the International Development Association. January 7, 2020.*

### 8.      Cameroon’s capacity to monitor and manage public debt for the purposes of the IMF’s debt

### 8. Cameroon’s capacity to monitor and manage public debt for the purposes of the IMF’s debt limit policy

### Debt management capacity, governance, and recent actions
- Capacity is assessed as adequate but further improvements are needed.
- In April SONARA signed a collateralized loan without seeking improved terms as recommended by the National Public Debt Committee (CNDP).
- Authorities committed to refrain from collateralized borrowing and strengthened CNDP procedures to require unconditional CNDP approval for all new borrowing.
- The CNDP adopted and published a manual of procedures for loan operations and public debt management in September 2019, clarifying responsibilities and enhancing cooperation between administrations.
- To enhance project implementation authorities plan:
  - introduce performance contracts for project managers that link remuneration to the quality of project management (structural benchmark);
  - create a basket fund to pool resources for counterpart funding.
- Additional efforts are required to ensure data on all PPPs is collected in a centralized place.

### External arrears, liquidity management, and repayment
- New external arrears were accumulated but have been cleared.
- Steps taken include strengthening monitoring of debt service, improving communication with creditors, use of escrow accounts to ensure Eurobond interest payments, and examining reimbursement options.
- New external arrears arose in the fifth review related to unbudgeted debt service on a loan on-lent to SONARA prior to the fire; caused by liquidity pressures from revenue shortfalls and delayed budget support; repaid in full before end-November.
- Authorities have taken steps to improve liquidity management and forecasting (MEFP ¶20) and are committed to timely servicing external loans, including those on-lent to public enterprises.

### SENDs (foreign-financed investment projects) and undisbursed commitments
- Progress made on SENDs monitoring and management, including:
  - finalization of a disbursement plan for SENDs for 2019–23 on project level;
  - cancelation of CFAF 111 billion in nonperforming SENDs;
  - continued monthly monitoring of disbursement requests and actual disbursements.
- Further cancellation of problematic SENDs of about CFAF 116 billion (0.5 percent of GDP) has stalled and chances of success have diminished.
- A large share (12 percent of GDP at end-2018) of problematic SENDs has been classified for improvement of management and acceleration of disbursements.
- SENDs were classified as problematic if they fulfilled at least one of six criteria (listed verbatim in source).

### External private sector debt
- Latest available data suggests private external debt declined to US$720 million at end-2018.
- Composition: parent companies and foreign affiliates 43 percent; governments and international organizations 38 percent.

### Macroeconomic forecast and assumptions (high-level)
- Baseline scenario assumes end of the ECF-supported program by mid-June 2020 and reflects updated projections that have worsened due to continuing security challenges, slowing external demand, and SONARA’s suspension of production.
- Fiscal consolidation expected to continue, reaching the CEMAC convergence criterion of a fiscal deficit of 1.5 percent in the medium term.
- External adjustment has progressed faster than expected due to recent surprises in NFA accumulation.
- Financing assumptions updated:
  - IMF budget support (CFAF 44 billion) rescheduled from end-2019 to 2020.
  - For 2020, additional budget support included: World Bank CFAF 56 billion and EU CFAF 16 billion.
  - China rescheduling: CFAF 148 billion (0.7 percent of GDP) in principal payments due during July 2019−March 2022 were reprofil ed to be paid later within remaining maturity.
  - Grant element of new external borrowing projected to decline from 31 percent in 2019 to 23 percent by end of projection period.
  - Discount rate remains at 5 percent.
- Domestic financing (excluding the BEAC loan) projected to shift towards medium- to long-term borrowing.
- Deposits and net below-the-line payments on correspondent accounts projected to increase, contributing to debt increase in 2019.

### SONARA-specific assumptions and risks
- Baseline does not incorporate restructuring of SONARA’s debt; discussions ongoing.
- Assumptions:
  - Short-term supplier debt declines in 2019 to end-September level, then rolls over at same amount during main shutdown and restructuring phase (2020-2021).
  - After 2021, short-term debt projected to decline gradually to about 0.3 percent of GDP.
  - Interest rate on external short-term supplier debt set in line with contractual and penalty interest charged on existing debt.
  - DSA incorporates first tranche of SONARA’s pre-financing agreement signed in April, already disbursed.
  - Cost of potential reconstruction of the refinery operation not incorporated in baseline (still being assessed and insurance discussions ongoing).
- SONARA projected to continue operating as an importer of refined oil during restructuring; imports financed through domestic borrowing.
- SONARA’s revenue projections adjusted downward for 2019 and following years; profits adjusted to account for observed increase in debt until end-September.

### Realism tools, forecast risks, and historical revisions
- Remaining adjustment in the primary balance from 2019 to 2021 is moderate at 0.5 percentage point compared to previous DSA (3.5 percent for 2018-2020) and judged attainable.
- Forecast error tool highlights risks from unexplained residuals and exchange rate effects.
- Compared to previous DSA, debt as a share of GDP at end-2018 increased from 36.9 percent to 39.5 percent due to:
  - large payments to below-the-line correspondent accounts;
  - expansion of the debt perimeter;
  - stronger-than-projected exchange rate valuation effects;
  - larger interest payments;
  - unexpected increase in SONARA’s debt.

### Country classification and stress test design
- Cameroon remains at medium debt carrying capacity based on October WEO 2019 and the World Bank’s 2018 CPIA.
- Main contributors to CI score: CPIA value and import coverage of reserves.
- Stress tests use standardized settings plus tailored shocks: a market financing shock and a commodity price shock (due to outstanding Eurobond and fuel/commodity exports >50 percent of total exports).
- Contingent liability stress test based on quantified contingent liabilities.

### Key debt stock and flow figures (as presented in Text Table 3)
- A. Public and publicly guaranteed debt (authorities' estimate: 1+2+3)
  - 531127.5627930.9739334.4823036.2
- 1. External debt
  - 394120.4465022.9565626.3617327.2
- 2. Domestic debt
  - 13046.715787.816917.920188.9
- 3. (External) Publicly guaranteed debt
  - 660.3510.3460.2390.2
- 4. Unpaid government obligations (float and arrears)
  - 6553.48384.14892.34802.1
- 5. External claims to SOEs (ex-SONARA)
  - 100.090.090.090.0
- 6. SONARA debt
  - 4572.45342.65972.87113.1
- 7. o/w external
  - 2931.53831.94462.13771.7

- B. Public and publicly guaranteed debt (staff estimate: A + 4+5+6)
  - 643333.3765937.7848839.5942941.5
- Domestic
  - 212411.0256712.6233110.8283212.5
- External
  - 431022.3509325.1615728.6659729.0
- o/w publicly guaranteed
  - 760.4600.3550.3480.2

- C. Stock of contracted but undisbursed debt 1/
  - 386620.0442421.8403518.8365216.1
- Domestic
  - 2811.51780.91710.8650.3
- External
  - 358618.5424520.9386518.0358715.8
- o/w multilateral
  - 12406.418489.116107.516407.2
- o/w bilateral
  - 18029.317198.515457.213355.9
- o/w commercial
  - 5442.86793.37093.36122.7

- Sources cited for table: Cameroonian authorities, and IMF staff calculations.
- Note: 1/ Excludes budget support. Changes in historical data largely reflect newly added floating debt and slight revisions to historical data.

### Debt sustainability outcomes and stress test results
- Classification: Cameroon remains at high risk of external debt distress, but debt remains sustainable.
- Public external debt projected to peak in 2020 at 30.6 percent of GDP and to decline gradually thereafter.
- Present value of external debt-to-GDP and present value of public-debt-to-exports remain below thresholds over the horizon.
- Debt service-to-revenue ratio breaches the threshold for the first two years by up to 6 percentage points, driven by SONARA short-term supplier debt, and again slightly in 2023.
- Debt service-to-exports ratio breaches its threshold continuously until 2025 for two reasons:
  - large short-term SONARA debt maturing (2019–2022, on average around 4 percentage points above threshold);
  - maturation of the Eurobond (2023–2025, on average about 4 percentage points above threshold).
- Debt service includes payments to the French Development Agency (AFD) under the C2D initiative, which are then returned to Cameroon as grants for specific projects.
- Under stress tests:
  - Present value of debt-to-GDP remains well below threshold under all shocks; peaks under exports shock in 2021 at 31.0 percent.
  - Present value of debt-to-exports breaches threshold under the primary balance, contingent liability, and exports shocks; exports shock raises the ratio up to 270.0 percent in 2026.
  - Debt service-to-exports ratio reaches maximum of 31 percent under the exports shock.
  - Debt service-to-revenue ratio is most extreme under a one-time 30 percent nominal depreciation (source text cuts off here).

*Source: IMF staff report text as provided in the content unit.*

### 27.0 percent in 2020. Historical scenarios point

### 1cmrea2020001 - 27.0 percent in 2020. Historical scenarios point

### B. Public Debt Sustainability
- Public sector debt is projected to peak in 2020 and gradually decline and remain well below the benchmark.
- Public debt projections:
  - Public debt peaks in 2020 at 40.8 percent of GDP.
  - The present value of debt-to-GDP declines gradually and remains well below the benchmark.
  - The 2019 total debt service-to-revenue ratio is 49 percent.
- Sensitivities and risks:
  - Dynamics are highly sensitive to assumptions on the rollover of SONARA’s short-term supplier debt.
  - While the public debt stock indicator does not breach its benchmark, Cameroon remains at high overall risk of public debt distress due to breaches by the two external debt service indicators under the baseline.
- Stress scenarios:
  - Under the stress scenarios, public sector debt remains well below the benchmark.
  - The most extreme shock across three indicators is combined contingent liabilities.
  - Even under combined contingent liabilities, present value of debt-to-GDP peaks at 47 percent of GDP.
  - Present value of debt-to-revenue jumps to 289 percent in 2020.
  - Debt service-to-revenue ratio peaks in 2021 at 84 percent.
  - Historical scenario projects an explosive path for present value of debt-to-revenue, driven by large historical primary deficits compared to projections.

### C. Market Module
- Market financing tool signals low risk related to market financing pressures.
- Cameroon remains below the benchmark for gross-financing needs and the benchmark on the EMBI spread.
- EMBI spread:
  - The EMBI spread has been fluctuating around the benchmark and recently declined to 542 as of December 2.
- No thresholds breached in the market module, signaling low market financing risks.

### D. Risk Rating and Vulnerabilities
- Overall assessment:
  - Cameroon remains at high overall risk of public debt distress, but debt is assessed as sustainable.
  - Thresholds are breached for the two external debt service indicators, indicating fragile liquidity.
- Supporting factors for sustainability assessment:
  - Debt indicators remain on non-explosive paths and debt stock indicators remain well below thresholds under the baseline.
  - Debt-service-to-revenue ratio is on a downward trajectory and falls below the threshold from 2021 onwards, with a one-year breach in 2023.
- Specific vulnerabilities:
  - Breach of debt-service-to-exports ratio largely due to inclusion of SONARA’s short-term supplier debt, which is backed by the imported oil it is used for and is sensitive to rollover and reprofiling assumptions.
  - SONARA has external arrears; authorities have cleared all external sovereign arrears.
  - Government has guaranteed only one of SONARA’s loans (on which arrears have also been cleared).
- Downside risks to projections:
  - Potential reconstruction costs.
  - Further deterioration of SONARA’s losses that could add to debt accumulation.
  - Realization of contingent liabilities from bank restructuring and from SOEs not included in the baseline.
  - Accelerations in disbursements due to the large stock of SENDs.
- Upside potential:
  - Successful reprofiling of SONARA’s arrears of short-term debt over multiple years, in line with authorities’ plan, could lower debt-service ratios.

### Policy recommendations and reform priorities
- Fiscal and structural reforms:
  - Steadfast implementation of fiscal and structural reforms is crucial to mitigate risks and ensure debt remains on a downward trajectory.
  - Deep structural reforms are needed to improve competitiveness and achieve economic diversification, addressing weaknesses in the debt service indicator expressed as a proportion to exports.
- Fiscal consolidation and borrowing strategy:
  - Fiscal consolidation, revenue mobilization, and a prudent borrowing policy skewed towards concessional loans are essential to keep public debt dynamics on a sustainable path and rebuild buffers ahead of upcoming high debt repayments.
- SONARA-specific measures:
  - Fundamentally build SONARA’s financial viability to address high debt service due to SONARA’s supplier debt.
  - Carefully monitor and manage SONARA’s corporate restructuring and interim operation as refined oil importer to ensure fiscal costs remain manageable.
- Management of SENDs:
  - Sound management of the SENDs will be critical.

*Sources: Cameroonian authorities; and IMF staff calculations.*

### 26.      The authorities agreed with the need for prudent debt management and the need to expand and

### 1cmrea2020001 - 26.

### Authorities' fiscal and debt-management stance
- Authorities agreed on the need for prudent debt management and to expand and diversify the export base, while projecting exports to be stronger in the medium- and long-run.
- Breaches in the debt service indicators were attributed to SONARA’s supplier debt.
- Policy priorities agreed:
  - Prioritize concessional borrowing and limit non-concessional borrowing to critical projects (MEFP ¶22).
  - Significant envisaged shift towards concessional financing in the medium-term debt strategy 2020-2022.
  - Strengthen monitoring and management of SOEs; CNDP to systematically review all loan and PPP project proposals (MEFP ¶26, ¶27).
  - Short-term measures to ensure SONARA’s financial viability; conduct comprehensive cost benefit analysis to evaluate corporate restructuring options for the medium-term (MEFP ¶28, ¶29).
- Existing SENDs expected to decline significantly over the medium-term through planned disbursements and while remaining within the budget envelope (MEFP ¶25).

### External Debt Sustainability — baseline projections (selected lines)
- External debt (nominal) (Percent of GDP, unless otherwise indicated):
  - 2016: 25.4
  - 2017: 27.7
  - 2018: 30.5
  - 2019: 32.4
  - 2020: 32.5
  - 2021: 32.4
  - 2022: 32.1
  - 2023: 31.3
  - 2024: 30.6
  - 2029: 28.4
  - 2039: 19.9
  - Historical/average figure shown: 18.0 and 30.7
- Of which: public and publicly guaranteed (PPG) (Percent of GDP):
  - 2016: 22.3
  - 2017: 25.1
  - 2018: 28.6
  - 2019: 30.5
  - 2020: 30.6
  - 2021: 30.5
  - 2022: 30.1
  - 2023: 29.4
  - 2024: 28.7
  - 2029: 26.8
  - 2039: 18.9
  - Historical/average figure shown: 15.9 and 28.9
- Change in external debt:
  - 2016: 1.3
  - 2017: 2.3
  - 2018: 2.8
  - 2019: 1.9
  - 2020: 0.1
  - 2021: -0.1
  - 2022: -0.4
  - 2023: -0.7
  - 2024: -0.7
  - 2029: -0.6
  - 2039: -0.9
- Identified net debt-creating flows (selected):
  - 2016: 0.8
  - 2017: -1.3
  - 2018: -0.7
  - 2019: 0.7
  - 2020: 0.4
  - 2021: 0.1
  - 2022: -0.1
  - 2023: -0.2
  - 2024: -0.4
  - 2029: -1.6
  - 2039: -1.3
- Non-interest current account deficit (Percent of GDP):
  - 2016: 2.1
  - 2017: 1.9
  - 2018: 2.5
  - 2019: 2.8
  - 2020: 2.6
  - 2021: 2.4
  - 2022: 2.4
  - 2023: 2.4
  - 2024: 2.3
  - 2029: 0.5
  - 2039: -2.1
  - Historical/average figure shown: 2.9 and 1.9
- Exports (Percent of GDP):
  - 2016: 19.2
  - 2017: 18.7
  - 2018: 18.9
  - 2019: 18.8
  - 2020: 18.1
  - 2021: 17.2
  - 2022: 16.4
  - 2023: 15.8
  - 2024: 15.2
  - 2029: 13.6
  - 2039: 12.3
  - Historical/average figure shown: 18.0 and 30.7 (contextual average)
- Net FDI (negative = inflow) (Percent of GDP):
  - 2016: -1.1
  - 2017: -2.3
  - 2018: -1.7
  - 2019: -1.8
  - 2020: -2.1
  - 2021: -2.1
  - 2022: -2.1
  - 2023: -2.2
  - 2024: -2.1
  - 2029: -1.4
  - 2039: 1.4
  - Historical/average figure shown: -2.0 and -1.9
- Endogenous debt dynamics (selected contributions, Percent of GDP or percent points):
  - Contribution from nominal interest rate (example years): 2016: 1.0; 2017: 0.8; 2018: 1.1; 2019: 0.9; 2020: 1.0.
  - Contribution from real GDP growth (example years): 2016: -1.1; 2017: -0.8; 2018: -1.0; 2019: -1.2; 2020: -1.2.
  - Contribution from price and exchange rate changes (example years): 2016: -0.2; 2017: -0.9; 2018: -1.6.
- Residual (Percent of GDP):
  - 2016: 0.6
  - 2017: 3.6
  - 2018: 3.6
  - 2019: 1.2
  - 2020: -0.2
  - 2021: -0.2
  - 2022: -0.3
  - 2023: -0.5
  - 2024: -0.3
  - 2029: 1.0
  - 2039: 0.4

- Selected sustainability indicators:
  - PPG debt service-to-exports ratio (selected years):
    - 2016: 12.1
    - 2017: 14.1
    - 2018: 17.3
    - 2019: 21.4
    - 2020: 18.9
    - 2021: 16.8
    - 2022: 18.2
    - 2023: 20.3
    - 2024: 19.2
    - 2029: 15.2
    - 2039: 13.9
  - PPG debt service-to-revenue ratio (selected years):
    - 2016: 14.0
    - 2017: 15.6
    - 2018: 18.5
    - 2019: 23.8
    - 2020: 21.4
    - 2021: 17.6
    - 2022: 17.9
    - 2023: 18.6
    - 2024: 17.0
    - 2029: 12.2
    - 2039: 10.8
  - Gross external financing need (Billion of U.S. dollars):
    - 2016: 1.8
    - 2017: 1.5
    - 2018: 2.6
    - 2019: 2.9
    - 2020: 2.4
    - 2021: 2.0
    - 2022: 2.1
    - 2023: 2.3
    - 2024: 2.2
    - 2029: 1.4
    - 2039: 2.1

### Public Sector Debt Sustainability — baseline projections (selected lines)
- Public sector debt (Percent of GDP):
  - 2016: 33.3
  - 2017: 37.7
  - 2018: 39.5
  - 2019: 40.8
  - 2020: 40.8
  - 2021: 40.4
  - 2022: 39.8
  - 2023: 39.1
  - 2024: 38.2
  - 2029: 32.6
  - 2039: 27.8
  - Historical/average shown: 24.0 and 37.5
- Of which: external debt (Percent of GDP) repeats the external PPG series above (22.3 in 2016 through 18.9 in 2039).
- Change in public sector debt (Percent of GDP):
  - 2016: 1.3
  - 2017: 4.4
  - 2018: 1.8
  - 2019: 1.3
  - 2020: 0.0
  - 2021: -0.4
  - 2022: -0.6
  - 2023: -0.7
  - 2024: -0.9
  - 2029: -1.0
  - 2039: -0.3
- Identified debt-creating flows (Percent of GDP):
  - 2016: 4.9
  - 2017: 0.9
  - 2018: -0.2
  - 2019: 0.3
  - 2020: 0.2
  - 2021: -0.3
  - 2022: -0.5
  - 2023: -0.6
  - 2024: -0.8
  - 2029: -1.1
  - 2039: -0.4
- Primary deficit (Percent of GDP):
  - 2016: 5.3
  - 2017: 4.2
  - 2018: 1.5
  - 2019: 1.4
  - 2020: 1.4
  - 2021: 1.0
  - 2022: 0.8
  - 2023: 0.8
  - 2024: 0.8
  - 2029: 0.5
  - 2039: 0.9
- Revenue and grants (Percent of GDP):
  - 2016: 16.9
  - 2017: 17.2
  - 2018: 18.1
  - 2019: 17.3
  - 2020: 16.4
  - 2021: 16.8
  - 2022: 17.1
  - 2023: 17.4
  - 2024: 17.3
  - 2029: 17.1
  - 2039: 16.0
- Automatic debt dynamics (Percent of GDP, contribution):
  - 2016: -0.4
  - 2017: -3.3
  - 2018: -0.4
  - 2019: -1.3
  - 2020: -1.2
  - 2021: -1.3
  - 2022: -1.3
  - 2023: -1.4
  - 2024: -1.6
  - 2029: -1.6
  - 2039: -1.3
- Debt service-to-revenue and grants ratio (selected years):
  - 2016: 13.8
  - 2017: 15.3
  - 2018: 18.1
  - 2019: 48.7
  - 2020: 46.9
  - 2021: 44.7
  - 2022: 44.9
  - 2023: 46.7
  - 2024: 47.5
  - 2029: 29.3
  - 2039: 31.9
- Gross financing need (Percent of GDP):
  - 2016: 8.7
  - 2017: 8.0
  - 2018: 5.0
  - 2019: 10.1
  - 2020: 9.1
  - 2021: 8.5
  - 2022: 8.4
  - 2023: 9.0
  - 2024: 9.0
  - 2029: 5.5
  - 2039: 6.0

### Key macroeconomic and borrowing assumptions (selected)
- Real GDP growth (in percent) (selected series):
  - 2016: 4.6
  - 2017: 3.5
  - 2018: 4.1
  - 2019: 3.9
  - 2020: 3.8
  - 2021: 4.1
  - 2022: 4.2
  - 2023: 4.5
  - 2024: 5.0
  - 2029: 5.5
  - 2039: 5.8
  - Historical/average figures shown: 4.3 and 4.7
- GDP deflator in US dollar terms (change in percent) (selected):
  - 2016: 0.8
  - 2017: 3.6
  - 2018: 6.3
  - 2019: -3.3
  - 2020: 1.6
  - 2021: 2.5
  - 2022: 2.3
  - 2023: 2.1
  - 2024: 2.3
  - 2029: 1.8
  - 2039: 1.9
  - Historical/average figures shown: -0.2 and 1.5
- Effective interest rate (percent) (selected):
  - 2016: 4.5
  - 2017: 3.2
  - 2018: 4.5
  - 2019: 2.9
  - 2020: 3.4
  - 2021: 3.2
  - 2022: 3.3
  - 2023: 3.0
  - 2024: 3.0
  - 2029: 2.7
  - 2039: 2.8
  - Historical/average figures shown: 3.4 and 3.0
- Growth of exports of G&S (US dollar terms, in percent) (selected):
  - 2016: -7.1
  - 2017: 4.4
  - 2018: 12.3
  - 2019: -0.3
  - 2020: 1.7
  - 2021: 1.3
  - 2022: 1.6
  - 2023: 2.5
  - 2024: 3.5
  - 2029: 5.5
  - 2039: 6.5
  - Historical/average figures shown: 1.4 and 3.2
- Grant element of new public sector borrowing (in percent) (selected projections):
  - 2020: 30.5
  - 2021: 31.3
  - 2022: 28.0
  - 2023: 28.0
  - 2024: 28.0
  - 2029: 27.8
  - 2039: 26.3
  - Historical/average/context figures shown: 22.6 and 28.0

### Stress tests, sensitivity analysis, and realism tools (high-level)
- Stress tests and sensitivity analysis were performed for 2019–2029 covering:
  - Alternative scenarios (e.g., key variables at historical averages).
  - Bound tests (Real GDP growth, Primary balance, Exports, Other flows, Depreciation, Combinations).
  - Tailored tests (Combined contingent liabilities, Commodity price, Market Financing).
- Table summaries indicate breaches and magnitudes across indicators:
  - Debt service-to-exports ratio, Debt service-to-revenue ratio, PV of debt-to-exports ratio, PV of debt-to-GDP ratio evaluated under multiple shocks.
  - Sensitivity tables show baseline and alternative scenario paths (selected baseline examples include PV of debt-to-exports baseline values: 125, 130, 136, 141, 142, 143, 144, 147, 150, 151, 152).
- Realism tools and drivers of debt dynamics figures illustrate contributions to debt changes from:
  - Primary deficit, Real interest rate, Real GDP growth, Real exchange rate depreciation, Other debt-creating flows, Residual (unexpected changes).
- Figures show that combined contingent liabilities and export shocks are among the most extreme stress scenarios for several indicators in the 2019–2029 projection window.

*Sources: Country authorities; and staff estimates and projections.*

### 1990. The size of 3-year adjustment from program inception is found on the horizontal axis; the

### Cameroon — Fifth Review under the Extended Credit Facility: Supplementary Information and Supplementary Letter of Intent (January 21, 2020)

### Recent developments and macroeconomic performance
- Real GDP growth
  - Growth was 3.9 percent during the first half of 2019 and estimated at 3.9 percent for 2019 (projection at fourth review: 4.1 percent).
  - Non-oil growth is expected to reach 5 percent by 2022.
- Inflation and external sector
  - Inflation reached about 2 percent on a per annum basis in 2019 H1.
  - Current account deficit: 4.7 percent of GDP in first half of 2019 (program projection for 2019: 4.0 percent of GDP).
- Fiscal and debt indicators
  - Public debt-to-GDP ratio: 41.5 percent at end-September 2019 (39.5 percent at end-2018).
  - SENDs (signed-but-undisbursed loans): 16.1 percent of GDP at end-September 2019 (18.8 percent at end-2018).
  - Non-oil primary deficit projection referenced: 2.8 percent of GDP.
- Program performance
  - Program performance described as broadly satisfactory; all quantitative performance criteria (PCs) met for the period under review though a continuous PC on external arrears accumulation was subsequently missed.
  - Structural benchmarks: 5 out of 13 structural benchmarks met; two observed with delay; sustained efforts underway on remaining measures.
- SONARA shock
  - Devastating fire at national oil refinery SONARA caused revenue shortfalls and affected some indicative targets (ITs).

### Financing and specific loan action
- Supplement requests:
  - Add a loan with the Kuwait Development Fund (KDF) to the list of projects eligible for the 2020 non-concessional borrowing (NCB) adjustor.
  - Loan amount: CFAF 8.6 billion (stated equivalent: 0.04 percent of GDP in the supplementary letter of intent).
  - Purpose: to finance construction of a section of the Olama-Kribi road.
  - Context: The Olama-Kribi road total cost is about CFAF 42 billion, of which CFAF 38 billion have been financed externally with non-concessional loans starting in May 2015.
  - Loan status: loan agreement signed on January 13, 2020; agreement not yet effective as conditions for entry into effect have not been met.
- Performance-criterion modification and structural benchmark update:
  - Authorities withdraw prior request to amend the December 2019 quantitative PC on the floor of the non-oil primary fiscal deficit due to review delay (review moved from December 2019 to January 2020).
  - Structural benchmark on audits of a few major SOEs was unmet as of December 2019 and is proposed to be reset to March 2020.

### Fiscal policy stance and medium-term framework
- 2020 budget and fiscal targets
  - 2020 budget law projects a fiscal deficit of 2.1 percent of GDP.
  - Social spending protected at 3.4 percent of GDP under the 2020 budget.
  - Medium-term objective: align with CEMAC convergence criterion of 1.5 percent of GDP for the overall fiscal deficit by 2022.
- Revenue and expenditure measures
  - Measures to expand the tax base: streamlining tax expenditures; proactive approach to lower tax arrears of public entities.
  - Expenditure rationalization: contain current spending on goods and services; reduce public investment where needed; savings on the wage bill; reduction of subsidies and transfers.
  - Fuel price reform: revise and simplify fuel price structure, accompanied by a communication campaign and a program of well-targeted subsidies (World Bank assistance noted).
  - Cash management: potential cash flow pressures to be met through issuance of T-bills and bonds; strengthen budget execution with transparency and limit complementary period to one month.
- Public financial management reforms
  - Expand the scope of the Treasury Single Account (TSA); repatriate commercial bank accounts of government entities to the central bank; consider centralizing counterpart funds for joint projects in a single BEAC “basket account.”
  - Strengthen government financial reporting systems; reinforce projects’ selection, planning and execution to improve capital expenditure effectiveness.
- Revenue administration reforms
  - Strengthen Direction Générale des Impôts and Direction Générale des Douanes via organizational and operational reforms, reduce fraud and tax evasion, streamline exemptions, and enhance taxpayer database and IT systems.
  - Continue collaborative FUSION application database to scale up data collection and information sharing.

### Debt strategy and SOE-related measures
- Debt policy
  - Priority to concessional borrowing; strictly limit signing of non-concessional loans to priority projects with no concessional alternatives and adhere to program debt limits.
  - Maintain prudent approach to preserve debt sustainability over 2020–22.
- SOE reforms and risk containment
  - Accelerate SOE and public establishment management reforms; increase monitoring of SOE performance; continue payments to enterprises for State consumption to contain fiscal risks.
  - Address cross-debt between government and major SOEs following ongoing inventory.
- SONARA medium-term solution and interim measures
  - A study to analyze restructuring options for SONARA to be finalized by end-March 2020.
  - Interim measures under consideration: improve SONARA cash position; settle debts owed to enterprises; require SONARA to pay tax and customs obligations; allow an amount of oil imports in line with obligations; assist in rescheduling SONARA’s debts vis-à-vis banks and suppliers.

### Monetary and financial sector stability actions
- External reserves and FX repatriation
  - Scaled up repatriation of foreign exchange; ensure transparency and surrender of export proceeds by public enterprises; share with central bank contracts signed with mining and oil companies; comply with new regulations on domiciliation of export transactions with a local commercial bank.
- Banking sector measures
  - Plans for resolution of two distressed banks adopted; financing requirements of SMEs elaborated towards an indirect financing scheme.
  - New microfinance regulations enforced (institutional reconversion, governance, control).
  - Non-performing loans (NPLs) addressed through an action plan: deployment of trained judges and court clerks in banking disputes; registration of movable property collaterals; preparation of draft law on penalties for nonpayment of credit.

### Competitiveness, business environment and AML/CFT
- Reforms to support private sector and diversification
  - Facilitate trade and modernize the CEMAC customs framework; simplify and update tax obligations while reducing compliance costs.
- AML/CFT and transparency
  - Adopt best international standards on AML/CFT aided by BEAC exchange regulation; comply with Extractive Industries Transparency Initiative (EITI) following 2019 validation.

### Requests to IMF Executive Board
- Completion of the Fifth Review under the ECF arrangement.
- Waiver of nonobservance of the unmet performance criterion related to external arrears accumulation.
- Approval to add the KDF loan (CFAF 8.6 billion) to projects eligible under the 2020 non-concessional borrowing adjustor and removal of the requested amendment to the December 2019 PC due to review delay.

*Source: Supplementary Information and Supplementary Letter of Intent for the Fifth Review under the Extended Credit Facility — Cameroon (January 21, 2020).*

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_Source: https://www.imf.org/-/media/files/publications/cr/2020/english/1cmrea2020001.pdf_