## 1cmrea2022001

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### Mobile Money Transfer Taxation
- Context:
  - Several countries in Africa, including Cameroon, have recently introduced or proposed a tax on mobile money transactions.
  - The 2022 budget law provides an increase of revenue of about CFAF 20 billion under this measure.
  - Box prepared by Roberto Piazza and Jean-Francois Wen.
- Main findings and arguments:
  - Advocates' view:
    - Mobile money tax seen as a means to tax the informal sector and an easy-to-administer revenue measure.
  - Critics' concerns:
    - Unequal treatment when not applied to banking sector.
    - Broad transaction taxes can reduce bank deposits, cause cascading effects on other means of payment, and lead to financial disintermediation.
    - Fiscal inequity and negative impact on financial inclusion, particularly for the poor and unbanked (often rural).
    - Fixed costs barrier: minimum deposit requirements and banking fees are burdensome for small-value transactions.
    - Behavioral and fiscal spillovers: example of Uganda—initial higher revenue offset by fall in telecom sector receipts due to decreased mobile money activity.
    - Additional negative impacts: reduced excise tax receipts (shift to cash) and reduced remittances facilitated by mobile money.
- Evidence and country experience referenced:
  - Uganda (2019 Article IV report), and mobile money tax episodes in: Tanzania in 2021; Ghana in 2021; Republic of Congo in 2019; Malawi in 2019; Côte d’Ivoire in 2019; Kenya, 2018; Uganda in 2018.
- Policy implication:
  - The implications of adopting a tax on mobile money transactions need careful weighing against distributional, financial inclusion, and broader fiscal revenue risks.
  - Upcoming tax policy diagnostic will help assess pertinence of these taxes.

### Program performance and quantitative targets (end-September / continuous PCs)
- Key outcomes:
  - Out of nine end-September ITs, five were missed.
  - Ceiling on the net domestic financing of the central government, excluding IMF financing, was exceeded by 0.3 percent of GDP.
  - Share of spending executed through exceptional procedures on authorized (payment order) spending reached 10.5 percent against a benchmark of 5 percent; continued to exceed target by 3 percent as of end-September.
  - Direct intervention spending of SNH overran its target by 0.2 percent of GDP.
  - Authorities contained exceptional procedures; share declined from 10.5 percent to 8 percent between July and September.
  - Floor on social spending executed to 93 percent of the target but missed by 0.2 percent of GDP.
  - Continuous PC on external arrears accumulation was met.
  - Ceiling on new non-concessional external debt (NCED) contracted or guaranteed by the government was not met: new non-concessional loan of CFAF 3 billion in September 2021 (project outside predetermined list). Contracted amount limited; overall NCED remained well below ceiling allowed by adjusters (TMU).

### Structural benchmarks (SBs) and implementation progress
- Progress:
  - At end-December, two out of eight SBs were met on time, including publication of the Audit Bench (Chambre des Comptes) FY2020 COVID-19 expenses audit.
  - SB on issuing decree to strengthen accountability of program/project implementing units completed on October 13 instead of end-September.
- Delays and factors:
  - Need for coordination with regional bodies.
  - SB6 (single treasury account-TSA): IT platform at BEAC expected December 2021 was slower than anticipated.
  - SB9 (PPP framework): awaiting regional framework.
  - SB5 (arrears): selection of four firms delayed by COVID-19; audits to form basis for arrears clearance plan expected by end-September 2022.
  - SB14 (deposit and consignment fund): appointment of managers under way.
  - Capacity constraints: SB2 TA delayed to October 2022; SB10 SOE audits underway (Port Authority of Douala near completion; CAMTEL and CAMWATER contracting stage to be submitted by end-June 2022); SB11 cross-debt inventory near completion (report available in April).

### Governance, COVID-19 expenditures and audit findings
- Governance actions:
  - Published execution report on COVID-19-related expenditures during 2020 and procurement information (Oct 20, 2020 to end-Dec 2021) including beneficial owners.
- Audit Bench findings (CAS-COVID):
  - Weak transfer of non-health information to MINSANTE; lack of centralized accounting under Special Fund hindered strategic management.
  - Award of special contracts was opaque; derogatory procedures beyond July 2020 costly and sometimes less effective than ordinary procedures.
  - Control teams faced major challenges collecting reliable accounting information; recommended accelerating accounting reforms and automation.
  - Audit Bench: 13 recommendations; opened 14 proceedings for mismanagement; transmitted 12 cases likely to be criminal offences to the Minister of Justice.
- Program follow-up:
  - New SBs include publishing execution report of COVID-19 expenses and preparing an action plan to strengthen public spending audit frameworks, with IMF staff; authorities intend to prepare and publish by December 2022 an Audit Bench audit of fiscal year 2021 COVID-19 expenses.

### Fiscal stance, BL2022, and COVID-19 related finances
- Fiscal aggregates and projections:
  - At end-September 2021, social spending reached CFAF 696 billion.
  - BL2022 reduces overall cash deficit by 0.7 percentage point to 2.3 percent of GDP in 2022; non-oil primary deficit (cash basis) of 3.5 percent of GDP.
  - Revenue expected to increase by one percentage point to 14.1 percent of GDP, driven by nonoil revenue, abolition of some COVID-19 tax relief, administrative measures, and new taxes on mobile money transfers.
  - Spending in 2022 expected to increase by 0.2 percentage points to 16.6 percent of GDP.
- Oil price revision impact:
  - Higher oil prices (increasing by USD13 to USD75.7 per barrel in 2022) lead to higher oil revenue and related spending: revenue and spending expected higher than BL2022 projections by 0.3 and 0.2 percent of GDP respectively.
  - Fiscal deficit expected limited to 2.2 percent of GDP; non-oil primary deficit (cash basis) of 3.7 percent of GDP.
- Vaccine deliveries (as of January 5, 2022):
  - 1.4 million doses Johnson & Johnson; 1.2 million Sinopharm; 589,600 AstraZeneca; 152,100 Pfizer.
  - As of January 19, 2022: 6.3 percent of eligible population fully vaccinated; 2.8 percent received one dose; 43.7 percent of healthcare personnel fully vaccinated.
- SDR allocation:
  - August 2021 SDR allocation equivalent to CFAF 208 billion.
  - Authorities plan to use 57 percent of allocation by end-2022 (CFAF 50 billion in 2021 and CFAF 70 billion in 2022) and save remainder as buffer.
  - IMF and CEMAC recommended saving about half; staff advised keeping about half as a buffer.

### Social safety nets and cash transfer program (Box 3)
- Strategy and pilots:
  - SND-30 aims for inclusive growth and redistribution.
  - Pilot cash transfer (Nov 2013–Jan 2016): 2,000 households; evaluation (June 2016) found positive impacts.
  - 2019-22 deployment: project in >100 municipalities + Douala and Yaoundé; around 300,000 households targeted.
- Four programs and benefits:
  - Direct ordinary cash transfers (OMT): CFAF 20,000 every two months over 2 years; CFAF 80,000 in 12th and 24th months (CFAF 360,000 total).
  - Emergency cash transfer (EMT): CFAF 180,000 over 12 months (CFAF 30,000 every two months).
  - THIMO (labor-for-cash): CFAF 1,300 per working day for 60 working days total.
  - TMU-COVID 19: CFAF 180,000 total (45,000 first two months; 90,000 in third month).
- Financing:
  - Government devoted CFAF 34 billion to social safety nets: CFAF 18 billion to support 75,000 households (CFAF 4.5 billion per year) and CFAF 16 billion under special COVID-19 allocation for 80,000 households.
  - Partners mobilized CFAF 46.2 billion: CFAF 33 billion World Bank; CFAF 13 billion AFD; CFAF 0.101 billion UNICEF.
- Targeting and conditionality:
  - Priority to populations hit by shocks and vulnerable layers (North-West and South-West among them).
  - Household approach covers disabled, elderly, widows/widowers, orphaned children, people without national IDs, people in chronic poverty.
  - Beneficiary heads sign moral contract committing to (i) send children to school, (ii) seek hospital care, (iii) feed household members, (iv) obtain birth certificates, and (v) save for income-generating activities.

### Fiscal stance and short-term priorities (staff view)
- Staff supports avoiding premature fiscal tightening, intensifying vaccination campaign, and accelerating cash transfer mechanism for most vulnerable households.
- Requirements to meet objectives:
  - Well-targeted and cost-effective spending.
  - Securing concessional financing.
  - Measures to mobilize domestic revenues.
- Authorities' commitments:
  - Accelerate vaccination through awareness; speed up cash transfer implementation.
  - Ensure transparency and accountability in SDR use; save about 43 percent as buffer.

### Medium-term fiscal strategy and targets
- Fiscal objectives and projections:
  - Fiscal deficit (cash basis) expected to decrease to 2.2 percent in 2022 (reduction of 1.3 percentage points relative to 2021).
  - Non-oil primary balance (cash basis) fiscal anchor to decrease to 3.7 percent of GDP in 2022 from 4.5 percent of GDP in 2020.
  - By end-2024: fiscal deficit (cash basis) projected to 0.8 percent of GDP; non-oil primary balance (cash basis) projected to 2.4 percent of GDP.
- Policy pillars:
  - Strengthen revenue mobilization.
  - Modernize PFM processes.
  - Reform SOEs.

### Domestic revenue mobilization: findings and measures
- Program target:
  - Increase non-oil revenue to 13.7 percent of GDP by 2024 from 12.9 percent in 2018.
- Drivers:
  - Economic recovery, acceleration of tax administration measures, adoption and execution of MTRS.
- Recommended measures:
  - Recover SOEs tax arrears—could generate gross additional revenue of about 1.5 percentage points of GDP (likely offset by increased subsidy spending).
  - Streamline tax exemptions; phase out least effective measures and replace with conditional cash transfers.
  - Customs optimization: e-payments, strengthen valuation, combat fraud and smuggling.
  - Accelerate MTRS to raise taxpayer compliance and set tax policy/administration roadmap.
- Tax potential:
  - Cameroon’s tax potential points to a possible increase of about 7 percentage points of GDP in tax revenues from transparency and effectiveness improvements.
- Text Table 1 (Potential Gains, Percent of GDP):
  - Discontinuing Tax relief to businesses and households: 0.5
  - Recovering SOEs tax arrears: 1.5
  - Streamlining the least effective VAT tax expenditure: 0.8 - 2.6
  - Taxing donor funded projects: 0.6
  - Total: 3.4 - 5.2

### Public Financial Management (PFM): findings and recommendations
- Progress noted: realism in proposed budget law, actions to clear arrears, generalization of TSA.
- Remaining weaknesses:
  - Underestimation of spending needs and commitments.
  - Excessive use of exceptional procedures undermining credibility and transparency.
  - Need for credible monthly cash plans and enhanced budget execution monitoring.
- Public Investment Management (PIM):
  - Low execution rates, high management costs, delays.
  - April 2020 PIMA: Cameroon PIM processes very weak relative to comparators.
  - Efficiency scores (infrastructure quality): Cameroon: 0.6; SSA average: 0.78.
  - Cameroon’s relative efficiency gap: around 60 percent (SSA average gap 40 percent).
  - Recommendations: implement Public Procurement Code; adopt single legal/regulatory PPP framework.
- Governance measures:
  - Limit derogation procedures; expand TSA; repatriate eligible accounts to BEAC.

### Reducing fiscal risks from SOEs
- Staff recommendations:
  - Address financial and fiscal risks from SOEs; strengthen oversight and borrowing restrictions; adopt credible clearance plan for cross debts based on end-2020 audit.
- SOE distortions and simulation:
  - SOEs wages higher; returns to capital lower; within-sector distortions.
  - Simulation: gradual elimination of ½ of estimated SOE subsidies and removal of ⅕ of cross-sectoral distortions would:
    - Raise GDP by about 25 percent over a 15-year horizon.
    - Reduce the fiscal deficit by about 6 percentage points of baseline GDP.
  - GDP increase driven by tertiary and secondary sector expansion.
- SONARA specifics:
  - SONARA debt amounts to 3 percent of GDP and 6.6 percent of total public and publicly guaranteed debt as of end-2020.
  - October 2021: SONARA reached revised agreement with local banks to restructure CFAF 261 billion of debt.
  - Negotiations with external creditors ongoing with early signs of progress.

### Strengthening debt management and reducing debt vulnerabilities
- Debt levels and risk:
  - Public debt stock: 44.9 percent of GDP end-2020; estimated 47.2 percent of GDP by end-2021.
  - Public external debt: estimated 30.5 percent of GDP at end-2020.
  - Updated DSA signals high risk of debt distress: three out of four external debt indicators and one public debt indicator breach thresholds under baseline.
  - Large and sustained breach for external debt service-to-exports ratio.
- Authorities’ actions:
  - Restated commitment to limit non-concessional borrowing.
  - September 2021: signed non-concessional loan (CFAF 3 billion) outside predetermined list—breach of continuous PC; requested update to list.
  - Agreed to replace nominal ceiling on new non-concessional borrowing with ceiling on present value of newly contracted or guaranteed external public debt (per revised DLP).
  - Proposed ceiling of CFAF 512.9 billion for end-2022; authorities’ borrowing plan maintains nominal overall borrowing envelope for project loans at CFAF 650 billion.
- Debt operations:
  - July 1 Eurobond issuance: CFAF 449 billion issued; buyback CFAF 358 billion of 2015 Eurobond; net financing cost about CFAF 75.5 billion.
  - Remainder (CFAF 17 billion) financed high-return development projects with limited concessional financing.
  - Need for focused medium-term debt strategy, consistent annual borrowing plans, improved creditor communication.
- Banking sector exposure:
  - Bank credit to public sector (including SOEs) rose from 15 percent of total assets in December 2019 to 21 percent in June 2021.
  - MCM TA recommended: publish quarterly issuance calendar; boost investor relations; disseminate macro-financial information; adapt issuance strategy to demand constraints.

### Reinforcing good governance, transparency, and anti-corruption
- Emphasis on transparency, accountability, and governance across fiscal policy, PFM, revenue mobilization and SOE oversight as enablers of fiscal consolidation and debt reduction.

### Financial stability and inclusion (banking system and policy recommendations)
- Banking system fragilities:
  - NPLs rose in H1 2021 despite BEAC forbearance, reaching almost 15 percent of gross loans.
  - Overdue loans high for private firms; NPLs rose strongly in Hotels and Commerce and Transportation and Telecom sectors.
  - Bank profitability moderately declined in June 2021 vs June 2020.
  - Aggregate capital, liquidity, and fixed asset ratios improved moderately but may worsen once forbearance expires.
  - Sovereign-bank linkages intensified; stock of domestic government securities in banks increased over past three years.
- Policy recommendations:
  - Continue financial sector reforms and restructure two failed banks under COBAC resolution plans; transfer bad assets to SRC.
  - Sign performance contracts with each troubled bank; implement Commercial Bank Cameroon privatization plan in 2022.
  - Operationalize movable collateral registry; implement 2019 law to clean past NPLs; train judges and clerks; make specialized commercial courts operational.
  - Review tax policies (VAT on interest, taxation of provisions) in upcoming tax diagnostic.
  - Strengthen SRC resources and structure for asset recovery.
- Financial inclusion:
  - Access to financial services low; mobile banking progressed rapidly.
  - Staff welcomes National Strategy for Inclusive Finance 2021-2025; recommends policy actions on financial literacy, land registries, credit bureaus, mobile banking reforms, and complementarities with banking system.
  - Upcoming tax diagnostic to review tax on non-profit MFIs and mobile transactions for consistency with inclusion goals.

### Promoting gender equality
- Macro gains:
  - Staff estimates GDP per capita growth could increase by ¼ percentage point if gender inequality index brought down to SSA average; more than 1 percentage point if matched to averages of leading emerging Asian or Latin American countries.
- Measures:
  - 2022 budget law includes first ever gender-sensitive budget annex focused on eight pilot ministerial departments.
  - Staff encourages AFRITAC TA recommendations implementation and broadening gender budgeting.
  - Recommend facilitating female entrepreneurship and improving access to credit for women.

### Promoting the green economy and climate resilience
- Climate risks:
  - Rising temperature, declining rainfall; increased drought, erosion, violent winds, floods.
  - Rate of forest loss nearly doubled in 2020 vs 2019, reaching 100kha.
  - SND-30 objective: intensify adaptation and mitigation measures.
- Recommendations and assistance:
  - World Bank producing Climate Change Development Report (CCDR).
  - IMF to encourage climate mitigation commitments under Glasgow Declaration on Land and Land-use.
  - Invest in infrastructure, build fiscal and external buffers, contingency planning, and consider C-PIMA and other IMF tools.

### Program modalities, financing, and capacity to repay
- BEAC policy assurances:
  - Raised policy rate (TIAO) by 25 basis points at extraordinary MPC meeting in late November.
  - Agreed to increase interest rate of liquidity absorptions to reduce excess liquidity and improve monetary transmission.
- Monitoring and conditionality:
  - Semi-annual reviews; QPCs, ITs, SBs.
  - End-March 2022 ITs and end-June 2022 QPCs proposed to be modified with updated projections; new end-Sept 2022 ITs and end-Dec 2022 QPCs proposed.
  - Continuous QPC ceiling on new NCED proposed to be replaced by PV-based ceiling per new DLP.
- Capacity to repay and risks:
  - Under baseline, Fund credit outstanding peaks over 3 percent of GDP in 2023.
  - Annual obligations to Fund peak at about 2.4 percent of revenues excluding grants in 2027.
  - Risks elevated: SOE contingent liabilities (SONARA), delays in reforms, security risks, COVID-19 pandemic.
- Financing assurances:
  - Program fully financed with firm commitments over next 12 months; World Bank disbursement for investment projects in 2022 expected to reach USD473 million.
- External financing table highlights (as presented in source; entries preserved verbatim):
  - Total (CFAF, billions): 2021 373, 2022 319, 2023 2279, 2024 1018, 2027 1271, 1010 0461
  - Total (SDR, millions): 961 508 643 376 468 37170
  - World Bank: 80885756
  - France: 0450 0 / 4556420
  - EU: 160160 / 3240315
  - Exceptional Financing: 1660001662101676
  - 1/ Cameroon's current quota is SDR 276.0 million.

### Data provision, statistical developments, and capacity development
- Data provision broadly adequate; improvements:
  - Rebasing of national accounts to 2016.
  - Strengthened public debt and balance of payments data quality and frequency.
  - Shift of budget execution reports to commitment basis.
- Remaining weaknesses:
  - Fiscal data coverage of local government and public enterprises, including cross-debts.
- CD Strategy:
  - Well-aligned with authorities’ economic reform strategy for 2021-23; revised CD strategy discussed with authorities.
- Staff appraisal:
  - Cameroon’s leadership in CEMAC regional strategy essential; staff welcomes commitment to rebuild BEAC foreign exchange reserves.
- Macroeconomic outlook and risks:
  - Economy gradually recovering; risks broadly balanced but high uncertainty.
  - External position in 2021 assessed weaker than fundamentals and desirable policies.
- SDR allocation and fiscal space:
  - SDR allocation provides policy space; staff encourages saving about half.

### Article IV timing and macro projections (selected figures)
- Next Article IV Consultation expected within 24 months.
- Table 1 (Selected Economic and Financial Indicators, 2019–28) (selected entries):
  - GDP at constant prices: 2019 3.4; 2020 -1.5; 2021 0.5; 2022 3.6; 2023 3.5; 2024 4.5; 2025 4.8; 2026 5.0; 2027 5.1; 2028 5.1
  - Consumer prices (average): 2019 2.5; 2020 2.4; 2021 2.5; 2022 2.3; 2023 2.3; 2024 2.1; 2025 2.0; 2026 2.0; 2027 2.0; 2028 2.0
  - Total revenue (including grants) (% of GDP): 2019 15.4; 2020 13.7; 2021 13.4; 2022 14.6; 2023 13.9; 2024 14.9; 2025 15.9; 2026 16.3; 2027 16.6; 2028 17.1
  - Non-oil revenue (% of GDP): 2019 12.3; 2020 11.7; 2021 11.4; 2022 12.1; 2023 11.7; 2024 12.0; 2025 13.1; 2026 13.6; 2027 14.4; 2028 15.1
  - Total expenditure (% of GDP): 2019 18.7; 2020 17.0; 2021 16.6; 2022 17.9; 2023 17.0; 2024 16.7; 2025 17.0; 2026 16.6; 2027 16.8; 2028 17.6
  - Public debt stock (% of GDP): 2019 41.6; 2020 45.8; 2021 44.9; 2022 46.2; 2023 47.2; 2024 45.0; 2025 42.3; 2026 39.7; 2027 36.8; 2028 34.4

### Central government operations and balance of payments (selected figures)
- Central government (Table 2a/2b highlights; CFAF billions):
  - Total revenue and grants: 2023 Rev. 3,584; 2023 Prog./Est. 2,879 / 3,145; 2024 Rev. 3,145.
  - Total expenditure: 2023 Rev. 4,338; 2023 Prog./Est. 3,878 / 3,894; 2024 Rev. 3,894.
  - Overall balance (payment order basis) including grants (2023 Rev.): -754.
  - Unpaid government obligations (Memorandum): end-2021 602; projections: 2024 518; 2025 516; 2026 416.
- Balance of Payments (Table 3 highlights; CFAF billions):
  - Current account balance: 2019 -992; 2020 -845; 2021 -872; 2022 Prog. -964; 2023 Est. -838; 2024 Prog. -523.
  - Exports, goods: 2019 3,238; 2020 2,651; 2021 2,538; 2022 3,185; 2023 3,154.
  - Imports, goods: 2019 -3,670; 2020 -3,009; 2021 -2,929; 2022 -3,715; 2023 -3,435.
  - Overall balance: 2019 163; 2020 -51; 2021 -316; 2022 -113; 2023 482; 2024 953.

### Monetary sector and financial soundness (selected figures)
- Broad money (M2, CFAF billions): 2019 5,575; 2020 6,252; 2021 7,115; 2022 7,875; 2023 8,539.
- Net foreign assets (CFAF billions): 2021 2,371; 2022 2,359; 2023 2,476.
- Credit to private sector (CFAF billions): 2019 2,970; 2020 3,002; 2021 3,166; 2022 3,342.
- Financial soundness (Table 6 highlights):
  - Non-performing loans to total loans: 2016 10.7; 2017 10.8; 2018 12.4; 2019 12.8; 2020 13.4; 2021 13.7; 2021 Q2 17.0; 2021 total 18.0.
  - ROE (net income to average capital): 2016 20.6; 2017 27.9; 2018 22.4; 2019 24.7; 2020 19.5; 2021 18.7.

### External financing needs and sources (Table 8 highlights)
- Total Financing Requirements (CFAF billions): 2021 202; 2022 4,165; 2023 1,688; 2024 1,734; 2025 1,774; 2026 1,917.
- Components (CFAF billions):
  - Current Account Deficit: 2021 838; 2022 523; 2023 876.
  - Amortization of PPG Debt: 2021 764; 2022 520; 2023 585.
  - Gross Reserves Accumulation: 2021 422; 2022 614; 2023 227.
- Financing Sources (CFAF billions): 2021 165; 2022 113; 2023 381; 2024 462; 2025 163; 2026 517.
- IMF Financing line items as presented in source.

### Quantitative performance and indicative targets (Table 9 highlights)
- Non-oil primary fiscal balance (payment order basis) floor and outcomes (CFAF billions):
  - End-July 2021 QPC -510; Actual -441 (Met).
  - End-Sep 2021 IT -847; Actual -637 (Met).
  - End-Dec 2021 QPC -1,078.
- Ceiling on net domestic financing of central government: multiple targets with Met/Not Met statuses (e.g., End-Sep 2021 IT 551; Actual 64 Not Met).
- Indicative targets:
  - Floor on non-oil revenue (CFAF billions): End-July 2021 IT 1,646; Actual 1,707 (Met); End-Sep 2021 IT 2,192; Actual 2,193 (Met).
  - Floor for poverty-reducing social spending (CFAF billions): End-Sep 2021 IT 745; Actual 696 (Not Met).

### Cumulative external budget support and TMU adjustors (extracted entries as in source)
- Cumulative external budget support, excluding IMF: 53555355110534510645135170
- New concessional external debt contracted or guaranteed by the government 10/: 21915030017535088105150210315420
- Balance of the special account for the unused statutory advances: 6161516150415041505050
- Adjustors, ceilings, and methodological notes as provided in the TMU (including exchange rate assumptions 0.828 (EUR/USD), 543.201 (CFAF/USD), 0.714 (XUA/USD) and concessional loan term assumptions).

### Risk Assessment and recommended policy responses (RAM condensed)
- High likelihood risks and responses:
  - Unexpected downside COVID-19 shifts: step up health and social protection spending; contain spread while limiting economic impact.
  - Social tensions/political instability: strengthen social safety nets and accelerate structural reforms.
  - Regional spillovers/security deterioration: coordinate with CEMAC; curtail unproductive public investments; prepare refugee contingency plans.
  - Contingent risks from SOEs: enhance monitoring/reporting and reduce state aid.
- Medium likelihood risks and responses include leveraging pandemic upside, strengthening bank supervision for sharp global risk premia rises, widening non-oil tax base for oil market volatility, and investing in cyber security.

### COVID-19 response, preparedness, and vaccination (selected figures)
- Preparedness and Response Plan financing required: close to US$ 825 million.
  - Pillars: (i) health US$101 million; (ii) mitigation US$646 million (including US$200 million tax relief to businesses); (iii) supply US$9.5 million; (iv) local development US$16.5 million; (v) social resilience US$52 million.
- Special COVID-19 account allocations:
  - 2020 Revised Budget Law: close to US$310 million (76 percent external budgetary support).
  - 2021 Revised Finance Law: close to $363 million, of which $148 million for vaccination.
  - Proposed 2022 Finance Law: $218 million for COVID-19 spending.
- Vaccination targets:
  - Aim to vaccinate 60 percent of eligible population (+18 years) by 2023.
  - As of January 19, 2022: 6.3 percent fully vaccinated; 2.8 percent one dose.

### National Accounts rebasing and external sector assessment (selected figures)
- Rebasing from 2005 to 2016: upward revision of 3.6 percent to nominal GDP in 2016; informal GDP share revised from 37.8 percent to 42 percent.
- External sector assessment:
  - 2021 current account balance improved to -3.4 percent of GDP.
  - Projected 2022 current account deficit: around -2.1 percent of GDP; deterioration to around -3.1 percent in 2024.
  - NIIP (end-2020): -29.8 percent of GDP; Gross Assets 30.1 percent; Gross Liab. 59.8 percent.
  - REER assessments: staff assesses REER to be overvalued by 15.2 percent based on CA model.

### Annexes and program governance commitments (selected)
- Structural benchmarks on governance and anti-corruption: publication of COVID-19 execution report (Jun-22); diagnostic of governance vulnerabilities (Jun-23); action plan for public spending audits (Dec-22); audit of 2021 COVID-19 expenses (Dec-22).
- Authorities committed to legal/institutional measures to criminalize corruption offences, strengthen whistleblower protection, and reinforce Audit Bench resources.

### Debt sustainability, SONARA, and stress-tests (selected figures)
- Staff DSA highlights:
  - Public debt stock: ~44.9 percent of GDP end-2020; estimated 47.2 percent by end-2021.
  - SONARA: debt restructured with banks CFAF 261 billion (repayable over 10 years at 5.5 percent per year); SONARA’s debt equals 3 percent of GDP as of end-2020.
  - Stock of contracted-but-undisbursed debt (SENDs): CFAF 3,506 billion as of end-October 2021 (14.1 percent of GDP).
  - DSA conclusions: High risk of external debt distress; three out of four external indicators breach thresholds under baseline.
  - Market module: maximum three-year gross financing needs 9 percent of GDP (benchmark 14 percent); EMBI spread 306 as of July 28, 2021 (benchmark 570).
  - CI score 2.70 (October 2021 vintage) signaling medium debt-carrying capacity though classification maintained as weak.
- Policy recommendations:
  - Gradual fiscal consolidation; limit non-concessional borrowing; strengthen debt management; expedite SONARA restructuring; manage SENDs.

### Technical Memorandum of Understanding (TMU) — definitions and reporting
- Definitions highlighted:
  - Government, nonfinancial public enterprise, total government resources, oil revenue, non-oil revenue, total government expenditure and net lending, primary balance.
  - Debt definitions aligned with Fund Guidelines and PV/concessionality calculations (5 percent discount rate for PV).
  - Domestic debt definition includes unreimbursed balances, advances from BEAC, Treasury bills and bonds, structured debt, domestic arrears, and SONARA’s domestic debt.
- Quantitative program objectives:
  - Non-oil primary balance floor (payment order basis) as PC; net domestic financing ceiling excluding IMF financing as PC; ceiling on disbursement of non-concessional external debt; ceiling on net claims of Central Bank on government; zero ceiling on accumulation of external payment arrears; ceiling on PV of new external debt contracted/guaranteed by government (PV calculation rules specified).
- Reporting obligations and cutoffs:
  - Monthly TOFE and annexes within six weeks after month-end; monthly accounting statements (cash advances, provisional commitments) within three weeks; signing/guaranteeing of external debt and occurrence of external arrears reported immediately.
  - Detailed lists of reporting items and periodicity provided.

*Italic line:* _Source: IMF staff report text (content unit: 1cmrea2022001)._

### 1. Mobile Money Transfer Taxation ________________________________________________________________ 8

### 1. Mobile Money Transfer Taxation

### Context
- Several countries in Africa, including Cameroon, have recently introduced or proposed a tax on mobile money transactions.
- The 2022 budget law provides an increase of revenue of about CFAF 20 billion under this measure.
- Box prepared by Roberto Piazza and Jean-Francois Wen.

### Main findings and arguments
- Advocates' view:
  - The mobile money tax is seen as a means to tax the informal sector.
  - It is considered an easy-to-administer measure for increasing revenues.
- Critics' concerns:
  - Unequal treatment: When the tax is not applied to the banking sector, it results in an unequal treatment of different means of payments.
  - Broad transaction taxes: A more encompassing measure that includes a tax on bank transactions, such as the one adopted in some Asian and Latin American countries, tends to reduce bank deposits, has detrimental cascading effects on other means of payment, and leads to financial disintermediation.
  - Fiscal inequity and financial inclusion: Taxing mobile money can be fiscally inequitable and hinder the current low level of financial inclusion. The poor and unbanked, often in rural areas and facing high transaction costs from formal banking, are negatively affected.
  - Fixed costs barrier: Minimum deposit requirements and banking fees generate fixed costs that are hard to bear for poor individuals, who typically make small-value transactions.
  - Behavioral and fiscal spillovers: Behavioral changes caused by the tax may lead to unintended losses of fiscal revenues. Example cited: in Uganda, the initial higher-than-expected revenue from the mobile money tax was offset by an overall fall in tax receipts from the telecom sector, caused in large part by the decreased activity in mobile money.
  - Additional negative impacts: Mobile money taxes can have a negative impact on excise tax receipts (as consumers are pushed into non-traceable cash transactions) and on the size of remittances from abroad, which are facilitated by mobile money.

### Evidence and country experience referenced
- Uganda: Uganda 2019 Article IV report—poor and unbanked segments found to be negatively affected; initial revenue offset by fall in telecom sector receipts.
- Listed country experiences with mobile money taxes and years:
  - Tanzania in 2021
  - Ghana in 2021
  - Republic of Congo in 2019
  - Malawi in 2019
  - Côte d’Ivoire in 2019
  - Kenya, 2018
  - Uganda in 2018

### Policy implications and next steps
- The implications of adopting a tax on mobile money transactions need to be carefully weighed against distributional, financial inclusion, and broader fiscal revenue risks.
- The upcoming tax policy diagnostic will among others help assess the pertinence of these taxes.

*Prepared by Roberto Piazza and Jean-Francois Wen.*

### 0.2 percent of GDP; (ii) the share of spending executed through exceptional procedures on

### 1cmrea2022001 - 0.2 percent of GDP; (ii) the share of spending executed through exceptional procedures on

### Program performance and quantitative targets (end-September / continuous PCs)
- Out of nine end-September ITs, five were missed.
- Ceiling on the net domestic financing of the central government, excluding IMF financing, was exceeded by 0.3 percent of GDP due to higher-than-expected net domestic debt financing and lower-than-expected proceeds of the Eurobond refinancing (higher debt repurchases).
- The share of spending executed through exceptional procedures on authorized (payment order) spending reached 10.5 percent against a benchmark of 5 percent; this continued to exceed the target by 3 percent as of end-September.
- Direct intervention spending of the National Hydrocarbons Company’s (SNH) overran its target by 0.2 percent of GDP, driven primarily by reemergence of security challenges in Northwest, Southwest and Far North regions necessitating quick deployment of resources.
- Authorities committed to containing spending through exceptional procedures; share of such spending in total spending declined from 10.5 percent to 8 percent between July and September.
- Floor on social spending was executed to 93 percent of the target but missed by 0.2 percent of GDP, owing to insecurity in some regions, incomplete identification of priority groups, and slow vaccine deployment.
- Continuous PC on external arrears accumulation was met.
- Ceiling on new non-concessional external debt (NCED) contracted or guaranteed by the government was not met: the authorities signed a new non-concessional loan (CFAF 3 billion) in September 2021 for a project outside the predetermined list.
  - The contracted amount remains limited; overall NCED remained well below the ceiling allowed by the adjusters (TMU).
  - Adoption of the new debt limit conditionality is expected to help avoid recurrence.

### Structural benchmarks (SBs) and implementation progress
- Progress underway on all SBs. At end-December, two out of eight SBs were met on time, including publication of the audit prepared by the Audit Bench of the Supreme Court (Chambre des Comptes) of FY2020 expenses related to COVID-19.
- SB on issuing a decree to strengthen accountability of program/project implementing units was completed on October 13 instead of end-September.
- Factors slowing SB progress:
  - Need for close coordination with regional bodies.
  - SB6 (single treasury account-TSA): establishment of an IT platform to facilitate management of the TSA accounts at the BEAC, expected in December 2021, was slower than anticipated.
  - SB9 (adopting a regulatory framework for PPPs): authorities awaiting adoption of the regional framework.
  - Contracting delays affecting SB5 (arrears): four firms were selected to conduct audits of all government payments arrears from 2000 to 2019; selection delayed by COVID-19 containment measures. The audits will form basis for a plan to clear certified arrears expected to be adopted by end-September 2022.
  - SB14 (deposit and consignment fund): process for appointing managers is under way.
  - Capacity constraints: SB2 (tax policy review) TA from IMF delayed and expected to be completed by October 2022; SB10 (SOE audits) reviews of three large SOEs underway (Port Authority of Douala near completion; CAMTEL and CAMWATER at contracting stage to be submitted by end-June 2022); SB11 (cross-debt inventory) near completion with report available in April.

### Governance, COVID-19 expenditures and audit findings
- Government implemented governance commitments related to IMF COVID-19 disbursements: published report on execution of COVID-19-related expenditures during the 2020 budget year and published information about contracts awarded from October 20, 2020 to end-December 2021, including beneficial owners.
- Audit Bench (Chambre des Comptes) audit of CAS-COVID (Special National Solidarity Fund) covered actions by MINSANTE, MINRESI and MINFI during 2020 and identified issues:
  - Transfer of non-health information (commitments and payments) from care centers to MINSANTE was not well organized, limiting strategic piloting and effectiveness of health response; lack of centralized accounting under Special Fund impeded strategic management.
  - Award of special contracts was opaque and conducive to abuses; use of derogatory procedures beyond July 2020 was costly for public finance and sometimes slower and less effective than ordinary procedures.
  - Control teams faced major challenges in collecting reliable accounting information; audit stressed need to maintain controls by financial controllers, state control engineers and store accountants and accelerate accounting reforms, particularly automation of collection of accounting and financial information.
- Audit Bench made 13 recommendations, opened 14 proceedings for mismanagement, and transmitted 12 cases likely to be classified as criminal offences to the Minister of Justice.
  - Non-criminal offences to be addressed by Chambre des Comptes; criminal offences by Ministry of Justice.
- Program includes new SBs to follow up on commitments, including publishing an execution report of expenses related to COVID-19 and preparing, with IMF staff, an action plan to strengthen frameworks for preparation, publication, and follow-up of public spending audits with recommendations for strengthening relevant institutions, especially the Audit Bench.
  - Authorities intend to prepare and publish by December 2022 an audit prepared by the Audit Bench of the Supreme Court.

### Fiscal stance, BL2022, and COVID-19 related finances
- At end-September 2021, social spending reached CFAF 696 billion, lower than program objectives.
- BL2022 reduces overall cash deficit by 0.7 percentage point to 2.3 percent of GDP in 2022, consistent with the program, with a non-oil primary deficit (cash basis) of 3.5 percent of GDP.
  - Revenue expected to increase by one percentage point to 14.1 percent of GDP, driven by nonoil revenue, partly from abolition of some COVID-19 related tax relief, administrative measures to simplify taxes on property income, and new taxes on mobile money transfers.
  - Spending in 2022 expected to increase by 0.2 percentage points to 16.6 percent of GDP, driven by goods and services and transfers; allocation for 2022 readjusted to align with vaccination needs and pace.
- Budget revisions due to updated oil assumptions: higher oil prices (increasing by USD13 to USD75.7 per barrel in 2022) lead to higher oil revenue and related spending.
  - Revenue and spending expected to be higher than BL2022 projections by 0.3 and 0.2 percent of GDP, respectively.
  - Fiscal deficit expected to be limited to 2.2 percent of GDP, with a non-oil primary deficit (cash basis) of 3.7 percent of GDP.
- As of January 5, 2022, vaccine deliveries to Cameroon: 1.4 million doses of the Johnson & Johnson vaccine, 1.2 million doses of Sinopharm, 589,600 of AstraZeneca, and 152,100 doses of Pfizer.
  - As of January 19, 2022, 6.3 percent of the eligible population was fully vaccinated, and 2.8 percent had received one dose.
  - 43.7 percent of the healthcare personnel is fully vaccinated.
- In August 2021, Cameroon received an SDR allocation equivalent to CFAF 208 billion.
  - Authorities plan to use 57 percent of this allocation by end-2022 (CFAF 50 billion in 2021 and 70 billion in 2022) and save the remainder to rebuild fiscal buffers and help bolster CEMAC’s international reserves.
  - IMF and CEMAC recommended saving about half of the allocation; staff stressed spending related to the SDR allocation should be transparent and accountable and advised keeping about half as a buffer.

### Social safety nets and cash transfer program (Box 3)
- National development strategy SND-30 aims for inclusive growth and redistribution to the most vulnerable.
- Pilot cash transfer (November 2013 to January 2016): 2,000 households in North and Northwest; evaluation (June 2016) confirmed multiple positive impacts (poverty reduction, improved housing, reduced food insecurity, improved education and health behaviors, increased probability of having national ID, increased social inclusion and financial inclusion).
- 2019-22 deployment: project to be deployed in more than 100 municipalities and Douala and Yaoundé, with around 300,000 households targeted.
- Four programs:
  - Direct ordinary cash transfers (OMT): beneficiary households receive CFAF 20,000 every two months over 2 years, with CFAF 80,000 in the 12th and 24th months (CFAF 360,000 in total).
  - Emergency cash transfer (EMT): beneficiary households receive a total of CFAF 180,000 over 12 months (CFAF 30,000 every two months).
  - Cash transfers in exchange for labor-intensive work (THIMO): beneficiaries receive CFAF 1,300 per working day for 60 working days in total.
  - Emergency cash transfers for the COVID-19 response (TMU-COVID 19): beneficiary households receive a total amount of CFAF 180,000 (45,000 in the first two months and 90,000 CFAF in the third month).
- Financing:
  - Government devoted CFAF 34 billion to social safety nets, including CFAF 18 billion to support 75,000 households (4.5 billion per year) and CFAF 16 billion under the special COVID-19 allocation to cover 80,000 households.
  - Partners mobilized CFAF 46.2 billion: CFAF 33 billion by the World Bank, CFAF 13 billion by AFD and CFAF 0.101 billion by UNICEF.
- Targeting and methodology:
  - Priority to populations hit by shocks and to vulnerable layers, including North-West and South-West regions affected by security crisis.
  - Household approach covers diverse vulnerable groups (disabled, elderly, widows/widowers, orphaned children, people without national identification cards, people in chronic poverty).
  - Beneficiary heads of household sign a moral contract committing to (i) send children to school, (ii) seek hospital care, (iii) feed household members, (iv) obtain birth certificates for children, and (v) save money for income-generating activities.

*International Monetary Fund — Cameroon Country Report content unit 1cmrea2022001*

### 26. Staff supports the authorities’ aim to avoid a premature tightening of fiscal policy,

### 26. Staff supports the authorities’ aim to avoid a premature tightening of fiscal policy, intensify the vaccination campaign, and accelerate implementation of the cash transfer mechanism for the most vulnerable households

### Fiscal stance and short-term priorities
- Staff supports avoiding a premature fiscal tightening while meeting spending needs, intensifying the vaccination campaign, and accelerating implementation of the cash transfer mechanism for the most vulnerable households.
- Meeting these objectives requires:
  - Well-targeted and cost-effective spending.
  - Securing concessional financing.
  - Measures to mobilize domestic revenues.

### Authorities' views (short-term)
- Agreed with staff recommendations.
- Committed to accelerate the vaccination campaign through increased awareness and to speed up implementation of the cash transfer mechanism.
- Committed to ensure transparency and accountability in the use of the SDR allocation and to save about 43 percent of it as a buffer to boost regional external and fiscal sustainability.

### Medium-term fiscal strategy and targets
- Authorities aim for a gradual fiscal consolidation path consistent with program objectives and CEMAC convergence criteria.
- Fiscal objectives and expected outcomes:
  - Fiscal deficit (cash basis) expected to decrease to 2.2 percent in 2022, reflecting a reduction of 1.3 percentage points relative to 2021, driven mainly by lower investment.
  - Non-oil primary balance (cash basis), the fiscal anchor, to decrease to 3.7 percent of GDP in 2022 from 4.5 percent of GDP in 2020.
  - By end-2024:
    - Fiscal deficit (cash basis) projected to decrease to 0.8 percent of GDP.
    - Non-oil primary balance (cash basis) projected to decrease to 2.4 percent of GDP.
- Policy pillars to strengthen external and fiscal sustainability, catalyze private investment and donor support, and promote inclusive diversification:
  - Strengthen revenue mobilization.
  - Modernize PFM processes.
  - Reform state-owned enterprises (SOEs).

### Domestic revenue mobilization: findings and measures
- Program target:
  - Increase non-oil revenue to 13.7 percent of GDP by 2024, from 12.9 percent of GDP in 2018.
- Drivers of revenue increase:
  - Economic recovery.
  - Acceleration of tax administration measures over the short term.
  - Adoption and execution of the Medium-Term Revenue Strategy (MTRS).
- Recommended tax policy and administration measures:
  - Recover SOEs tax arrears in the context of more transparent and informative accounting practices — could generate gross additional revenue of about 1.5 percentage points of GDP (likely to be offset by increased subsidy spending).
  - Streamline tax exemptions with limited social impact; conduct in-depth analysis and gradual phaseout of least effective measures, replacing them with conditional cash transfer mechanisms; analyze investment incentives and quantify tax and customs privileges under the Investment Code.
  - Customs administration optimization: regular reconciliation and verification of tax databases; simplify procedures through e-payments; strengthen customs valuation processes; enhance actions to combat fraud and smuggling.
  - Accelerate implementation of the MTRS to raise taxpayer compliance and establish a road map covering tax policy, law, and tax and customs administrations.
- Tax potential and efficiency gains:
  - Cameroon’s tax potential points to a potential increase of about 7 percentage points of GDP in tax revenues, mostly from improvements in transparency and government effectiveness and increased productivity of low-yielding direct taxes.
- Text Table 1: Potential Gains from Revenue Enhancement (Percent of GDP)
  - Discontinuing Tax relief to businesses and households: 0.5
  - Recovering SOEs tax arrears: 1.5
  - Streamlining the least effective VAT tax expenditure: 0.8 - 2.6
  - Taxing donor funded projects: 0.6
  - Total: 3.4 - 5.2

### Public Financial Management (PFM): findings and recommendations
- Progress noted: realism of the proposed budget law, actions to clear arrears, generalization of the Treasury Single Account (TSA).
- Remaining weaknesses:
  - Persistent underestimation of spending needs and commitments.
  - Excessive use of exceptional procedures undermining credibility and transparency.
  - Need to enhance budget execution monitoring and transparency, including preparing credible monthly cash plans.
- Public investment management (PIM):
  - Low execution rates, very high management costs and delays.
  - April 2020 Public Investment Management Assessment: Cameroon PIM processes are very weak relative to comparators.
  - Estimated efficiency scores based on infrastructure quality:
    - Cameroon: 0.6
    - Sub-Saharan African countries (SSA) average: 0.78
  - Cameroon’s relative efficiency gap with respect to the efficiency frontier: around 60 percent, larger than SSA average efficiency gap of 40 percent.
  - Recommendations: strengthen PIM by implementing the Public Procurement Code and adopting a single legal and regulatory framework governing Public-Private Partnerships (PPP).
- Limit derogation procedures and strengthen governance and transparency:
  - Payments by the Treasury without prior authorization (excluding debt service) remain sizeable and pose risks.
  - Authorities committed to limit exceptional procedures, expand the TSA, and repatriate eligible bank accounts of administrations, public institutions and agencies, public establishments, and the Autonomous Amortization Fund (CAA) to the BEAC.

### Reducing fiscal risks from SOEs
- Staff recommendations:
  - Address financial and fiscal risks associated with SOEs to avoid buildup of cross-debts with the state.
  - Improve SOE financial situations; strengthen oversight of SOEs and subnational government operations, including borrowing restrictions and public guarantees.
  - Adopt a credible and progressive clearance plan of cross debts between the State and SOEs based on the end-2020 audit.
- SOE-related distortions and simulation results:
  - SOEs wages higher than in non-SOE firms; return to capital lower, generating labor and capital subsidies and within-sector distortions.
  - Cross-sector distortions skew the economy toward the primary sector, reducing aggregate productivity and discouraging investment.
  - Simulation: gradual elimination of ½ of estimated subsidies to SOEs and removal of ⅕ of cross-sectoral distortions would:
    - Raise GDP by about 25 percent over a 15-year horizon.
    - Reduce the fiscal deficit by about 6 percentage points of baseline GDP.
    - GDP increase driven by expansion of the tertiary and secondary sectors.
- SONARA (national oil refinery) specific issues:
  - SONARA’s debt amounts to 3 percent of GDP and 6.6 percent of total public and publicly guaranteed debt as of end-2020.
  - In October 2021 SONARA reached a revised agreement with local banks to restructure CFAF 261 billion of debt.
  - Negotiations with external creditors ongoing with some early signs of progress.

### Authorities' views (structural fiscal reforms)
- Reiterated commitment to medium-term fiscal consolidation and acceleration of structural reforms: implement MTRS, strengthen PFM, and enhance SOE oversight.
- Ongoing reform to institutionalize governance by program contracts (MINFI instruction) to improve public enterprise performance.
- Fiscal policy reforms to be accelerated after completion of the planned tax diagnostic.
- Noted social pressures from the pandemic that affect reform implementation.

### Strengthening debt management and reducing debt vulnerabilities
- Debt levels and risk:
  - Public debt stock: 44.9 percent of GDP in end-2020; estimated 47.2 percent of GDP by end-2021.
  - Public external debt: estimated 30.5 percent of GDP at end-2020.
  - The updated DSA signals a high risk of debt distress: three out of four external debt indicators and one public debt indicator breach respective thresholds under the baseline scenario.
  - Large and sustained breach for the external debt service-to-exports ratio highlights a narrow export base relative to projected debt service.
  - Debt indicators broadly remain unchanged compared to the previous DSA and below peaks in the previous year, supported by a successful Eurobond issuance and some progress in restructuring SONARA’s domestic debt.
  - As the pandemic effects wane and fiscal consolidation continues, debt indicators are expected to gradually improve in the medium term.
- Authorities’ commitments and actions:
  - Restated commitment to limit non-concessional borrowing.
  - September 2021: signed a non-concessional loan (CFAF 3 billion) for a project not included in the predetermined list, breaching the continuous program condition on new non-concessional external debt; authorities requested to update the list to include the project.
  - Agreed to replace the nominal ceiling on new non-concessional external borrowing with a ceiling on the present value of newly contracted or guaranteed external public debt, per revised Fund policy on Debt Limits (DLP).
  - Proposed ceiling of CFAF 512.9 billion for end-2022, based on the authorities’ borrowing plan which maintains the nominal overall borrowing envelope for project loans at CFAF 650 billion (same level as 2021 budget).
- Debt management operations and strategy:
  - July 1 Eurobond issuance: CFAF 449 billion issued as part of a liability management operation to buy back CFAF 358 billion of the 2015 Eurobond with a net financing cost of about CFAF 75.5 billion.
  - Remainder of proceeds (CFAF 17 billion) financed high-return development projects with limited concessional financing.
  - Authorities acknowledged the need for a more focused medium-term debt strategy to develop consistent annual borrowing plans and improve creditor communication.
  - Commitments to reassess and cancel SENDs related to old/non-performing projects and to strengthen controls on new borrowing for better alignment with absorption capacity.
- Domestic financing and banking sector exposure:
  - Bank credit to the public sector (including SOEs) rose from 15 percent of total assets in December 2019 to 21 percent in June 2021, raising concerns of an amplified sovereign-bank nexus and potential crowding out of private credit.
  - MCM TA recommended immediate actions to strengthen debt management and issuance practices, including:
    - Improving planning and communication of calls for tenders; publish a quarterly issuance calendar.
    - Boosting investor relations.
    - Disseminating information on macro-financial variables.
    - Adapting issuance strategy to demand constraints.

### Authorities' views (debt management)
- Emphasized reducing debt vulnerabilities as a key priority.
- Highlighted active debt management success in accessing the market to refinance the maturing Eurobond.
- Committed to slowing external debt growth, utilizing concessional financing, and limiting non-concessional borrowing to high-priority projects with proven socioeconomic and financial returns.
- Supported new debt limits based on present value terms as a credible anchor of medium-term fiscal and debt policies.
- Noted potential positive implications for Cameroon’s composite indicator (CI) of debt carrying capacity—possible reclassification to medium—depending on global economic recovery and regional reserves accumulation.

### Reinforcing good governance, transparency, and anti-corruption
- Text notes the importance of transparency, accountability, and governance across fiscal policy, PFM, revenue mobilization, and SOE oversight as critical enablers of the fiscal consolidation and debt reduction strategy.

*Source: IMF staff report text (content unit: 1cmrea2022001).*

### 45. Good governance, decentralization, and strategic management of the State constitutes

### 45. Good governance, decentralization, and strategic management of the State constitutes

### Governance, transparency, and anti-corruption: findings and benchmarks
- Good governance, decentralization, and strategic management of the State is a key pillar of Cameroon’s National Development Strategy for 2020-30 (SND30).
- Recent efforts:
  - Publication in November 2021 of the COVID-19 spending audit report (SB for end-December).
  - Publication of results of public procurement tenders and the beneficial ownership of companies receiving contracts on COVID-19 related expenditures.
  - Progress in clearing arrears and cross-debt (annex III).
- Persistent problem: weak governance and corruption continue to hamper Cameroon’s business environment and competitiveness.
- Legal and institutional shortcomings identified:
  - Need to criminalize corruption offences and reduce exemptions from prosecution.
  - Weak whistleblower protection.
  - Weak frameworks for confiscation of proceeds and instrumentalities of crime.
  - Governance weaknesses remain in fiscal governance, market regulation, rule of law and AML/CFT (as noted in IMF Country Report No. 18/378, Annex II).
- Planned governance diagnostic:
  - A comprehensive governance diagnostic is planned to be conducted in consultation with IMF staff pursuant to the Fund’s 2018 enhanced governance framework.

### Authorities’ commitments and new structural benchmarks (SBs)
- Authorities intend to:
  - Publish by June 2022, consistent with RCFs commitments, an execution report of expenses related to COVID-19 and executed during the 2021 budget year (New Structural Benchmark (New SB)).
  - Conduct in consultation with IMF staff, and publish by June 2023, a diagnostic of vulnerabilities in governance, including in corruption, covering state functions most relevant to economic activity: (i) fiscal governance; (ii) financial sector oversight; (iii) market regulation; (iv) rule of law; and (v) Anti Money Laundering and Combatting the Financing of Terrorism (AML/CFT) (New SB).
  - Prepare, in consultation with IMF staff, and submit to IMF Staff by December 2022, an action plan for strengthening the frameworks for preparation, publication, and follow-up of public spending audits, with recommendations for strengthening relevant institutions, especially the Supreme Court’s Audit Bench (New SB).
  - Prepare and publish by December 2022 an audit prepared by the Audit Bench of the Supreme Court (Chambre des Comptes) of fiscal year 2021 expenses related to COVID-19 (New SB).

### Authorities’ views on governance reforms
- Government priorities:
  - Re-define the definition of corruption and similar offenses; reduce exemptions from prosecution; strengthen whistleblower protection; improve confiscation of proceeds and instrumentalities of crime.
  - Strengthen the independence and intervention powers of the National Anti-Corruption Commission (CONAC).
  - Emphasize provisions of the 1996 constitutional amendment requiring senior officials to declare their assets.
  - Strengthen the means of the Audit Bench to align with CEMAC directives.
- Diagnostic expected to:
  - Provide a roadmap for future reforms and ensure complementarity with work by external partners (EU, World Bank).

### Structural reforms to strengthen productivity and accelerate private sector-led diversification

H3: Strengthening financial stability and inclusion

- Banking system fragilities (findings):
  - Non-performing loans (NPLs) rose in the first half of 2021 despite regulatory forbearance by the BEAC, reaching almost 15 percent of gross loans.
  - Overdue loans are particularly high for private firms; NPLs rose strongly in Hotels and Commerce and Transportation and Telecom sectors.
  - Bank profitability moderately declined in June 2021 relative to June 2020 despite forbearance.
  - Aggregate capital, liquidity, and fixed asset ratios improved moderately but may worsen when forbearance measures expire.
  - Concentration risks declined between June 2020 and June 2021 but remained high.
  - Sovereign-bank linkages intensified as Cameroon is the reference debt issuer for the CEMAC regional market; over the past three years, the stock of domestic government securities in banks’ balance sheets has significantly increased.

- Policy recommendations (staff):
  - Continue financial sector reforms and restructuring of two failed banks under COBAC resolution plans, including exit of historical shareholders and transfer of bad assets to the debt recovery agency (SRC).
  - In the near term, sign performance contracts with each of the two banks including a governance framework aligned with best practices and a strategy for the State to sell its shares.
  - Implement the Commercial Bank Cameroon privatization plan in 2022 as announced.
  - Operationalize the movable collateral registry launched in 2019 to facilitate NPL reduction.
  - Continue implementation of the 2019 law allowing clean-up of past NPLs from bank balance sheets; hire and train judges and clerks and make specialized commercial courts operational.
  - Review tax policies (including VAT on interest revenues and taxation of provisions at time of write-off of bank legacy NPLs) in the context of the upcoming tax diagnostic to facilitate financial intermediation.
  - Strengthen SRC resources and organizational structure consistent with its mandate, including transfer of bad assets from bank balance sheets to the SRC and their recovery.

- Financial inclusion and related actions:
  - Access to financial services is low; indicators of financial inclusion appear to be at the median of SSA countries.
  - Mobile banking has progressed rapidly, supporting money transfers and payments, and could further support intermediation of microfinance institutions.
  - Staff welcomes the National Strategy for Inclusive Finance 2021-2025 and recommends the strategy include:
    - Specific policy actions to improve financial literacy and land registries.
    - Create credit bureaus and strengthen institutions facilitating information sharing among banks and microfinance institutions.
    - Reforms to strengthen mobile banking (including phone network infrastructure) and reinforce complementarities with the banking system regarding microconsumer loans.
  - Upcoming tax diagnostic expected to review new tax policies in the 2022 budget law, such as the income tax on non-profit micro-finance institutions and the tax on mobile transactions, to assess consistency with financial inclusion and development objectives.

H3: Promoting gender equality

- Macroeconomic gains from narrowing gender gaps:
  - Staff estimates indicate Cameroon GDP per capita growth could increase by ¼ percentage point if its gender inequality index score were brought down to the SSA average.
  - Growth could increase to more than 1 percentage point if brought to the average of 5 leading emerging Asian countries (Indonesia, Malaysia, Thailand, Philippines, and Vietnam) or the 5 leading Latin American economies (Brazil, Chile, Colombia, Mexico, and Peru).

- Recent measures and recommendations:
  - The 2022 budget law includes an annex devoted to gender budgeting—the first ever gender sensitive budget document—focused on eight pilot ministerial departments.
  - Staff welcomes adoption of gender budgeting tools and encourages implementation of AFRITAC TA recommendations and broadening gender budgeting beyond pilot departments.
  - Persistent gaps: ICT skills, women’s access to assets (including land), and environmental issues; monitoring methodologies need improvement.
  - Staff recommends modifying laws and policies to facilitate female entrepreneurship and intensifying consultations with banks and technical and financial partners to facilitate women's access to credit.

H3: Promoting the green economy and climate resilience

- Climate risks and environmental trends:
  - Cameroon faces rising temperature and declining rainfall, with increased drought, erosion, violent winds, and floods.
  - Rate of forest loss nearly doubled in 2020 compared to 2019, reaching 100kha.
  - SND-30 objective: “Intensify adaptation and mitigating measures against the effects of climate change and environmental management to ensure economic growth as well as sustainable and inclusive development.”

- Recommendations and assistance:
  - World Bank is producing a Climate Change Development Report (CCDR) to identify key challenges, potential cost and loss to the economy, and policy responses.
  - IMF will encourage authorities to fulfill climate mitigation commitments under the Glasgow Declaration on Land and Land-use.
  - Importance of investing in infrastructure and building financial resilience through adequate fiscal and external buffers and preparing rapid responses to disasters through contingency planning.
  - IMF assistance available, including Climate-Public Investment Management Assessment (C-PIMA), to help draw up concrete plans to mitigate fiscal impacts of climate-related shocks (e.g., country insurance, lending lines with multilateral financial institutions).

- Authorities’ views on financial inclusion, gender, and climate:
  - National Strategy for Inclusive Finance 2021-2025 identifies six strategic directions: (i) improving quality and access to financial services; (ii) improving access to finance for value chains, SMEs, and agriculture firms; (iii) promoting innovation for numeric finance; (iv) promoting Islamic finance; (v) promoting financial literacy and consumer protection; and (vi) improving the framework for regulations and tax policies.
  - Commitment to restructure failed banks as required by COBAC, continue implementation of law to deal with NPLs, operationalize the collateral registry and strengthen information sharing platforms.
  - Commitment to implement AFRITAC TA recommendations on gender budgeting and expand beyond pilot Departments; commitment to modify laws and policies to facilitate female entrepreneurship.
  - Cameroon signed the Glasgow Declaration on Land and Land Use at CoP26; commitment under AFR 100 initiative to restore approximately 12 million degraded lands.
  - Interest expressed in models and data sources for climate resilience such as the Climate Change Indicators Dashboard, the Carbon Pricing Assessment Tool (CPAT), and the C-PIMA.

### Program modalities, financing, and capacity to repay

- BEAC policy assurances and regional actions:
  - BEAC provided updated policy assurances in support of CEMAC countries’ Fund-supported programs in a follow-up letter of policy support of December 2021.
  - BEAC actions include: (i) raised the policy rate (TIAO) by 25 basis points at an extraordinary MPC meeting in late November; and (ii) agreed to increase the interest rate of liquidity absorptions to reduce excess liquidity, stimulate the interbank market, and improve monetary policy transmission.
  - BEAC will continue to work towards effective application of foreign exchange regulation, including implementing adaptations for the extractive sector.

- Program monitoring and conditionality:
  - Program performance reviewed semi-annually through six-monthly and continuous quantitative performance criteria (QPCs), quarterly indicative targets (ITs), and structural benchmarks (SBs).
  - Updates:
    - End-March 2022 ITs and end-June 2022 QPCs proposed to be modified in line with updated macroeconomic projections.
    - New end-September 2022 ITs and end-December 2022 QPCs proposed.
    - Continuous Quantitative Performance Criteria Ceiling on new non-concessional external debt contracted or guaranteed by the government proposed to be replaced starting from the Executive Board date by the PV of contracting and guaranteeing of new external borrowing in line with the new DLP.
    - Missed structural benchmarks proposed to be reset and new structural benchmarks proposed to support good governance and transparency.

- Capacity to repay and risks:
  - Under the baseline, total Fund credit outstanding (based on existing and prospective drawings) peaks at over 3 percent of GDP in 2023.
  - Annual obligations to the Fund peak at about 2.4 percent of revenues excluding grants in 2027, well above the reference group top quartile.
  - Risks are elevated and include SOE contingent liabilities (especially from SONARA’s debt restructuring), delays in implementing critical reforms, security risks, and the COVID-19 pandemic.
  - Strong political support at national and regional level is critical to mitigate risks.

- Financing assurances and donor commitments:
  - Program remains fully financed, with firm commitments over the next 12 months and good prospects for financing over the remainder of the arrangement.
  - Donor engagement is important for their decision to contribute to budget support, quasi-budget support and project financing.
  - World Bank disbursement for investment projects in 2022 is expected to reach USD473 million, including the regional Douala-Ndjamena Corridor project and the Adaptive Social Nets and Economic Inclusion project.
  - Additional sizeable amounts expected for the Mobility Urban Douala and Local Governance and Resilience project.

- External financing table highlights (Text Table 4; figures in billions of CFAF unless otherwise indicated):
  - Total (CFAF, billions): 2021 373, 2022 319, 2023 2279, 2024 1018, 2027 1271, 1010 0461 (table formatting preserved as in source).
  - Total (SDR, millions): 961 508 643 376 468 37170 (as presented in the source table).
  - World Bank: 80885756 (table entry).
  - France: 0450 0 / 4556420 (table entries).
  - EU: 160160 / 3240315 (table entries).
  - Exceptional Financing: 1660001662101676 (DSSI (Net) entries).
  - 1/ Cameroon's current quota is SDR 276.0 million.

*Cameroon — International Monetary Fund. Source: IMF staff report excerpt provided.*

### 66. Data provision is broadly adequate, and the authorities have been working with

### 1cmrea2022001 - 66. Data provision is broadly adequate, and the authorities have been working with

### Data provision and recent statistical developments
- Data provision is broadly adequate, and the authorities have been working with development partners to improve the quality, coverage, and timeliness of key macroeconomic data (¶66).
- Significant developments since the last Article IV Consultations:
  - Rebasing of the national accounts to 2016.
  - Strengthening of the quality and frequency of public debt and balance of payments data.
  - Shift of budget execution reports to a commitment basis with more comprehensive coverage.
- Important weaknesses remain in fiscal data coverage of local government and public enterprises, including cross-debts (¶66).

### Capacity development (CD)
- The CD Strategy for Cameroon is well-aligned with the authorities’ economic reform strategy for 2021-23 and program objectives (Annex VI) (¶67).
- Cameroon has an overall good track record of implementing TA recommendations (¶67).
- A revised CD strategy was discussed with the authorities, taking stock of new ways of working (remote missions) and evolving needs in the COVID-19 pandemic context (¶67).

### Staff appraisal — regional role and external stability
- Cameroon’s continued leadership in implementing the CEMAC’s regional strategy is essential given its status as the largest contributor to CEMAC reserves and the region’s external sustainability (¶68).
- Staff welcomes the authorities’ commitment to policies consistent with regional external stability, including rebuilding BEAC foreign exchange reserves and supporting BEAC and COBAC enforcement of the new foreign exchange regulations (¶68).

### Macroeconomic outlook and risks
- The economy is gradually recovering from the COVID-19 pandemic, with risks broadly balanced but high uncertainty (¶69).
- Growth is recovering after the deep drop in Q2-2020 (¶69).
- Risks are mitigated by:
  - The authorities’ track record.
  - Close engagement with donors.
  - A comprehensive CD program.
  - Contingency planning, including in Cameroon’s COVID-19 response plan (¶69).
- The external position in 2021 is assessed to be weaker than implied by fundamentals and desirable policies (¶69).

### SDR allocation and fiscal space
- The SDR allocation provides additional policy space (¶70).
- Staff encourages the authorities to save about half of the SDR allocation, in line with the IMF and CEMAC recommendation, and stresses the importance of ensuring the needed transparency and accountability (¶70).

### Fiscal policy stance and budget management
- Staff supports the authorities’ aim to avoid a premature tightening of fiscal policy and efforts to mitigate the impact of the pandemic (¶71).
- Recommended approach:
  - Continued gradual fiscal consolidation over the short term while providing space for COVID-related spending and expanding transfers to vulnerable populations (¶71).
  - Accelerate the fiscal consolidation path once the crisis abates to strengthen debt sustainability and ensure a strong and inclusive recovery (¶71).
- Key fiscal management actions:
  - Completion of the Treasury Single Account reform.
  - Strictly limiting recourse to direct interventions and exceptional spending procedures to improve cash management, budget execution, fiscal transparency, and budget credibility (¶71).

### Structural reforms and private sector development
- Advancing structural reforms is critical to strengthen productivity and accelerate private sector-led economic diversification (¶72).
- Staff encourages:
  - Strengthening dialogue with the private sector and civil society.
  - Enhancing the business climate, investment efficiency, and financial inclusion.
  - Protecting property and investor rights and effectively enforcing the anti-corruption legal framework (¶72).

### Transparency, governance, and anti-corruption
- Authorities’ efforts to promote transparency and good governance and reduce corruption risks are welcome (¶73).
- Positive steps include publication of the COVID-19 related audit and continued implementation of governance-related commitments made under the RCF (¶73).

### Public debt, SOEs, and contingent liabilities
- Public debt is sustainable although the country remains at high risk of debt distress (¶74).
- Authorities have shown strong commitment to reducing debt vulnerabilities, including restructuring SONARA’s debt (¶74).
- Staff welcomes the commitment to limit non-concessional borrowing in line with the revised DLP and emphasizes continued fiscal consolidation, prudential borrowing policy, and steadfast implementation of structural fiscal reforms (¶74).
- Addressing financial and fiscal risks associated with SOEs is a high priority and could yield sizeable economic benefits (¶75).
- Staff urges:
  - Strengthening efforts to restructure SONARA without delays based on a thorough cost-benefit analysis of all available options.
  - Timely completion of diagnostic studies of three large public SOEs to mitigate contingent risks.
  - Clearance of government cross-debts with SOEs and of government arrears.
  - Enhancing SOEs’ monitoring and oversight and reforming policies to level the playing field across sectors (¶75).

### Program implementation, performance criteria, and review requests
- The program remains on track and structural reforms are advancing, but with delays in some key areas (¶76).
- All end-July quantitative performance criteria were observed (¶76).
- A continuous performance criterion on the ceiling on the contracting or guaranteeing of new non-concessional external debt was missed in September as the authorities signed a project loan not included in the list of projects (¶18). This project was part of the previous ECF lists (¶76).
  - The contracted amount is limited, no concessional financing was available, and the overall ceiling remained respected (¶76).
  - Adoption of the new debt limit conditionality will help avoid similar issues in the future (¶76).
- Based on performance and regional policy assurances, staff supports the authorities’ request for completion of the first review and also supports the following requests and modifications (¶77):
  - (i) a waiver of nonobservance of the continuous PC on the non-concessional borrowing limit as the deviation is minor (¶76);
  - (ii) modification of the end-March 2022 ITs and the end-June 2022 QPCs;
  - (iii) the adoption of the new end-September 2022 ITs and the end-December 2022 QPCs;
  - (iv) the replacement of the continuous nominal QPC on non-concessional borrowing by the new NPV limit in line with the new DLP; and
  - (v) a waiver for performance criteria applicability for end-December 2021 (¶77).
- Staff welcomes the authorities’ commitment to accelerating structural reforms and supports rescheduling delayed structural benchmarks (¶77).
- Staff proposes that completion of the second review under the ECF-EFF arrangements be conditional on implementation of critical policy assurances on NFAs at the union level (¶77).

*Source: Excerpt from IMF staff report (paragraphs 66–77).*

### 78. The next Article IV Consultation is expected to take place within 24 months in

### 1cmrea2022001 - 78. The next Article IV Consultation is expected to take place within 24 months in

### Article IV timing
- "The next Article IV Consultation is expected to take place within 24 months in accordance with the Executive Board decision on consultation cycles for members with Fund arrangements."

### Real sector developments (Figure 1 highlights)
- Growth contracted due to the pandemic, driven by a sharp decrease in the tertiary sector.
- Exports and consumption declined as lockdowns persisted.
- Inflation remained subdued with some regional variations.
- Exports decreased and imports decreased in parallel.
- Consumer Price Indices (2015M9–21M9): Overall Consumer Prices and components (Food, Non-Food) show subdued inflation (figure panels; series span Sep-15 to Sep-21).
- Growth composition panels cover 2016Q1–2021Q4 with components: Primary, Secondary excl. oil, Oil, Tertiary, Taxes and duties, GDP; and Consumption, Investment, Exports, Imports, GDP.

### Fiscal developments (Figure 2 and Table highlights)
- The fiscal deficit increased as authorities responded to the pandemic.
- Non-oil revenue deteriorated.
- Unpaid government obligations are shrinking, with higher relative share of bank financing.
- Public debt continues to increase and capital spending decreased.
- Table 1 (Selected Economic and Financial Indicators, 2019–26) key entries:
  - GDP at constant prices: 2019 3.4; 2020 -1.5; 2021 0.5; 2022 3.6; 2023 3.5; 2024 4.5; 2025 4.8; 2026 5.0; 2027 5.1; 2028 5.1
  - Oil GDP at constant prices: 2019 8.4; 2020 2.6; 2021 3.1; 2022 0.1; 2023 0.1; 2024 0.1; 2025 0.1; 2026 0.3; 2027 0.5
  - Non-Oil GDP at constant prices: 2019 3.3; 2020 -1.8; 2021 0.5; 2022 3.8; 2023 3.6; 2024 4.6; 2025 4.9; 2026 5.2; 2027 5.2; 2028 5.2
  - Consumer prices (average): 2019 2.5; 2020 2.4; 2021 2.5; 2022 2.3; 2023 2.3; 2024 2.1; 2025 2.0; 2026 2.0; 2027 2.0; 2028 2.0
  - Total revenue (including grants) (% of GDP): 2019 15.4; 2020 13.7; 2021 13.4; 2022 14.6; 2023 13.9; 2024 14.9; 2025 15.9; 2026 16.3; 2027 16.6; 2028 17.1
  - Oil revenue (% of GDP): 2019 2.5; 2020 1.9; 2021 1.8; 2022 2.2; 2023 1.9; 2024 2.4; 2025 2.5; 2026 2.3; 2027 2.0; 2028 1.9
  - Non-oil revenue (% of GDP): 2019 12.3; 2020 11.7; 2021 11.4; 2022 12.1; 2023 11.7; 2024 12.0; 2025 13.1; 2026 13.6; 2027 14.4; 2028 15.1
  - Total expenditure (% of GDP): 2019 18.7; 2020 17.0; 2021 16.6; 2022 17.9; 2023 17.0; 2024 16.7; 2025 17.0; 2026 16.6; 2027 16.8; 2028 17.6
  - Overall fiscal balance (payment order basis) excluding grants (% of GDP): 2019 -3.8; 2020 -3.4; 2021 -3.3; 2022 -3.7; 2023 -3.4; 2024 -2.4; 2025 -0.6; 2026 -0.8; 2027 -0.4; 2028 -0.6
  - Public debt stock (% of GDP): 2019 41.6; 2020 45.8; 2021 44.9; 2022 46.2; 2023 47.2; 2024 45.0; 2025 42.3; 2026 39.7; 2027 36.8; 2028 34.4
  - Of which external debt (% of GDP): 2019 29.4; 2020 31.1; 2021 30.5; 2022 32.3; 2023 33.9; 2024 32.8; 2025 32.0; 2026 31.1; 2027 30.1; 2028 29.3

### Central government operations (Table 2a / 2b highlights)
- 2021 (Prog./Est.) and projections through 2026 include detailed revenue and expenditure aggregates (CFAF billions and percent of GDP).
- Selected levels (CFAF billions, 2023 Rev.; 2023 Prog.; 2024 Est. etc.):
  - Total revenue and grants: 2023 Rev. 3,584; 2023 Prog./Est. 2,879 / 3,145; 2024 Rev. 3,145; projections up to 2026: 5,965 (2026 Prog.)
  - Total expenditure: 2023 Rev. 4,338; 2023 Prog./Est. 3,878 / 3,894; 2024 Rev. 3,894; projections up to 2026: 6,140 (2026 Prog.)
  - Current expenditure (2023 Rev.): 2,693; Capital expenditure (2023 Rev.): 1,594
  - Overall balance (payment order basis) including grants (2023 Rev.): -754 (CFAF billions)
  - Unpaid government obligations (Memorandum): end-2021 602; projections show changes across 2022–2026 (e.g., 2023 602; 2024 518; 2025 516; 2026 416)
- Fiscal ratios (percent of GDP) mirror Table 1 entries (e.g., total revenue and grants 15.4 percent in 2023 Rev.; total expenditure 18.7 percent in 2023 Rev.; overall balance excluding grants -3.8 percent 2023 Rev.).

### Balance of Payments (Table 3 highlights)
- Current account balance (CFAF billions): 2019 -992; 2020 -845; 2021 -872; 2022 Prog. -964; 2023 Est. -838; 2024 Prog. -523; 2025 Proj. -876; 2026 Proj. -984; 2027 Proj. -1,023; 2028 Proj. -1,042
- Trade balance (CFAF billions): 2019 -432; 2020 -358; 2021 -391; 2022 -530; 2023 -281; 2024 -218; 2025 -549; 2026 -666; 2027 -709; 2028 -723
- Exports, goods (CFAF billions): 2019 3,238; 2020 2,651; 2021 2,538; 2022 3,185; 2023 3,154; 2024 3,705; 2025 3,501; 2026 3,538; 2027 3,664; 2028 3,845
  - Oil and oil products: 2019 1,292; 2020 825; 2021 825; 2022 1,228; 2023 1,168; 2024 1,385; 2025 1,195; 2026 1,120; 2027 1,083; 2028 1,074
  - Non-oil sector exports: 2019 1,946; 2020 1,826; 2021 1,713; 2022 1,958; 2023 1,986; 2024 2,319; 2025 2,306; 2026 2,418; 2027 2,582; 2028 2,771
- Imports, goods (CFAF billions): 2019 -3,670; 2020 -3,009; 2021 -2,929; 2022 -3,715; 2023 -3,435; 2024 -3,922; 2025 -4,050; 2026 -4,203; 2027 -4,373; 2028 -4,568
- Capital and financial account balance (CFAF billions): 2019 1,071; 2020 434; 2021 392; 2022 851; 2023 887; 2024 818; 2025 910; 2026 1,109; 2027 1,244; 2028 1,388
- Overall balance (CFAF billions): 2019 163; 2020 -51; 2021 -316; 2022 -113; 2023 482; 2024 953; 2025 412; 2026 522; 2027 234; 2028 345
- IMF Financing and other financing lines appear in financing tables (see Table 8).

### Monetary sector (Table 4 highlights)
- Broad money (M2, CFAF billions): 2019 5,575; 2020 6,252; 2021 7,115; 2022 7,875; 2023 8,539; 2024 9,162; 2025 9,823; 2026 10,525
- Net foreign assets (CFAF billions, Est./Proj.): 2021 2,371; 2022 2,359; 2023 2,476; 2024 2,939; 2025 3,114; 2026 3,295; 2027 3,516; 2028 3,862
- Net domestic assets (CFAF billions): 2021 3,204; 2022 3,893; 2023 4,639; 2024 4,936; 2025 5,425; 2026 5,867; 2027 6,307; 2028 6,663
- Credit to the private sector (CFAF billions): 2019 2,970; 2020 3,002; 2021 3,166; 2022 3,342; 2023 3,556; 2024 3,811; 2025 4,109; 2026 4,457
- Contributions to growth of broad money (percentage points): Net foreign assets 5.7 (2019), -0.2 (2020), 1.9 (2021), 6.5 (2022), 2.2 (2023), 2.1 (2024), 2.4 (2025), 3.5 (2026); Net domestic assets 0.8 (2019), 12.4 (2020), 1.9 (2021), 4.2 (2022), 6.1 (2023), 1.9 (2024), 4.2 (2025), 3.6 (2026)
- Broad money (annual percentage change): 2019 6.5; 2020 12.1; 2021 13.8; 2022 10.7; 2023 8.4; 2024 7.3; 2025 7.2; 2026 7.1

### Capacity to repay the Fund and Fund obligations (Table 5 & Figure 3)
- Table 5 projects Fund-related principal, charges and interest, outstanding credit, and related ratios 2021–2035.
- Outstanding IMF credit based on existing and prospective drawings (SDR millions, selected years):
  - 2021 828.0; 2022 1,021.2; 2023 1,090.2; 2024 1,081.9; 2025 985.3; 2026 823.1; 2027 631.1; 2028 458.2; 2029 296.9; 2030 166.8; 2031 81.0; 2032 29.4; 2033 4.9; 2034 0.0; 2035 0.0
- Outstanding IMF credit (CFAF billions, corresponding): 2021 653.8; 2022 826.8; 2023 878.8; 2024 869.1; 2025 790.5; 2026 659.9; 2027 506.3; 2028 367.6; 2029 238.2; 2030 133.8; 2031 65.0; 2032 23.6; 2033 3.9; 2034 0.0; 2035 0.0
- Percent of quota (SDR 276,000,000) for outstanding IMF credit: 2021 300.0; 2022 370.0; 2023 395.0; 2024 392.0; 2025 357.0; 2026 298.2; 2027 228.7; 2028 166.0; 2029 107.6; 2030 60.4; 2031 29.3; 2032 10.7; 2033 1.8; 2034 0.0; 2035 0.0
- Net use of Fund credit (SDR millions, selected): 2021 124.2; 2022 193.2; 2023 72.0; 2024 -4.6; 2025 -92.9; 2026 -158.6; 2027 -188.6; 2028 -170.0; 2029 -159.0; 2030 -128.3; 2031 -84.7; 2032 -50.8; 2033 -24.1; 2034 -4.7; 2035 0.2
- Memo items: Nominal GDP (CFAF billions): 2022 24,951; 2023 26,828; 2024 28,491; 2025 30,388; 2026 32,581; 2027 34,939; 2028 37,398; 2029 40,106; 2030 43,025; 2031 46,173; 2032 49,568; 2033 53,227; 2034 57,175; 2035 61,437
- Debt service (CFAF billions, memo): 2021 1,001; 2022 677; 2023 699; 2024 680; 2025 691; 2026 690; 2027 699; 2028 690; 2029 757; 2030 807; 2031 1,021; 2032 1,027; 2033 1,053; 2034 954; 2035 1,008

### Financial soundness and bank sector indicators (Table 6 highlights)
- Capital adequacy:
  - Total bank regulatory capital to risk-weighted assets: 2016 9.1; 2017 9.7; 2018 10.8; 2019 10.7; 2020 13.8; 2021 12.8; 2021 Q1 13.9; 2021 Q2 15.0; 2021 total 11.6; 2019 latest 13.2
  - Total capital (net worth) to assets: 2016 7.5; 2017 7.8; 2018 8.7; 2019 8.9; 2020 9.9; 2021 9.8; 2021 Q1 9.7; 2021 Q2 10.9; 2021 total 10.9; 2019 latest 12.4
- Asset quality:
  - Non-performing loans to total loans: 2016 10.7; 2017 10.8; 2018 12.4; 2019 12.8; 2020 13.4; 2021 13.7; 2021 Q1 14.2; 2021 Q2 17.0; 2021 total 18.0; 2019 latest 18.2
- Earnings and profitability:
  - Net income to average capital (ROE): 2016 20.6; 2017 27.9; 2018 22.4; 2019 24.7; 2020 19.5; 2021 18.7; 2021 Q1 18.5; 2021 Q2 14.4; 2021 total 13.0
- Liquidity:
  - Liquid assets to total assets: 2016 23.2; 2017 24.2; 2018 26.4; 2019 25.9; 2020 30.1; 2021 27.8; 2021 Q1 29.9; 2021 Q2 26.5; 2021 total 27.1; 2019 latest 27.7

### External financing needs and sources (Table 8)
- Total Financing Requirements (CFAF billions): 2021 202; 2022 4,165; 2023 1,688; 2024 1,734; 2025 1,774; 2026 1,917
- Components (CFAF billions, select years):
  - Current Account Deficit: 2021 838; 2022 523; 2023 876; 2024 984; 2025 1,023; 2026 1,042
  - Amortization of PPG Debt: 2021 764; 2022 520; 2023 585; 2024 577; 2025 607; 2026 659
  - Gross Reserves Accumulation (+ = increase): 2021 422; 2022 614; 2023 227; 2024 173; 2025 144; 2026 215
- Financing Sources (CFAF billions): 2021 165; 2022 113; 2023 381; 2024 462; 2025 163; 2026 517; plus additional/exceptional financing sources 373; 319; 227; 99; 900 (across years)
- IMF Financing (CFAF billions equivalent or notation): 96; 150; 8; 64; 3; 00 (presented line items include Prospective ECF, Prospective EFF, Budget Support, AFDB, WB, France, EU, Other, Exceptional Financing, DSSI)

### Quantitative performance and indicative targets under ECF and EFF (Table 9 highlights)
- Periodic QPC and selected outcomes:
  - Floor on the non-oil primary fiscal balance (payment order basis): End-July 2021 QPC -510; End-July 2021 Actual -441 (Met); End-Sep 2021 IT -847; End-Sep 2021 Actual -637 (Met); End-Dec 2021 QPC -1,078; End-March 2022 IT (Prog.) -250; End-March 2022 IT -41; End-June 2022 QPC (Prog.) -504; End-June 2022 QPC -432; End-Sept 2022 IT -499; End-Dec 2022 QPC -886
  - Ceiling on net domestic financing of the central government (excluding IMF financing): multiple quarterly targets and Not Met / Met status (example: End-July 2021 IT 114; Actual 108 Met; End-Sep 2021 IT 551; Actual 64 Not Met)
  - Ceiling on disbursement of non-concessional external debt: End-July 2021 IT 308; Actual 118 Met; End-Sep 2021 IT 472; Actual 152 Met; End-Dec 2021 QPC 566; subsequent quarter targets listed
- Indicative targets:
  - Floor on non-oil revenue (CFAF billions): End-July 2021 IT 1,646; Actual 1,707 Met; End-Sep 2021 IT 2,192; Actual 2,193 Met; End-Dec 2021 QPC 2,930; End-March 2022 IT (Prog.) 796; Actual 794; End-June 2022 QPC (Prog.) 1,598; Actual 1,558; End-Sept 2022 IT 2,361; End-Dec 2022 QPC 3,221
  - Ceiling on the net accumulation of domestic payment arrears: End-July 2021 IT 0; Actual 73 Not Met; End-Sep 2021 IT -41; Actual 45 Not Met; and subsequent dates with Not Met / Met flags
  - Floor for poverty-reducing social spending (CFAF billions): End-July 2021 IT 450; Actual 452 Met; End-Sep 2021 IT 745; Actual 696 Not Met; End-Dec 2021 QPC 1,111; End-March 2022 IT (Prog.) 158; Actual 172; End-June 2022 QPC (Prog.) 380; Actual 382; End-Sept 2022 IT 716; End-Dec 2022 QPC 1,062

*Italic line:* Sources: Cameroonian authorities; BEAC; and IMF staff calculations and estimates as presented in the document.

### 1. Cumulative external budget support, excluding IMF

### 1. Cumulative external budget support, excluding IMF

### Key quantitative indicators
- 1. Cumulative external budget support, excluding IMF: 53555355110534510645135170
- 2. New concessional external debt contracted or guaranteed by the government 10/: 21915030017535088105150210315420
- 3. Balance of the special account for the unused statutory advances: 6161516150415041505050

### Adjustors, ceilings, and methodological notes
- Sources: Country Authorities and IMF Staff projections
- 3/ To be adjusted by potential use of the Eurobond proceeds of CFAF 37.5 billion.
- 4/ The zero ceiling applies until the end of the arrangement.
- 10/ On a contracting basis in accordance with the IMF's debt limits policy: http://www.imf.org/external/np/pp/eng/2014/111414.pdf.
- Note: The terms in this table are defined in the TMU.
- * Standard Continuous Performance Criteria also apply: (i) Not to impose new or intensify existing restrictions on the making of payments and transfers for current international transactions; (ii) Not to introduce new or intensify existing multiple currency practices; (iii) Not to conclude bilateral payments agreement that are inconsistent with the IMF’s Articles of Agreement (Article III); and (iv) Not to impose new or intensify existing import restrictions for balance of payments reasons.
- 1/ Program indicators under A are performance criteria at end-July 2021 and end-December 2021 and end-June 2022 and end-December 2022; indicative targets otherwise.
- 2/ The ceiling on net domestic financing (excluding payment of arrears) of the budget and the ceiling on the net borrowing from the central bank will be adjusted if the amount of disbursements of external budgetary assistance excluding IMF financing, falls short of or exceeds program forecasts. If disbursements are less (higher) than the programmed amounts, the ceiling will be raised (reduced) pro tanto, up to a maximum of CFAF 120 billion at the end of each quarter. These ceilings include deposits of CFAF 37.5 billion at the central bank from the eurobond refinancing operations. The 2021 ceilings include also CFAF 30 billion at end-July and CFAF 40 billion at end-September and December of BEAC repurchases (to be adjusted based on the realization) of Cameroon's bonds.
- 5/ Excluding ordinary credit for imports and debt relief obtained in the form of rescheduling or refinancing.
- 6/ For 2021 the adjustment will be equal to the amount of non-concessional budget support approved up to a maximum of CFAF 110 billion. For 2022 the adjustment will be equal to the amount of non-concessional budget support approved up to a maximum of CFAF 174 billion.
- 7/ From program approval through end-December 2022, the ceiling will be set at zero. For 2021, an adjustor of up to CFAF 300 billion will be applied for the macro-critical projects specified in Text Table 1 of the TMU contracted after program approval. Non-concessional external debt already contracted or guaranteed in 2021 prior to program approval counts against the 2021 adjustor, including the potential uses of the Eurobond refinancing proceeds of CFAF 37.5 billion. For 2022, until modified by the IMF Executive Board, the ceiling will be adjusted upward exclusively for the projects specified in Table 1 of the TMU , up to a maximum determined by the difference between (i) CFAF 300 billion, and (ii) the amount of the adjustor applied at end-December 2021.
- 8/ Cumulative ceiling calculated from January 1, 2022 and monitored on a continuous basis from completion of the first review under the ECF/EFF arrangement. Excludes ordinary credit for imports, debt relief obtained in the form of rescheduling or refinancing, and budget support loans from the WB. Assumptions for the exchange rates are: 0.828 (EUR/USD), 543.201 (CFAF/USD), 0.714 (XUA/USD). Given the uncertainty of the borrowing plan for concessional loans, the terms were assumed at 30 year maturity, 5 year grace period, 0.4% fixed interest rate, and 0.75% management fee per annum.
- 9/ 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.

### Structural benchmarks and prior actions (selected substantive items and statuses)
- Prior Action 1: Publish on the ARMP website an overall table of the results of contracts related to COVID-19 and awarded from end of June 2021 to end of December 2021, including the actual beneficial owners of contracting entities. Indicator: Publication on the ARMP website. Status: Met. Comment: https://www.dgb.cm/2021/11/16/la-chambre-des-comptes-publie-son-rapport-daudit-sur-la-gestion-des-fonds-covid-19/
- Revenue Mobilization 2: Prepare a diagnosis of the tax policy and formulate recommendations for the establishment of a development-oriented tax system that at the same time broadens the tax base. Initial Schedule: Oct-21. Indicator: Diagnostic sent to IMF staff. Status: Not Met. Comment: The IMF TA will be conducted in 2022. Revised Schedule: Oct-22.
- Public finance and debt management 3: Publish the audit prepared by the audit bench of the supreme court (chambre des comptes) of fiscal year 2020 expenses related to COVID-19. Dec-21. Indicator: A copy of the audit report published on the website of the Ministry of Finance is sent to IMF staff. Status: Met. Comment: https://www.dgb.cm/2021/11/16/la-chambre-des-comptes-publie-son-rapport-daudit-sur-la-gestion-des-fonds-covid-19/
- Public finance and debt management 4: Adopt and publish all the implementing texts of the Public Procurement Code, including those relating to the establishment of internal administrative management structures. Sep-21. Indicator: A copy of all published texts is provided to IMF staff. Status: Met. Comment: https://minmap.cm/wp-content/uploads/2021/09/arret%C3%A91_compressed-1.pdf
- Public finance and debt management 5: Complete the audits of government payment arrears and adopt an arrears settlement plan of arrears certified by these audits. Dec-21. Indicator: Communication of the audit report and the clearance plan to IMF staff. Status: Not Met. Comment: The authorities have selected four auditors to audit the debts that would then provide the basis for clearing the debts. Revised Schedule: Sep-22.
- Public finance and debt management 6: Pursue the reforms aimed at extending the STA to the BEAC: (i) present a census of government accounts ... excluding counterpart funds as of June 30, 2021 and December 31; (ii) close and repatriate the balances of these STA accounts to the BEAC before the end of March 2022. Mar-22. Indicator: Transmission of the list of non-BEAC accounts and closed accounts and transferred to the BEAC to IMF staff. Status/Comment: Authorities completed the census of government accounts ... waiting for the BEAC's platform to repatriate the balances. Revised Schedule: Jun-22.
- Public Investment Management 8: Strengthen the accountability of the implementing units by setting, by decree, the modalities for monitoring the performance of all programs and projects financed both from domestic and external resources. Sep-21. Indicator: Decree published. Status: Not Met. Comment: Authorities issued the decree on October 13. Working with WB and AFDB to index remuneration to performance.
- Public Investment Management 9: Adopt a legal and regulatory framework governing Public-Private Partnerships (PPP). Jun-22. Indicator: Legal and regulatory framework published. Status/Comment: Pending the adoption of a regional framework, a draft aligned with the future regional framework has been prepared. Revised Schedule: Dec-22.
- Public enterprises 10–12: Diagnostics, inventories, and program-contract governance actions largely Not Met with revised schedules in 2022; comments indicate ongoing work (PAD diagnostic being finalized; cross-debt inventory report being finalized).
- Extractive Sector 13: Finalize and publish all the texts of application of the mining code of 2016. Mar-22. Indicator: Implementation texts published. Status: (entry shows Mar-22).
- Business climate 14: Make the deposit and consignment fund operational. Oct-21. Indicator: Decree designating the officers. Status: Not Met. Comment: Authorities have yet to nominate the officers. Revised Schedule: Jun-22.
- Several new Structural Benchmarks on good governance and anti-corruption (17–20): publication of COVID-19 execution report (Jun-22); diagnostic of governance vulnerabilities (Jun-23); action plan for public spending audits (Dec-22); audit of 2021 COVID-19 expenses (Dec-22).

### Risk Assessment and recommended policy responses (condensed from RAM)
- Nature of RAM: shows events that could materially alter the baseline; relative likelihood categories: "low" (<10%), "medium" (10–30%), "high" (30–50%).
- High likelihood risks and recommended responses:
  - Unexpected downside shifts in the Covid-19 pandemic: Growth falls and public financing needs increase sharply. Response: Step up spending on health and social protection, and adopt measures to contain the spread of the pandemic while limiting its impact on the economy.
  - Social tensions and widespread social discontent/political instability: Strengthen social safety net and accelerate structural reforms to enhance social cohesion.
  - Spillovers from other CEMAC countries and regional security deterioration: Coordinate with other CEMAC countries to build additional buffers; provide space for higher security expenditure by curtailing unproductive public investments; prepare contingency plans for refugees with UNHCR.
  - Contingent risks from state-owned enterprises: Enhance monitoring and timely reporting of SOE risks; develop strategies to reduce state aid.
- Medium likelihood risks and recommended responses:
  - Unexpected upside shifts in the Covid-19 pandemic: Leverage gains to bolster fiscal space and catalyze structural reforms.
  - Sharp rise in global risk premia: Accelerate structural reforms, enhance bank supervision and regulation, encourage digital financial inclusion.
  - Oversupply and volatility in the oil market: Widen the non-oil tax base, increase efficiency of the national oil refinery (SONARA), spur competition in oil import sector.
  - Cyber attacks: Enhance investment in IT systems and increase awareness of cyber security.

### Cameroon’s response to the Covid-19 crisis (selected findings and measures)
- Evolution of the pandemic:
  - First cases reported on March 6, 2020.
  - Weekly confirmed cases peaked in June 2020, dipped, resurged early 2021, dipped mid-year, peaked again in October 2021.
  - All 10 regions affected; more males infected than females overall.
  - Several strains detected by the Cameroonian Center for Research on Emerging Diseases.
  - As of January 19, 2022: 116,718 confirmed cases and 1,880 deaths reported to WHO.
- Government containment and deconfinement measures:
  - March 17, 2020 package of 13 measures: closure of land, air and sea borders; quarantine for travelers from high-infection countries; suspension of entry visas; closure of schools and universities; prohibition of gatherings >50 persons; closure of bars/restaurants/entertainment after 6 pm; suspension of missions of civil servants and parastatals abroad; cancellation of school/university games; ban on overloading taxis/public transport; use of electronic communications for meetings >10 persons; hygiene/WHO recommended measures.
  - April 10, 2020 additional measures: mandatory masks in public areas; local production of anti-COVID drugs; establishment of specialized treatment centers in all regional capitals; intensified screening tests and awareness campaign.
  - April 30, 2020 deconfinement measures: reopening of bars/restaurants/leisure after 6 pm conditional on social distancing and masks; relaxation of passenger limits in public transport with masks and prohibition of overloading.
  - Since July 2020: decentralized approach relying on health districts and regions; focus on monitoring cases, local testing, reinforcing screening for travelers, strengthening health service capacity; schools reopened in June; some land crossing points remain shut or partially operational.
- Economic and social mitigation measures:
  - Fiscal measures announced April 30, 2020 for businesses: tax moratoria and deferred payments; exemptions and temporary tax relief including (i) exemptions from the tourist tax in hotel and catering sectors for the rest of 2020; (ii) exemption from withholding tax for taxis, motorbikes and petty traders for Q2 2020; (iii) allocation of a special envelope of CFAF 25 billion for expedited clearance of VAT credits awaiting reimbursement; (iv) postponement of property tax deadline for 2020 to end-September 2020.
  - Household measures: (i) increase in family allowance from CFAF 2,800 to CFAF 4,500; (ii) a raise of 20 percent on pensions that did not benefit from a 2016 reform; (iii) three-month payment of family allowances to employees of companies unable to pay social security contributions or which had placed staff on technical leave; (iv) spreading payment of social security contributions for Q2 2020 over three instalments and canceling late fees.

*Source: IMF staff and Cameroon authorities as presented in the provided content.*

### 7. Alongside these short-term measures, the authorities adopted a three-year

### 1cmrea2022001 - 7. Alongside these short-term measures, the authorities adopted a three-year

### Preparedness and Response Plan and COVID-19 financing
- Total financing required: close to US$ 825 million.
- Plan five pillars and allocated amounts:
  - (i) health strategy to prevent the spread of the pandemic and take care of infected persons: US$101 million
  - (ii) mitigation of economic and financial repercussions of the pandemic: US$646 million, including a US$200 million tax relief to affected businesses
  - (iii) supply of essential products: US$9.5 million
  - (iv) local development of innovative solutions: US$16.5 million
  - (v) social resilience to alleviate the repercussions of the COVID-19 pandemic on vulnerable people and households: US$52 million
- Special COVID-19 account:
  - Governed by a circular issued by the Minister of Finance specifying organization, operation, and monitoring-evaluation mechanisms.
  - 2020 Revised Budget Law (enacted June 2020) allocated close to US$310 million to the special COVID-19 account, financed at 76 percent by external budgetary support and resources released by debt service suspension.
  - 2021 Revised Finance Law allocates close to $363 million to the special COVID-19 account, of which $148 million for vaccination.
  - Proposed 2022 Finance Law allocates $218 million for COVID-19 related spending.

### Vaccination
- National vaccine readiness and deployment plan prepared under UN country team guidance.
- Vaccine doses received as of January 5, 2022:
  - 1.4 million doses of the Johnson & Johnson vaccine
  - 1.2 million doses of Sinopharm
  - 589,600 of AstraZeneca
  - 152,100 doses of Pfizer
- Notes on doses: Some doses have expired.
- Vaccination targets and coverage:
  - Aim: vaccinate 60 percent of the eligible population (+18 years old) by 2023.
  - As of January 19, 2022:
    - 6.3 percent of the eligible population fully vaccinated
    - 2.8 percent received one dose
    - 43.7 percent of healthcare personnel is fully vaccinated

### Follow-up on Commitments Under RCF-1 and RCF-2 (as of end-December 2021)
- Commitments and status:
  - (i) Issue a semi-annual report on COVID-19 related spending.
    - Status: Met. A report for March-December 2020 has been published.
  - (ii) Commission an independent audit of this spending at the end of FY2020 and publish results.
    - Status: Met. An audit prepared by the Audit Bench of the Supreme Court (Chambre des Comptes) of FY2020 expenses related to COVID-19 has been published.
  - (iii) Issue before the RCF-2 Board date a circular implementing Article 90 of the Public Procurement Code to modify standard procurement forms, in particular regarding beneficial ownership identification.
    - Status: Met. A circular implementing Article 90 has been published.
  - (iv) Publish documents relating to results of public procurement awarded by government and the beneficial ownership of companies receiving procurement contracts on COVID-19 related expenditures.
    - Status: Met. Authorities published information about government contracts from October 20, 2020 to end December 2021, including names of companies’ actual owners (beneficial owners).

### National Accounts Revisions
- Rebasing updated base year from 2005 to 2016 with IMF TA (AFRITAC Central).
- New data sources used include ECAM household consumption surveys (2001, 2007, 2014), RGE 2016 general business census, EESI employment/informal sector surveys (2005, 2010), DSF 2016 statistical and tax declarations, and 2016 balance of payments prepared according to BPM 6.
- Impact of rebasing:
  - Upward revision of 3.6 percent to nominal GDP in 2016 (previous 2005 rebasing increase was 8.6 percent).
  - Increased contributions to added value: agriculture +3.3 percent, industry +0.9 percent; tertiary sector contribution decreased.
  - Informal GDP share revised upward from 37.8 percent (2005 base year) to 42 percent (2016 base year).
  - Rebasing lowered the tax to revenue ratio by 41 basis points to 13.2 percent in 2020.
- Observed structural changes: significant shifts in sectoral contributions and informal sector share.

### External Sector Assessment (Annex V)
- Overall assessment: Cameroon’s external position in 2021 assessed to be weaker than implied by fundamentals and desirable policies.
- Current account and projections:
  - 2021 current account balance improved to -3.4 percent of GDP on the back of higher oil prices and a more gradual rebound in imports.
  - Projected 2022 current account deficit: around -2.1 percent of GDP (tighter fiscal balance and higher oil prices).
  - Projected deterioration to around -3.1 percent in 2024, then gradual improvement thereafter.
  - Risks include prolonged COVID-19 pandemic, supply chain disruptions, socio-political conflicts.
- Foreign assets and liabilities (end-2020):
  - NIIP: -29.8 percent of GDP
  - Gross Assets: 30.1 percent of GDP
  - Debt Assets: 20.4 percent of GDP
  - Gross Liab.: 59.8 percent of GDP
  - Debt Liab.: 48.4 percent of GDP
- Recent trajectory:
  - Over the last 5 years, net liability position increased by 10.6 percent of GDP.
  - Assessment: NIIP sustainable but large share of debt liabilities raises risks; Cameroon is at high risk of external debt distress.
  - Policy recommendation: strengthen public debt management and limit non-concessional borrowing.
- Assessment using EBA-Lite models for 2021:
  - Actual CA: -3.4
  - Cyclically adjusted CA: -4.7
  - CA Norm (from CA model): -2.5
  - CA Gap (CA model): -2.2 percent of GDP
  - Policy gap: 4.9 percent of GDP, driven by:
    - tighter fiscal policy: +2.0 percent
    - lower public health spending: +0.7 percent
    - lower private credit: +0.5 percent
    - slower credit growth: +0.5 percent
  - REER assessments:
    - REER appreciated by 3.1 percent in 2020 relative to previous year; broadly unchanged over 2021.
    - EBA-lite CA model estimates a REER gap of 15.4 percent in 2020; REER Index model yields -13.8 percent.
    - Staff assesses REER to be overvalued by 15.2 percent based on the CA model.
- Capital and financial accounts:
  - Net capital inflows increased to 3.4 percent of GDP in 2021 from 1.6 percent of GDP in 2020, driven by higher long-term official capital inflows including the SDR allocation and Eurobond issuance.
  - FDI inflows in 2021: around 1.6 percent of GDP (compared to 2.6 percent of GDP in 2019).
  - FDI projected to reach 2.6 percent of GDP by 2026 under gradual recovery.
  - Risks to capital inflows: concerns over debt sustainability, fragility of recovery, normalization of monetary policy in advanced economies, potential decline in official creditor financing.
  - Policy recommendation: gradual fiscal consolidation and implementation of structural reforms to improve business environment to attract durable foreign capital inflows.

### Capacity Development Strategy Note Update (Annex VI) — summary
- Objective: define CD strategy, expected objectives, and TA in support of macroeconomic policy priorities for 2021-23.
- Recent TA focus areas: revenue administration, tax policy, debt and expenditure management, compilation and dissemination of statistics.
- CD strategy priorities:
  - Support government revenue mobilization and Medium-Term Revenue Strategy (MTRS); modernize tax and customs administrations; streamline exemptions.
  - Raise efficiency, effectiveness, and transparency of public expenditure; reduce fiscal risks from SOEs.
  - Reinforce governance, transparency, and anti-corruption frameworks; address fraud and corruption.
  - Strengthen debt management capacity and improve consistency with medium-term debt strategy (MTDS).
  - Improve government financial statistics compilation and reporting.
  - Additional emerging needs: governance and anti-corruption assistance, resilience to climate change, financial inclusion strategy formulation.
- Authorities’ views: value IMF capacity building, view TA priorities as closely aligned with program objectives; collaboration with IMF HQ and AFRITAC Centre described as excellent.

*International Monetary Fund: Cameroon Country Report content unit 1cmrea2022001 (selected sections as provided).*

### Annex VII. Implementation of Past Article IV Fund Advice

### Annex VII. Implementation of Past Article IV Fund Advice

### Fiscal policy and public financial management — progress, outstanding actions, and diagnostics
- Target: tighten fiscal stance to bring non-oil primary deficit (NOPD) below 4 percent of non-oil GDP.
- Status and recent outcome:
  - Ongoing.
  - The COVID-19 pandemic has delayed progress and the NOPD is estimated at 4.6 percent of GDP in 2021, the NOPD (cash basis), which remains above the target.
- Expand the tax base: phase out tax and customs exemptions; restore normal taxation of fuel products; narrow eligibility under the investment incentives law.
  - Status: Ongoing.
  - Authorities committed to streamline the least effective tax exemptions, intensify recovery of tax arrears and duties, and requested IMF TA for a diagnostic to inform short- and medium-term fiscal measures, especially revenue mobilization.
- Strengthen tax collection: create more decentralized tax offices and complete single taxpayer identification by linking tax and customs databases.
  - Status: Ongoing. Key measures have yielded some positive results.
  - Authorities continued efforts to strengthen tax collection, combat fraud and evasion, and improve exchange of information between tax and customs administrations; regional centers remain highly dependent on central fiscal transfers.
- Enhance budget controls: account for all revenue/expenditure on a gross basis; limit complementary period to one month and use “carry forwards”; compile and clear backlog of pending payments (including toward SONARA); discontinue SNH direct off-budget interventions; bring security spending to the budget; rationalize and integrate investments into the budget; gradually reduce contracted but not implemented projects.
  - Status: Ongoing, limited progress despite strong ex-ante commitments.
  - Updates: (i) reduced the complementary period to one month; (ii) audit to verify the stock of arrears as of end-2020 and prepare an arrears clearance plan is ongoing; (iii) SNH direct interventions are reported monthly; (iv) internal decision to limit use of below-the-line treasury accounts for investment projects; (v) aligned annual budgets with the medium-term budget framework.
- Improve implementation of the medium-term debt strategy by vesting sole authority for contracting debt in the Minister of Finance.
  - Status: Implemented.
  - All project financing proposals and PPP projects are examined by the National Public Debt Committee (CNDP, chaired by the Finance Minister). All new loan agreements require unconditional CNDP approval; procedures clarified in a manual adopted and published in September 2019. Authorities note need to further strengthen CNDP authority.
- Strengthen monitoring of contingent liabilities: monitor SOE performance (especially SONARA); prepare annual report on financial health of all SOEs and state-owned banks; clear SONARA arrears, including overdue supplier credits.
  - Status: Ongoing.
  - 2021 IMF TA provided a diagnostic of SOEs covering governance, transparency, financial relations with the State, and budgetary risk control. Authorities intend to: establish an exhaustive directory of public enterprises; schedule an audit of end-2020 cross debts between the State and public enterprises (tax arrears of 1.5 percent of GDP) and adopt (2022) a credible and progressive clearance plan based on cash requirements; supplement texts to strengthen control of budgetary risks and governance; finalize restructuring of SONARA bank debts and conclude negotiations on restructuring debt vis-à-vis Traders under similar conditions as banks.
- Implement new IT to reconcile civil service payroll with treasury payment system.
  - Status: Ongoing, with some delay.
  - Authorities envisage strict control on return-to-pay for officials suspended after physical counting (COPPE) and installation of integrated career and payroll management software to replace obsolete tools.

### Financial sector policies — actions and remaining work
- Strengthen the banking sector: address three problem banks and rising non-performing loans (NPLs); enhance cooperation with regional supervisor COBAC; revise business model of the public SME bank.
  - Status: Ongoing, with some delay.
  - Authorities have: taken steps to implement COBAC-approved resolution plans for two troubled banks and aim to complete restructuring as soon as possible; continue to implement an NPL reduction strategy; train judges and clerks on banking dispute resolution and transform commercial chambers into specialized commercial courts; BC-PME (Banque Camerounaise des PME) adopted a new business model on February 27, 2020. Strengthening of resources and organization of the Debt Collection Company (SRC) is being prepared.
- Enhance financial intermediation: update mobile banking legal framework; strengthen supervision of micro-financial institutions (MFIs); implement central information database for banks and large MFIs.
  - Status: Ongoing.
  - Authorities expanded the creditor database to MFIs; the national movable security directory (RNSM) is operational; a New National Strategy for Financial Inclusion 2022-2025 has been prepared and is going to be launched in 2022.

### Structural policies — business environment, regional integration, and transparency
- Improve the business environment: reduce bureaucratic impediments (paying tax, intra-CEMAC trading); increase anti-corruption efforts; strengthen transparency and good governance.
  - Status: Ongoing, with good progress in simplification of tax procedures.
  - Measures: establishment of escrow accounts to accelerate VAT refunds; enabled mobile tax declaration and payment for small and micro enterprises; published audit of COVID-19 spending and information on COVID-19 related contracts awarded from October 20, 2020 to end June 2021, including beneficial owners.
- Accelerate regional integration: ensure human and financial resources for CEMAC Commission; set a common external tariff for the CEMAC customs union; harmonize economic and technical standards; address non-tariff barriers.
  - Status: Ongoing.
  - Authorities continued regional efforts to liberalize flow of goods and people, unified the two stock exchanges to Douala, and revised the legislative framework on custom tariffs in line with regional requirements.

### Key diagnostics and implementation constraints
- Progress has improved since the 2017 ECF-supported program in fiscal consolidation and structural reforms to boost non-oil revenue, enhance public financial management, and improve the business environment.
- Constraints noted: complex socio-political environment has limited progress in governance, reduction of tax expenditures, expansion of the property tax, and elimination of fuel subsidies with more flexible pump prices.

### Annex VIII. Cameroon’s Development Strategy (SND-30) — objectives and targets
- SND-30 is the reference framework for the second phase of Vision 2035; adopted in January 2020.
- Strategy orientation: mix of local production of imported goods and export promotion; private sector as main driver with targeted public interventions; promote emergence of national champions.
- Structural transformation goals and specific targets:
  - Raise the annual growth rate to 8.1 percent on average over 2020-2030.
  - Raise growth in the secondary sector (excluding oil) to more than 8 percent in the medium term.
  - Reduce the trade balance deficit to 3 percent of GDP in 2030.
  - Lower the poverty rate to less than 25 percent in 2030.
  - Lower underemployment to less than 50 percent in 2030.
  - Raise the Human Capital Index from 0.39 in 2018 to 0.55 in 2030.
  - Raise the Human Development Index to 0.70 in 2030.
- Guiding principles (eight): maintain macroeconomic stability; clear articulation of hierarchy of sectoral/thematic/spatial tools; harmony across territory; development planning in decentralization context; integrate catch-up actions for areas affected by social/security crises; unity in diversity and improved state–citizen relations; strengthen strategic management of the State and create optimal conditions for private sector; account for international commitments while contextualizing them.
- Sectoral and investment measures:
  - Plan to support production of mass consumption goods (rice, fish, maize, and milk) with an endowment of 30 billion CFAF under the 2021 budget.
  - Tax and customs measures to promote second-generation agriculture, agri-food factories, livestock farming, and health supply.
  - Finalize ongoing infrastructure projects (e.g., Lom Pangar dam, Memve'ele hydroelectric dam, drinking water supply project in Yaoundé and surroundings).
  - Promote “made in Cameroon” in agro-industry, wood, textiles, mining and metallurgy, pharmaceutical and biomedical industries.
  - Set up economic zones to promote national champions; strengthen fiscal and customs incentives to support imports of tools and production equipment and facilitate exports of finished products.
  - Emphasize research, development, and innovation; develop artistic industries, cultural and creative activities, and film industry.

### Appendix I — Letter of Intent highlights (Yaoundé, February 4, 2022)
- Program context: government implementing 2021-24 Economic and Financial Program under ECF and EFF amid health, economic, and security challenges; program aligned with PREF-CEMAC regional reform commitments.
- Macroeconomic performance under ECF/EFF: broadly satisfactory; progress on structural reforms delayed.
  - All quantitative periodic criteria for end-July 2021 were met.
  - Two out of five indicative targets were met.
  - Continuous performance criterion on external arrears accumulation was met.
  - Continuous performance criterion ceiling on new non-concessional external debt (NCED) contracted or guaranteed by the government was not met in September due to signing a minor new non-concessional loan of CFAF 3 bn for a project outside the predetermined list.
- Requests to the IMF:
  - Waiver for performance criteria applicability for end-December 2021 (data for December 2021 not known before Executive Board meeting in February 2022).
  - Waiver for non-observance of the continuous performance criterion on the ceiling on new non-concessional external debt (CFAF 3 bn case).
  - Revision of performance criteria for 2022 in line with authorities’ objectives, including modification of continuous performance criterion on public debt: replace nominal ceiling on new nonconcessional external debt with a ceiling on the present value of new external debt contracted or guaranteed by the national government (reflecting IMF debt limits policy reform effective June 30, 2021).
  - Approval of changes to program targets for end-March and end-June and new criteria for end-September and end-December in line with updated macro projections.
  - Conclusion of the first review of the ECF-EFF agreement and disbursement request of 82.8 million SDRs.
- Foreign exchange and SDR use:
  - Government supports BEAC and COBAC enforcement of new foreign exchange regulations and will ensure repatriation of export proceeds, particularly oil revenues, to rebuild BEAC foreign exchange reserves.
  - Government welcomed the SDR allocation made available in August 2021.
  - SDR use: used CFAF 50 billion in 2021 and plan to use CFAF 70 billion in 2022, bringing the amount used at end-2022 to 57 percent of the total allocation.
- Commitments:
  - Authorities to report required information to IMF staff by prescribed deadlines per TMU.
  - Government confirms agreement to publication of the letter, the MEFP, the TMU, and the IMF staff report.
- Supplementary materials: MEFP supplements the memorandum of July 15, 2021 and defines quantitative criteria, indicative targets, and structural benchmarks through end-2022.

*Source: Annex VII and related sections from the provided IMF content unit.*

### 2. Technical Memorandum of Understanding

### 2. Technical Memorandum of Understanding

### Introduction
- COVID-19 pandemic and difficult security context continued to weigh heavily on the economic and social situation in 2021, causing a sharp slowdown in activity, higher public health spending, a significant decline in government revenues, and a worsening of the budget deficit.
- Government commitment:
  - Restore path to strong, sustained and inclusive growth.
  - Structural transformation in line with the National Development Strategy for Cameroon through 2030 (SND-30).
  - Assumption: COVID-19 will gradually start to wane in 2022; nonoil growth expected to be over 4.9 percent starting in 2023.
  - Priorities: curb pandemic effects, strengthen local economic resilience, complete/commission major infrastructure projects, support industries with large spillovers.
- Program frameworks: SND-30 and the Post-COVID-19 Economic Support and Recovery Plan (2020) are reference frameworks and backbone of a poverty reduction and growth strategy through end-2022; program consistent with PREF-CEMAC steering committee strategic framework.

### Recent economic developments
- Growth and activity:
  - Growth slowed to 0.5 percent in 2020 (provisional estimates).
  - Growth expected to reach 3.5 percent in 2021.
  - Domestic demand began to recover; external demand improving with global recovery.
- Inflation:
  - Inflation remained under control at around 2.1 percent in 2021 despite rising international prices.
- Fiscal execution and financing:
  - Fiscal deficit on a payment order basis through end-December 2021 projected at 3.1 percent of GDP, broadly in line with the supplementary budget (LFR) target.
  - Oil revenues projected below LFR target but offset by good nonoil revenue performance and expenditure control.
  - Government drew CFAF 50 billion from its SDR allocation equivalent to CFAF 208 billion held by the central bank to smooth 2021 budget execution; agreement signed with BEAC on SDR use.
- External sector:
  - External current account deficit declined; in Q3 2021 export increase exceeded import rise, improving goods balance.
  - External deficit in 2021 expected to decline to around 3.4 percent of GDP (as against 3.7 percent in 2020).
- Monetary aggregates:
  - Money supply increased 15.1 percent year-on-year to September 2021, driven by net foreign assets, credit to the economy and net claims on the government.
  - Government net debit position vis-à-vis banks rose 39.5 percent; credit to the economy increased 7.4 percent; net foreign assets rose 16.4 percent.
  - For 2021 as a whole, money supply expected to increase 13.8 percent, driven by a 36.3 percent increase in net claims on the government and a 4.4 percent increase in credit to the economy.
- Public debt:
  - Outstanding public sector debt at end-October 2021: 44.9 percent of GDP, an increase of 0.8 percentage point of GDP compared to end-2020; projected to reach 45.4 percent by end-2021.
  - External public debt (excluding unguaranteed public enterprise debt) at end-October 2021: 29.6 percent of GDP, a 0.9 percentage point increase compared to end-2020; projected to reach 30.1 percent of GDP at end-December 2021.
  - New nonconcessional commitments on project loans during first 10 months of 2021: CFAF 146.9 billion (against CFAF 350 billion projected in LF22).
  - Cumulative new commitments on project loans (concessional and nonconcessional): CFAF 558.9 billion.
  - Cumulative external disbursements through October 31, 2021: CFAF 947.9 billion (including CFAF 300.9 billion on project loans), versus CFAF 964 billion estimated in the national debt plan for 2021 (including CFAF 703 billion on project loans).

### Implementation of the economic and financial program
- Quantitative performance:
  - Almost all periodic quantitative criteria were met; all end-July quantitative performance targets met.
  - Three of five indicative targets missed: SNH direct interventions exceeded objective by 0.2 percent of GDP; expenditures using exceptional procedures exceeded target by 5.5 percentage points; domestic arrears target missed—attributed to reemergence of security challenges in northwest, southwest and far north regions.
  - Five quantitative indicative targets missed in September.
- Continuous criterion on ceiling for new nonconcessional external debt:
  - A non-concessional loan of CFAF 2.93 billion signed on September 21 for water distribution rehabilitation (Buea, Tiko, Mutengene); project later included in IMF-approved list (project number 15).
  - At end-October total new non-concessional external debts contracted or guaranteed by Government (excluding Eurobond): CFAF 147 billion, below IMF-approved ceiling (July 2021).
- Structural benchmarks and reforms:
  - Implementing regulations for the Public Procurement Code published (including regulation on internal units for administrative management of contracts) — structural benchmark for September.
  - Audit of fiscal year 2020 COVID-19-related spending by Supreme Court audit bench published on Ministry of Finance website — structural benchmark for December.
  - Decree issued to increase accountability of project implementation units — structural benchmark for September.
  - Review of tax policy (assistance requested from IMF Fiscal Affairs Department) delayed to 2022 — structural benchmark for October; intended to improve resource mobilization and expand tax base.
- Ongoing structural measures (longer than anticipated):
  - Four firms selected to audit government payment arrears from 2000 to 2019; audits to form basis of certified arrears clearance plan — structural benchmark for December.
  - Diagnostic studies of CAMTEL, PAD, CAMWATER under way: PAD near completion; CAMTEL and CAMWATER at contracting stage, to be completed and submitted to IMF staff by end-June 2022.
  - Inventory of cross debts between public enterprises and government and among public enterprises at end-2020 near completion; report to be available in April 2022 to support debt clearance plan.
  - Managers of Caisse de dépôts et de consignation not yet appointed; appointment process under way.

### Economic and Financial Program for 2022 and the medium term
A. Macroeconomic Framework
- Growth outlook:
  - Recovery that began in 2021 under nonoil sector expected to reach 4.8 percent in 2023 (assumes COVID-19 wanes).
  - Average annual growth of oil sector from 2022 to 2026 expected to be close to zero (increasing gas production offsets oil field depletion).
- Fiscal consolidation:
  - Objective: gradual fiscal consolidation to ensure medium- and long-term fiscal sustainability and implement SND-30 under IMF program.
  - Target overall fiscal deficit (payment order basis) reduction: from 3.2 percent in 2020 to 1.8 percent in 2022, 0.3 percent in 2023 and 0.5 percent in 2024.
  - Develop and implement a medium-term revenue strategy with IMF technical assistance covering revenue administration and tax policy.
  - Public action priorities: implementation of economic recovery plan, health response (emphasis on vaccinations), reconstruction of conflict-affected regions (far north, northwest, southwest), strengthening decentralization, universal health coverage, strengthening social safety nets.
- SDR allocation use:
  - Plan to use CFAF 70 billion of SDR allocation in 2022, bringing total used through end-2022 to CFAF 120 billion, or 57 percent of the allocation.
- External current account:
  - Expected to improve to around 3 percent of GDP in the medium term through export stimulus, import substitution, and regional integration.
  - Objective to stabilize current account deficit at around 3 percent of GDP in the medium term and aim for regional coverage rate of close to five months of imports.
- Monetary policy:
  - Focus on achieving CEMAC goals for inflation and foreign exchange reserves.
  - Economic recovery and reduced fiscal financing pressures should allow BEAC some room to reduce money supply growth and increase external coverage without systemic stability risks.
- Risks:
  - External risks: uncertainties on COVID-19 duration/intensity; commodity price levels and volatility; persistence of international trade tensions; influx of refugees.
  - Domestic risks: worsening insecurity in conflict regions; refugee inflows; deterioration of financial position of some public and quasi-public enterprises.
  - Mitigant: strength of non-oil sector.

B. Fiscal Policy in 2022
- Overall fiscal objective:
  - Reduce deficit while supporting recovery; reduce overall fiscal deficit (payment order basis) from 3.1 percent of GDP in 2021 to 1.8 percent in 2022 and keep public debt below 50 percent of GDP.
  - LF22 target for additional mobilization of nonoil revenues: 0.8 percent of GDP.
- LF22 public action focus areas:
  - Economy: consolidate growth, commission large infrastructure projects, pursue import substitution, implement plan to support consumer goods production, improve business environment.
  - Security: maintain security monitoring and implement reconstruction plan for northwest, southwest and far north regions.
  - Social measures: implement pandemic response strategy (strengthen health monitoring, vaccination deployment), continue universal health coverage (CSU), expand social safety nets for households most affected by pandemic.
  - Governance: consolidate gains, strengthen decentralization; expand General Decentralization Allocation coverage to urban communities; continue clearing domestic debt and government arrears; step up Single Treasury Account implementation; simplify expenditure procedures and speed up payments.
- LF22 structural and reporting changes:
  - Major changes: change in financial reporting framework; continuation of policy to rationalize quasi-tax resources allocated to certain public agencies; introduction of annex on gender-sensitive budgeting.
  - LF22 allocates new revenues to certain special earmarked accounts, establishes new fiscal programs, and renews authorization mechanism for government guarantees to public enterprises for foreign borrowing.
- Revenue measures:
  - Emphasis on strengthening nonoil domestic revenue mobilization through tax administration reforms and recovery.
  - Given uncertainties and pending audit, new tax policy measures to be adopted after audit completion; LF22 measures limited to tax on money transfers and tax treatment for nonprofit organizations.
- Expenditure measures:
  - Continued application of “zero value” strategy: freeze year-on-year growth of nonwage operating expenditure across government departments and prioritize available fiscal space for key challenges.

C. Structural Fiscal Reforms in 2021 and 2022
- Public Finance Management Reform (section begins in source; details follow in subsequent text beyond supplied excerpt).

*Attachment I. Supplementary Memorandum of Economic and Financial Policies, 2021-2022 — January 2022.*

### 24.      The economic classification used in the draft LF22 has changed and a new codification

### 1cmrea2022001 - 24.      The economic classification used in the draft LF22 has changed and a new codification

### Economic classification and accounting reform
- The economic classification used in the draft LF22 has changed and a new codification has been used in preparation for implementation of accrual basis accounting in the government starting in 2022 supported by technical assistance from AFRITAC and the French Development Agency.
- These changes have impacted: the LF22 format, the configuration of budget envelopes, the execution rules and procedures, and the recording of transactions.

### Public finance reform, Treasury operations, and cash management
- Government continuing reforms to improve quality of public expenditure and cash flow management as defined in the public finance reform program.
- Treasury operations and Single Treasury Account (CUT):
  - All accounts to be transferred to the Single Treasury Account inventoried (structural benchmark).
  - Agreement signed with the BEAC on management of that account.
  - BEAC coordinating configuration of the CUT technical platform for six national Public Treasuries in the CEMAC zone; BEAC expects the platform will be completed and implemented in the first quarter of 2022.
  - Priority actions: realistic commitment plans for credible monthly cash flow plans, prior authorization of all Treasury payments, curtailment of exceptional procedures.
- Capital expenditure management reforms:
  - Decree establishing terms and conditions for monitoring performance of management units for domestically and externally financed projects and programs signed and published in September 2021 (structural benchmark); to be applied going forward. Decree calls for:
    - Signing of standardized performance contracts linking remuneration of implementation unit managers to well-defined performance indicators.
    - Performance contract requirements to include preparation of quarterly reports with physical and financial project implementation indicators and review of disbursement plans and project management expenditures.
  - Creation of a maturation and compensation fund for public investment projects to ensure efficient and rapid project maturation and better execution of projects financed from ordinary domestic and/or external resources.
  - Establishment of a mechanism for evaluating and considering recurring charges to determine necessary annual needs for maintenance, upkeep and depreciation of government assets.
  - Enhancement of public investment management by implementing Public Procurement Code regulations, particularly those relating to establishment of internal administrative management units for contracts, adopted and published in September 2021 (structural benchmark).
  - Adoption of a single legal and regulatory framework governing Public-Private Partnerships (PPPs) so all PPP projects comply with one framework by end-December 2022 (structural benchmark).
- Current expenditure measures:
  - Introduction/step up of conditional cash transfers to the most vulnerable households in cooperation with the World Bank.
  - Review of the civil service pension system (government officials) with recommendations by end-May 2022 (structural benchmark).

### Tax administration reforms and revenue measures
- LF22 measures on quasi-taxation and earmarked accounts:
  - Expanded coverage of public agencies subject to ceilings on allocated taxes; revenue surpluses over the ceiling set in the budget law will be repaid into the Single Treasury Account to support government fiscal expenditure.
  - LF22 allocates new revenues to certain special earmarked accounts (CAS) and amends provisions to allocate new types of revenues to CAS to strengthen their revenue potential.
- LF22 specific tax-revenue measures expected to raise an additional CFAF 20 billion:
  - Key measures: a tax on money transfers, an increase in the special excise tax to finance local governments, and an increase in the duty on timber exports.
- General Directorate of Taxation (DGI) modernization efforts:
  - Simplify and digitize procedures across registration, remote filing, online submission, follow-up, payment, issuance of tax reminders, and adjustment notifications.
  - Introduce electronic invoicing to ensure traceability and exhaustive tax tracking of transactions and optimize VAT and excise tax monitoring.
  - Fully computerize tax audit follow-up, tax information collection, issuance of tax reminders via scheduling and execution of field audits and issuance of adjustment notifications.
  - Improve tracking of personal income tax by implementing the universal income declaration by June 30 of each year.
- General Directorate of Customs (DGD) reforms to optimize revenue, facilitate trade, and combat fraud:
  - Streamline tax expenditures with support from technical and financial partners.
  - Pursue interface of DGD CAMCIS information system with MINTRANSPORT to curtail vehicle registration fraud.
  - Strengthen collaboration with MINFOF, SGS and other partners for timber exports and reconcile tax bases with Société Générale de Surveillance (SGS).
  - Improve collections strategy and tracking of outstanding balances by:
    - Requiring cash payment of customs duties and taxes on imports intended for public procurement.
    - Signing memoranda of understanding with public enterprises (e.g., ENEO, PAD) to establish a common platform for monitoring and settling outstanding balances.
    - Automating tracking of claims and suspension of facilities for enterprises in debt to the government.
  - Improve business climate via paperless procedures for foreign trade and implementing remaining CAMCIS modules.
  - Continue reforms with National Facilitation Committee (CONAFE) to reduce cost and time for clearance of goods.
  - Strengthen customs capacity to combat fraud by:
    - Introducing alert procedure allowing authorized intermediaries to inform Customs of suspected irregular international foreign trade financial transactions.
    - Improving recording and valuation of exports.
    - Continuing the Stop Illicit Trade (HALCOMI) operation to combat fraud, smuggling and major trafficking.
  - Consolidate development taxation focused on productive sector support, local processing promotion, and export support by implementing import substitution policy.
- Joint DGI–DGD data integration and database actions:
  - Strengthen joint work based on “FUSION” software to guarantee collection, sharing and use of information between departments.
  - Continue cleanup of taxpayer database through full migration of secured DGI file to DGD information system (CAMCIS).
  - Implement alert mechanism to monitor self-employed and nonprofessional persons conducting foreign trade operations that do not comply with employee status.
  - Create a single database of taxpayers with customs and tax debts and merge tax clearance certificate (ANR) issuance with customs clearance into a single document.

### Tax policy reform levers and revenue potential
- Government intends to conduct a tax policy review with IMF technical assistance to identify additional short- and medium-term tax policy measures.
- Potential levers to consider:
  - Reduction of some tax expenditures that represented 21 percent of nonoil tax revenue and 2.6 percent of GDP in 2019 according to the report on tax expenditure annexed to the 2021 budget law (LF21), including tax exemption on imports for donor-financed projects.
  - Streamlining tax regime for externally financed contracts by effectively abolishing the tax absorption regime.
  - Broadening tax base in the transport sector by combining multiple taxes and charges paid by carriers into a single levy.
  - Overhaul of property taxation in anticipation of local taxation reform.
  - Application of excise duties on certain products likely to be produced locally.
  - Continued implementation of import substitution measures to expand tax base by subjecting certain locally producible goods to excise duties, promoting exports, and strengthening national supply of consumer products.
  - Collection of tax arrears of public enterprises, which could generate additional revenues equivalent to approximately 1.5 percentage point of GDP; government will step up collection and implement measures to avoid recurrence.

### Debt policy, ceilings, and contingent liabilities
- Policy focus: improve debt sustainability by slowing pace of new external debt commitments and favoring concessional loans; limit nonconcessional borrowing to high priority, cost-effective projects lacking concessional financing.
- LF22 borrowing ceilings for 2022:
  - Overall ceiling on new external commitments of CFAF 650 billion for direct borrowing by central government, including:
    - CFAF 230 billion in nonconcessional loans.
    - CFAF 420 billion in concessional loans.
  - Ceiling on foreign guarantees: CFAF 40 billion for public enterprises, establishments, and decentralized local governments (CTDs).
  - Exceptional guarantee of CFAF 200 billion for domestic loans of public enterprises, private companies and CTDs.
  - Ceiling on issuance of Treasury bills for budget financing: CFAF 350 billion.
- IMF public debt limits policy alignment and ceilings:
  - Until amendment by the Executive Board, ceiling on new nonconcessional external debt contracted or guaranteed by the government set at zero, adjusted upward exclusively for projects specified in Table 1 of the TMU (which revises Table 1 of July 2021 TMU), up to a maximum equivalent to the difference between (i) CFAF 300 billion and (ii) the amount of the adjustor applied at end-December 2021.
  - Following approval by the Board of the first review, new ceiling of CFAF 512.9 billion (based on present value of new external borrowing contracted or guaranteed by the government) will replace the nominal ceiling on nonconcessional borrowing, in line with IMF public debt limits policy reforms that entered into effect on June 30, 2021.
- Role of National Public Debt Committee (CNDP):
  - CNDP to approve all borrowing proposals, including those of public enterprises and CTDs, all PPP projects, and all guarantee requests (taking account of impact on debt sustainability).
  - Medium-term debt strategy (MTDS) to focus on coherent annual borrowing plans; communications strategy to be strengthened.
- Domestic arrears and audits:
  - DGTCFM began clearing audited outstanding balances of account units prior to 2019 starting in 2020: approximately 4,508 items validated corresponding to CFAF 50.6 billion; outstanding balances due were paid.
  - Audit of floating debt covering payment arrears on services to government departments, public establishments, public enterprises and CTDs over period 2000-20: four firms selected, work begun, reports expected by end-June 2022 leading to preparation of plans to clear claims definitively validated at conclusion.
- Contracted-but-undisbursed debt (SENDs):
  - Stock of external SENDs, excluding budgetary assistance, increased from CFAF 3,147 billion at end-2020 to CFAF 3,496 billion in October 2021, primarily owing to new concessional loans.
  - 2022 SEND disbursement plan to be aligned with externally financed expenditures in the framework; government to take measures to gradually reduce the stock of SENDs.
  - Government will begin canceling SENDs on old nonperforming projects and seek appropriate new financing for completion where necessary.

### Public enterprise reform and management of contingent liabilities
- Strengthen management and governance of public enterprises to improve service delivery and limit fiscal risks:
  - Implement reforms under Laws 2017/011 and 2017/010 of July 12, 2017 on General Statute Governing Public Enterprises and General Statute Governing Public Establishments; supplement provisions and implementing decrees of June 19, 2019 to strengthen fiscal risk control, classification, and governing bodies operation (aligned with IMF technical assistance recommendations of March 2021).
  - Complete assessments of viability of certain public enterprises (CAMTEL, CAMWATER and the Autonomous Port of Douala) by June 2022 (structural benchmark) and audit other loss-making or highly indebted public enterprises.
  - Review all approved or administered prices for products offered by public enterprises with view to revising calculation formula and/or possible liberalization by December 2022.
  - Public Treasury to continue quarterly payments for government consumption to utilities (ENEO, CAMWATER, CAMTEL, SONARA, CAMPOST, SIC, HYSACAM, CAMRAIL) based on sufficient annual budget allocations to limit recurrence of large cross debts; in return, entities required to meet tax obligations.
  - Inventory of cross debts as of end-December 2020 between government and public enterprises and among public enterprises to be completed by June 2022 for the 30 public enterprises/utilities with largest tax debts or claims on government (as in Green Paper annexed to 2021 budget).
  - Public enterprises benefiting from on-lending or guaranteed loans must fulfill contractual obligations; government to initiate discussions to devise collection plans for amounts due on maturities settled by government and set terms for effective tracking to enable timely debt service payments and avoid new arrears.
  - For new financing, government will introduce more security and measures to collect debt service payments on time; amounts expected from public enterprises for on-lending or guaranteed debt will be clearly identified and recorded in the budget law.
- Governance improvements:
  - Ensure boards of directors include highly qualified officials with sector-relevant expertise; strengthen internal control systems; require production and publication of audited annual financial statements and submission of business plans per statutes.
  - Create an umbrella entity to advise government on policies to improve performance and reduce budgetary risks, responsible for steering and coordinating government’s shareholding policy.
  - Introduce additional criteria for classification of public enterprises and public establishments regarding remuneration of officers and directors by end of current three-year evaluation cycle, bearing in mind international best practices.
  - Streamline government portfolio: reduce public sector presence where private sector can operate efficiently, merge similar enterprises, and use PPPs with solid institutional framework; amend PPP legal/regulatory framework per regional directives to improve transparency and ensure all PPP projects covered by single framework.
  - CTR to establish a regularly updated table of risks broken down by public enterprise to map portfolio risks overall and by sector.

*Source: 1cmrea2022001 - 24. The economic classification used in the draft LF22 has changed and a new codification*

### 42.      To improve the performance of public enterprises, the Government intends to pursue

### 1cmrea2022001 - 42.      To improve the performance of public enterprises, the Government intends to pursue

### Public enterprises: performance contracts and subsidies
- Government policy components:
  - (i) signing performance contracts specifying the public service obligations, unit costs (as a basis for payment of subsidies), and required measurable indicators of production volume and service quality;
  - (ii) gradually reducing subsidies to underperforming enterprises;
  - (iii) listing large public enterprises in industrial sectors on the stock exchange; and
  - (iv) implementing support measures based on better exploitation of the local market.
- Rationale:
  - Clear identification of public service obligations and quantification of output and associated unit costs are essential to assess financial performance, operational efficiency, and the need for government subsidies.
- Institutional action and deadline:
  - The government will issue a MINFI instruction to institutionalize governance by performance contract and will publish these performance contracts and the evaluation reports on the MINFI’s official website by end-June 2022 (structural benchmark).

### SONARA: measures to restore financial soundness
- Planned measures:
  - Complete negotiations on the restructuring of SONARA’s debt to traders (suppliers of crude oil and finished petroleum products) under the same conditions as those concluded with the banks as soon as possible.
  - Each month validate any shortfalls and/or overpayments and ensure settlement of the amounts due by the debtor party within a maximum of 120 days.
  - Require SONARA to regularly pay taxes and customs duties owed to the Public Treasury.
  - Ensure SONARA is authorized to import a volume of petroleum products consistent with its financial commitments.

### Regional monetary policy and BEAC reserves
- Government commitments to regional monetary stability:
  - Rebuild the BEAC reserves and ensure enforcement of new foreign exchange regulations under national jurisdiction.
- Specific actions:
  - Identify accounts held by public enterprises abroad and require compliance with the new foreign exchange regulations on the opening of offshore accounts.
  - In liaison with the BEAC, ensure that new concession contracts or revenue-sharing agreements with the extractive industries comply with the provisions of the foreign exchange regulations before signature; ensure the new Petroleum Code is fully compliant with the CEMAC foreign exchange regulations.
  - Ministry of Finance to establish a data exchange platform for the BEAC, banks, DGTCFM and DGD to facilitate control and monitoring of repatriation of export proceeds and financial transactions with the rest of the world; sign a memorandum on the exchange of foreign trade data covering commercial banks, microfinance institutions, foreign exchange bureaus, DGD, DGTCFM and the BEAC.

### Financial sector stability and nonperforming loans
- Measures to strengthen stability and reduce NPLs:
  - Complete the restructuring of two distressed banks within the timetable set by the COBAC and open them to private sector investment in a timely manner.
  - Continue training of judges and clerks on resolution of bank disputes; transform existing commercial chambers into specialized commercial courts with judges trained in commercial disputes.
  - Encourage banks and financial institutions to systematically submit data to the national personal property security directory (RNSM).
  - Strengthen the operation of the State Asset Management Company (SRC) to effectively perform its new missions.

### Financial sector development and industrialization (SND-30 focus)
- Six focal areas for government interventions:
  - (i) financial inclusion and densification of the financial and banking system (preparation of a national strategy underway);
  - (ii) development of local financing for investments and exports;
  - (iii) strengthening of regional and international financing of investments and exports;
  - (iv) development of supplier credit;
  - (v) contribution of the Cameroonian diaspora and repatriation of capital invested abroad;
  - (vi) development of financial talents and skills.
- Institutional action:
  - The National Economic and Financial Committee (CNEF) is leading the update of the national financial sector development strategy.
- Diversification of investor base for government securities:
  - In 2022, prepare a strategy in collaboration with the BEAC to encourage participation of nonbank investors (insurance, pension funds, individuals, etc.), particularly in long maturity issues.
  - Ensure compliance with specifications for primary dealers, including the obligation to sell a portion of their underwriting to customers.

### Competitiveness and private sector development
- Structural obstacles identified:
  - Insufficient infrastructure, high factor costs, limited access to financing, unskilled labor force, legal and judicial system shortcomings.
- Strategic response (SND-30):
  - Promote basic infrastructure and strengthen governance to increase competitiveness and private sector development.
- Private sector dialogue:
  - Establish thematic groups for formal dialogue with the private sector to hold meetings at least twice a year to monitor implementation of recommendations of the Cameroon Business Forum by end-March 2022 (structural benchmark).
- Trade facilitation commitments:
  - Support regional initiatives for migration of the customs information system.
  - Limit intermediate controls on the transport of goods in transit at conventional checkpoints.
  - Simplify administrative formalities and procedures for cross-border trade.
  - Specific objectives: (i) reduce port transit times for goods for import, export or transit; (ii) reduce port transit costs for imports and exports; (iii) complete computerization of procedures on port platforms; (iv) implement measures of the Trade Facilitation Agreement.
  - Ensure proper functioning of the National Trade Facilitation Committee (CONAFE).
  - Ensure implementation of the national strategy on the African Continental Free Trade Area (AfCFTA).
- Reform of business incentives:
  - Revise the law to streamline incentives and promote healthy competition by end-December 2022 (structural benchmark), based on recommendations of the tax policy review.

### Environment and climate change targets
- SND-30 objective:
  - “Stepping up measures to adapt and mitigate the effects of climate change and environmental management to ensure economic growth and sustainable and inclusive development.”
- Paris Agreement commitment:
  - Reduce future greenhouse gas emissions by 35 percent by 2030, including 12 percent unconditional and 23 percent conditional on international support (financing, transfers of technology and capacity building).
- International commitments:
  - Cameroon signed the Glasgow Declaration on Forests and Land Use at CoP26, aiming to stem and reverse loss of forests and land degradation by 2030.
  - Undertake to restore approximately 12 million hectares of degraded lands under the AFR 100 Initiative.

### Good governance, transparency, and anti-corruption
- Institutional and legal measures:
  - Strengthen legal and institutional framework to promote public governance: improve definition of corruption and related offenses, reduce exemptions from prosecution, strengthen whistleblower protection, facilitate seizure of goods used or produced by offenses.
  - Strengthen independence and intervention powers of the National Anti-Corruption Commission (CONAC).
  - Strengthen resources of the audit bench of the Supreme Court to align with CEMAC directives.
- Diagnostics and publication:
  - Conduct, in consultation with IMF staff, and publish a diagnosis of governance vulnerabilities and corruption covering: (i) fiscal governance; (ii) supervision of the financial sector; (iii) regulation of the market for goods and services; (iv) the rule of law; (v) the fight against money laundering and the financing of terrorism (AML/CFT).
- Recent transparency actions related to COVID-19:
  - Publication in November 2021 of the audit report on COVID-19 expenditures in 2020.
  - Publication of results of public procurement for COVID-19-related expenditures, including information on beneficial owners.
  - Publication of the annual report on COVID-19 expenditure execution.

### AML/CFT and EITI commitments
- AML/CFT:
  - National Risk Assessment (NRA) results and 2021-2024 priority action plan presented in January 2021.
  - National Financial Investigation Agency (ANIF) implemented recommendations including creation of a national framework.
  - GABAC conducted evaluation in March 2021 and adopted report in October 2021; evaluations will inform strategic decision-making and resource allocation using a risk-based approach.
- EITI:
  - Cameroon was temporarily suspended from EITI in April 2021 due to delay in publication of the 2018 EITI report; suspension lifted when the report was published in June 2021.
  - 2019 EITI report presented publicly in November 2021.
  - EITI board found significant progress but noted only 3 of 14 corrective measures implemented; Cameroon has until the next validation expected to begin in April 2023 to implement the remaining 11 measures and four measures from EITI-2019.
  - Government committed to redouble efforts to implement EITI board recommendations and to complete and publish all implementing regulations for the 2016 Mining Code by end-March 2022 (structural benchmark).

### Gender equality and gender-sensitive budgeting
- Policy direction:
  - Continue promoting equitable access of women and men to education, training, health services and social protection.
  - Address insufficient consideration of differentiated needs of men and women in public policies and in budget preparation.
- Budgeting tool changes:
  - LF22 includes a specific annex devoted to gender-sensitive budgeting.
  - First Gender-Sensitive Budget Document focuses on eight pilot ministerial departments (gradual approach) to link policies and subsequent budget allocations to promote gender equality and increase the share of budget allocated to reducing gender inequalities.
- Legal and policy reforms:
  - Pledge to amend discriminatory laws and policies to facilitate female entrepreneurship, including consultations with banks and partners to facilitate access to credit for women.

### Program modalities, monitoring, and reviews
- Monitoring framework:
  - Program monitored on the basis of semiannual reviews and the performance criteria, indicative targets and structural benchmarks defined in Tables 1 and 2 of the memorandum and in the attached Technical Memorandum of Understanding.
- Review timetable:
  - Second review based on end-December 2021 targets expected to be completed by June 15, 2022.
  - Third review based on end-June 2022 targets expected to be completed by December 15, 2022.
  - Fourth review based on end-December 2022 targets expected to be completed by June 15, 2023.
- Requests to IMF Executive Board:
  - Waiver for non-observance of the continuous performance criterion on the ceiling on new nonconcessional external debt contracted or guaranteed by the government for end-December 2021 (new non-concessional borrowing included a project that was in previously approved lists but subsequently dropped).
  - Approval requested for modifications to program targets for end-March and end-June and approval of new criteria for end-September and end-December in line with updated macroeconomic projections.
  - The newly introduced ceiling on the present value of new external debt contracted or guaranteed by the national government will replace the nominal ceiling on new non-concessional external debt (reforms to the IMF’s debt limits policy entered into effect on June 30, 2021).

### List of Priority Projects for 2022 (selected)
- 1. Construction of 225kv Ebolowa – Kribi and 90 KV Mbalmayo – Mekin power lines and related works
- 2. Extension of the Intelligent video surveillance system at the national level (phase 2)
- 3. Presidential Plan for the reconstitution of the North-West and South-West regions
- 4. 400 Kv Natchigal – Bafoussam transmission line
- 5. Edéa – Kribi road rehabilitation project (110 km)
- 6. Construction of 225 KV electrical transmission line for the supply of Kribi industrial port complex
- 7. Project to acquire 25 wagons
- 8. Electrification of 200 localities with Solar Photovoltaic Systems
- 9. EBOLOWA – AKOM II – KRIBI road construction project
- 10. OLOUNOU – OVENG – Gabon border – Bridge on the Kom river- road construction project
- 11. Project for the creation and management of a fleet of hydraulic and civil engineering machinery
- 12. Construction and Equipment of a Welding workshop in the National Higher Polytechnic Institute of the University of Bamenda
- 13. Construction of the Menchum Dam
- 14. Construction of the Ekondo Titi – Isanguele – Mudemba road

*Source: Excerpt from the IMF staff report memorandum on Cameroon program policies and structural benchmarks.*

### 1. Cumulative external budget support, excluding IMF

### 1. Cumulative external budget support, excluding IMF

### Key figures and table extracts
- Row 1 (Cumulative external budget support, excluding IMF): 53555355110534510645135170
- Row 2 (New concessional external debt contracted or guaranteed by the government 10/): 21915030017535088105150210315420
- Row 3 (Balance of the special account for the unused statutory advances): 6161516150415041505050
- Sources: Country Authorities and IMF Staff projections
- Adjustment note: To be adjusted by potential use of the Eurobond proceeds of CFAF 37.5 billion.
- Ceiling/limit references and assumptions present in notes below.

### Notes, adjustors, and ceilings
- The zero ceiling applies until the end of the arrangement.
- On a contracting basis in accordance with the IMF's debt limits policy: http://www.imf.org/external/np/pp/eng/2014/111414.pdf. (Footnote 10/)
- Note: The terms in this table are defined in the TMU.
- Standard Continuous Performance Criteria additionally apply:
  - (i) Not to impose new or intensify existing restrictions on the making of payments and transfers for current international transactions;
  - (ii) Not to introduce new or intensify existing multiple currency practices;
  - (iii) Not to conclude bilateral payments agreement that are inconsistent with the IMF’s Articles of Agreement (Article III);
  - (iv) Not to impose new or intensify existing import restrictions for balance of payments reasons.
- Program indicators under A are performance criteria at end-July 2021 and end-December 2021 and end-June 2022 and end-December 2022; indicative targets otherwise. (Footnote 1/)
- Adjustment mechanism for ceilings on net domestic financing (excluding payment of arrears) of the budget and net borrowing from the central bank:
  - Will be adjusted if disbursements of external budgetary assistance excluding IMF financing fall short of or exceed program forecasts.
  - If disbursements are less (higher) than the programmed amounts, the ceiling will be raised (reduced) pro tanto, up to a maximum of CFAF 120 billion at the end of each quarter.
  - These ceilings include deposits of CFAF 37.5 billion at the central bank from the eurobond refinancing operations.
  - The 2021 ceilings include also CFAF 30 billion at end-July and CFAF 40 billion at end-September and December of BEAC repurchases (to be adjusted based on the realization) of Cameroon's bonds. (Footnote 2/)
- Exclusions and definitions:
  - Excluding ordinary credit for imports and debt relief obtained in the form of rescheduling or refinancing. (Footnote 5/)
- Non-concessional budget support adjustor:
  - For 2021 the adjustment will be equal to the amount of non-concessional budget support approved up to a maximum of CFAF 110 billion.
  - For 2022 the adjustment will be equal to the amount of non-concessional budget support approved up to a maximum of CFAF 174 billion. (Footnote 6/)
- Macro-critical projects adjustor and ceilings on non-concessional external debt:
  - From program approval through end-December 2022, the ceiling will be set at zero.
  - For 2021, an adjustor of up to CFAF 300 billion will be applied for the macro-critical projects specified in Text Table 1 of the TMU contracted after program approval.
  - Non-concessional external debt already contracted or guaranteed in 2021 prior to program approval counts against the 2021 adjustor, including the potential uses of the Eurobond refinancing proceeds of CFAF 37.5 billion.
  - For 2022, until modified by the IMF Executive Board, the ceiling will be adjusted upward exclusively for the projects specified in Table 1 of the TMU, up to a maximum determined by the difference between (i) CFAF 300 billion, and (ii) the amount of the adjustor applied at end-December 2021. (Footnote 7/)
- Cumulative ceiling monitoring and exchange rate / concessional loan assumptions (Footnote 8/):
  - Cumulative ceiling calculated from January 1, 2022 and monitored on a continuous basis from completion of the first review under the ECF/EFF arrangement.
  - Excludes ordinary credit for imports, debt relief obtained in the form of rescheduling or refinancing, and budget support loans from the WB.
  - Assumptions for the exchange rates are: 0.828 (EUR/USD), 543.201 (CFAF/USD), 0.714 (XUA/USD).
  - Given the uncertainty of the borrowing plan for concessional loans, the terms were assumed at 30 year maturity, 5 year grace period, 0.4% fixed interest rate, and 0.75% management fee per annum.
- Treasury payments without prior authorization (cash advances and provisional budget commitments), excluding debt service payments, are referred to in the table. (Footnote 9/)

### Structural benchmarks, prior actions, and implementation status (selected items)
- Prior Action 1: Publish on the ARMP website an overall table of the results of contracts related to COVID-19 and awarded from end of June 2021 to end of December 2021, including the actual beneficial owners of contracting entities.
  - Status: Met
  - Evidence: Publication on the ARMP website
- Prior Action 2: Prepare a diagnosis of the tax policy and formulate recommendations for the establishment of a development-oriented tax system that at the same time broadens the tax base.
  - Initial schedule: Oct-21
  - Status: Not Met
  - Comment: Diagnostic sent to IMF staff. The IMF TA will be conducted in 2022. Revised schedule: Oct-22
- Prior Action 3: Publish the audit prepared by the audit bench of the supreme court (chambre des comptes) of fiscal year 2020 expenses related to COVID-19.
  - Initial schedule: Dec-21
  - Status: Met
  - Evidence: Copy of the audit report published on the Ministry of Finance website
- Prior Action 4: Adopt and publish all the implementing texts of the Public Procurement Code, including those relating to the establishment of internal administrative management structures.
  - Initial schedule: Sep-21
  - Status: Met
- Prior Action 5: Complete the audits of government payment arrears and adopt an arrears settlement plan of arrears certified by these audits.
  - Initial schedule: Dec-21
  - Status: Not Met
  - Comment: Authorities have selected four auditors; revised schedule Sep-22
- Prior Action 6: Pursue the reforms aimed at extending the STA to the BEAC:
  - Tasks: (i) present a census of government accounts ... excluding counterpart funds as of June 30, 2021 and December 31; (ii) close and repatriate the balances of these STA accounts to the BEAC before the end of March 2022.
  - Initial schedule: Mar-22
  - Status/Comment: Census completed for June 30 and December 31, 2021. Authorities are waiting for the BEAC's platform to repatriate the balances. Revised schedule: Jun-22
- Prior Action 7: Carry out a diagnostic study of the public administration pension system, together with recommendations for its improvement.
  - Initial schedule and status: May-22, May-22
- Prior Action 8: Strengthen accountability of implementing units by setting, by decree, modalities for monitoring performance of all programs and projects financed both from domestic and external resources.
  - Initial schedule: Sep-21
  - Status: Not Met
  - Comment: Decree issued October 13; authorities working with the WB and AFDB to index remuneration to performance.
- Prior Action 9: Adopt a legal and regulatory framework governing Public-Private Partnerships (PPP).
  - Initial schedule: Jun-22
  - Status: Pending regional framework; draft prepared to align with future regional framework. Revised schedule: Dec-22
- Selected additional structural benchmarks (schedules and statuses shown as in source):
  - Finalize diagnostics of CAMTEL, PAD, CAMWATER: Dec-21 — Not Met; PAD diagnostic being finalized; CAMTEL and CAMWATER ongoing. Revised schedule: Jun-22
  - Establish inventory of cross-debts between public enterprises and State at end-2020 and adopt clearance plan: Dec-21 — Not Met; cross-debt inventory being finalized. Revised schedule: Jun-22
  - Institutionalize governance by program contracts for public enterprises and publish on MINFI website: Jun-22 — Instruction published in official newspapers. Revised schedule: Jun-22
  - Finalize and publish application texts of the mining code of 2016 (Law n ° 2016/017 of December 14, 2016): Mar-22 — Implementation texts published.
  - Make deposit and consignment fund operational (nominate officers): Oct-21 — Not Met; officers not yet nominated. Revised schedule: Jun-22
  - Strengthen public-private sector consultation format with thematic groups and semi-annual meetings: Mar-22 — New consultation format set up and first meeting held.
  - Revise Law No. 2013/004 of April 18, 2013 to rationalize incentives: Jun-22 — To be rescheduled after tax policy diagnostic. Revised schedule: Dec-22
  - Publish execution report of COVID-19 expenses executed during 2021 budget year: Jun-22 — New SB (structural benchmark) Jun-22
  - Diagnostic of governance vulnerabilities (fiscal governance; financial sector oversight; market regulation; rule of law; AML/CFT): Jun-23 — New SB Jun-23
  - Action plan for strengthening frameworks for public spending audits and Supreme Court’s Audit Bench: Dec-22 — New SB Dec-22
  - Publish audit of fiscal year 2021 COVID-19 expenses by the Supreme Court audit bench: Dec-22 — New SB Dec-22

### Technical Memorandum of Understanding (TMU): Definitions and measurement guidance (selected)
- Coverage and period:
  - TMU defines quantitative performance criteria and indicative objectives used to assess performance under Cameroon’s ECF and EFF arrangements over 2021-24.
  - Quantitative performance criteria and indicative objectives from end-July 2021 until December 2022 are provided in Table 1 of the MEFP; structural benchmarks in Table 2 of the MEFP.
- Government definition:
  - “Government” is the central government of the Republic of Cameroon, including implementing agencies, institutions, and organizations receiving special public funds as defined in GFSM 2001 (paragraphs 2.48–50).
  - Excludes local governments, the Central Bank, or any other public entity with autonomous legal status whose operations are not included in the TOFE.
- Nonfinancial public enterprise definition:
  - Commercial or industrial unit, fully or partially owned by central government, selling goods and services to the public on a large scale.
  - Since June 2017, operations between government and these enterprises treated on a gross basis in the TOFE.
- Revenue definitions:
  - Total government resources: tax and nontax fiscal revenue (Chapter 5 of GFSM 2001) and grants. Revenue recorded on a cash basis.
  - Proceeds from sale of assets and privatizations are not considered government revenue.
  - Oil revenue: total transferable balance of the Société Nationale des Hydrocarbures (SNH), and income tax on oil companies and gas operators. Recorded on a cash basis.
  - Non-oil revenue: all government tax and nontax revenue excluding oil revenue. VAT recorded net of VAT refunds. Pipeline fees paid by COTCO recorded under nontax revenue.
  - Privatization revenue: all funds paid to government in connection with sale or transfer of management (concession) or sale of shares; must be recorded on a gross basis. Costs of sales/concessions recorded under expenditure.
- Expenditure definitions:
  - Total government expenditure and net lending include wages and salaries, goods and services, transfers (including subsidies, grants, social security benefits), interest payments, capital expenditure, recorded on payment order basis unless indicated, and net lending as defined in GFSM 2001.
  - Includes expenditure carried out without prior payment authorization and pending regularization.
  - Spending advances (interventions directes) by SNH are included in government expenditure (emergency payments by SNH on behalf of government to cover exceptional sovereignty and security outlays).
  - Social expenditure defined to include specified ministries’ total expenditure, COVID-19 related expenditures, administered price subsidies (fuel at the pump, electricity to households), and Social Safety Net Program expenditures.
- Balance and financing:
  - Primary balance defined as difference between total government revenue and total government expenditure and net lending, not including interest payments on external and domestic debt.
- Debt definitions and treatment:
  - “Debt” definition follows paragraph 8(a) of the Guidelines on Public Debt Limits in Fund-Supported Programs (Executive Board Decision 15688–(14/107) adopted December 5, 2014), including commitments contracted or guaranteed for which values not yet received; includes direct, noncontingent liabilities creating obligation to provide assets or services and scheduled payments.
  - Penalties or damages awarded by a court as a result of nonpayment that constitute contractual obligations are considered debt.
  - External debt defined as borrowing or debt service in a currency other than the CFA franc; applies to debt between CEMAC countries and from BDEAC.
  - Relevant performance criteria apply to external debt of the government, public enterprises receiving transfers, and other public entities with government holding more than 50 percent of capital stakes, or private debt guaranteed by the government.
  - Guaranteed debt defined as explicit legal obligation on the government to reimburse in event of debtor default.
- Concessional external debt:
  - External debt is concessional if it comprises a grant component of at least 35 percent.
  - Grant component = (face value − present value) / face value, using a discount rate of 5 percent to calculate present value at the date the loan is arranged.
  - Concessionality calculation reflects maturity, grace period, schedule of maturities, commitment fees, and management fees. Concessionality calculations for IsDB loans reflect existing agreement between IsDB and IMF.

*International Monetary Fund — Extracts from the Technical Memorandum of Understanding and related tables*

### 16.      Domestic debt is defined as all government’s debts and obligations denominated in CFA

### 1cmrea2022001 - 16.      Domestic debt is defined as all government’s debts and obligations denominated in CFA

### Definitions: Domestic debt and structured debt
- Domestic debt: all government’s debts and obligations denominated in CFA francs. This item 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 that has been subject to a formal agreement or securitization.
  - Structured bank debt: all claims of local banks on government, with the exception of Treasury bills and bonds.
  - Structured non-bank debt: all government's balances payable in connection with local non-bank institutions, individuals, or the CEMAC, that have been securitized or subject to a formal reimbursement agreement according to a clearly defined schedule.
- Under the program:
  - structured bank debt is included in net bank credit; and
  - structured non-bank debt is reflected in non-bank financing.

### Net domestic financing of the government (definition and components)
- Net domestic financing of the government = (i) net bank credit to the government; and (ii) net non-bank financing.
- Net bank credit to the government:
  - equal to the change in the balance between the government’s commitments and assets with the national banking system.
  - Government assets include: (i) the Treasury’s cash resources on hand; (ii) Treasury deposits with the Central Bank, not including the Heavily Indebted Poor Counties (HIPC) account and the Debt Reduction and Development Contract (C2D) account; and (iii) the credit balance of the accounts of the Caisse Autonome d'Amortissement with commercial banks earmarked for reimbursement of the government's debt obligations.
  - Government commitments include: (i) financing from the Central Bank; net IMF financing (disbursements net of reimbursements), refinancing of guaranteed bonds, and Treasury paper held by the Central Bank; and (ii) financing from commercial banks, specifically loans and direct advances; and Treasury securities, bills, and bonds held by local banks.
  - Net bank credit to the government is calculated based on the data provided by the Bank of Central African States (BEAC) and should be subject to monthly reconciliation between the Treasury and the BEAC.
- Net non-bank financing to the government includes:
  - (i) change in outstanding balance of government securities (Treasury bills and bonds) issued in CFA francs on the regional financial market and not held by the local banking system;
  - (ii) change in outstanding balance of structured non-bank domestic debt;
  - (iii) privatization revenue;
  - (iv) change in the balance of correspondent bank accounts (including Account 42) and consignment accounts;
  - (v) change in the balance of outstanding claims on government abandoned by the private sector.
- The government’s net non-bank financing is calculated by the public treasury.

### Domestic payment arrears (components and definitions)
- Domestic payment arrears = (i) payment arrears on expenditure; (ii) payment arrears on structured domestic debt; and (iii) 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 where normal expenditure execution procedure was followed but payment is pending.
  - 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 or the reimbursement of matured Treasury securities, bills, or bonds and the amount effectively paid after the payment deadline in the agreement or after the maturity date.
- Unstructured debt:
  - i. Unstructured debt of the CAA: all balances payable and liabilities of the government transferred to the CAA that have not been subject to a reimbursement or securitization agreement. The stock of unstructured debt is estimated at CFAF 68.0 billion at end-2020.
  - ii. Domestic "floating” debt: all government commitments for which a service was provided by a public or private service provider but that has not been subject to any budget commitment (invoices payable and not settled to public and private enterprises). Excludes tax debt deriving from debt offsetting operations with public enterprises and execution of externally financed public procurement agreements not covered by the budget due to insufficient appropriations.
  - The Directorate General of Budget will conduct a monthly assessment of these commitments in collaboration with the public treasury.

### External payment arrears (definition)
- External payment arrears: 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).
- Excludes payment arrears on external financial obligations of the government that are subject to rescheduling.

### Quantitative Program Objectives — Overview and reporting
- Quantitative targets (QTs) in Table 1 of the MEFP are assessed on a cumulative basis from the beginning of the calendar year to which they apply, unless otherwise indicated.
- Detailed data and reporting cutoffs (monthly submission within six weeks after end of month) are specified for several targets.

### A. Non-Oil Primary Balance (Performance criterion)
- A floor for the non-oil primary balance (based on payment order) is defined as a quantitative objective.
- Non-oil primary balance = primary balance (paragraph 12) − oil revenue (paragraph 6).
- Consistency rule: 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 with IMF staff will be undertaken.
- Adjustment: the non-oil primary fiscal balance floor will be adjusted downward (upward) by the difference if positive (if negative) between cumulative expenditure since the beginning of the fiscal year covered by new SDR allocations and the programmed amount of these expenses. The programmed amount of these expenses could reach CFAF 75 billion at the end of September and CFAF 150 billion at the end of December 2021.
- Cutoff: detailed data on government financial operations to be submitted monthly within six weeks from the end of the month.

### B. Net Domestic Financing of the Government Excluding Net IMF Financing (Performance criterion)
- A ceiling on net domestic financing excluding net IMF financing is defined as a quantitative objective.
- For program requirements, this equals net domestic financing as defined, not including net IMF financing.
- Adjustment provisions:
  - Ceiling adjusted if (i) disbursements of external budget support net of external debt service and payment of external arrears, and (ii) rescheduling of bilateral external debt service are lower than program forecasts.
  - At end of each quarter, if disbursements of external budget support are below (above) programmed amounts, 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 budget aid disbursements during the year.
  - At end of each quarter, if rescheduling of bilateral external debt service is below (above) programmed amounts, corresponding quarterly ceilings will be adjusted upward (downward) pro‑rata.
- Cutoff: detailed data on net domestic financing and status of budget support disbursements, reimbursement of external debt service, and status of external arrears to be submitted monthly within six weeks after month-end.

### C. Disbursement of Non-Concessional External Debt (Performance criterion)
- A ceiling on disbursements of non-concessional external debt applies to debt contractually arranged to finance projects.
- This criterion is based on external debt definition and the concept of concessionality (paragraphs 14 and 15).
- Cutoff: detailed information on disbursements of external debt contracted by the government must be reported within six weeks after month-end, indicating signing dates and distinguishing concessional vs non-concessional loans.

### D. Net Claims of the Central Bank on the Central Government (Performance criterion)
- A ceiling on net claims of the Central Bank on government is defined.
- Criterion = Central Bank’s claims on government, excluding IMF financing (including unpaid balances of consolidated statutory advances, refinancing of guaranteed bonds, and Treasury securities held by the Central Bank) − cash and total deposits of the Treasury with the Central Bank (including balance of special account of unused statutory advances).
- The balance of the special account will be regularly monitored.
- Adjustment: ceiling will be adjusted if disbursements of external budget support are below programmed levels.
- At end of each quarter, if disbursements of external budget support are below (above) programmed amounts, relevant quarterly ceilings will be adjusted upward (downward) commensurately, within the limit of CFAF 120 billion for each quarter of 2021.
- Cutoff: BEAC must report detailed information on all financing from the Central Bank to government and the statement on the balance of the special account of unused statutory advances within six weeks after month-end.

### E. Non-Accumulation of External Payment Arrears (Performance criterion)
- A ceiling of zero on the accumulation of new external payment arrears is a continuous quantitative objective.
- Applies to accumulation of external arrears as defined (paragraph 19).
- Government undertakes not to accumulate any external payment arrears on its debt, with the exception of arrears subject to rescheduling.
- Measured cumulatively on approval of the program.
- Cutoff: data on balances, accumulation, and reimbursement of external arrears reported within six weeks after month-end; monitored continuously and any new external arrears should be reported immediately to the Fund.

### F. Present Value (PV) of External Debt Contracted or Guaranteed by the Government (Performance criterion)
- A ceiling on the PV of new external debt contracted or guaranteed by the public sector applies, including debt contracted or guaranteed for which value has not yet been received and private debt with official guarantees.
- Applicable to external debt as defined and to contingent public liabilities; not applicable to borrowing in CFA francs, Treasury bills and bonds in CFA francs on the CEMAC regional market, regular short-term supplier loans, regular import credits, IMF loans, World Bank budget support loans, or debt relief/rescheduling.
- PV calculation:
  - discount future debt service payments using unified discount rate of 5 percent.
  - For debts with grant element equal or below zero, PV = nominal value.
  - PV of external debts in currencies other than USD calculated in USD at program exchange rates as specified in TMU Text Table 1.
  - For variable interest rate debt (benchmark + fixed spread), PV calculated using program reference rate plus fixed spread (basis points) specified in the contract.
  - Program reference rate for six-month USD SOFR = 0.04 percent and will remain fixed for the duration of the program.
  - Spreads: six-month Euro EURIBOR over six-month USD SOFR = -56 basis points; six-month JPY OIS over six-month USD SOFR = -8 basis points; six-month GBP SONIA over six-month USD SOFR = 1 basis point.
  - For interest rates on currencies other than Euro, JPY, and GBP, the spread over six-month USD SOFR = 15 basis points.
  - Where variable rate linked to a benchmark other than six-month USD SOFR, a spread reflecting the difference between the benchmark and six-month USD SOFR (rounded to the nearest 50 bps) will be added.
- Program exchange rates (Text Table 1):
  - US Dollar: 543.201 CFA franc per currency unit; Currency units per US Dollar = 1.00
  - Euro: 655.957 CFA franc per currency unit; Currency units per US Dollar = 0.828
  - AfDB XUA: 760.26 CFA franc per currency unit; Currency units per US Dollar = 0.714
  - STG Pound: 782.048 CFA franc per currency unit; Currency units per US Dollar = 0.695
  - Japanese Yen: 5.092 CFA franc per currency unit; Currency units per US Dollar = 106.679
  - Chinese Yuan: 82.338 CFA franc per currency unit; Currency units per US Dollar = 6.597
- Adjustment mechanisms:
  - Upward (downward) adjustor by amount budget support exceeds (falls short of) projected amounts; any adjustment capped at 10 percent of the external debt ceiling set in PV terms and must be consistent with debt sustainability.
  - External debt ceiling in PV terms adjusted upward by full PV amount of any project financing dedicated to COVID-19 vaccine interventions not anticipated at time of setting the performance criterion (authorities will consult IMF staff before contracting or guaranteeing such borrowing).
  - An adjustor of up to 5 percent of the external debt ceiling in PV terms applies in case deviations are prompted by changes in financing terms (interest, maturity, grace period, payment schedule, upfront commissions, management fees). This adjustor cannot be applied when deviations are prompted by an increase in nominal amount of total debt contracted or guaranteed.
- Cutoff: detailed information on all loans (conditions and creditors) contracted by the government, and guarantees issued, must be reported within six weeks after month-end and reported immediately when signed or guaranteed.

### Other indicative quantitative targets
- A. Non-Oil Revenue: a floor on non-oil revenue as defined in paragraph 7 is an indicative objective.
- B. Accumulations of Domestic Payment Arrears: a ceiling on net accumulations of domestic payment arrears is an indicative objective. Domestic payment arrears covered by the Treasury are defined in paragraph 19 and exclude unstructured floating debt not covered by the Treasury.
- C. Social Expenditure: a floor on social expenditure pursuant to paragraph 11 is an indicative objective; these items will be monitored regularly in connection with program implementation.
- Cutoffs: Reporting deadlines for indicative targets follow the same monthly six-week submission requirement.

*Source: Technical Memorandum — Cameroon, International Monetary Fund*

### 48.      The data on the government's financial position as presented in the table of government

### The data on the government's financial position as presented in the table of government financial operations

### Reporting obligations on government financial position and fiscal execution
- 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.  
- 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.  
- The signing or guaranteeing of external debt, and the occurrence of external payment arrears must be reported immediately to the IMF.

### Ceiling on share of exceptional expenditure (indicative objective)
- 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.
- The criterion is 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.
- Authorized expenditure presented in Table M1 of the table of government financial operations will be used to compute this ratio.

### Cutoff dates and timeliness
- Monthly accounting statements (cash advances, provisional commitments, advance funds): report within 3 weeks after month end.
- The table of government financial operations (TOFE) and customary annex tables: monthly, reporting lag 6 weeks.
- The summary situation of Treasury Operations (SROT): MINFI/DGTC, Monthly, reporting lag 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, reporting lag 6 weeks.
- Implementation status of social expenditure defined in Paragraph 11: MINEFIN/DGB, Monthly, reporting lag 6 weeks.
- Status of balances payable for the current fiscal year (orders unpaid) distinguishing those over 90 days and others: MINFI/DGT, Monthly, reporting lag 6 weeks.
- Domestic debt reimbursement status: MINFI/CAA, Monthly, reporting lag 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, reporting lag 4 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, reporting lag 4 weeks.
- Data on the implementation of the public investment program, including a detailed listing of financing sources: MINFI/MINEPAT/CAA, Quarterly, reporting lag 6 weeks.
- Monthly accounting statements showing the amount of cash advances, advance funds, and the balance of provisional budget commitments: MINFI, Monthly, reporting lag 6 weeks.
- Publish the oil product price structure: MINFI/CSPH, Monthly, first week of the current month.
- Prices, consumption, and taxation of oil products (including current price structure, detailed calculation from FOB price to retail, volumes purchased and distributed distinguishing retail and industrial sales, and breakdown of tax revenue on petroleum products—customs duty, excise tax on petroleum products (TSPP), and value-added tax (VAT)—and support for the refinery and the situation of shortfalls and overpayments): MINFI/CTR/CSPH, Monthly, reporting lag 6 weeks.
- Monthly statement of correspondent accounts (including Account 42) and consignment deposits with the Treasury broken down into major categories: MINFI/DGT, Monthly, reporting lag 6 weeks.
- Provide revenue forecasts and monthly outturns for DGI, DGD, DGB by type of tax: Monthly, reporting lag 6 weeks.
- Preliminary annual balance of payments data: MINFI, Annual, reporting lag 9 months.
- Foreign trade statistics: MINFI/INS, Monthly, reporting lag 6 weeks.
- Any revision of the balance of payments data: BEAC/MINFI, On revision, reporting lag 2 weeks.
- Provisional national accounts and any revision: INS, Annual, reporting lag 6 months.
- Quarterly National Accounts: INS, Quarterly, reporting lag 3 months.
- Disaggregated consumer price indices for Douala and Yaoundé: INS, Monthly, reporting lag 4 weeks.
- Consumer price indices disaggregated by city, product and at the national level: INS, Monthly, reporting lag 6 weeks.
- Any official report or study devoted to Cameroon’s economy: MINEPAT, from date of publication or finalization, reporting lag 2 weeks.
- Any decision, decree, law, order, or circular having economic or financial implications: MINFI/MINEPAT, reporting lag 2 weeks.
- Report on implementation of expenditure of the special allocations account (CAS) COVID-19: MINFI/DGB, Bi‑annually, reporting lag 3 months.
- CAS-COVID-19 expenditure audit report: MINFI/DGB, Annually, reporting lag 6 months.

### Data submission and revisions
- 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 promptly to IMF staff.
- The authorities undertake to report 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 priority projects under the non-concessional borrowing limit (projects covered by the quantitative ceiling on new non-concessional external debt contracted or guaranteed by the government for 2021 and until the completion of the first program review)
1. Project to acquire 25 wagons  
2. East entrance Douala road, Phase II  
3. Completion of the Olembe Sports Complex in Yaounde  
4. Edéa-Kribi road rehabilitation project (110 km) and development of the Lolabé-Campo section (39 km)  
5. Construction of 225 KV electrical transmission line for the supply of Kribi industrial port complex  
6. Construction of 225kv Ebolowa Kribi and 90 KV Mbalmayo-Mekin power lines and related works  
7. EBOLOWA-AKOM II- KRIBI road construction project  
8. OLOUNOU- OVENG- Gabon border-Bridge road construction project on the Kom river  
9. Douala international airport rehabilitation project, additional financing component B  
10. Electrification of 200 localities by Solar Photovoltaic Systems  
11. Extension at the national level of the Intelligent video surveillance system (phase 2)

### Selected IMF relations and financial data (as of December 31, 2021)
- Quota: 276.00 (SDR Million; 100.00 percent of quota)  
- IMF's Holdings of Currency (Holdings Rate): 357.73 (SDR Million; 129.61)  
- Reserve Tranche Position: 1.35 (SDR Million; 0.49)  
- Net cumulative allocation (SDR Department): 441.80 (SDR Million; 100.00)  
- Holdings (SDR Department): 218.64 (SDR Million; 49.49)  

Outstanding purchases and loans (SDR Million; %Quota):
- RCF Loans: 276.00 (100.00)  
- ECF Arrangements: 469.20 (170.00)  
- Extended Arrangements: 82.80 (30.00)

Latest financial commitments — Arrangements:
- EFF, Date of Expiration Jul 28, 2024, Amount Approved 322.00 (SDR Million), Amount Drawn 82.80 (SDR Million)  
- ECF, Date of Expiration Jul 28, 2024, Amount Approved 161.00 (SDR Million), Amount Drawn 41.40 (SDR Million)  
- ECF, Date of Expiration Sep 30, 2020, Amount Approved 483.00 (SDR Million), Amount Drawn 427.80 (SDR Million)

Outright Loans — Commitments:
- RCF, Date of Commitment Oct 21, 2020, Date Drawn/Expired Oct 23, 2020, Amount Approved 110.40 (SDR Million), Amount Drawn 110.40 (SDR Million)  
- RCF, Date of Commitment May 04, 2020, Date Drawn/Expired May 06, 2020, Amount Approved 165.60 (SDR Million), Amount Drawn 165.60 (SDR Million)

Projected payments to Fund (SDR Million; based on existing use of resources and present holdings of SDRs):
- Principal forthcoming by year: 2022: 41.40; 2023: 63.48; 2024: 96.60; 2025: 154.56  
- Charges/Interest forthcoming by year: 2022: 1.06; 2023: 1.07; 2024: 1.07; 2025: 1.00  
- Total forthcoming by year: 2022: 1.06; 2023: 42.47; 2024: 64.55; 2025: 97.67; 2026: 155.56

### HIPC, MDRI, and safeguards
- HIPC Initiative (Enhanced Framework): Assistance committed by all creditors (US$ Million): 1,267.00; Of which IMF assistance (US$ million) 37.04 (SDR equivalent in millions) 28.62. Completion point date Apr 2006.  
- Disbursement of IMF assistance (SDR Million): Assistance disbursed to the member 28.62; Interim assistance 11.25; Completion point balance 17.37; Additional disbursement of interest income 5.05; Total disbursements 33.67.  
- MDRI-eligible debt (SDR Million): 173.26; Financed by MDRI Trust 149.17; Remaining HIPC resources 24.09. Delivery Date April 2006; Eligible Debt Total 173.26 (GRA/PRGT/Total).  
- Safeguards assessment: BEAC full safeguards assessment completed in 2017; an update assessment is in progress. The 2017 assessment noted positive steps: alignment of secondary legal instruments with amended Charter and issuance of FY 2019 audited financial statements in compliance with IFRS.

*Prepared from the provided IMF content unit.*

### conclusion of a multi-year governance-focused reform with support from the Fund.

### 1cmrea2022001 - conclusion of a multi-year governance-focused reform with support from the Fund.

### Non-Financial Relations — Exchange Arrangement and Surveillance
- Cameroon participates in a currency union with five other members of the CEMAC and has no separate legal tender.
- Cameroon’s currency, the CFA franc, is pegged to the euro at the fixed rate of CFAF 655.957 per euro.
- Local currency equivalent: CFAF 811.7=SDR 1, as of December 23, 2021.
- Effective January 1, 2007, the exchange arrangement of the CEMAC countries was reclassified as a “conventional pegged arrangement” (definitional change only).
- Cameroon maintains an exchange system free of restrictions on the making of payments and transfers for current international transactions, except for restrictions maintained for security reasons notified to the IMF pursuant to Executive Board decision 144 152/51.
- The last Article IV consultation with Cameroon was concluded by the Executive Board on July 6, 2018.
- Financial System Stability Assessment (FSSA) and FSAP history:
  - FSSA report issued in May 2000.
  - FSSA update completed in February 2009, based on a joint IMF-World Bank FSAP mission in June 2007.
  - CEMAC regional FSAP conducted in 2006 and regional FSAP update in 2015.
- ROSC history:
  - First ROSC on fiscal transparency and transparency of monetary and financial policies issued June 2000.
  - Fiscal ROSC reassessment mission visited Yaoundé during May 6–18, 2009; report issued June 2010.

### Technical Assistance (Selected missions by year and topic)
- 2021
  - December AFRITAC mission on tax revenue digitalization
  - October AFRITAC mission on tax revenue data management
  - October AFRITAC mission on diversifying the domestic debt investor base
  - October AFRITAC mission on internal budget audit
  - September AFRITAC mission on the tax revenue administration information system
  - September AFRITAC mission on gender budgeting
  - July STA mission on the national accounts
  - July FAD mission on budget decentralization
  - July AFRITAC mission on managing civil service remuneration
  - June FAD mission on budget decentralization
  - May FAD mission on managing fiscal risks in public enterprises
  - April AFRITAC mission on public finance statistics
  - April AFRITAC mission on gender budgeting
  - March FAD mission on revenue administration and digitalization
  - March AFRITAC mission on customs revenue administration
- 2020
  - November AFRITAC mission on accounting of public physical assets
  - November FAD mission on taxing project aid
  - October AFRITAC mission on the medium debt strategy
  - July AFRITAC mission on accounting of public physical assets
  - June AFRITAC mission on accounting of public physical assets
  - June AFRITAC mission on modernizing tax management in the Covid context and beyond
  - May AFRITAC mission on securing customs revenues during Covid
  - May AFRITAC mission on the national accounts
  - May STA mission on data dissemination
  - May FAD mission on revenue decentralization and reforming local taxation
  - March FAD mission on strengthening public capital expenditures
  - January AFRITAC mission on the Treasury Single Account
  - January AFRITAC mission on internal budget controls: accounting of public physical assets
- 2019
  - August AFRITAC mission on internal budget control and accounting
  - June AFRITAC mission on mobilizing tax revenues
  - May AFRITAC mission on the national accounts
  - May AFRITAC mission on public financial statistics
  - March STA mission on the national accounts
  - February STA mission on natural resource statistics and projections
  - January AFRITAC mission on the Treasury Single Account
  - January STA mission on external statistics
  - January STA mission on government finance statistics
- 2018
  - December FAD mission on revenue administration
  - October FAD mission on accounting and regularization of exceptional spending procedures
  - August AFRITAC mission on budget risk management
  - August FAD mission on the efficiency and equity of public expenditures
  - July AFRITAC mission on customs revenue administration
  - June FAD mission on fiscal reporting and accounting
  - June STA mission on balance of payments statistics
  - May AFRITAC mission on internal budget control
  - April FAD mission on assessing the efficiency and equity of public expenditures
  - April FAD mission on medium term budget framework
  - April AFRITAC mission on public debt management
  - April MCM mission on assessing the valuation of the non-performing loan portfolio
  - April AFRITAC mission on mobilizing domestic revenues and revenue administration
  - March AFRITAC mission on identifying macro-budgetary needs
  - March MCM mission on distressed asset valuation
  - February MCM mission on distressed asset valuation
  - February FAD mission on rationalizing exceptional spending procedures
- 2017 (selected)
  - November FAD mission on improving budget execution by streamlining derogatory procedures
  - November AFRITAC government finance statistics
  - September FAD mission on advancing reforms in tax administration
  - July STA mission on balance of payments statistics
  - March MCM mission on monetary policy design and implementation
  - January MCM/AFC Public debt management
  - January FAD/AFW seminar on GDP
  - January AFRITAC-Central mission and workshop on PFM

### Resident Representative
- The post of IMF Resident Representative has been maintained in Yaoundé continuously since 1989.
- The current Resident Representative, Mr. Nicholas Staines, started his assignment in August 15, 2021.

### Statistical Issues — Data Adequacy and Improvements
- General: Data provision has some shortcomings but is broadly adequate for surveillance purposes.
- Improvements: Quarterly data produced for national accounts and balance of payments; monthly Treasury data on budget execution.
- Real sector statistics:
  - National accounts rebased to 2005 in July 2017 and to 2016 in December 2020 by INS.
  - INS compiles a quarterly GDP time series and has received IMF technical assistance to improve seasonal adjustments.
  - INS publishes a monthly Consumer Price Index (base year 2011) for the main cities and nationally.
  - INS compiles quarterly Industrial Production Index, Industrial Production Price Index for the secondary sector, and a Turnover Index for the tertiary sector.
- Government finance statistics:
  - Quality broadly adequate, but shortcomings in coverage, periodicity, timeliness, and accessibility.
  - Monthly reports on overall budget execution now produced regularly.
  - Work underway to produce budget execution reports as of January 2023 based on GFSM 2001/2014.
  - Major improvements include:
    - (i) Budget execution data on commitment basis produced monthly since January 2018; reports include greater transparency on oil sector revenue and expenditure interventions and better monitoring of the payment floats.
    - (ii) Annexes of the budget law submitted to Parliament now include the Livre Vert on public enterprises and a report on Tax Expenditures.
    - (iii) Authorities adopted the six CEMAC Directives related to public financial management, but full implementation delayed beyond the January 1, 2022 target date: Loi de Finances – Régime Financier de l’Etat, Règlement General de la Comptabilité Publique, Plan Comptable de l’Etat, Nomenclature Budgétaire, TOFE, and Transparence et Bonne Gouvernance dans la Gestion des Finances Publiques.
  - Important remaining weaknesses:
    - (i) lack of information on the financial situation of local governments;
    - (ii) poor monitoring of cross-debts in the public sector and of public enterprise debt;
    - (iii) lack of comprehensive and timely financial information on public enterprises.
- Monetary and financial statistics:
  - Monetary statistics reported by BEAC monthly in SRFs, with delays up to two months.
  - Key shortcoming: long delay in publication of data on interest rates offered by financial institutions to non-financial entities on deposits and loans.
  - Depository corporation survey excludes deposit-taking microfinance institutions.
- Financial sector surveillance:
  - COBAC reports all core financial soundness indicators and additional indicators to STA for Cameroon.
- Balance of payments:
  - Cameroon participates in the JSA/AFR Project to Improve External Sector Statistics since 2016.
  - BoP data quality improved: data reported annually and, since 2017, quarterly.
  - Significant delays remain due to source data lags (financial and capital accounts, external trade data).
  - Annual IIP data submitted first time in 2016 for 2012–15 and produced yearly since then.
- External debt:
  - External debt data broadly adequate for surveillance; collected by the Caisse Autonome d'Amortissement (CAA).
  - CAA publishes timely monthly reports and quarterly and annual summaries.
  - Data comprehensive for public and explicitly guaranteed debt; comprehensive only for those categories.

### Data Standards, Reporting, and Common Indicators (as of December 31, 2021)
- Cameroon has participated in the GDDS since 2001.
- In July 2017, Cameroon began publishing critical macroeconomic data on INS website—the National Summary Data Page (NSDP), making e-GDDS effective.
- No ROSC data are available.
- Reporting to STA:
  - Reports limited data for IMF Government Finance Statistics Yearbook under 2014 format for 2012-18.
  - Limited quarterly data reproduced in International Financial Statistics.
  - Reports quarterly and yearly data for publication in the Fund’s Balance of Payments Statistics.
- Table of Common Indicators Required for Surveillance (selected entries and exact dates):
  - Exchange rates: Date of latest observation Jan 2022; Date received Jan 2022; Frequency D; Frequency of reporting D; Frequency of publication Daily, on BEAC website.
  - International reserve assets and liabilities: Date of latest observation Oct 2021; Date received Dec 2021; Frequency M M M.
  - Reserve/Base money: Oct 2021; Dec 2021; M M M.
  - Broad money: Oct 2021; Dec 2021; M M M.
  - Central bank balance sheet: Oct 2021; Dec 2021; M M M.
  - Consolidated balance sheet of the banking system: Oct 2021; Dec 2021; M M M.
  - Interest rates: Sep 2021; Oct 2021; M M M.
  - Consumer price index (main cities): Oct 2021; Nov 2021; M M M.
  - Consumer price index (national): Sep 2021; Nov 2021; M M M.
  - Central government revenue, expenditure, balance and composition of financing: Oct 2021; Dec 2021; M M Partial data published quarterly.
  - Stocks of debt contracted or guaranteed by the central government: Nov 2021; Dec 2021; M M M.
  - External current account balance: Sep 2021; Dec 2021; Q Q Q.
  - Exports and imports of goods and services: Oct 2021; Dec 2021; M M M.
  - GDP/GNP: Jun 2021; Oct 2021; Q Q Q.
  - Gross external debt: Nov 2021; Dec 2021; Q Q Q.
  - International investment position: Dec 2020; Sep 2021; Y Y Y.

### Debt Sustainability Analysis — Key Findings and Risks
- Joint Bank-Fund Debt Sustainability Analysis (DSA) conclusions:
  - Risk of external debt distress: High
  - Overall risk of debt distress: High
  - Granularity in the risk rating: Sustainable
  - Application of judgement: No
- Cameroon is at high risk of external and overall public debt distress.
- Three out of four external debt indicators breach the thresholds under the baseline scenario, with a particularly large and sustained breach for the external debt service-to-exports ratio.
- The PV of public debt-to-GDP ratio is also above the benchmark.
- Despite the high-risk rating, debt can be assessed as sustainable given:
  - levels of debt and debt service indicators remain broadly unchanged compared to the previous DSA and are below those sustained in the previous year thanks to a successful issuance of the Eurobond and some progress in restructuring SONARA’s domestic debt.
  - ongoing fiscal consolidation envisaged under the IMF supported program, and reforms to boost exports and output.
- The rating is vulnerable to downside risks including:
  - more protracted and severe disruptions due to the pandemic,
  - unsuccessful restructuring of SONARA’s external debt,
  - resurgence of socio-political tensions.
- Cameroon’s Composite Indicator (CI) based on the October 2021 WEO and the 2020 World Bank CPIA data is 2.70, signaling a medium debt-carrying capacity. The country classification is maintained at weak level given the need of two consecutive signals for a classification change.
- Policy measures recommended to mitigate risks:
  - gradual fiscal consolidation in line with crisis mitigation efforts,
  - limited reliance on non-concessional borrowing,
  - further strengthening public debt management,
  - prudent management of SOEs.

### Public Debt Coverage and Contingent Liability Stress Test
- Public debt coverage in the DSA includes: central government debt, expenditure floats and arrears, guarantees, debt of public oil company SONARA, and external arrears of other SOEs.
- DSA does not cover local government debt (local governments not allowed to borrow from financial markets); other general government elements (social security funds, extra budgetary funds) not covered due to lack of data.
- Total SOE debt estimated at around 12.6 percent of GDP in the previous DSA (based on 2020 budget law annex).
  - About 1.5 percent of GDP owed to the government.
  - SONARA’s debt included in DSA: 3.0 percent of GDP as of end-2020.
  - Remaining SOE debt not accounted in the debt stock could amount to 8.1 percent of GDP.
  - Authorities’ estimate of SOE debt not included in the DSA is about 1 percent of GDP.
  - Authorities preparing an inventory of cross-debts among SOEs and between SOEs and the state (structural benchmark).
- Contingent liability stress test parameters and estimates:
  - SOE debt not included in the debt stock: estimated at 8.1 percent of GDP as of end-2020.
  - Capital stock of PPPs: about 7.0 percent of GDP, corresponding to a contingent liability of 2.4 percent of GDP (35 percent of the total PPP stock).
  - Contingent liabilities from financial markets set at the minimum value of 5 percent of GDP (average cost to the government of a financial crisis in a LIC since 1980).
  - Estimates for other elements not covered are currently not available.

*Prepared by the staff of the International Monetary Fund (IMF) and the International Development Association (IDA). February 10, 2022.*

### 4.       Public debt has continued to grow over the past ten months, although at a somewhat

### 4.       Public debt has continued to grow over the past ten months, although at a somewhat

### Public debt stock and composition (staff preliminary estimates)
- Total public and publicly guaranteed (PPG) debt is around CFAF 11,366 billion (45.6 percent of GDP) as of end-October 2021.
- External debt stock: CFAF 7,845 billion (31.4 percent of GDP).
- Domestic debt: CFAF 3,520 billion (14.1 percent of GDP).
- Total Public Debt (staff estimate) by vector in Text Table 3:
  - Total Public Debt (staff estimate): 643432.1765936.5851238.3966941.61053444.91136645.6 (Bn CFAF; % GDP)
  - Debt of the central government (staff estimate): 590129.4706633.7786035.4903738.9979841.71067942.8 (Bn CFAF; % GDP)
  - Total External (staff estimate): 431021.5509224.3615227.7683129.4715430.5784531.4 (Bn CFAF; % GDP)
  - Total Domestic (staff estimate): 212410.6256712.2236010.6283812.2338014.4352014.1 (Bn CFAF; % GDP)
- Sources: Cameroonian authorities and IMF staff calculations.

### External debt composition and terms
- Multilateral debt share: 40.6 percent of total PPG external debt as of end-October 2021.
- In bilateral debt, debt owed to China represents 62 percent of total bilateral debt (Text).
- Commercial debt includes a newly issued Eurobond (CFAF 449 billion) and remaining Eurobond issued in 2015 (CFAF 93 billion).
- Around 40 percent of external debt is on concessional terms.
- 39 percent of external debt is denominated in Euros.
- Average maturity for external debt (excluding SONARA’s debt): 9.0 years.
- Weighted average interest rate on external debt: 2.4 percent.
- Around 24 percent of external debt has a flexible interest rate.
- Text Table 4 (selected shares and amounts):
  - Total PPG External Debt (staff estimate): 431050926152683171547845100.0100.0100.0100.0100.0100.0 (Bn CFAF; Percent share)
  - Multilateral: 11521450199523492764318826.728.532.434.438.640.6 (Bn CFAF; Percent share)
  - Bilateral: 20772440271630773069321048.247.944.245.142.940.9 (Bn CFAF; Percent share)
  - Commercial: 713760941972913104916.514.915.314.212.813.4 (Bn CFAF; Percent share)
  - of which: Eurobond: 45045045045045054210.48.87.36.66.36.9 (Bn CFAF; Percent share)

### Domestic debt composition and terms
- Government bonds (including Bons du Trésor Assimilables (BTA) and Obligations du Trésor Assimilables (OTA)) increased over the past ten months, reaching 35.0 percent of the total domestic public debt.
- Share of float and arrears declined from about 16.2 percent at end-2020 to 15.4 percent at end-October 2021.
- Average maturity of domestic debt (excluding float and SONARA’s debt): 4 years.
- Average weighted interest rate on domestic debt: 2.9 percent.

### Stock of contracted-but-undisbursed debt (SENDs)
- Stock of SENDs as of end-October 2021: CFAF 3,506 billion, 14.1 percent of GDP (Text Table 5).
- SENDs include domestic SENDs amounting CFAF 10.1 billion (disbursed in November 2021).
- SENDs composition (shares):
  - Multilateral SENDs: around 57 percent.
  - Bilateral SENDs: 23 percent.
  - Commercial SENDs: 20 percent.
- China accounts for about 18 percent of total SENDs stock among bilateral SENDs.
- Text Table 5 (selected figures):
  - Stock of contracted-but-undisbursed debt (SENDs) (Oct-2021 Prel.): 393619.6432820.6404318.2347014.9314613.4350614.1 (Bn CFAF; % GDP)
  - External SENDs (Oct-2021 Prel.): 365518.2414919.8387317.4340514.6314613.4349614.0 (Bn CFAF; % GDP)
  - o/w multilateral (Oct-2021 Prel.): 13466.717468.316277.316717.217697.519868.0 (Bn CFAF; % GDP)
  - o/w bilateral (Oct-2021 Prel.): 17838.917108.215457.011214.88243.57973.2 (Bn CFAF; % GDP)
  - o/w commercial (Oct-2021 Prel.): 5262.66933.37013.26132.65542.47132.9 (Bn CFAF; % GDP)

### External arrears and private external debt
- No new sovereign external arrears were reported.
- The DSA includes external arrears of SONARA: CFAF 244.1 billion and other SOEs: CFAF 9 billion as of end-October 2021.
- External private sector debt decreased to CFAF 413 billion as of end-2020; most held as direct investments by foreign parent companies and official institutions.

### Public debt management capacity and recommendations
- Capacity to monitor and manage public debt for IMF debt limits policy: adequate, but further improvements needed.
- Recent improvements: all project financing proposals and PPP projects examined by the National Public Debt Committee (CNDP); new loan agreements granted only with unconditional approval; manual published in 2019 clarifying procedures and responsibilities.
- Remaining weaknesses:
  - CNDP engagement oftentimes delayed until late in debt contracting process.
  - Debt policy not firmly anchored by medium-term debt management framework, causing discrepancies between announced plans and actual financing.
- Recommendations and further efforts warranted:
  - Strengthen active engagement of the CNDP earlier in the contracting process.
  - Enhance effectiveness of the medium-term public debt strategy (MTDS).
  - Improve estimates of financing needs.
  - Develop consistent annual borrowing plans.
  - Implement an enhanced communication strategy to facilitate creditors’ understanding of debt management objectives.
- Note on SENDs: problematic SENDs defined by six criteria; problematic SENDs estimated at CFAF 1,926 billion as of end-2020.
- Footnote: external arrears to oil suppliers do not reflect government insolvency and/or liquidity problems.

### Macroeconomic forecast and medium/long-term assumptions
- Rebasing of national accounts from 2005 to 2016 resulted in an upward revision of 3.6 percent to nominal GDP in 2016.
- Revision to real GDP growth for 2020: from -1.5 percent to 0.5 percent.
- Overall fiscal deficit (payment order basis, excluding grants) for 2020 revised from -3.4 percent to -3.3 percent of GDP.
- Baseline projection assumes implementation of national vaccine deployment plan covering 60 percent of the eligible population (+18 years old) by end-2023.
- Box 1: Medium Term (2021-2025) projections and assumptions:
  - Real GDP growth projected to average 4.6 percent.
  - Annual inflation projected to remain around 2.1 percent.
  - Overall fiscal deficit projected to average -1.5 percent of GDP (payment order basis, excluding grants).
  - Revenue-to-GDP ratio (excluding grants) projected to average 15.2 percent.
  - Current account balance (including grants) projected to average -3.0 percent of GDP.
- Long Term (2026-2041) projections and assumptions:
  - Real GDP growth projected to average 5.4 percent.
  - Revenue-to-GDP ratio (excluding grants) projected to average 17.1 percent over 2026-2041.
  - Exports of goods and services projected to decline as a share of GDP from an average of 17.4 percent in 2021-25 to around 14.8 percent in the long-term, reflecting falling oil production.
- Text Table 6 (selected numeric assumptions):
  - Real GDP growth (current): 3.90.54.65.4 (2016-2019; 2020; 2021-2025; 2026-2041)
  - Inflation (GDP deflator) (current): 1/1.20.52.11.9
  - Overall fiscal balance excl. grants, payment order basis (current): -4.5-3.3-1.5-1.5
  - Total revenue excluding grants (current): 14.613.215.217.1
  - Current account balance including grants (current): -3.4-3.7-3.0-2.6
  - Exports of goods and services (current): 18.615.017.414.8
  - Oil price (US dollars per barrel) (current): 56.341.369.669.3

### Financing assumptions and recent financing operations
- Public gross financing needs over 2021-2024: CFAF 6,901 billion (25.4 percent of GDP); average 65 percent assumed to be financed externally.
- DSA reflects debt service suspended of CFAF 290 billion (1.2 percent of GDP) from May 2020 to December 2021 under the G20 DSSI.
- DSA includes the Eurobond issued in July: CFAF 449 billion.
- DSA reflects IMF financing of CFAF 375 billion (SDR 483 million, 175 percent of quota).
- Prospective budget support from donors: CFAF 477 billion in 2021-2024.
- Cameroon received an SDR allocation of CFAF 208 billion; authorities plan to use CFAF 50 billion in 2021 and CFAF 70 billion in 2022. These amounts reflected in domestic debt via government finance statistics.
- Eurobond details in footnote:
  - Newly issued Eurobond denominated in Euros (EUR 685 million), 12 years maturity, 5.95% coupon rate.
  - Authorities repurchased 79.42 percent of outstanding old Eurobond (CFAF 357.7 billion); remaining old Eurobond (estimated CFAF 93 billion) assumed repaid in equal tranches in 2023-2025.
- Post-2023 financing composition: gradually shifts toward commercial borrowing, decreasing grant element.
- Domestic financing assumptions: slightly larger share of longer maturity bonds following MTDS but adjusted for limited investor base; domestic financing (excluding the BEAC loan) projected to shift progressively towards more medium-to-long-term borrowing.

*Sources: Cameroonian authorities and IMF staff calculations.*

### 14.      Financing assumptions regarding SONARA reflect latest information on debt restructuring.

### 14.      Financing assumptions regarding SONARA reflect latest information on debt restructuring.

### SONARA financing and operational assumptions
- SONARA signed a revised agreement with the local banks in October 2021 to restructure its debt.
- Total amount owed to the bank is agreed at CFAF 261 billion, to be repaid over 10 years with an interest of 5.5 percent per year.
- The DSA assumes the difference between the restructured amount (CFAF 261 billion) and the end-2020 bank debt (CFAF 287 billion) has been repaid in 2021.
- Letters of credit provided by domestic banks (CFAF 90.3 billion at end-2020) were excluded from SONARA’s debt stock due to their short-term revolving nature.
- Negotiations with external creditors are ongoing; early signs of progress have not been confirmed, and restructuring of debt held by external creditors including oil traders is not assumed in the baseline.
- Short-term debt from external oil traders is classified as arrears.
- A portion of SONARA’s medium- and long-term external debt that was due for repayment in 2020 (estimated at around CFAF 31 billion) was classified as arrears.
- Operational assumptions:
  - SONARA is assumed to continue functioning as an importer of refined oil.
  - SONARA is assumed to gradually recover production capacity starting from 2024 and reaching 60 percent of the pre-crisis level in 2027.
  - Among SONARA’s revenue, only financing expenses (CFAF 20 billion per year) and net income are assumed to be used for debt service and accounted for as part of the fiscal revenue in the DSA.
  - The cost of potential reconstruction of the refinery operation is not incorporated in the baseline as it is still being assessed and insurance discussions are ongoing.

### DSA realism and forecast tools — risks to baseline projections
- The realism tool highlights risks to the baseline projections:
  - The projected 3-year fiscal adjustment is considered ambitious but achievable relative to past LIC IMF programs.
  - Growth projection deviates from the path implied by projected fiscal consolidation; COVID-19 impacts may not be fully captured.
  - Government investment is projected to recover gradually, at a slightly slower pace versus the previous DSA.
- The forecast error tool indicates different debt dynamics versus historical developments, suggesting potential challenges:
  - Contribution of the current account and FDI is expected to be smaller than historically observed.
  - Real GDP growth and price and exchange rate projections are expected to further reduce external debt.
  - Projected change in public debt is driven by a smaller contribution of primary deficit and a stronger contribution of real GDP growth.
  - The forecast error is similar to the median of other LICs.

### Country classification and stress-test design
- Cameroon’s CI score based on October 2021 WEO projections and the 2020 World Bank CPIA score is 2.70.
  - This score is higher than suggested by the previous DSA vintages (2.65 and 2.58 shown).
  - The new CI score corresponds to a medium level debt-carrying capacity, but the classification remains ‘weak’ because two consecutive signals are required for a change.
- Stress tests:
  - Standardized stress tests apply default settings; contingent liability stress test is based on quantified contingent liabilities.
  - Tailored stress tests for Cameroon include a market financing shock and a commodity price shock (exports of fuel and other commodities > 50 percent of total exports).
  - For the debt service-to-revenue ratio, the most extreme shock is a one-time 30 percent nominal depreciation.

### Debt sustainability assessment — key findings
- External debt sustainability:
  - External risk of debt distress is assessed as high: three indicators breach thresholds under the baseline scenario.
  - The external debt service-to-exports ratio and the external debt service-to-revenue ratio breach their respective thresholds; the external debt service-to-exports ratio shows a large and sustained breach.
  - Significant increases in debt service payments in 2021 are driven by the redemption of the maturing Eurobond.
  - The PV of external debt-to-exports ratio shows a one-time marginal breach in 2021, then declines below the threshold.
  - Under stress tests, thresholds for all four external indicators are breached:
    - Combined contingent liabilities shock is the most extreme for PV of debt-to-GDP.
    - Exports shock is the most extreme for PV of debt-to-exports and debt service-to-exports ratios.
    - Historical scenarios point to exploding PV of debt-to-GDP and PV of debt-to-exports reflecting past large current account deficits.
- Public debt sustainability:
  - Overall risk of public debt distress is assessed as high: PV of debt-to-GDP breaches the benchmark under the baseline.
  - The PV of debt-to-GDP is projected to decline gradually but remain above the benchmark until 2022.
  - PV of debt-to-revenue and debt service-to-revenue ratios are projected to decline gradually.
  - The most extreme shock for all public indicators is the combined contingent liabilities shock due to sizable SOE debt not captured in the debt stock.
  - Absent the SOE impact, the commodity shock is the most extreme for PV of debt-to-revenue and debt service-to-revenue.
- Market module:
  - The market financing tool signals low risks from market financing pressures:
    - Cameroon’s maximum three-year gross financing needs is estimated at 9 percent of GDP, below the benchmark of 14 percent.
    - Latest available EMBI spread for Cameroon is 306 as of July 28, 2021, below the benchmark of 570.
- Overall assessment:
  - Cameroon is at high risk of debt distress, but debt is deemed sustainable:
    - High external debt distress risk driven by multiple indicator breaches, especially the external debt service-to-exports ratio (large, sustained breach).
    - PV of public debt-to-GDP is above the benchmark.
    - Debt levels and debt service indicators are broadly unchanged compared to the previous DSA and below those of the previous year.
    - Efforts to restructure SONARA’s debt and the Eurobond issuance have improved the debt profile; authorities committed to active debt management.

### Vulnerabilities, shocks, and key numerical thresholds cited
- Vulnerabilities and downside risks:
  - More protracted/severe COVID-19 shock.
  - Less-than-expected exports.
  - Resurgence of socio-political tensions.
  - Unsuccessful restructuring of SONARA’s debt.
  - Realization of contingent liabilities from bank restructuring and SOEs not included in the baseline.
  - Accelerations in disbursements due to the large stock of SENDs.
- Upside:
  - Stronger exports driven by rising international oil prices could reduce Cameroon’s debt service burden.
- Numerical figures referenced in the DSA:
  - CFAF 261 billion (restructured bank debt amount).
  - 10 years (repayment period for CFAF 261 billion).
  - 5.5 percent per year (interest rate on restructured bank debt).
  - CFAF 287 billion (end-2020 bank debt).
  - CFAF 90.3 billion (letters of credit at end-2020).
  - CFAF 31 billion (portion of medium- and long-term external debt due in 2020 classified as arrears).
  - 2024 (start of gradual recovery of production capacity).
  - 60 percent (SONARA production capacity relative to pre-crisis level in 2027).
  - CFAF 20 billion per year (financing expenses assumed used for debt service and fiscal revenue).
  - CI score 2.70 (October 2021 vintage).
  - CI previous vintages shown: 2.65 and 2.58.
  - Maximum three-year gross financing needs: 9 percent of GDP (vs benchmark 14 percent).
  - EMBI spread: 306 as of July 28, 2021 (vs benchmark 570).
  - One-time 30 percent nominal depreciation (most extreme shock for debt service-to-revenue ratio).

### Policy recommendations and priorities
- Ensure debt remains on a downward trajectory and strengthen sustainability through:
  - Gradual fiscal consolidation aligned with crisis mitigation efforts.
  - Steadfast implementation of structural fiscal reforms.
  - A prudent borrowing policy skewed towards concessional loans.
  - Avoiding new non-concessional borrowing, which would weaken debt sustainability.
  - Improving competitiveness and achieving economic diversification to reduce vulnerable debt indicators expressed as proportions of exports.
  - Strengthening SONARA’s debt restructuring efforts and fundamentally rebuilding its financial viability.
  - Maintaining sound management of the SENDs.

*Source: IMF country report content provided in the supplied PDF excerpt.*

### 26.      The authorities agreed that reducing debt vulnerabilities is a key priority to support

### 1cmrea2022001 - 26.      The authorities agreed that reducing debt vulnerabilities is a key priority to support

### Debt vulnerabilities and authorities' commitments
- The authorities judged that the risk of debt distress remains high and committed to reducing debt vulnerability by:
  - slowing the pace of external debt growth;
  - utilizing concessional financing where available;
  - limiting non-concessional borrowing only to high priority projects with proven socioeconomic and financial returns.
- The authorities highlighted positive potential implications of:
  - continued active debt management;
  - ongoing efforts to boost exports and revenue;
  - possible reclassification of Cameroon’s composite indicator (CI) of debt carrying capacity as medium, conditional mainly on global economic recovery and regional reserves accumulation.
- The authorities plan to use 57 percent of the August 2021 SDR allocation by end-2022 and save 43 percent as a buffer to boost regional fiscal and external sustainability.

### Key debt and sustainability indicators (selected figures from the External Debt Sustainability Framework, Baseline Scenario)
- External debt (nominal):
  - 2018: 29.5
  - 2021: 35.5
  - 2026: 31.0
  - 2031: 27.1
  - 2041: 19.3
- Public and publicly guaranteed (PPG) external debt:
  - 2018: 27.7
  - 2021: 33.9
  - 2026: 29.3
  - 2031: 25.8
  - 2041: 18.5
- Change in external debt (selected years):
  - 2018: 2.6
  - 2019: 3.5
  - 2020: -0.6
  - 2021: 3.2
- Identified net debt-creating flows (selected years):
  - 2018: -0.8
  - 2019: 2.2
  - 2020: 1.3
  - 2021: 0.8
- Sustainability indicators (selected):
  - PV of PPG external debt-to-GDP ratio (selected years): 24.3; 24.2; 24.5; 23.6; 22.8; 22.0; 21.5; 19.3; 14.4 (values shown across the DSA tables)
  - PV of PPG external debt-to-exports ratio (selected): 162.4; 140.0; 128.5; 135.6; 136.4; 134.6; 133.2; 127.0; 104.8
  - PPG debt service-to-exports ratio (selected): 17.3; 19.3; 10.2; 18.1; 13.9; 15.0; 14.1; 13.0; 12.2; 13.6; 10.0
  - PPG debt service-to-revenue ratio (selected): 20.8; 25.2; 11.5; 22.4; 18.1; 16.4; 14.5; 12.8; 11.5; 12.1; 7.8
- Gross external financing need (Billion of U.S. dollars) (selected):
  - 2018: 2.6
  - 2019: 3.0
  - 2020: 1.6
  - 2021: 2.2
  - 2022: 1.0
  - 2031: 3.1

### Macroeconomic outlook and recent performance
- Growth and outlook:
  - GDP growth recovered to 3.5 percent in 2021.
  - Growth projections: 4.5 percent in 2022; 4.8 percent in 2023; medium-term annual average of 5.0 percent.
  - Real GDP growth (table, selected): 4.0 (2018); 3.4 (2019); 0.5 (2020); 3.5 (2021); 4.5 (2022); 4.8 (2023); 5.0 (2024); 5.1 (2025); 5.1 (2026); 5.3 (2031); 5.5 (2041).
- Inflation and external sector:
  - Inflation remains below the regional convergence threshold of 3 percent.
  - Current account deficit decreased significantly in 2021 owing to stronger-than-expected oil and non-oil exports and moderate import rise.
- Fiscal performance:
  - Preliminary estimate: fiscal deficit contained at 3.1 percent of GDP in 2021, supported by relatively good non-oil revenues performance and contained expenditure.
  - Government revenues (excluding grants, in percent of GDP): 15.2 (2018); 14.9 (2019); 13.3 (2020); 13.9 (2021); 14.7 (2022); 15.9 (2023); 16.2 (2024); 16.7 (2025); 17.2 (2026); 17.0 (2031); 17.7 (2041).
- Other projections and assumptions (selected):
  - GDP deflator in US dollar terms (change in percent) (selected): 6.5 (2018); -4.1 (2019); 2.4 (2020); 6.4 (2021); -0.7 (2022); 3.0 (2023).
  - Effective interest rate (percent) (selected): 4.5 (2018); 3.5 (2019); 1.9 (2020); 2.6 (2021); 2.0 (2022); 2.0 (2023).
  - Growth of exports of G&S (US dollar terms, in percent) (selected): 12.3 (2018); 5.5 (2019); -21.0 (2020); 27.2 (2021); 14.4 (2022).

### Stress tests, risks, and indicators
- Stress-test framework and selected outcomes:
  - Figures present indicators of public and PPG external debt under alternative scenarios, 2021–2031, including most extreme shocks such as one-time depreciation, exports shock, and combined contingent liabilities.
  - Market-financing risk indicators show potential heightened liquidity needs as "Low" for certain horizons; EMBI spreads correspond to latest available data in the DSA.
- Risk assessment:
  - The staff and authorities assess Cameroon as at high risk of debt distress.
  - Tailored stress tests consider commodity price shocks, natural disasters (n.a. where not applicable), combined contingent liabilities, and market-financing shocks.
- Sensitivity analysis (selected):
  - Table entries show breaches where bold values indicate a breach of the threshold; tailored tests (e.g., combined contingent liabilities) yield higher PV of debt and debt service ratios in several scenarios.

### Program performance, reforms, and policy priorities
- Program performance under the ECF/EFF arrangements:
  - All quantitative performance criteria (PCs) at end-July 2021 were met, except the continuous PC on the ceiling on new non-concessional external debt (missed due to a non-concessional project loan in health sector).
  - Two out of five indicative targets (ITs) were met; ITs on the share of spending executed through exceptional procedures and on domestic arrears were missed, partly due to security challenges.
  - Structural benchmark implementation: implementing texts for the Public Procurement Code adopted and published; audit report of Covid-19-related spending for FY 2020 published; decree adopted to monitor program and project performance.
  - Progress on SOE reforms: diagnostic studies of three large SOEs underway; cross-debt inventory between SOEs and the State being finalized; audit of government arrears: four auditors selected to pave way for arrears settlement plan.
- Policy priorities and planned reforms:
  - Fiscal policy: continue growth-friendly fiscal consolidation over the medium-term to ensure fiscal sustainability and achieve the regional overall fiscal deficit convergence criterion.
  - Authorities will pursue contingency measures on the budget as needed, maintain close engagement with partners, and implement the National Development Strategy for 2020-30 (SND30) and post-Covid-19 recovery plan.
  - Health and vaccination: continue national vaccine readiness and deployment plan; strengthen communication to boost community support for vaccination.
  - Debt management: active debt management, boost exports and revenue, and use concessional financing where available; limit non-concessional borrowing to high-priority projects with proven returns.

*Source: 1cmrea2022001 - 26.      The authorities agreed that reducing debt vulnerabilities is a key priority to support*

### 1.6 percent      of GDP by 2024. In the same consolidation efforts, they intend to reach a non-

### Cameroon: Fiscal consolidation, governance, and structural reform commitments

### Fiscal consolidation and revenue mobilization
- Target: 1.6 percent of GDP by 2024.
- Fiscal anchor: reach a non-oil primary balance—key fiscal anchor—of 2 percent of non-oil GDP by 2024 against 4.9 percent prior to the crisis (2019) and 4 percent in 2021.
- 2022 budget law measures:
  - Target additional mobilization of non-oil revenues up to 0.8 percent of GDP.
  - Introduce measures to increase tax revenue and streamline parafiscal taxation.
- Revenue administration actions:
  - Improve tax collection and combat tax evasion and fraud.
  - Ensure integrity of taxpayer records and the IT system.
  - Develop and implement a medium-term revenue strategy.
  - Draw on Fund technical assistance to develop new approaches to revenue mobilization and tax base broadening.
- Acknowledged constraints: considerable weight of the informal sector, tax expenditure, and low contribution of personal income tax.

### Expenditure management and social protection
- Public finance reform program priorities:
  - Improve quality of public expenditure and cash flow management.
  - Use available fiscal space for priority and social spending and development projects to promote sustainable and inclusive growth.
- 2022 budget law prioritization:
  - Spending on vaccination needs and pace.
- Social protection measures:
  - Accelerate cash transfer mechanism to protect the most vulnerable, with World Bank support and drawing on other countries’ experience.
- Public investment and current expenditure reforms:
  - Improve project selection, planning, and execution to enhance effectiveness and efficiency of public investment.
  - Maintain measures to improve current expenditure, including reviewing the current civil service pension system.
- Cash management and arrears avoidance:
  - Strengthen cash flow management and continue to improve treasury operations, including operationalization of the Treasury single account (TSA) in liaison with the regional central bank (BEAC).
  - Adopt realistic expenditure commitment plans to prepare credible monthly cash flow plans.
  - Redouble efforts to curtail the use of exceptional procedures.

### Debt policy and management of contingent liabilities
- Commitment to consider debt sustainability analysis and recommendations.
- Borrowing strategy:
  - Continue to limit the pace of new external debt commitments while prioritizing concessional loans.
  - Strictly limit signing of non-concessional loans to priority projects for which concessional resources are unavailable while adhering to the program debt limits set in the 2022 budget law.
- Debt management institutional arrangements:
  - Reaffirm central role of the national public debt committee (CNDP); CNDP approval required for all borrowing proposals.
  - Medium-term debt strategy to focus on preparing coherent annual borrowing plans and strengthening the communication strategy.

### State-owned enterprises (SOEs) and contingent liabilities
- Priority to address financial and fiscal risks associated with SOEs and improve SOE governance.
- Actions:
  - Strengthen management and governance of SOEs to improve public service delivery and limit fiscal risks.
  - Ministry of Finance to issue an instruction to institutionalize governance by performance contract by the end-June 2022 to improve performance of public enterprises.
  - Accelerate SONARA’s debt restructuring and put the company on a sound financial footing.
  - Carry out an audit of highly indebted SOEs — notably CAMTEL, CAMWATER, and Port Autonome de Douala (PAD) — and assess their financial viability, based on diagnostic studies which are near completion.

### Governance
- Completed transparency and accountability requirements regarding management of Covid-related spending for FY 2020 and committed to fulfilling requirements for FY 2021.
- Strengthen legal and institutional framework to promote good governance and enhance strategy for combating corruption through preventive and repressive actions.
- With Fund technical assistance:
  - Conduct a diagnostic of vulnerabilities in governance including state functions most relevant to economic activity.
  - Prepare an action plan to strengthen the Supreme court’s audit bench by the end of 2022.

### Structural reforms and climate commitments
- Authorities committed to accelerating structural reform agenda to minimize pandemic scars and foster inclusive and resilient growth.
- Focus on removing structural obstacles to private sector development and economic diversification.
- Under SND30: step up measures to adapt and mitigate climate change effects to ensure inclusive and durable growth.
- International commitment: signed the Glasgow Declaration on forests and land use during CoP 26, aimed at stemming and reversing loss of forests and land degradation by 2030.
- Restoration target: undertaken measures to restore approximately 12 million hectares of degraded land under the AFR 100 Initiative.

### Conclusion and program requests
- Authorities reiterate commitment to program objectives: strengthen macroeconomic stability, firm up inclusive growth, and enhance CEMAC’s external stability and economic prospects.
- Request:
  - Directors’ support for completion of the 2021 Article IV consultation and the first review under the ECF/EFF-supported program.
  - Waivers for performance criteria applicability to account for December 2021 performance targets that cannot be assessed at this stage, and for nonobservance and modification of performance criterion consistent with the program’s objectives.

*Source: IMF staff summary of Cameroonian authorities’ program commitments as presented in the provided content.*

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_Source: https://www.imf.org/-/media/files/publications/cr/2022/english/1cmrea2022001.pdf_