## 1cmrea2023001 - IMF staff report for Cameroon (Third Reviews under the ECF/EFF Arrangements)

## Source details

**Canonical URL:** [1cmrea2023001 - IMF staff report for Cameroon (Third Reviews under the ECF/EFF Arrangements)](https://www.imf.org/-/media/files/publications/cr/2023/english/1cmrea2023001.pdf)

## Other formats

- [Markdown version](/-/media/files/publications/cr/2023/english/1cmrea2023001.pdf.md)
- [Structured JSON version](/-/media/files/publications/cr/2023/english/1cmrea2023001.pdf.json)

---

### Recent economic developments
- Real GDP growth revised to 3.4 percent for 2022 (from 3.8 percent during the second review) reflecting spillovers from Russia’s war in Ukraine, inflationary pressures, supply chain disruptions, tight global financial conditions, the security crisis in certain regions, and developments in the oil and gas sector.
- Headline inflation expected to reach 6 percent at end-2022, from 3.5 percent at end-2021. Domestic food prices represent around 40 percent of the CPI basket and were a primary driver of inflation.
- Private sector credit to customers increased by 6.0 percent (end-December 2021 to end-October 2022), with deposits rising by 0.8 percent over the same period.
- BEAC policy rate increased by 1 p.p. in March and September 2022 to 4½ percent; interest rate on the liquidity absorption window increased in February 2022; weekly liquidity injections were reduced in July 2022.
- External position improved in 2022: current account deficit estimated to narrow from 4.0 percent of GDP in 2021 to 1.6 percent of GDP in 2022, reflecting higher global hydrocarbon prices and REER depreciation.
- Fiscal outcomes in 2022:
  - Overall deficit improved from 3.0 percent of GDP in 2021 to 1.8 percent of GDP in 2022.
  - Non-oil primary balance (NOPB) deteriorated from 3.9 percent of GDP in 2021 to 4.5 percent of GDP in 2022, mainly due to higher oil prices and currency depreciation leading to higher spending on the fuel subsidy.
- Cameroon remains at high risk of debt distress; two out of four DSA indicators breach thresholds under the baseline scenario.

### Outlook and projections
- Real GDP growth projected at 4.3 percent in 2023 and should average 4.5 percent in the medium term, driven by the Liquefied Natural Gas (LNG) sector, primary sector (forestry and logging) and services (financial, trade and repair, transport, information, and communication services).
- Inflation expected at about 6 percent by end-2023 following retail fuel price adjustment and should decline below 3 percent in the medium term.
- Current account deficit projected to widen to about 3 percent of GDP in 2023 and remain below 3 percent of GDP in the medium term.
- Public debt-to-GDP ratio projected to decline below 40 percent by 2025.

Key projected indicators (from Table 1)
- GDP at constant prices: 2021: 3.6; 2022: 3.8; 2023: 3.4; 2024: 4.6; 2025: 4.3; 2026: 4.4; 2027: 4.5.
- Consumer prices (average): 2021: 2.3; 2022: 4.6; 2023: 5.3; 2024: 2.8; 2025: 5.9; 2026: 4.7; 2027: 3.0.
- Nominal GDP (at market prices, CFAF billions): 2021: 25,158; 2022: 27,389; 2023: 27,210; 2024: 29,325; 2025: 29,749; 2026: 32,393; 2027: 34,866.
- Gross national savings (percent of GDP): 2021: 14.0; 2022: 16.3; 2023: 15.9; 2024: 17.3; 2025: 15.9; 2026: 16.6; 2027: 17.9.
- Gross domestic investment (percent of GDP): 2021: 17.9; 2022: 18.4; 2023: 17.4; 2024: 20.0; 2025: 18.8; 2026: 19.6; 2027: 20.6.
- Stock of public debt (percent of GDP): 2021: 46.8; 2022: 44.0; 2023: 46.4; 2024: 40.8; 2025: 42.8; 2026: 40.4; 2027: 38.5.
- Current account balance (including official grants, percent of GDP): 2021: -4.0; 2022: -2.1; 2023: -1.6; 2024: -2.6; 2025: -2.8; 2026: -3.0; 2027: -2.6.

### Program performance and recent IMF actions
- Cameroon has completed two reviews since approval in July 2021 of three-year ECF/EFF arrangements for SDR 483 million (about US$689.5 million, or 175 percent of quota). Completion of the third review allows total disbursement of SDR 55.2 million (about US$73.3 million).
- Program performance mixed:
  - All quantitative performance criteria (QPCs) at end-June 2022 were met.
  - Missed QPCs at end-December 2022: floor on the non-oil primary balance (NOPB) and the continuous QPC on non-accumulation of external arrears.
  - Three of five indicative targets (ITs) were missed at end-June and end-September 2022: ceilings on SNH direct interventions, share of spending through exceptional procedures, and net accumulation of domestic payment arrears.
- Waivers and applicability:
  - Executive Board approved waivers of nonobservance for two performance criteria: (i) missed floor on the non-oil primary balance at end-December 2022; (ii) missed continuous zero ceiling on accumulation of new external payments arrears. Waivers approved due to corrective actions by authorities and temporary nature of non-observance.
  - Executive Board approved a waiver of applicability for three end-December 2022 performance criteria for which data are not yet available and there is no evidence they were not observed.
- Structural benchmarks (SBs) for third review: of 14 SBs, seven completed (five with some delay), and two SBs missed for reasons beyond authorities’ control. Prior action on increasing domestic fuel prices has been met.
- Authorities have implemented corrective measures to address missed quantitative targets and repeatedly missed indicative targets.

### Fiscal policy, fuel subsidy actions, and measures to create fiscal space
- Fuel subsidy and fiscal impacts in 2022:
  - Fuel subsidy exceeded budget projection of CFAF 600 billion (2.3 percent of GDP) by CFAF 200 billion (0.7 percent of GDP) due to higher oil import prices and currency depreciation.
  - Fuel subsidy contributed about 0.4 p.p. of GDP to widening non-oil primary deficit in 2022 relative to revised budget projections.
  - Overall fiscal deficit declined to 1.8 percent of GDP in 2022 from 3 percent of GDP in 2021.
  - NOPB deteriorated to 4.5 percent of GDP in 2022 from 3.9 percent in 2021, exceeding program target of 4 percent of GDP.
- Fuel price adjustment implemented:
  - Retail fuel prices increased on February 1, 2023: gasoline +15.9 percent, diesel +25 percent, kerosene for businesses +60 percent.
  - Average increase estimated at around 21 percent; estimated reduction in fuel subsidy by around CFAF 238 billion (0.8 percent of GDP) in 2023.
  - Estimated positive NFC of about CFAF 76 billion (around 0.3 percent of GDP) after the February 1, 2023 adjustment under current assumptions.
- Phase-out trajectory:
  - Authorities agree to gradually eliminate fuel subsidy by 2025 with further pump price increases of about 10 percent in each year (2024 and 2025) under current staff simulations.
  - Positive cumulative net fiscal contribution in 2024-25 from these adjustments is estimated at about 2 percent of GDP (sensitive to global oil price assumptions).
- Additional 2023 measures:
  - Expected additional revenues in 2023: CFAF 86 billion total, of which CFAF 56 billion in non-oil revenue.
  - Spending reductions envisaged: CFAF 108 billion.
  - Revised budget to reflect these measures to be adopted by April 2023.
  - Retail fuel price increase and additional measures expected to reduce non-oil primary deficit by 1.1 p.p. of GDP to 2.4 percent of GDP in 2023.
- Social mitigation:
  - Minimum wage increased by 15.5 percent in February 2023.
  - Public sector wages increased by 5.2 percent in February 2023.
  - Commitment to scale up conditional cash transfers (filets sociaux) by 100 percent in 2023 (SB15) though LF23 includes a 50 percent increase that would be further increased in the revised budget.

### Structural fiscal reforms and public financial management priorities
- Key reform areas:
  - Non-oil revenue mobilization: tax policy diagnostic (SB1) and a three-year plan (2023-25) to modernize and align the tax system with international standards; staff recommended reducing tax expenditures and expanding VAT taxpayer base (SB18) with target to increase number of VAT taxpayers from 13,500 at end-December 2022 to 14,850 by end-October 2023.
  - Current spending and cash management: prepare credible monthly cash flow plans consistent with commitment and public procurement plans; limit exceptional procedures and require quarterly regularization.
  - Treasury Single Account (TSA): inventory of accounts to be transferred to TSA completed; transfer contingent on BEAC platform availability (SB3).
  - Arrears clearance: audits of arrears due in 2000-2019 finalized; clearance plan to be adopted (SB2, September 2023). Inventory of end-2021 debts between government and 14 public enterprises finalized.
  - Capital spending: implement October 2021 decree for project management units (SB20); establish maturation and compensation fund for investment projects.
  - SOE fiscal risks: diagnostic studies completed for PAD, CAMTEL, and CAMWATER (SB4); steps to place SONARA on sound financial footing with framework approved in September 2022; TOR for technical studies and business plan to be finalized (SB14).
  - Civil service pension reforms: TOR formulated (SB16, October 2022) and study under way.

### Structural benchmarks, implementation status, and rephasing
- Of 14 SBs for the third review:
  - Seven completed, five with delay.
  - Two SBs missed for reasons beyond authorities’ control (SB3 and SB11).
- Examples of SBs met in December 2022:
  - SB4: completed diagnostic studies for three public enterprises.
  - SB13: established mechanism to reconcile direct SNH interventions; first quarterly report expected in mid-May.
- Rephasing and new SBs:
  - Six unmet SBs rephased with new due dates (examples: SB2, SB5, SB6, SB9, SB11, SB12).
  - New SBs introduced: SB18 (broaden VAT taxpayer base), SB19 (eliminate income tax allowances and replace with investment allowances and study of Law’s implementation), SB20 (improve project and debt management and prioritization of externally financed investment).

### Debt sustainability, composition, and risks
- Current assessment:
  - Cameroon remains at high risk of debt distress; debt is sustainable with active fiscal reforms and debt management (see DSA).
  - Under baseline scenario, two out of four external indicators breach thresholds; PV of public debt-to-GDP ratio is above benchmark.
  - External debt stock indicators remain below threshold; external debt service indicators have improved and are on a downward trend.
  - Debt service-to-revenue ratio expected to stop breaching the threshold in the medium term.
- Key debt figures and dynamics:
  - Total public and publicly guaranteed (PPG) debt: CFAF 12,674 billion (47.5 percent of GDP) (Sep-2022 preliminary staff estimate).
  - External debt stock (Sep-2022, Prel.): CFAF 8,766 billion (32.8 percent of GDP).
  - Domestic debt (Sep-2022, Prel.): CFAF 3,908 billion (14.6 percent of GDP).
  - SENDs (stock of contracted-but-undisbursed debt, excl. budget support) as of Sep-22 prelim.: CFAF 3,560 billion or around 13.3 percent of GDP.
  - SONARA debt developments: agreement with main supplier in September 2022; supplier debt value CFAF 183 billion in December 2022 (24 percent of total debt and 48 percent of external debt) to be repaid over 10 years at 5.5 percent.
- Market and financing signals:
  - EMBI spread for Cameroon: 618 bps as of February 9, 2023 (noted in DSA discussion).
  - Max three-year gross financing needs estimated at 6 percent of GDP (benchmark 14 percent).
- Policy for borrowing:
  - Program ceiling on PV of newly contracted or guaranteed external public debt for end-2022: CFAF 512.9 billion.
  - World Bank projects potentially to be signed in 2023 amount to US$1.25 billion or PV of CFAF 361.9 billion (compared to PV of CFAF 179.4 billion in 2022); adjustor rules apply.
  - Authorities optimizing borrowing plan to contract more concessional loans and prioritizing projects that could boost GDP, budgetary revenues, and exports.
- Downside risks to debt sustainability:
  - Lower global hydrocarbon prices, tighter global financial conditions, delayed SONARA restructuring, and accumulation of SENDs can worsen debt vulnerabilities.

### Financial sector, stability, and inclusion
- Banking sector:
  - Non-performing loans (NPLs) rose by mid-2022 to around 15 percent of gross loans, then recently stabilized.
  - Bank profitability improved in 2022 relative to 2021.
  - Aggregate capital and liquidity ratios remained adequate; concentration risks and sovereign-bank exposures are high but have stabilized.
  - Net budget financing from commercial banks exceeds 1 percent of GDP per year.
- Policy measures:
  - Expect to sign authorizing agreement with COBAC by March 2023 to implement restructuring of two distressed banks; these banks to open capital to private sector within five years per performance contracts.
  - Completion of privatization of the Commercial Bank of Cameroon (CBC) planned.
  - Plan to prepare a 2023 strategy to encourage participation of non-bank investors (insurance, pension funds, individuals) in government securities, particularly long maturities.
  - Sinking fund account set up at the BEAC to pay maturities of OTAs and bonds, including Eurobonds.
- Financial inclusion:
  - National Strategy for Inclusive Finance 2021-2025 aims to remove barriers to funding businesses across banks, microfinance, insurance, and mobile money services.

### Governance, transparency, and anti-corruption
- Legal framework gaps remain in criminalization of corruption offences; exemptions from prosecution; whistleblower protection; and confiscation of proceeds and instrumentalities of crime.
- Implementation status related to RCF/RCF commitments:
  - Authorities published reports on related expenditures, information on contracts with names of beneficial owners, and submitted reports prepared by the Supreme Court Audit Bench, though momentum slowed on publication of COVID-related audit reports.
  - Supreme Court Audit Bench prepared an action plan with recommendations; action plan to be finalized with LEG TA and published by April 2023.
- Public enterprises governance:
  - Strengthen internal controls; require publication of audited annual financial statements; submission of business plans per Law n°2017/11 of July 12, 2017.
- Good governance actions:
  - Prepare and publish a diagnosis of governance vulnerabilities (SB10 rephased); prepare an action plan to strengthen public spending audit frameworks (SB11 rephased).

### Program monitoring, reporting, and TMU data requirements
- Program monitoring to be done semi-annually through six-monthly and continuous QPCs, quarterly ITs, and SBs.
- Cutoff and reporting:
  - Monthly TOFE and related government finance tables to be reported monthly with 6-week lag (end-December data by March 15).
  - Monthly accounting statements on cash advances, provisional commitments, and advance funds to be reported within three weeks after each month-end.
  - Detailed reporting requirements encompass government finance, monetary sector, balance of payments, real sector, and structural reforms (see TMU).
- Definitions and quantitative targets:
  - Net domestic financing defined as net bank credit to government plus net non-bank financing.
  - Continuous zero ceiling on accumulation of new external payment arrears as a performance criterion.
  - PV computation rules: unified discount rate 5 percent; program reference rate for six-month USD SOFR = 0.04 percent; specified spreads for EURIBOR, JPY OIS, GBP SONIA, and other currencies.

### Risks and downside scenarios (RAM highlights)
- Major near-term downside risks include:
  - Intensifying spillovers from Russia’s war in Ukraine (Relative Likelihood: High).
  - Commodity price shocks (Relative Likelihood: High).
  - Systemic social unrest driven by inflation and declining incomes (Relative Likelihood: High).
  - Abrupt global slowdown or recession (Relative Likelihood: Medium).
  - Sharp tightening of global financial conditions (Relative Likelihood: Medium to High).
  - Climate-related natural disasters (Relative Likelihood: Medium).
- Domestic risks include deterioration of sociopolitical conditions and governance/corruption perceptions (Relative Likelihood: Medium), spillovers from regional security situation, and contingent risks from SOEs.
- Recommended policy responses include reinforcing external buffers, strengthening social safety nets, accelerating structural reforms, identifying concessional financing sources, and strengthening SOE monitoring and transparency.

### Staff appraisal and program decisions
- Staff supports completion of the third review conditional on:
  - Adoption of new March 2023 ITs and end-June 2023 QPCs.
  - Waivers for nonobservance of the floor on the NOPB at end-December 2022 and the non-accumulation of external arrears.
  - Waivers of applicability for three other end-December 2022 QPC targets (data unavailable by Board meeting).
- Staff proposes that completion of the fourth review be conditional on implementation of critical policy assurances at the union level (December 2022 union-wide background paper).

*Source: IMF staff report for Cameroon, Third Reviews under the Extended Credit Facility and the Extended Fund Facility Arrangements (1cmrea2023001).*

### 4.5 percent in 2022 mainly due to increased fuel subsidies.  Real GDP growth is projected at

### 1cmrea2023001 - 4.5 percent in 2022 mainly due to increased fuel subsidies.  Real GDP growth is projected at

### Recent economic developments
- Real GDP growth revised to 3.4 percent for 2022 (from 3.8 percent during the second review) reflecting spillovers from Russia’s war in Ukraine, inflationary pressures, supply chain disruptions, tight global financial conditions, the security crisis in certain regions, and developments in the oil and gas sector.
- Headline inflation expected to reach 6 percent at end-2022, from 3.5 percent at end-2021. Domestic food prices represent around 40 percent of the CPI basket and were a primary driver of inflation.
- Private sector credit to customers increased by 6.0 percent (end-December 2021 to end-October 2022), with deposits rising by 0.8 percent over the same period.
- BEAC policy rate increased by 1 p.p. in March and September 2022 to 4½ percent; interest rate on the liquidity absorption window increased in February 2022; weekly liquidity injections were reduced in July 2022.
- External position improved in 2022: current account deficit estimated to narrow from 4.0 percent of GDP in 2021 to 1.6 percent of GDP in 2022, reflecting higher global hydrocarbon prices and REER depreciation.
- Fiscal outcomes in 2022:
  - Overall deficit improved from 3.0 percent of GDP in 2021 to 1.8 percent of GDP in 2022.
  - Non-oil primary balance (NOPB) deteriorated from 3.9 percent of GDP in 2021 to 4.5 percent of GDP in 2022, mainly due to higher oil prices and currency depreciation leading to higher spending on the fuel subsidy.
- Cameroon remains at high risk of debt distress; two out of four DSA indicators breach thresholds under the baseline scenario.

### Outlook and projections
- Real GDP growth projected at 4.3 percent in 2023 and should average 4.5 percent in the medium term, driven by the Liquefied Natural Gas (LNG) sector, primary sector (forestry and logging) and services (financial, trade and repair, transport, information, and communication services).
- Inflation expected at about 6 percent by end-2023 following retail fuel price adjustment and should decline below 3 percent in the medium term.
- Current account deficit projected to widen to about 3 percent of GDP in 2023 and remain below 3 percent of GDP in the medium term.
- Public debt-to-GDP ratio projected to decline below 40 percent by 2025.

Key projected indicators (from Table 1)
- GDP at constant prices: 2021: 3.6; 2022: 3.8; 2023: 3.4; 2024: 4.6; 2025: 4.3; 2026: 4.4; 2027: 4.5.
- Consumer prices (average): 2021: 2.3; 2022: 4.6; 2023: 5.3; 2024: 2.8; 2025: 5.9; 2026: 4.7; 2027: 3.0.
- Nominal GDP (at market prices, CFAF billions): 2021: 25,158; 2022: 27,389; 2023: 27,210; 2024: 29,325; 2025: 29,749; 2026: 32,393; 2027: 34,866.
- Gross national savings (percent of GDP): 2021: 14.0; 2022: 16.3; 2023: 15.9; 2024: 17.3; 2025: 15.9; 2026: 16.6; 2027: 17.9.
- Gross domestic investment (percent of GDP): 2021: 17.9; 2022: 18.4; 2023: 17.4; 2024: 20.0; 2025: 18.8; 2026: 19.6; 2027: 20.6.
- Stock of public debt (percent of GDP): 2021: 46.8; 2022: 44.0; 2023: 46.4; 2024: 40.8; 2025: 42.8; 2026: 40.4; 2027: 38.5.
- Current account balance (including official grants, percent of GDP): 2021: -4.0; 2022: -2.1; 2023: -1.6; 2024: -2.6; 2025: -2.8; 2026: -3.0; 2027: -2.6.

### Program performance and recent IMF actions
- Cameroon has completed two reviews since approval in July 2021 of three-year ECF/EFF arrangements for SDR 483 million (about US$689.5 million, or 175 percent of quota). Completion of the third review allows total disbursement of SDR 55.2 million (about US$73.3 million).
- Program performance mixed:
  - All quantitative performance criteria (QPCs) at end-June 2022 were met.
  - Missed QPCs at end-December 2022: floor on the non-oil primary balance (NOPB) and the continuous QPC on non-accumulation of external arrears.
  - Three of five indicative targets (ITs) were missed at end-June and end-September 2022: ceilings on SNH direct interventions, share of spending through exceptional procedures, and net accumulation of domestic payment arrears.
- Waivers and applicability:
  - Executive Board approved waivers of nonobservance for two performance criteria: (i) missed floor on the non-oil primary balance at end-December 2022; (ii) missed continuous zero ceiling on accumulation of new external payments arrears. Waivers approved due to corrective actions by authorities and temporary nature of non-observance. 
  - Executive Board approved a waiver of applicability for three end-December 2022 performance criteria for which data are not yet available and there is no evidence they were not observed.
- Structural benchmarks (SBs) for third review: of 14 SBs, seven completed (five with some delay), and two SBs missed for reasons beyond authorities’ control. Prior action on increasing domestic fuel prices has been met.
- Authorities have implemented corrective measures to address missed quantitative targets and repeatedly missed indicative targets.

### Policy priorities and recommended reforms
- Fiscal consolidation and fuel subsidy reform:
  - Substantial reduction in the fuel subsidy through a retail fuel price adjustment in early 2023, accompanied by measures to mitigate social impact, and elimination of the subsidy in the medium term.
  - Mobilize additional domestic non-oil revenue to create fiscal space for productive expenditures and social protection.
  - Further efforts to reduce fuel subsidies; mitigation measures to protect the vulnerable will be critical.
- Structural fiscal reforms and public financial management:
  - Accelerate structural fiscal reforms and improve public financial management.
  - Resolve and prevent external and domestic arrears and seek concessional financing.
- Debt sustainability and debt management:
  - Strengthen debt sustainability under active debt management; address risks from tighter global financial conditions and uncertain availability of concessional financing.
- Governance, transparency, and anti-corruption:
  - Reinforce governance, strengthen transparency and anti-corruption efforts, and ensure financial sector stability.
- Growth, inclusion, and resilience:
  - Implement structural reforms in the National Development Strategy to enhance investment efficiency, strengthen financial inclusion, and improve the business climate.
  - Strengthen transparency, governance, and the anti-corruption framework; ensure financial sector stability.
- Specific staff recommendations:
  - Phase out costly temporary tax measures and price controls.
  - Avoid export restrictions that may harm food security, especially in import-dependent countries.

### Risks and downside scenarios
- Major near-term downside risks (Risk Assessment Matrix, Annex I) include:
  - Global developments, including recession and a prolonged war in Ukraine, further slowing growth and exacerbating supply disruptions.
  - High food, fertilizer, and energy prices, and supply disruptions maintaining inflationary pressures.
  - Lower global hydrocarbon prices reducing export and fiscal revenue and constraining policy space.
  - Tighter global financial conditions, uncertain availability of concessional financing, and rollover risks threatening debt sustainability.
  - Climate-related shocks worsening food insecurity, political instability, and conflicts.

*Source: IMF staff report for Cameroon, Third Reviews under the Extended Credit Facility and the Extended Fund Facility Arrangements (1cmrea2023001).*

### 12.      Risks are mitigated. Cameroon has a strong record of implementing macroeconomic

### 1cmrea2023001 - 12.      Risks are mitigated. Cameroon has a strong record of implementing macroeconomic

### Program performance: quantitative outcomes and corrective actions
- Quantitative performance at end-June 2022: broadly on track. All quantitative performance criteria (QPCs) were met; three indicative targets (ITs) were missed (ceilings on direct interventions of SNH, share of spending executed through exceptional procedures, and net accumulation of domestic payment arrears).
- End-September 2022: three of five ITs were missed. SNH direct interventions and share of spending using exceptional procedures continued to exceed targets due to security spending, higher compensation of traders from increases in oil import prices with fixed retail prices, and introduction of a new budget classification in early 2022.
- Two QPCs were missed at end-December 2022:
  - Floor on the NOPB was missed mainly due to higher-than-expected fuel import prices and currency depreciation, resulting in higher fuel subsidy. Authorities did not increase retail fuel prices at end-2022.
  - Continuous QPC on non-accumulation of external arrears was missed following late debt service payments to France and the International Islamic Trade Finance Corporation (ITFC) due to end-year cash management issues; the breach was minor (0.08 percent of GDP) and temporary, and all payments were cleared.
- Corrective measures taken by authorities:
  - Retail fuel prices were increased on February 1, 2023, resulting in a subsidy consistent with program projections and expected to limit use of exceptional procedures and reduce domestic payment arrears.
  - A committee was set up to monitor SNH direct interventions; authorities committed to submit a quarterly report on SNH interventions by type of expenditure starting Q1 2023.

### Structural benchmarks (SBs) and implementation status
- Of 14 SBs for the third review:
  - Seven completed, five with some delay.
  - Two SBs missed for reasons beyond authorities’ control (SB3 and SB11).
- SBs met in December 2022:
  - SB4: completed diagnostic studies for three public enterprises.
  - SB13: established mechanism to reconcile direct SNH interventions; first quarterly report expected in mid-May.
- Five SBs implemented with delay (examples and follow-ups):
  - SB1: submission of a diagnostic of tax policy with follow-up action plan (new SB18).
  - SB8: nomination of management to operationalize the Caisse des Dépôts et Consignations (CDC).
  - SB15: doubling social cash transfers.
  - SB16: submitting terms of reference for study on sustainability of civil service pension system.
  - SB17: study on options for reforming fuel price mechanism.
- Seven SBs were not implemented; authorities propose reformulating repeatedly missed SBs to focus on measures critical for program success.

### Policy discussions and macro-critical priorities
- Discussions covered:
  - Short-term policies to manage food and fuel shocks.
  - Measures to gradually phase out fuel subsidies and mitigate impact on the most vulnerable.
  - Policy options to improve non-oil revenue mobilization.
  - Medium-term policies to unlock growth potential and bolster resilience.

### Fiscal performance and drivers (2021–2022)
- First half of 2022: fiscal performance strong.
  - Oil revenues increased by 70 percent by end-June 2022 (year-on-year).
  - Non-oil revenues increased by about 11 percent by end-June 2022 (year-on-year).
  - Primary spending lagged, particularly on subsidies and transfers and public investment, leading to overperformance in the NOPB in H1 2022.
- Fuel subsidy impact:
  - Fuel subsidy exceeded budget projection of CFAF 600 billion (2.3 percent of GDP) by CFAF 200 billion (0.7 percent of GDP) due to higher oil import prices and currency depreciation.
  - Overall fiscal deficit declined to 1.8 percent of GDP in 2022 from 3 percent of GDP in 2021.
  - NOPB deteriorated to 4.5 percent of GDP in 2022 from 3.9 percent in 2021, exceeding program target of 4 percent of GDP.
  - Fuel subsidy contributed about 0.4 p.p. of GDP to widening non-oil primary deficit in 2022 relative to revised budget projections.
  - Increased fuel subsidy pressures led to greater use of exceptional procedures and accumulation of domestic arrears.

### Creating fiscal space for productive investment and social protection
- Fuel price adjustment:
  - Retail fuel prices increased on February 1, 2023: gasoline +15.9 percent, diesel +25 percent, kerosene for businesses +60 percent.
  - Average increase estimated at around 21 percent; estimated reduction in fuel subsidy by around CFAF 238 billion (0.8 percent of GDP) in 2023.
- Mitigation measures:
  - Minimum wage increased by 15.5 percent in February 2023.
  - Public sector wages increased by 5.2 percent in February 2023.
  - Commitment to scale up conditional cash transfers (filets sociaux) by 100 percent in 2023 (SB15).
- Medium-term approach:
  - Authorities aim to gradually eliminate fuel subsidy through further domestic fuel price adjustments in 2024-25 based on oil price developments.
  - Complementary measures studied: expanding social registry, improving access to education and health services, accelerating SONARA restructuring, achieving energy transition, strengthening domestic productive industries.
- Additional revenue and expenditure measures (Text Table 2 summary):
  - Expected additional revenues in 2023: CFAF 86 billion total, of which CFAF 56 billion in non-oil revenue.
  - Spending reductions envisaged: CFAF 108 billion.
  - Revised budget to reflect these measures to be adopted by April 2023.
- Fiscal stance and non-oil primary deficit:
  - Initial 2023 budget projected a non-oil primary deficit of 2.5 percent of GDP but underestimated fuel subsidy by about CFAF 300 billion (1 percent of GDP), implying a non-oil primary deficit of 3.5 percent of GDP.
  - Retail fuel price increase and additional measures expected to reduce non-oil primary deficit by 1.1 p.p. of GDP to 2.4 percent of GDP in 2023.
- Use of SDRs:
  - Authorities used CFAF 60 billion (0.2 percent of GDP) of the 2021 SDR allocation in January 2023 and intend to use another CFAF 20 billion by end-2023.

### Structural fiscal reforms and public financial management priorities
- Key reform areas:
  - Non-oil revenue mobilization:
    - Tax policy diagnostic (SB1) recommended reviewing treatment of in-kind benefits to increase Personal Income Tax (PIT) revenue and replacing Corporate Income Tax (CIT) holidays with an investment allowance (new SB).
    - Three-year plan (2023-25) to modernize and align tax system with international standards.
    - Efforts to increase number of VAT taxpayers in 2023 (new SB18); improve tax compliance, data collection, cross-checking, and sharing.
    - Staff recommended reducing tax expenditures, including those related to subsidizing fuel consumption.
  - Current spending and cash management:
    - Prepare credible monthly cash flow plans consistent with commitment and public procurement plans.
    - Streamline processes for urgent expenditures with quarterly regularization; limit exceptional procedures to a few urgent spending items defined by law with transparent procedures and reporting.
  - Treasury Single Account (TSA):
    - Inventory of accounts to be transferred to TSA completed; transfer to TSA contingent on BEAC platform availability (SB3).
  - Arrears:
    - After clearing end-2019 arrears, audits of arrears due in 2000-2019 finalized; clearance plan to be adopted (SB2, September 2023).
    - Inventory of end-2021 debts between government and 14 public enterprises finalized; work underway on SOE debt inventory and clearance plan.
  - Capital spending:
    - Priority to implement October 2021 decree establishing procedures for monitoring project management units (SB20, April 2023).
  - Fiscal risks from SOEs:
    - Diagnostic studies completed for PAD, CAMTEL, and CAMWATER; authorities intend to implement key recommendations (SB4).
    - Steps to place SONARA on sound financial footing; framework for restructuring approved in September 2022; TOR for technical studies and business plan to be finalized and submitted to IMF staff (SB14, June 2023, rephased to September 2023).
    - PPP legal/regulatory framework prepared to unify PPP management; adoption delayed pending finalization of CEMAC-wide regional framework (SB5, rephased to September 2023).
  - Civil service pension reforms:
    - TOR formulated (SB16, October 2022); government examining sustainability and quasi-fiscal risks of pension system.

### Debt sustainability and debt management
- Current assessment:
  - Cameroon remains at high risk of debt distress, but debt is sustainable with active fiscal reforms and debt management (see DSA).
  - Under baseline scenario, two out of four external indicators breach thresholds; PV of public debt-to-GDP ratio is above benchmark, indicating high risk of overall debt distress.
  - Prevailing extreme shock: commodity price shock.
  - External debt stock indicators remain below threshold; external debt service indicators have improved and are on a downward trend.
  - Debt service-to-revenue ratio expected to stop breaching the threshold in the medium term.
- Downside risks to debt sustainability:
  - Ongoing war in Ukraine could set back global recovery and prolong supply disruptions.
  - Tightening global financial conditions could increase borrowing costs.
  - Delayed restructuring of SONARA’s debt could intensify risks; SONARA reached agreement with its main supplier in September 2022 (accounts for 24 percent of total debt and 48 percent of external debt); negotiations with other suppliers expected to conclude in 2023.
  - A decrease in global energy prices could deteriorate export and fiscal revenues.
- Program borrowing ceiling and adjustor:
  - Program ceiling on PV of newly contracted or guaranteed external public debt with an adjustor for World Bank projects in 2023.
  - Program ceiling for end-2022: CFAF 512.9 billion.
  - World Bank projects potentially to be signed in 2023 amount to US$1.25 billion or PV of CFAF 361.9 billion (compared to PV of CFAF 179.4 billion in 2022).
  - Authorities optimizing borrowing plan to contract more concessional loans and prioritizing projects that could boost GDP, budgetary revenues, and exports.
  - Need to address high levels of contracted but undisbursed loans (SEND) and low disbursement rates; implement monitoring procedures for project management units (SB20).

### Governance, transparency, and anti-corruption
- Priority to strengthen good governance, transparency, and anti-corruption as an integral element of program implementation and to reduce fiscal risks (section title and emphasis present; detailed measures are within broader PFM and SOE reforms described above).

*Source: Content unit 1cmrea2023001 (IMF staff and country authorities).*

### 31.      While the authorities have taken important steps to strengthen transparency and

### 1cmrea2023001 - 31.      While the authorities have taken important steps to strengthen transparency and

### Transparency, governance, and audit
- Legal framework gaps remain in: criminalization of corruption offences; exemptions from prosecution; whistleblower protection; and confiscation of proceeds and instrumentalities of crime.
- Implementation status related to Rapid Credit Facility (RCF) commitments:
  - Authorities have published reports on related expenditures, information on contracts with the names of beneficial owners, and submitted reports prepared by the Supreme Court Audit Bench.
  - Momentum has slowed, notably on publication of audit reports on COVID-related expenditures.
- Supreme Audit Institution (SAI) TA preparation:
  - The Supreme Court Audit Bench prepared an action plan with recommendations on human and capital needs; costing to be discussed with the Ministry of Finance.
  - Action plan to be finalized with LEG TA and published by April 2023.
  - Preparatory coordination work for the governance diagnostic started pending arrival of a LEG mission in March 2023; main relevant agencies expressed readiness to provide inputs.
- Beneficial owner publication:
  - Authorities considered extending publication requirements to all procurement contracts but noted high administrative and legislative hurdles (revision of the Public Procurement Code) and capacity constraints for the public regulatory agency that would handle filings and publication.

### Public enterprises and related governance reforms
- Ongoing reforms to strengthen public enterprise governance (MEFP¶45):
  - Strengthening internal controls.
  - Requiring publication of audited annual financial statements.
  - Submission of business plans in accordance with Law n°2017/11 of July 12, 2017.

### National Development Strategy and growth objectives
- SND30 meets PRGS requirements; developed in consultation with multiple stakeholders including the World Bank.
- Strategy envisages increasing the annual growth rate to 8.1 percent on average by 2030 — characterized as ambitious without substantial acceleration in structural reforms.
- Priorities consistent with program objectives: (i) structural transformation; (ii) improving human capital and access to services; (iii) employment and economic integration; (iv) governance, decentralization, and strategic management; (v) boosting resilience to climate change.
- Fifteen flagship projects with estimated cost of CFAF 37,500 billion financed mainly through own resources, external financing (including World Bank), and PPPs.

### Private sector-led growth and diversification
- Structural impediments to private sector development and diversification persist.
- Private and financial sector participants call for accelerated removal of impediments and improved public–private dialogue.
- Regional trade facilitation needs to be paired with efforts to avoid distortions in tax, legal, and judicial systems.
- Consultation format between public and private sectors strengthened, but private sector requests more frequent consultations, especially on the budget (budget orientation papers shared too late for meaningful input).
- Deposit and consignment fund (Caisse des depots et consignations):
  - Management nominated (SB8, December 2022).
  - Authorities intend to review legal framework to align with international best practices.
  - Staff emphasized adherence to principles of good governance and transparency for public banks and regulation/supervision by the COBAC.

### Financial stability, inclusion, and sectoral reforms
- Banking sector fragilities:
  - Non-performing loans (NPLs) rose by mid-2022 to around 15 percent of gross loans, then recently stabilized.
  - Bank profitability improved in 2022 relative to 2021.
  - Aggregate capital and liquidity ratios remained adequate.
  - Concentration risks and sovereign-bank exposures are high but have recently stabilized.
  - Net budget financing from commercial banks exceeds 1 percent of GDP per year.
- Government reform measures:
  - Expectation to sign authorizing agreement with COBAC by March 2023 to implement restructuring of two distressed banks; these banks to open capital to private sector within five years per performance contracts.
  - Completion of privatization of the Commercial Bank of Cameroon (CBC) is planned.
  - Priorities include: training judiciary on bank dispute resolution; transforming commercial chambers into specialized commercial courts; encouraging systematic data submission to the movable collateral registry (RNSM); strengthening State Asset Management Company (SRC) governance with operational and budgetary independence, transparency, accountability, and a sunset clause for banking asset recovery activities.
  - Following COBAC decision to lower large exposure limit, most banks’ exposures remain within the new limit of 25 percent of capital.
  - Staff reiterated need to avoid using fiscal resources to bail out shareholders.
- Diversifying investor base for government securities:
  - Plan to prepare a strategy in 2023 to encourage participation of non-bank investors (insurance, pension funds, individuals), particularly in long maturity issues in line with the medium-term debt strategy.
  - A sinking fund account is set up at the BEAC with resources to pay maturities of OTAs and bonds, including the Eurobonds.
- Financial inclusion:
  - National Strategy for Inclusive Finance 2021-2025 aims to remove barriers for funding businesses by traditional banks and cover banks, microfinance, insurance, and mobile money services.
- FX regulations for extractive sector:
  - Repatriation and surrender requirements came into effect in January 2022, but BEAC is not yet enforcing sanctions for non-compliance pending resolution of technical difficulties, including in opening and operating foreign currency accounts in the CEMAC region.

### Program issues, performance criteria, and safeguards
- Regional assurances:
  - BEAC met its end-June 2022 NFA target and provided updated policy assurances supporting CEMAC countries’ Fund-supported programs.
  - BEAC tightened monetary policy in 2022 and will continue work towards effective application of FX regulation, including adaptations for the extractive sector from 2022.
- Program monitoring:
  - Program performance to be reviewed semi-annually through six-monthly and continuous QPCs, quarterly ITs, and SBs.
  - Authorities request resetting end-March and end-June 2023 QPCs and ITs to reflect current macroeconomic framework, budget projections, and program commitments, and setting new end-September and end-December 2023 QPCs and ITs.
- Waivers requested:
  - Waiver for nonobservance of two performance criteria at end-December 2022:
    - Floor on the NOPB missed due to higher oil prices and currency depreciation leading to higher fuel subsidy spending (MEFP, Table 1) (¶13); waiver requested due to corrective actions taken (¶13).
    - Continuous zero ceiling on accumulation of new external payments arrears missed following delayed debt service payments to ITFC and France due to end-year cash management issues; waiver requested due to minor (0.08 percent of GDP) and temporary nature and arrears have been cleared (¶13).
  - Waiver of applicability requested for three other end-December 2022 QPCs because data to assess observance will not be available by the Board date; TMU revised to reflect Cameroon’s complementary budget period of 30 days at budget year-end and clarify SDR allocation inclusion and new adjustor for ceiling on contracting new external debt.
- Additional SBs and rephasing:
  - Agreement to additional SBs for next two program reviews and corrective actions for unmet SBs:
    - Rephase six unmet SBs with new dates (examples and rephasing): audit of domestic arrears and action plan rephased to September 2023 (SB2); PPP legal and regulatory framework rephased to September 2023 (SB5); inventory of debts between SOEs rephased to September 2023 (SB6); law to rationalize incentives rephased to December 2023 (SB9); action plan to strengthen public spending audit frameworks rephased to April 2023 (SB11); publication of audit report on COVID-related expenditures rephased to March 2023 (SB12).
    - Do not rephase/remove one unmet SB: transfer of public entity accounts to the TSA delayed pending completion of BEAC IT platform (SB3).
    - Rephase two SBs due for next review: diagnostic of vulnerabilities in governance and fight against corruption rephased from June to September 2023 (SB10); restructuring plan for SONARA postponed from March to June 2023 (SB14).
    - Three new SBs introduced: (SB18) broaden VAT taxpayer base; (SB19) eliminate income tax allowances and replace with investment allowances in 2013 Law as intermediate step and undertake study/audit of the Law’s 10-year implementation; (SB20) improve project and debt management and prioritization of externally financed investment.

### Capacity to repay the Fund, risks, and financing
- Capacity to repay:
  - As of end-December 2022, total outstanding credit from the Fund amounts to 370 percent of quota.
  - Baseline projections: total Fund credit outstanding peaks at 3.0 percent of GDP in 2023 (based on existing and prospective drawings).
  - Annual obligations to the Fund peak at about 3.1 percent of revenues in 2027.
  - Risks to capacity to repay are elevated but mitigated by Cameroon’s past track record of repaying the Fund and program strength.
- Program risks and mitigation:
  - Risks from the war in Ukraine compounded pandemic risks (¶11).
  - Authorities indicated production of a fiscal risk statement which might include a contingency plan; contingency measures include mechanism blocking up to 15 percent of budgeted current expenditures on goods and services.
- Financing assurances:
  - Program remains fully financed with firm commitments for upcoming 12-month period and good prospects for remainder; donors confirmed the importance of Fund engagement to their contributions.
- Regional consistency:
  - Despite lower projected natural gas prices and a stronger CFAF to US dollar affecting external balance, level of NFA at end-2023 projected to remain broadly in line with CEMAC December 2022 staff report projections.

### Staff appraisal (key macro outcomes and program performance)
- Macroeconomic performance:
  - Economic recovery supported by higher oil prices and non-oil production in 2021 continued into 2022 amid Russia’s war in Ukraine, inflationary pressures, supply chain disruptions, and tight global financial conditions.
  - Real GDP growth: increased to 3.6 percent in 2021; expected to reach 3.4 percent in 2022.
  - Headline inflation projected at 6 percent at end-2022, driven by food prices, higher import costs, and domestic supply pressures.
- Program performance summary:
  - All quantitative performance criteria (QPCs) at end-June 2022 were met.
  - Missed QPCs: floor on NOPB at end-December 2022 (higher fuel subsidy spending) and continuous zero ceiling on accumulation of new external payments arrears (late payments to ITFC and France).
  - Missed indicative targets (ITs): three of five ITs missed at end-June and end-September — ceilings on direct interventions of the SNH, share of spending through exceptional procedures, and net accumulation of domestic payment arrears.
  - Authorities proposed corrective measures to address missed quantitative targets.

*Source: Content unit 1cmrea2023001.*

### 55.      Progress on structural benchmarks continues with delays. Of the 14 structural

### Progress on structural benchmarks continues with delays

### Structural benchmarks: status and implementation
- Of the 14 structural benchmarks, seven have been completed, of which five with some delay.
- Two structural benchmarks were missed for reasons beyond the authorities’ control.
- Six unmet structural benchmarks were rephased.
- One structural benchmark was dropped as the remaining action is not within the authorities’ control.

### External financing (Text Table 5. Cameroon: External Financing)
- Table heading: Text Table 5. Cameroon: External Financing (In billions of CFAF, unless otherwise indicated)
- Source: IMF staff calculations.
- 1/ Cameroon's current quota is SDR 276.0 million.
- 2022 2023 2024
- Total (CFAF, billions)
- Total (SDR, millions)
- Percent of Gap
- Percent of Quota
- Financing Gap: 287220180686828100300
- IMF Financing: 115919229835943130
- ECF: 383031991201443
- EFF: 7761611982392987
- Budget Support from other Donors: 1721298838946957170
- AFDB: 50410
- 911101340
- World Bank: 626162
- 1852232781
- France: 452726
- 981181443
- EU: 000
- 0000
- Other: 1500151827
- Exceptional Financing: 0000000
- DSSI (Net): 0000000
- Residual Gap: 000
- 0000

### Macroeconomic outlook and risks
- Economic growth is expected to accelerate to 4.3 percent in 2023.
- Inflation is expected to remain at about 6 percent at end-2023.
- Projections are subject to considerable downside risks, especially from an intensification of external pressures and potential stronger-than-expected tightening in financial conditions.

### Fiscal policy, social measures, and program stance
- The authorities are committed to sustaining fiscal consolidation consistent with the program.
- The overall fiscal deficit target is projected to decline to 0.8 percent of GDP in 2023.
- The non-oil primary deficit is projected to decline to 2. 4 percent of GDP in 2023.
- Staff welcomes:
  - The reduction in fuel subsidies.
  - Measures to sustain the agreed fiscal policy stance to make room for priority spending over the medium term.
- As mitigation measures, the authorities:
  - Increased the minimum wage and public sector wages.
  - Plan to scale up by 100 percent the existing mechanism for conditional cash transfers (filets sociaux) in 2023.
- It will be important to continue phasing out temporary tax measures and price controls.

### Debt outlook and contingent liabilities
- Cameroon remains at high risk of debt distress, but its debt is sustainable.
- Planned continued fiscal consolidation, structural reforms, and prudent borrowing that limits reliance on non-concessional borrowing would support a reduction in debt vulnerabilities.
- Advancing the negotiation process on SONARA’s debt restructuring would limit contingent liabilities.

### Structural reforms and governance priorities
- Structural reforms need to be accelerated to unlock Cameroon’s growth potential.
- Further steps are needed to:
  - Enhance investment efficiency.
  - Strengthen financial inclusion.
  - Improve the business climate.
- These reforms should be accompanied by a strengthened transparency, governance, and anti-corruption framework.
- Continued progress in enhancing the management of SOEs will be equally critical.

*Source: IMF staff calculations.*

### 60.      Based on Cameroon’s performance under the program, the implementation of the

### 1cmrea2023001 - 60.

### Program decision, conditionality, and waivers
- Staff supports the authorities’ request for the completion of the third review based on Cameroon’s performance under the program, the implementation of the end-December 2022 regional policy assurances and regional policy assurances established in the December 2022 union-wide paper.
- Staff supports authorities’ request for:
  - (i) the adoption of the new March 2023 ITs and end-June 2023 QPCs;
  - (ii) waivers for nonobservance of the floor on the NOPB at end-December 2022 and the non-accumulation of external arrears; and
  - (iii) waivers of applicability for three other end-December 2022 QPC targets (data unavailable by Board meeting and no clear evidence PCs will not be met).
- Staff proposes that completion of the fourth review be conditional on the implementation of critical policy assurances at the union level established in the December 2022 union-wide background paper.

### Real sector developments (high level findings)
- Growth remained strong, driven by a robust performance in the primary and tertiary sectors.
- Consumption continues to recover.
- Inflation, driven by food and energy prices, has accelerated rapidly with some regional variations.
- Exports recovered from pandemic lows, mainly driven by oil exports, which are projected to slow down, with imports slowing in parallel.

### Fiscal developments and policy implications
- Revenue collection in 2022 was driven by strong performance in the oil revenue mobilization.
- Public spending increased, with more spending on transfers and subsidies.
- Increased fuel subsidies were used as a policy to protect the population from a surge in international oil prices and limit inflation pressures.
- The high cost of the fuel subsidy led to a deterioration in the non-oil primary balance and accumulation of domestic payment arrears.
- The impact of GDP growth and a lower deficit on public debt dynamics was favorable albeit attenuated by exchange rate depreciation.

### Key fiscal and macro numbers (selected excerpts from tables)
- Table 1 (selected lines as presented in source):
  - GDP at constant prices: 3.63.63.83.44.64.34.44.54.64.7
  - Oil GDP at constant prices:-3.2-3.24.2-5.1-3.00.71.10.30.30.3
  - Non-Oil GDP at constant prices3.83.83.83.64.84.44.54.64.74.8
  - Nominal GDP (at market prices, CFAF billions)25,15825,15827,38927,21029,32529,74932,39334,86637,22639,777
  - Oil8018011,1871,0731,090907862814777747
  - Non-Oil 24,35724,35726,20126,13728,23528,84131,53134,05236,44939,030
  - Consumer prices (average)2.32.34.65.32.85.94.73.02.32.0
  - Overall fiscal balance (payment order basis) Excluding grants-2.6-3.2-2.5-2.4-0.5-1.1-0.9-0.5-0.8-1.2
  - Non-oil primary balance (payment order basis, percent of non-oil GDP) -3.4-4.1-4.2-4.6-2.3-2.5-1.8-1.1-1.4-1.7
  - Stock of public debt 45.546.844.046.440.842.840.438.537.537.2
  - Of which: external debt 31.631.731.232.730.330.529.729.129.229.4

- Table 2a (central government, selected lines as presented in source):
  - Total revenue and grants 3,5593,5114,2234,3864,6534,5924,6024,9645,3025,6646,107
  - Total expenditure 4,1574,2624,7574,8874,7184,8504,8315,1705,4115,9196,527
  - Current expenditure 2,9702,9923,2373,3003,0633,3043,2853,3293,3283,5633,797
  - Wages and salaries 1,0741,0751,1741,1741,2631,2411,2841,3811,4781,5821,704
  - Subsidies and transfers 6917421,0131,123768887924751561600642
  - Capital expenditure 1,1481,1331,4191,4191,5851,4941,4941,7602,0022,3572,730
  - Overall balance (payment order basis) Including grants -597-751-534-501-65-258-229-207-109-255-420
  - Overall balance (cash basis) Including grants -697-609-680-623-197-373-376-367-245-373-420

- Table 3 (balance of payments, selected lines as presented in source):
  - Current account balance -1,003-997-574-429-771-846-960-908-948-991
  - Trade balance -379-288-18899-377-384-438-441-444-466
  - Exports, goods3,2613,3364,6384,3664,3233,9984,0604,2664,4704,759
  - Imports, goods-3,640-3,624-4,827-4,266-4,700-4,382-4,498-4,707-4,914-5,225
  - Oil and oil products1,2371,2382,0631,9341,7631,6131,5851,5721,5481,582
  - Non-oil sector2,0242,0982,5762,4322,5602,3852,4752,6942,9213,176

- Table 4 (monetary survey, selected lines as presented in source):
  - Net foreign assets2,6273,1933,2783,4373,6563,9554,266
  - Broad money 7,3248,1578,8159,68510,45511,19712,110
  - Credit to the economy 1/3,7724,3424,6734,9755,2855,6085,972
  - Credit to the private sector3,2943,7424,0724,3744,6845,0085,344

### External financing, capacity to repay, and financing needs
- Table 5 (Capacity to Repay, selected figures as presented):
  - Principal (SDR millions and CFAF billions reported in the table) sequence includes: Principal29.0      63.5      96.6      159.2    180.9    146.0    123.9    90.8      46.6      17.2      -       -       -       -
  - Charges and interest17.1      25.3      26.2      25.9      24.9      23.2      21.0      18.8      16.5      14.5      13.3      12.7      12.6      12.6
  - Outstanding IMF credit based on existing and prospective drawings SDR millions1,090.2    1,081.9985.3826.2639.1468.0306.7176.690.834.44.90.00.00.0
  - Fund obligations based on existing and prospective credit (SDR, millions) and memorandum items included nominal GDP and exports series as presented.

- Table 8 (External financing needs and sources, selected lines as presented):
  - Total Financing Requirements 150416511844175418881959
  - Current Account Deficit 429846960908948991
  - Amortization of PPG Debt 520728716739811856
  - Gross Reserves Accumulation (+ = increase) 55577168107129112
  - Financing Sources 121714311664175418881959
  - Financing Gap 287220180000
  - Additional/Exceptional Financing Sources 287220180000
  - IMF Financing 1159192000
  - Prospective ECF383031000
  - Prospective EFF776161000
  - Budget Support (excl. IMF)17212988000

### Policy implications and recommendations (implied by analysis)
- Maintain implementation of regional and union-level policy assurances (including those in the December 2022 union-wide background paper) as a condition for forward program reviews.
- Adopt the new March 2023 ITs and end-June 2023 QPCs supported by staff to sustain program momentum.
- Address the fiscal cost of fuel subsidies to limit deterioration in the non-oil primary balance and accumulation of domestic arrears.
- Mobilize financing (including prospective ECF and EFF disbursements and budget support) to close projected financing gaps and support reserve accumulation.

*International Monetary Fund staff summary based on the source content provided.*

### Annex I. Risk Assessment Matrix (August 4, 2022)

### Annex I. Risk Assessment Matrix (August 4, 2022)

### External risks — summary of identified risks, likelihood, impacts, and recommended policy responses
- Intensifying spillovers from Russia’s war in Ukraine
  - Relative Likelihood: High
  - Impact if Realized: Further sanctions resulting from the war and related uncertainties exacerbate trade and financial disruptions and commodity price volatility, with Europe, LICs, and commodity-importing EMs among the worst hit.
  - Recommended Policy Response: Reinforce external buffers. Enhance social safety net. Diversify import sources.

- Commodity price shocks
  - Relative Likelihood: High
  - Impact if Realized: A combination of continuing supply disruptions (e.g., due to conflicts and export restrictions) and negative demand shocks causes recurrent commodity price volatility and social and economic instability.
  - Recommended Policy Response: Save part of the oil proceeds towards policy buffers, including to support regional reserve target. Roll-back crisis-related accommodative policy measures and adhere to the planned fiscal consolidation to boost confidence and promote private sector-led growth.

- Systemic social unrest
  - Relative Likelihood: High
  - Impact if Realized: Rising inflation, declining incomes, and worsening inequality amplify social unrest and political instability, causing capital outflows from EMDEs, slowing economic growth, and giving rise to economically damaging populist policies (e.g., preserving fossil fuel subsidies).
  - Recommended Policy Response: Implement targeted measures to strengthen social protection and mitigate the impact of rising prices.

- Abrupt global slowdown or recession
  - Relative Likelihood: Medium
  - Impact if Realized: Global and idiosyncratic risk factors combine to cause a synchronized sharp growth slowdown, with outright recessions in some countries, spillovers through trade and financial channels, and downward pressures on some commodity prices.
  - Recommended Policy Response: Build policy buffers during the period of high commodity prices to create space for accommodative policies during recession. In the long run, continue efforts of export diversification and private sector reforms.

- Local COVID-19 outbreaks
  - Relative Likelihood: Low
  - Impact if Realized: Outbreaks in slow-to-vaccinate countries or emergence of more contagious vaccine-resistant variants force new lockdowns or inhibit commerce. This results in extended supply chain disruptions, slower growth, capital outflows, and debt distress in some EMDEs.
  - Recommended Policy Response: Continue to prioritize social and health-related spending, including vaccines, and enhance the efficiency of spending. Energize external support to the economy and vaccination. Strengthen crisis management and preparedness.

- De-anchoring of inflation expectations and stagflation
  - Relative Likelihood: Medium
  - Impact if Realized: Supply shocks to food and energy prices sharply increase headline inflation and pass through to core inflation, de-anchoring inflation expectations and triggering a wage-price spiral in tight labor markets. Central banks tighten monetary policy more than envisaged leading to weaker global demand, currency depreciations in EMDEs, and sovereign defaults. Together, this could lead to the onset of stagflation.
  - Recommended Policy Response: In the short term, tighten monetary and financial conditions as needed to constrain inflation and anchor inflation expectations. In the medium term, accelerate implementation of structural reforms to strengthen growth and labor and product markets.

- Sharp tightening of global financial conditions
  - Relative Likelihood: Medium to High
  - Impact if Realized: EMDEs: Sharp tightening of global financial conditions combined with volatile commodity prices leads to spiking risk premia, widening of external imbalances and fiscal pressures, capital outflows, sudden stops, and debt and financial crises across EMDEs.
  - Recommended Policy Response: Identify concessional financing sources. Continue reforms to strengthen domestic resource mobilization and debt management as well as domestic capital and financial markets.

- Natural disasters related to climate change
  - Relative Likelihood: Medium
  - Impact if Realized: More frequent natural disasters deal severe damage to infrastructure (especially in smaller vulnerable economies) and amplify supply chain disruptions and inflationary pressures, causing water and food shortages and reducing medium-term growth.
  - Recommended Policy Response: Develop a strategy for strengthening resilience and adaptation mechanisms based on recent CCDR recommendations.

### Domestic risks — summary of identified risks, likelihood, impacts, and recommended policy responses
- Deterioration of domestic sociopolitical conditions
  - Relative Likelihood: Medium
  - Impact if Realized: Uncertainty regarding the succession of President Biya could threaten period of relative political stability in the country. The ongoing crisis in the Anglophone regions has fueled social discontent and is yet to be resolved.
  - Recommended Policy Response: Increase dialogue with civil society and business community.

- Deterioration of domestic political conditions (governance and corruption perceptions)
  - Relative Likelihood: Medium
  - Impact if Realized: Given perceptions of poor governance and corruption it may be difficult to maintain a sustainable consensus to govern. This could compromise the macroeconomic stabilization gains made over the last three years and derail key reforms.
  - Recommended Policy Response: Intensify communication on the benefits of the government’s macroeconomic program and enhance the inclusiveness of the approach to economic management. Step up efforts to improve governance.

- Unexpected downside shifts in the COVID-19 pandemic
  - Relative Likelihood: Medium
  - Impact if Realized: Growth falls and public financing needs increase sharply, leading to higher fiscal and external financing gaps and undermining debt sustainability.
  - Recommended Policy 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.

- Spillovers from other CEMAC countries
  - Relative Likelihood: Medium
  - Impact if Realized: Worsening economic situation of other CEMAC countries could affect Cameroon through extra pressure in the payment and banking systems.
  - Recommended Policy Response: Coordinate with other CEMAC countries to build additional buffers through fiscal consolidation and structural reforms.

- Spillovers of the regional security situation
  - Relative Likelihood: Medium
  - Impact if Realized: A deterioration of the regional security situation would lead to an increase in displaced populations, a costlier security response, and decline of investment in affected regions.
  - Recommended Policy Response: Provide space for more effective security by curtailing unproductive public investments; prepare contingency plans for refugees with UNHCR.

- Contingent risks from state-owned enterprises
  - Relative Likelihood: Medium
  - Impact if Realized: Contingent risks from state-owned enterprises could impose further pressures on public finances and the ongoing fiscal consolidation under the program.
  - Recommended Policy Response: Contain contingent risks through enhanced monitoring and timely reporting of the risks of the state-owned enterprises and developing reforms and strategies to put SOEs on a sound financial footing.

### RAM methodology and operational guidance note
- The Risk Assessment Matrix (RAM) shows events that could materially alter the baseline path.
- The relative likelihood is staff’s subjective assessment of risks surrounding the baseline:
  - “low” is meant to indicate a probability below 10 percent,
  - “medium” a probability between 10 and 30 percent,
  - “high” a probability between 30 and 50 percent.
- The RAM reflects staff views on the source of risks and overall level of concern as of the time of discussions with the authorities. Non-mutually exclusive risks may interact and materialize jointly. The conjunctural shocks and scenarios highlight risks that may materialize over a shorter horizon (between 12 to 18 months) given the current baseline. Structural risks are those that are likely to remain salient over a longer horizon. G-RAM operational guidance is available from the SPR Risk Unit website.

*Source: Annex I. Risk Assessment Matrix (August 4, 2022).*

### 2. The authorities increased domestic fuel prices on February 1, 2023. The average

### 1cmrea2023001 - 2. The authorities increased domestic fuel prices on February 1, 2023. The average

### Fuel price increase and immediate fiscal impact
- The authorities increased domestic fuel prices on February 1, 2023. The average increase across main fuel products reaches 21 percent.
- The increase is in line with staff recommendations and is intended to bring the net fiscal contribution (NFC) of the fuel subsidy to zero, where NFC is measured as the difference between the total fuel subsidy and the tax and customs revenue from fuel.
- Under the current assumptions, the announced increase in fuel prices is estimated to:
  - reduce the fuel subsidy by about CFAF 238 billion (0.8 percent of GDP), and
  - allow an estimated positive NFC of about CFAF 76 billion (around 0.3 percent of GDP).

### Phase-out trajectory and simulations (2024–25)
- The authorities agree to the need to gradually phase out the fuel subsidy by 2025, which requires further pump price increases in 2024-25.
- Under the current assumptions, staff simulations suggest:
  - an increase in pump prices of about 10 percent in each year (2024 and 2025).
  - the positive cumulative net fiscal contribution in 2024-25 from this adjustment is estimated at about 2 percent of GDP.
- The estimates are sensitive to global oil price assumptions and subject to uncertainty.
- Allowing pass-through from global energy prices to domestic prices would:
  - alleviate the budget cost of the fuel subsidy, and
  - create space for accommodating other higher priority spending, including for social and development needs.

### Contextual macro-fiscal and external figures referenced
- Fuel subsidy estimated to reach around CFAF 800 billion (3 percent of GDP) in 2022.
- Non-oil primary balance expected to worsen to 4.5 percent of GDP in 2022 from 3.9 percent of GDP in 2021.
- Public debt projections:
  - Public debt projected to reach 46.4 percent of GDP at end-2022, down from 46.8 percent at end-2021.
  - External public debt projected to increase to 32.7 percent of GDP at end-2022, up from 31.7 percent at end-2021.
- Macroeconomic outlook:
  - Growth: 3.6 percent in 2021; projected 3.4 percent in 2022; projected 4.3 percent in 2023.
  - Inflation: domestic inflation reached 5.7 percent in September 2022 and is expected to reach 6 percent at end-2022; average inflation expected at 5.9 percent in 2023 and stabilize around 2 percent in the medium term.
  - Current account deficit (including grants): projected to narrow from 4 percent of GDP in 2021 to 1.6 percent of GDP in 2022 before levelling off below 3 percent in the medium term.

### Policy implications and recommended mitigation measures
- Fiscal consolidation strategy includes:
  - Reducing spending on the fuel subsidy by increasing domestic fuel prices and gradually eliminating spending on fuel subsidies over the medium term.
  - Mobilizing domestic non-oil fiscal revenues (target to increase domestic non-oil revenue from 12 percent in 2022 to around 13.1 percent of GDP in 2025).
  - Reducing total primary spending from around 17 percent of GDP in 2022 to 14.4 percent of GDP in 2025.
- Social protection and mitigation:
  - The government will develop a package of social measures to mitigate the impact of higher domestic retail fuel prices on the most vulnerable population and sectors.
  - The government will gradually expand the conditional cash transfer mechanism to the most vulnerable households, with the support of the World Bank.
- Operational and governance measures to support the program:
  - Improve monitoring of expenditure related to direct interventions by the National Hydrocarbons Company (SNH).
  - Continue measures to rebuild foreign exchange reserves at the BEAC and enforce foreign exchange regulations.
  - Commit to corrective actions and structural benchmarks to strengthen fiscal oversight and public financial management.

*Source: IMF staff report extract, February 2023.*

### 18. The current account deficit should improve and decline below 3 percent of GDP in the

### 18. The current account deficit should improve and decline below 3 percent of GDP in the

### Current account, exports, and reserves
- Rising hydrocarbon prices should temporarily boost export earnings.
- Programs to promote non-oil exports, import substitution, and regional integration are expected to contribute to a gradual reduction of the current account deficit below 3 percent of GDP.
- Compliance with the CEMAC foreign exchange regulations should:
  - lead to greater repatriation of export proceeds;
  - limit illicit outflows;
  - contribute to consolidating the region's net foreign assets.
- Objective: achieve a coverage of nearly five months of imports for the region in the medium term.

### Monetary policy stance
- Monetary policy will remain geared towards achieving CEMAC's objectives for inflation and foreign reserves.
- Continued economic recovery and reduced budget financing pressures should provide the BEAC leeway to:
  - reduce money supply growth;
  - raise foreign reserve coverage without risking financial system stability.

### Fiscal policy in 2023 — LF23 priorities and innovations
- LF23 articulates four broad priority areas for fiscal policy in 2023: security, economic, social, and governance.
  - Includes: maintaining security and reconstructing regions in difficulty; completing major energy and transport projects; accelerating import-substitution policy; containing inflation; strengthening social safety nets; reinforcing the legal framework for decentralization; initiating a general review of public policies.
- LF23 innovations include:
  - revising legal framework for mobilizing certain service revenues;
  - rationalization of para-fiscality to transfer excess earmarked revenues to the Treasury;
  - introduction of a budget annex relating to fiscal risks;
  - allocation of new revenues to certain Special Accounts (CASs), modification of their ceilings, and establishment of a new Special Fund for reconstruction of regions damaged by security tensions;
  - institution of an endorsement commission on guarantees granted by the State;
  - closure of public entity accounts in commercial banks and microfinance establishments;
  - a new mechanism for transferring proceeds of the Special Telecommunications Fund intended for the Investment Promotion Agency (API).
- Fiscal consolidation targets in LF23:
  - bring the overall budget deficit (payment order basis, including grants) from an estimated 1.8 percent of GDP in 2022 to 0.8 percent in 2023;
  - envisages a 0.4 percentage point increase in non-oil revenue to 12.4 percent of GDP in 2023;
  - reduce primary spending from 17 percent of GDP in 2022 to 15.2 percent of GDP in 2023.

### Revised fiscal outlook and spending priorities
- Fiscal outlook revised to reflect substantial global uncertainties, updated projections for growth, inflation, and international oil prices.
- Revised outlook incorporates:
  - recent increase in domestic retail fuel prices;
  - more fiscal space for productive expenditures in health, education, and social protection.
- Outcome of measures: reduction in the overall deficit to 0.8 percent of GDP and the non-oil primary deficit to 2.4 percent of GDP.

### Creating fiscal space for productive investment and social spending
- Constraints on borrowing heighten the need to create fiscal space for priority expenditures, especially investment and social spending.
- Strategies:
  - gradual phase-out of fuel subsidies;
  - strengthening mobilization of domestic non-oil revenues.

Phasing out fuel subsidies and boosting social spending
- Under current oil price projections and no policy change, fuel subsidies in 2023 are likely to reach CFAF 625 billion (2.1 percent of GDP).
- The government introduced the first fuel price increase on February 1, 2023 consistent with reducing the fuel subsidy to bring its net fiscal contribution to zero.
- Authorities intend to gradually eliminate the fuel subsidy over the medium term by further domestic retail fuel price adjustments in 2024 and 2025.
- Government measures to mitigate social impact:
  - increased gasoline prices by 15.9 percent and diesel by 25.2 percent, while keeping kerosene for households and LPG unchanged;
  - mitigation package includes increasing the minimum wage (SMIG) by 15.5 percent and public wages by 5.2 percent;
  - LF23 includes an increase in spending on conditional cash transfers (filets sociaux) by 50 percent (below the doubling in structural benchmark SB15, December 2022);
  - authorities committed to an additional increase in these expenditures to be reflected in the revised budget law to achieve the envisaged objective.

### Mobilizing domestic non-oil revenues — tax policy and administration reforms
- Current revenue collection at around 12 percent of GDP is below potential.
- Revenue mobilization requires reforms in tax policy and tax administration; broadening the tax base is challenged by tax expenditures, large informal sector, and low yield of personal income tax.
- Diagnostic study of tax policy (SB1, October 2022) recommends:
  - reforms to the tax on wages and salaries, replacing presumptive valuation of in-kind benefits with actual monetary values;
  - gradually phasing out VAT withholding at source and reducing the number of VAT exemptions;
  - replacing corporate income tax holidays with an investment allowance and lowering the rate of the minimum tax applied to turnover;
  - closing the gap between excise tax rates applied to imports and local production, increasing the tobacco tax rate, decreasing the number of goods subject to excise taxes, and reducing the export tax rate on gold;
  - evaluating the new tax on e-money transfers after one year based on quantitative assessment of economic effects;
  - reconsidering the plan to reinstall an annual personal income tax declaration.
- LF23 actions based on the diagnostic:
  - authorities will take measures to improve VAT collection, notably by increasing the number of taxpayers subject to VAT (new SB18, ¶33, October 2023);
  - government will formulate an action plan to rationalize investment incentives (new SB19, October 2023);
  - LF23 increased excise and customs tax rates on certain products.
- Directorate of Taxes (DGI) three-year modernization plan (2023-25) aims to:
  - simplify and digitalize tax procedures with HARMONY 2;
  - implement reform of the integrated tax partnership to broaden the tax base;
  - improve tracking of personal income tax via universal income declaration before June 30 each year;
  - focus on control of tax expenditures.

Customs administration reforms (DGD)
- Consolidation of reforms to optimize receipts including:
  - enforce suspension of payment facilities to state debtors and prohibition of exemptions inconsistent with regulations;
  - extend electronic payments of customs duties and taxes nationwide and automate customs clearance controls via COSMOS extension to containerized goods;
  - harmonize tax bases in Customs information systems;
  - improve a posteriori controls using risk-analysis indicators;
  - strengthen collaboration with SGS for evaluation of used vehicles and require Identification Control of Used Imported Vehicles (CIVIC);
  - improve export handling leveraging the 4th scanner;
  - finalize automation of the Public Auctions procedure.
- Additional measures with high tax impact in LF23 include:
  - rationalize inopportune tax expenditures;
  - broaden tax base by raising taxation on import of luxury or negative-externality goods and on raw materials exported without substantive processing (wood in logs, sawn wood, cocoa beans);
  - readjust customs clearance and collection on imported telephones, tablets and digital terminals; revise taxation for goods intended for public procurement; define legal framework for taxation of e-commerce;
  - implement legal framework for modern digital control tools (COSMOS, drones, geolocation) to fight smuggling and illicit trafficking;
  - institute annual obligation to communicate documentation related to transfer pricing policy to Customs Administration;
  - tighten sanctions for fraudulent external transfers of funds without counterparty.

Revenue agency collaboration
- Strengthen collaboration between DGI and DGD through the FUSION platform:
  - migrate DGI records to CAMCIS;
  - strengthen monitoring of individuals engaged in foreign trade;
  - create a single taxpayer database with customs and tax debts and merge ANR issuance with customs clearance into a single document;
  - collaborate between DGI, DGD and DGTCFM to enforce compliance of government suppliers with tax obligations;
  - develop action plan to reinforce integrity and viability of DGI’s taxpayer database within HARMONY 2, including investigative measures for systematic recovery and reinforcing FUSION for data collection and sharing across revenue administration, customs, budget, public companies, utilities, mobile phone companies, banks, etc.
- Target: increase number of VAT taxpayers from 13,500 at end-December 2022 to 14,850 by end-October 2023 (new SB18, October 2023).

### Mining, petroleum, and related reforms
- Mining sector considered an important pillar and national priority; Mining Code adopted in 2016 with legislative framework finalized.
- 2020 creation of state mining company SONAMINES to promote sector development; Mining Code needs revision to reflect creation.
- Authorities commit to publish all decrees regulating application of the Code by March 2023 (SB7).
- Authorities plan to adopt a decree implementing the Petroleum Code at end-March 2023 to promote oil operations.

### Public Financial Management reform
- Government continuing reforms to improve quality of public expenditure and cash flow management, addressing:
  - underestimation of spending needs and commitments;
  - excessive use of exceptional procedures.
- Measures include preparing credible monthly cash flow plans consistent with commitment and public procurement plans and limiting exceptional procedures.
- Inventory of accounts to be transferred to the Treasury Single Account (TSA) completed, but transfers pending (SB3, December 2022) due to BEAC IT platform not yet operational.
- Government undertaking measures to better manage current expenditure:
  - study of civil service pension system sustainability to reduce quasi-fiscal risks (SB16, October 2022) and follow-up reforms;
  - reconciliation committee for SNH interventions (including SNH and Ministry of Finance) (SB13, December 2022) to submit table of SNH interventions quarterly to IMF, reports transmitted 45 days after quarter-end starting end-March 2023;
  - measures to monitor and reduce expenditures via improved data processing, streamlined urgent-expenditure processes, and quarterly regularization of exceptional expenditures.
- Reforms to enhance capital spending effectiveness:
  - implement October 2021 decree establishing monitoring procedures for project management units (SB20, April 2023);
  - create a maturation and compensation fund for public investment projects;
  - establish mechanism to evaluate and incorporate recurrent maintenance costs of state assets;
  - implement public procurement regulations related to internal structures for administrative management of procurement.

### Maintaining cautious debt management
- Central role reaffirmed for National Committee on Public Debt (CNDP): all public debt proposals and guarantees to be submitted for CNDP approval.
- Debt policy focuses on slowing pace of new external borrowing and favoring concessional loans due to high risk of debt distress.
- Non-concessional borrowing limited to high-priority, cost-effective projects when no concessional financing is available.
- Policy to contain stock of signed but undisbursed loans (SEND):
  - between January and December 2023, government will reduce stock of non-performing SEND by cancelling closed projects or reallocating financing to new priority investments;
  - present value ceiling to be integrated into debt strategy.
- Adjuster for 2023 ceiling on concessional debt commitments to accommodate available concessional World Bank loan offers of around CFAF 700 billion—excluding contracted projects in Q4 2022—that will be absorbed through the medium term to achieve SND30 growth objectives.
- Government will ensure new borrowings do not alter risk of over-indebtedness and that funding is absorbed by priority projects in accordance with decree on project maturation.
- Financing contracted should be disbursed on schedule, in line with program budget deficit objectives, to contain level of SEND.

*Source: 1cmrea2023001 - 18. The current account deficit should improve and decline below 3 percent of GDP in the (PDF chapter content).*

### 42. The government remains committed to clearing domestic arrears and to settling

### 42. The government remains committed to clearing domestic arrears and to settling

### Clearing domestic arrears and settling public sector debts
- After clearing arrears outstanding at end-2019, the government has finalized the audits of government payment arrears due over the period 2000-2019 and will shortly adopt a clearance plan while assuring the viability of the public debt (SB2, September 2023).
- The government has finalized the inventory of debts at end-2021 between the State and 14 public enterprises and is preparing a plan for their clearance.
- An inventory and clearance plan of debts between public enterprises is underway, with a focus on the 14 largest public enterprises given difficulties collecting data from SOEs (SB6).

### Deposit and consignment fund (Caisse des dépôts et consignations)
- The government has nominated the management for the deposit and consignment fund (SB8, December 2022).
- The government is committed to reviewing the legal framework to bring the fund in line with international best practices.
- The fund must adhere to the principles of good governance and transparency.

### Public enterprise reform and management of contingent liabilities
- Overall commitment: strengthen public enterprise management to improve service delivery and limit fiscal risks.
- Key first-step actions:
  - (i) validate and implement recommendations from diagnostic studies of PAD, CAMTEL, and CAMWATER, then assess other public enterprises in weak financial positions;
  - (ii) assess, and if necessary, revise, administered prices for public enterprise products June 2023 at the latest;
  - (iii) require utility companies to issue billing invoices to public administrations on a timely basis;
  - (iv) require public administrations to make quarterly utility service payments, and that utility companies meet their obligations on taxes and loans guaranteed or retroceded by the State;
  - (v) regularly update the public enterprise risk dashboard maintained by the CTR to map the risks of the State's portfolio and implement AFRITAC’s tool for assessing financial risks.
- Governance strengthening measures:
  - (i) ensure executive boards include qualified directors;
  - (ii) strengthen internal controls, require publication of audited annual financial statements, and submission of business plans in accordance with law n°2017/11 of July 12, 2017;
  - (iii) put in place a cross-functional structure responsible for steering governance issues and State shareholder policy; a study on the State's shareholder policy must be carried out beforehand;
  - (iv) revise the classification of public enterprises and establishments that provides the basis for remunerating managers by the end of the current three-year evaluation cycle;
  - (v) rationalize the State's portfolio by reducing the number of public enterprises through mergers or PPPs.
- PPP framework status: legal and regulatory framework prepared but the structural benchmark has not been met (SB5); draft texts under examination pending regional public procurement reform.

### Improving public enterprise performance
- Measures being implemented:
  - (i) implement the July 2022 requirement for performance contracts specifying public service obligations, unit costs (as a basis for paying subsidies), indicators of output and service to be provided, to be published with related evaluations;
  - (ii) gradually reduce subsidies to under-performing public enterprises;
  - (iii) list large industrial public enterprises on the regional stock market (BVMAC); PAD, CHC, ADC, SODECOTON have been identified.

### SONARA restructuring
- Steps to place SONARA on a sound financial footing:
  - (i) rapidly complete negotiations on restructuring traders’ claims on the same terms as with the banks;
  - (ii) validate monthly any shortfalls and/or overpayments, and pay amounts owed by the debtor within 60 days;
  - (iii) require SONARA to make regular payments of taxes and customs duties owed to the Treasury;
  - (iv) ensure traders are authorized to import a volume of petroleum products consistent with their financial commitments.
- Government determination to pursue SONARA’s industrial, financial, and operational restructuring in line with Inter-Ministerial Committee recommendations.
- In September 2022, the government approved a framework for restructuring SONARA and terms of reference for technical studies and a business plan, which will be finalized and submitted to IMF staff (SB14, June 2023).

### Regional monetary policy and financial sector stability
- Support for regional stability and BEAC reserve rebuilding; commitment to enforce foreign exchange regulations under national jurisdiction.
- Specific actions:
  - (i) require public enterprises to comply with foreign exchange regulations;
  - (ii) in liaison with the BEAC, ensure new concession contracts or revenue-sharing agreements with the extractive industries comply with regulatory provisions before signing; ensure the new Petroleum Code is fully compliant.
- Data infrastructure: Ministry of Finance will 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.
- Financial sector reforms:
  - sign an authorizing agreement with the COBAC by March 2023 to implement restructuring of the two distressed banks and will not use fiscal resources to bail-out historical shareholders;
  - these two banks will open their capital to the private sector within 3 years as provided in their performance contracts;
  - complete the privatization of the Commercial Bank of Cameroon (CBC);
  - train the judiciary on resolution of bank disputes and 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);
  - continue strengthening the operation of the State Asset Management Company (SRC) with robust governance, operational and budgetary independence, strong transparency and accountability rules, and a sunset clause for its banking asset recovery activities.

### Diversifying investor base and debt management
- In 2023, prepare a strategy to encourage participation of non-bank investors (insurance, pension funds, individuals, etc.), particularly in long maturity issues in line with the medium-term debt strategy and assuring sustainability of public debt.
- The government continues to set aside in a sinking fund account at BEAC the resources needed to pay maturities of OTAs and bonds, including the Eurobonds.

### Competitiveness and private sector development
- Strengthen regular consultation with the private sector and initiate reform of business incentives—especially the law on private investment incentives—to encourage a competitive business environment (new SB19, October 2023).
- Trade facilitation priorities:
  - reduce port transit costs and delays for imported, exported, or in-transit goods;
  - complete digitalization of procedures on port platforms and strengthen interconnection;
  - accelerate full implementation of the Agreement on Facilitation of Procedures (TFA) and ensure proper functioning of the National Trade Facilitation Committee (CONAFE);
  - implement the concept of AEO (Authorized Economic Operator);
  - implement the National Strategy for the implementation of the African Continental Free Trade Area.

### Environment and climate change
- SND-30 focuses on environment protection and climate resilience.
- Cameroon signed the Glasgow Declaration on Forests and Land Use at the 2021 CoP26 and undertook to restore approximately 12 million hectares of degraded lands under the AFR 100 Initiative.
- Cameroon may gain from the 2022 CoP27 agreement on the ‘loss and damage fund’.
- Based on the World Bank’s Climate and Development report on Cameroon’s climate vulnerabilities, the government will implement measures to improve climate resilience within four priority areas: agriculture, forestry, and land use; cities; infrastructure; and human capital.

### Promoting good governance
- The government will conduct, in consultation with IMF staff, and publish a diagnosis of governance vulnerabilities and the fight against corruption (SB10, September 2023, rephased from June 2023).
- Diagnostic will cover: (i) fiscal governance; (ii) supervision of the financial sector; (iii) regulation of the market for goods and services; (iv) the rule of law; and (v) the fight against money laundering and the financing of terrorism (AML/CFT).
- Oversight and transparency actions:
  - (i) National Anti-Corruption Commission (NACC/CONAC) published its 2021 report;
  - (ii) Chambre des Comptes completed report on 2021 COVID-19 expenditures and is finalizing the audit; government will prepare and publish an action plan to strengthen frameworks for preparation, publication, and follow-up of public spending audits with recommendations for strengthening relevant institutions, especially the Supreme Court’s Audit Bench (SB11);
  - (iii) government published the 2020 EITI report in December 2022 and is implementing 15 corrective measures in preparation for the new validation session scheduled for October 2023; publication of the EITI report for 2021 scheduled for June 2023;
  - (iv) government will implement measures to strengthen the national AML/CFT framework in line with the March 2022 GABAC report;
  - (v) National Agency for Financial Investigation (ANIF) published its report for 2021 in November 2022.

### Program modalities, monitoring, and waivers
- Program monitoring: semiannual reviews and 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 schedule:
  - fourth review based on end-December 2022 targets expected on or after June 15, 2023;
  - fifth review based on end-June 2023 targets expected on or after December 15, 2023;
  - sixth review based on end-December 2023 targets expected on or after June 3, 2024.
- Government requests to IMF Executive Board:
  - waivers of non-observance for the performance criteria on non-oil primary fiscal balance at end-December 2022 and the continuous non-accumulation of external payment arrears;
  - waivers of applicability for the remaining performance criteria for end-December 2022;
  - modification of targets for end-March and end-June 2023.
- Rationale for waivers and modifications:
  - waiver for non-oil primary deficit at end-December 2022 requested based on corrective actions taken;
  - waiver for continuous non-accumulation of external arrears requested due to the minor (0.08 percent of GDP) and temporary nature of the non-observance, and these arrears have been cleared;
  - waiver of applicability needed because data on remaining end-December 2022 quantitative performance criteria will not be available before the Executive Board meeting scheduled for March 2023;
  - approval requested for modification to program targets for end-March and end-June 2023 in line with updated macroeconomic projections and policies.

### Key quantitative performance highlights (selected, as presented)
- Floor on the non-oil primary fiscal balance (payment order basis): -432 -170 Met -499 -486 Met -1,083 -1,213 Not Met -164 10 -316 -331 -474 -727
- Ceiling on the net domestic financing of the central government (excluding IMF financing): 150 -257 Met 210 -89 Met 46 -52 -18 -121 132 147 80
- Ceiling on net borrowing of the central government from the central bank (excluding IMF financing): 170 -219 Met 170 -69 Met 170 -158 0 -311 391 271 11
- Ceiling on the disbursement of non-concessional external debt: 324 248 Met 485 311 Met 647 203 173 406 346 518 691
- Continuous criterion: Ceiling on the accumulation of new external payments arrears: 0 0 Met 0 0 Met 0 Not met 0 0 0 0 0 0
- PV of contracting and guaranteeing of new external borrowing: 512.9 248 Met 512.9 318.6 Met 512.9 ... 512.9 512.9 ... 512.9
- Indicative target: Floor on non-oil revenue: 1,558 1,576 Met 2,361 2,362 Met 3,275 908 910 1,837 1,729 2,591 3,681
- Indicative target: Ceiling on the net accumulation of domestic payment arrears: -296 3 Not Met -536 1 Not Met -85 -15 -41 -34 -81 -122 -162.5
- Indicative target: Floor for poverty-reducing social spending: 382 455 Met 716 926 Met 1,062 287 306 337 624 993 1,325
- Indicative target: Ceiling on direct interventions of SNH: 80 92 Not Met 110 133 Not Met 145 4040 80 80 110 145
- Share of spending executed through exceptional procedures on authorized (payment order) spending: 59.2 Not Met 41 2.6 Not Met 44 4 4 4 4 4
- Memorandum item: Cumulative external budget support, excluding IMF (earliest disbursement): 45 46 46 461 491 572 923 292 368 129

*Source: IMF staff and country authorities, text and tables from the provided memorandum.*

### 2. Balance of the special account for the unused statutory advances505050505050505050505050

### 1cmrea2023001 - 2. Balance of the special account for the unused statutory advances505050505050505050505050

### Prior Action (implemented)
- Increase domestic retail fuel prices with the magnitude of the increase consistent with achieving a zero net budget cost of the fuel subsidy based on international oil price assumptions at the time of the adjustment together with mitigation measures increasing the minimum wage and public wages.
  - Status: Met
  - Comment: These mitigation measures will complement the authorities’ commitment to scale up by 100 percent the existing mechanism for conditional cash transfers (filets sociaux) in 2023 (SB15).

### Structural Benchmarks (selected entries, status, and comments)
- Revenue Mobilization
  - Prepare a diagnosis of the tax policy and formulate recommendations for establishing a development-oriented tax system that also broadens the tax base.
    - Due Date: Oct-22
    - Status: Not met-implemented with delay
    - Comment: IMF TA was completed in October 2022, and the report submitted to staff with some delay. A follow-up SB is included below (SB18).
- Public finance and debt management
  - Complete the audits of government payment arrears and adopt an arrears settlement plan of arrears certified by these audits.
    - Due Date: Sep-22; Rephased Due Date (Third Review): Sep-23
    - Indicator: Communication of the audit report and the clearance plan to IMF staff
    - Status: Not met
    - Comment: Audits that would provide a basis for clearing the debts are underway and should be communicated to IMF staff shortly.
  - Pursue reforms aimed at extending the TSA to the BEAC: (i) present a census of government accounts ... as of June 30, 2021, and December 31; (ii) close and repatriate the balances ... before the end of March 2022.
    - Due Date: Dec-22
    - Indicator: Transmission of the list of non-BEAC accounts and closed accounts and transferred to the BEAC to IMF staff.
    - Status: Not met
    - Comment: Authorities met conditions within their control, but the regional BEAC platform needed for repatriation is not yet available.
- Public Enterprises
  - Finalize the diagnostic studies of CAMTEL, PAD, CAMWATER.
    - Due Date: Dec-22
    - Indicator: Diagnostic studies sent to IMF staff
    - Status: Met
    - Comment: Staff has received the three reports.
- Public Investment Management (PIM)
  - Adopt a legal and regulatory framework governing Public-Private Partnerships (PPP) so that all PPP projects follow a single framework.
    - Due Date: Dec-22; Rephased Due Date: June-23
    - Indicator: Legal and regulatory framework published
    - Status: Not met
    - Comment: A preliminary draft prepared; final adoption to align with future regional framework.
  - Establish an inventory of respective debts between public enterprises and the State ... at the end of 2020 and adopt a plan for clearance.
    - Due Date: Dec-22; Rephased Due Date: Sept-23
    - Indicator: Inventory and plan shared with IMF staff
    - Status: Not met
    - Comment: Inventory and plan to clear debts between SOEs and the government finalized in January 2023; inventory of debts between SOEs delayed due to data constraints on SOE cross debts.
- Extractive Sector
  - Finalize and publish all the texts of application of the mining code of 2016 (Law n ° 2016/017 of December 14, 2016).
    - Due Date: Mar-23
    - Indicator: Implementation texts published
    - Comment: Implementation texts finalized but the Code needs revision to reflect creation of SONAMINE in December 2020.
- Business Climate
  - Make the deposit and consignment fund operational to collect deposits paid by taxpayers in tax disputes.
    - Due Date: Dec-22
    - Indicator: Decree designating the officers of the deposit and consignment fund
    - Status: Not met-implemented with delay
    - Comment: The decree was published in January 2023.
  - Revise Law No. 2013/004 of April 18, 2013, to rationalize incentives and promote healthy competition between economic operators.
    - Due Date: Dec-22; Rephased Due Date: Dec-23
    - Indicator: A revised law is published
    - Status: Not met
    - Comment: SB rephased with a new SB19 as intermediate step following IMF TA mission.
- Good Governance and Anti-Corruption
  - Publish a diagnostic of vulnerabilities in governance, including in corruption, covering fiscal governance, financial sector oversight, market regulation, rule of law, and AML/CFT.
    - Due Date: June-23; Rephased Due Date: Sept-23
    - Indicator: Publication of the report
    - Comment: Deadline shifted to September 2023 to allow sufficient time for diagnostic assessment processes.
  - Prepare and publish an action plan for strengthening frameworks for preparation, publication, and follow-up of public spending audits, with recommendations for strengthening relevant institutions, especially the Supreme Court’s Audit Bench.
    - Due Date: Dec-22; Rephased Due Date: Apr-23
    - Indicator: Submission of action plan to the IMF staff
    - Status: Not met
    - Comment: Authorities prepared an initial action plan; further discussion with staff required following TA mission in March 2023.
  - Prepare and publish an audit by the audit bench of the supreme court of fiscal year 2021 expenses related to COVID-19.
    - Due Date: Dec-22; Rephased Due Date: Mar-23
    - Indicator: Publication of the report
    - Status: Not met
    - Comment: Audit in progress but will not be completed within planned timeframe.
  - SNH Direct Interventions: Put in place a mechanism to identify type of expenditures of SNH’s direct interventions and ensure semi-annual regularization by type of expenditure.
    - Due Date: Dec-22
    - Indicator: Set up a reconciliation committee (including SNH and Ministry of Finance) and submit to IMF staff semi-annually a table of SNH interventions by type of expenditure.
    - Status: Met
    - Comment: Reconciliation committee set up; quarterly report on SNH interventions by type of expenditure to be submitted starting from the first quarter of 2023.
  - SONARA Restructuring Plan: Elaborate a restructuring plan for SONARA, including industrial and financial options under consideration.
    - Due Date: Mar-23; Rephased Due Date: June-23
    - Indicator: Elaborate and submit to IMF staff the new restructuring plan for SONARA
    - Comment: Restructuring plan being discussed.
  - Social Transfers: In consultation with the World Bank, submit to IMF staff a timetable to scale up by 100 percent the existing mechanism for conditional cash transfers (filets sociaux) in 2023.
    - Due Date: Dec-22
    - Indicator: Submit to IMF staff a timetable for scaling up social transfers
    - Status: Not met-implemented with delay
    - Comment: Authorities committed to doubling conditional cash transfers in the revised 2023 budget.
  - Civil Service Pension System: Conduct a study of the sustainability of the civil service pension system with a view to reducing quasi-fiscal risks.
    - Due Date: Oct-22
    - Indicator: Submit TOR to IMF staff
    - Status: Not met-implemented with delay
    - Comment: TOR submitted in November 2022.
  - Fuel Price Mechanism: In consultation with the World Bank, undertake a study on options for reforming the existing fuel price mechanism aiming at gradually phasing out fuel subsidies while developing targeted protection for the most vulnerable households.
    - Due Date: Dec-22
    - Indicator: Submit study to IMF staff
    - Status: Not met-implemented with delay
    - Comment: Staff received a study of the fuel price mechanism prepared with the World Bank.

### New Structural Benchmarks (introduced)
- SB18 — Revenue administration
  - Objective: Increase the number of VAT taxpayers from 13,500 at the end of end-December 2022 to 14,850 by end-October 2023.
  - Due Date: Oct-23
  - Indicator: List of the new taxpayers by operational department sent to IMF staff.
  - Rationale: Follow-up on recommendation of recently completed tax diagnostic.
- SB19 — Business Climate
  - Objective: Formulate an action plan with recommendations to eliminate CIT holidays (including the minimum tax) to promote healthy competition between economic operators, excluding companies operating in the agriculture, livestock, and fishery sectors.
  - Due Date: Oct-23
  - Indicator: Action plan submitted to IMF staff.
  - Rationale: Interim step to SB9; IMF tax policy diagnostic suggests eliminating income tax allowances and replacing them with better focused investment allowances for targeted approach.
- SB20 — Project and Debt Management
  - Objective: Implement the decree of October 2021 governing project management units.
  - Due Date: Apr-23
  - Indicator: Issuance of order specifying the procedures for monitoring the performance of project management units.
  - Rationale: Introduced to improve project and debt management.

### Technical Memorandum of Understanding (TMU) — Definitions and Framework
- Scope and purpose
  - TMU defines quantitative performance criteria and indicative objectives for Cameroon’s program under the Extended Credit Facility (ECF) and the Extended Fund Facility (EFF) over 2021-24.
  - Quantitative performance criteria and indicative objectives from end-June 2022 until end-December 2023 are in Table 1 of the MEFP; structural benchmarks are in Table 2 of the MEFP.
- Government
  - “Government” = central government of the Republic of Cameroon, including all implementing agencies, institutions, and any organizations receiving special public funds as per GFSM 2001 (paragraphs 2.48–50).
  - Excludes local governments, the Central Bank, or any other public entity with autonomous legal status not included in the table of government financial operations (TOFE).
- Nonfinancial public enterprise
  - Defined as a commercial or industrial unit, fully or partially owned by central government, selling goods and services to the public on a large scale.
  - From June 2017, operations between government and these public enterprises should be treated on a gross basis in the TOFE.
- Revenue definitions
  - Total government resources = tax and nontax fiscal revenue (GFSM 2001 Chapter 5) and grants.
  - Revenue recorded on a cash basis.
  - Proceeds from sale of assets and revenue from privatizations are not considered government revenue.
  - Oil revenue = total transferable balance of Société Nationale des Hydrocarbures (SNH), and income tax on oil companies and gas operators. Oil revenue recorded on a cash basis.
  - Non-oil revenue = all government's (tax and nontax) revenue, excluding oil revenue. VAT is recorded net of VAT refunds. Pipeline fees paid by Cameroon Oil Transportation Company (COTCO) recorded under nontax revenue.
  - Privatization revenue = all funds paid to the government in connection with sale or transfer of management of a public enterprise (concession), agency, or facility; includes sale of shares held by government. Must be recorded on gross basis; costs recorded separately 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 otherwise indicated; includes net lending as defined in GFSM 2001.
  - Total government expenditure also includes expenditure carried out without prior payment authorization and pending regularization.
  - Direct interventions by SNH are included in government expenditure (emergency payments by SNH on behalf of government, substantially to cover exceptional sovereignty and security outlays).
  - Social expenditure includes expenditure recorded in the government budget for priority programs: (i) education sector total expenditure of Ministries (Basic Education, Secondary Education, Employment and Vocational Training); (ii) health sector current and capital expenditure of Ministry of Public Health, including COVID-19 related expenditures; (iii) other social sectors: Ministries of Labor and Social Security, Youth and Civic Education, Social Affairs, and Promotion of Women and Family; (iv) administered price subsidies (fuel at the pump, electricity to households); (v) gas subsidy; and (v) expenditures for the Social Safety Net Program.
- Balance and financing
  - Primary balance: Defined as difference between total government revenue (paragraph 5) and total government expenditure and net lending (paragraph 9) not including interest payments in connection with external and domestic debt.
- Debt definitions and classifications
  - Debt: As per paragraph 8 (a) of the Guidelines on Public Debt Limits in Fund-Supported Programs (Executive Board Decision 16919– (20/103) adopted October 28, 2020), includes commitments contracted or guaranteed for which values have not been received; debt understood as a current liability created under contractual arrangement to provide value at some future point(s). Includes arrears, penalties, and judicially awarded damages arising from failure to make payment under contractual obligation that constitutes debt.
  - External debt: Any borrowing or debt service in a currency other than the CFA franc; includes debt between CEMAC countries and debt from BDEAC. Relevant performance criteria apply to external debt of government, public enterprises receiving transfers from government, other public entities with government >50 percent capital, or private debt guaranteed by government.
  - Guaranteed debt: Any explicit legal obligation incumbent on the government to reimburse a debt in event of debtor default (cash or in kind).
  - Concessional external debt: Considered concessional if it comprises a grant component of at least 35 percent.
    - Grant component = difference between face value and present value (PV) expressed as percentage of face value.
    - PV of debt at date contractually arranged calculated by discounting debt service payments at date arranged.
    - Discount rate used: 5 percent.
  - Domestic debt: All government debts and obligations denominated in CFA francs; includes unreimbursed balances, advances from the Bank of Central African States, Treasury bills and bonds, structured debt, domestic payment arrears, and SONARA’s domestic debt.
  - Structured debt: Debt subject to a formal agreement or securitization.
    - Structured bank debt = all claims of local banks on government, except 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 with a clearly defined schedule.

*Source: Excerpt from the Technical Memorandum of Understanding and Table 2 (Prior Action and Structural Benchmarks) in the IMF document for Cameroon.*

### 18. Net domestic financing of the government is defined as the sum of (i) net bank credit to

### 1cmrea2023001 - 18. Net domestic financing of the government is defined as the sum of (i) net bank credit to

### Definitions: Net Domestic Financing
- Net domestic financing of the government = sum of:
  - (i) net bank credit to the government; and
  - (ii) net non-bank financing.
- Net bank credit to the government:
  - 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 (CAA) 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: loans and direct advances; and Treasury securities, bills, and bonds held by local banks.
  - Net bank credit is calculated based on data provided by the Bank of Central African States (BEAC) and is 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 (defined in paragraph 16);
  - (iii) privatization revenue (defined in paragraph 8);
  - (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.

### Definitions: Domestic and External Payment Arrears
- Domestic payment arrears = sum of:
  - (i) payment arrears on expenditure;
  - (ii) payment arrears on structured domestic debt;
  - (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 unpaid obligations where normal expenditure execution procedures were followed but payment is still pending; balances payable under 90 days represent payments in progress.
  - The Treasury will monitor monthly to identify expenditure arrears in the stock of balances payable.
- Payment arrears on structured domestic debt:
  - Defined as the difference between the amount due under a domestic debt arrangement (defined in paragraph 11) or reimbursement of matured Treasury securities, bills, or bonds and the amount effectively paid after the payment deadline indicated in the agreement or after the maturity date.
- Unstructured debt:
  - i. Unstructured debt of the CAA: includes 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 56.2 billion at end-2022.
  - ii. Domestic "floating” debt: government commitments for which a service was provided but not subject to any budget commitment (invoices payable not settled to public and private enterprises). Excludes tax debt from debt offsetting with public enterprises and execution of externally financed public procurement not covered by the budget due to insufficient appropriations. The Directorate General of Budget will conduct a monthly assessment in collaboration with the public treasury.
- External payment arrears:
  - Defined as external debt obligations of the government not paid when due in accordance with contractual terms (taking into account contractual grace periods).
  - Excludes payment arrears on external financial obligations that are subject to rescheduling.

### Quantitative Program Objectives: Overview
- Quantitative targets (QTs) are as specified in Table 1 of the MEFP and are assessed on a cumulative basis from the beginning of the calendar year unless otherwise indicated.
- 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 will be undertaken in consultation with IMF staff.
- Cutoff dates for reporting:
  - Monthly detailed data on government financial operations indicating the primary balance, oil revenue, and miscellaneous expenditure must be submitted within six weeks from the end of the month, except end-December data.
  - End-year data on government financial operations will be submitted by March 15 of the following year (Cameroon's Law No 2018/012 provides a complementary period of 30 days after end of calendar year).

### Specific Performance Criteria and Indicative Targets
- A. Non-Oil Primary Balance
  - A floor for the non-oil primary balance (based on payment order) is a quantitative objective. Non-oil primary balance = primary balance (paragraph 12) minus oil revenue (paragraph 6).
- B. Net Domestic Financing of the Government Excluding Net IMF Financing
  - A ceiling on net domestic financing excluding net IMF financing is a quantitative objective. Net domestic financing excluding net IMF financing = net domestic financing (paragraph 16) not including net IMF financing.
  - Adjustment: ceiling on net bank financing excluding net IMF financing will be 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 is lower than program forecasts.
  - Quarterly adjustment rule for external budget support disbursements: at end of each quarter, if disbursements 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 2022 and 2023. This ceiling may be reviewed depending on budget aid disbursement rates during the year.
  - Quarterly adjustment for rescheduling of bilateral external debt service: if rescheduling is below (above) programmed amounts, corresponding quarterly ceilings adjusted upward (downward) pro-tanto.
  - Cutoff: detailed data on net domestic financing (bank and non-bank), 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
  - A ceiling on disbursements of non-concessional external debt defined as a quantitative objective; applicable to debt contractually arranged to finance projects. Based on external debt definition in paragraph 14 and concessionality concept in paragraph 15.
  - Cutoff: detailed information on disbursements contracted by the government must be reported within six weeks after month-end, indicating loan signing date and distinction between concessional and non-concessional.
- D. Net Claims of the Central Bank on the Central Government
  - A ceiling on net claims of the Central Bank on government is a quantitative objective.
  - Defined as difference between 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) and cash and total deposits of the Treasury with the Central Bank, including the balance of the special account of unused statutory advances.
  - Ceiling includes agreed use of the 2021 SDR allocation.
  - Adjustment: ceiling will be adjusted if disbursements of external budget support are below programmed levels, with quarterly adjustments upward (downward) commensurately within the limit of CFAF 120 billion for each quarter of 2022 and 2023.
  - Cutoff: BEAC must report detailed information on all financing from the Central Bank to government and 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
  - A ceiling of zero on accumulation of new external payment arrears is defined as a continuous quantitative objective. Applies to accumulation as defined in paragraph 20.
  - Government undertakes not to accumulate any external payment arrears on its debt, except arrears subject to rescheduling.
  - This performance criterion is measured cumulatively on approval of the program.
  - Cutoff: data on balances, accumulation, and reimbursement of external arrears reported within six weeks after month-end; any new external arrears should be reported immediately to the Fund.
- F. PV of External Debt Contracted or Guaranteed by the Government and certain other Public Entities
  - A performance criterion (ceiling) applies to the present value (PV) of new external debt contracted or guaranteed by the government and certain other public entities, including obligations for which value has not yet been received and private debt with official guarantees.
  - Applicable to external debt as defined in paragraph 14 and contingent public liabilities as defined in paragraph 13.
  - Not applicable to borrowing arranged in CFA francs, Treasury bills and bonds issued in CFA francs on the CEMAC regional market, regular short-term supplier loans, regular import credits, loans from the IMF, budget support loans from the World Bank, or debt relief or rescheduling.
  - PV calculation:
    - Discount future debt service stream at the unified discount rate of 5 percent (Executive Board Decision No. 15248-(13/97)).
    - For debts with grant element <= zero, PV = nominal value.
    - PV of external debts in currencies other than the U.S. dollar calculated in U.S. dollar terms at program exchange rates as specified in TMU Text Table 1.
    - For variable-rate debts of form benchmark + fixed spread, PV computed using program reference rate plus the fixed spread (in basis points) specified in contract.
    - Program reference rate for six-month USD SOFR = 0.04 percent (fixed for program duration).
    - 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 is 15 basis points.
    - If variable rate linked to benchmark other than six-month USD SOFR, add spread reflecting difference between that benchmark and six-month USD SOFR (rounded to nearest 50 bps).
  - Adjustment mechanisms:
    - Upward (downward) adjustor by amount budget support exceeds (falls short of) projected amounts, capped at 10 percent of external debt ceiling set in PV terms and must be consistent with debt sustainability.
    - Upward adjustment equal to full PV amount of any project financing dedicated to COVID-19 vaccine interventions not anticipated when setting the criterion; authorities to consult IMF staff before contracting/guaranteeing such borrowing.
    - Adjustor up to 5 percent of external debt ceiling in PV terms for changes in financing terms (interest, maturity, grace period, payment schedule, upfront commissions, management fees) of a debt or debts; cannot be applied when deviations are prompted by an increase in nominal amount of total debt contracted or guaranteed.
    - If PV of World Bank loans signed in 2023 > PV of World Bank loans signed in 2022 (CFAF 179.4 billion), ceiling adjusted upward pro-tanto, capped at CFAF 182.5 billion (PV) in 2023 according to identified projects.
  - Cutoff: detailed information on all loans (conditions and creditors) contracted by the government must be reported within six weeks after month-end; same applies to guarantees. Any signing or guaranteeing of debt should be reported immediately to the Fund.

### Program Exchange Rates and Related Numerical Parameters
- Unified discount rate for PV calculations: 5 percent.
- Program reference rate for six-month USD SOFR: 0.04 percent.
- Spreads (basis points) relative to six-month USD SOFR:
  - Euro EURIBOR: -56 basis points
  - JPY OIS: -8 basis points
  - GBP SONIA: 1 basis point
  - Other currencies: 15 basis points
- Text Table 1. Cameroon: Program Exchange Rates (exact values)
  - US Dollar: CFA franc per currency unit 617.546 ; Currency units per US Dollar 1.00
  - Euro: CFA franc per currency unit 655.957 ; Currency units per US Dollar 0.9414
  - AfDB XUA: CFA franc per currency unit 821.855 ; Currency units per US Dollar 0.7514
  - STG Pound: CFA franc per currency unit 745.254 ; Currency units per US Dollar 0.8286
  - Japanese Yen: CFA franc per currency unit 4.655 ; Currency units per US Dollar 132.650
  - Chinese Yuan: CFA franc per currency unit 88.398 ; Currency units per US Dollar 6.986
- Specific numerical ceilings and estimates noted in text:
  - Stock of unstructured debt (CAA) estimated at CFAF 56.2 billion at end-2022.
  - Quarterly adjustment limit for budget support disbursements: CFAF 120 billion for each quarter of 2022 and 2023.
  - Cap on upward adjustment to external debt ceiling for World Bank loan PV in 2023: CFAF 182.5 billion (PV).
  - Reference PV of World Bank loans signed in 2022: CFAF 179.4 billion.

### Other Indicative Quantitative Targets and Reporting
- G. Non-Oil Revenue: floor on non-oil revenue (paragraph 7) is an indicative objective.
- H. Accumulations of Domestic Payment Arrears: 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.
- I. Social Expenditure: floor on social expenditure pursuant to paragraph 11 is an indicative objective; these items will be monitored regularly.
- J. Share of Exceptional Expenditure in Total Authorized Expenditure Not Including Debt:
  - Ceiling on share of exceptional expenditure in total authorized expenditure not including debt is an indicative objective.
  - Calculated as ratio between exceptional expenditure (expenditure excluding debt service paid without prior authorization, including cash advances and provisional commitments) and total authorized expenditure, excluding debt service, that is domestically financed (including wages).
  - Exceptional expenditure will be monitored regularly as part of program implementation.
- Cutoff dates for reporting government financial position, detailed revenue listing (highlighting oil revenue), domestic payment arrears, and status of social expenditure execution: within six weeks after month-end, except end-December data as indicated earlier.

*Source: 1cmrea2023001 (Technical Memorandum of Understanding sections 18–47).*

### 48. Monthly accounting statements showing the amount of cash advances, provisional budget

### 48. 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.

### Data submission requirements
- Monthly accounting statements showing the amount of cash advances, advance funds, and the balance of provisional budget commitments must be reported to IMF staff within three weeks after the end of each month.
- Authorized expenditure presented in Table M1 of the table of government financial operations (TOFE) will be used to compute this ratio.
- 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 program objectives.

### Table 1 — summary of data reporting requirements (selected items and periodicity)
- Government Finance
  - The summary situation of Treasury Operations (La situation résumée des Operations du Trésor (SROT)), including statement of unpaid orders of more than 90 days or less, as well as statement of the correspondent accounts.
    - Responsible institution: Ministry of Finance (MINFI)/DGTC
    - Frequency of data: Monthly
    - Reporting lag: 6 weeks
  - The table of government financial operations (TOFE) and customary annex tables; (data on execution of investments financed with external grants and loans must be available in a timely manner...).
    - Responsible institution: MINFI/DP
    - Frequency: Monthly
    - Reporting lag: 6 weeks, except for end-December for which data will be reported by March 15 of the following year
  - 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).
    - Responsible institution: MINFI/BEAC
    - Frequency: Monthly
    - Reporting lag: 6 weeks
  - Implementation status of social expenditure defined in Paragraph 11.
    - Responsible institution: Ministry of Economy and Finance (MINEFIN)/DGB
    - Frequency: Monthly
    - Reporting lag: 6 weeks
  - Domestic debt reimbursement status.
    - Responsible institution: MINFI/CAA
    - Frequency: 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).
    - Responsible institution: MINFI/CAA
    - Frequency: 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 structured bank and non-bank debt service forecast and actual payments.
    - Responsible institution: MINFI/CAA
    - Frequency: Monthly
    - Reporting lag: 6 weeks
  - Monthly monitoring report on calls for funds and effective disbursements.
    - Responsible institution: CAA/MINEPAT
    - Frequency: Monthly
    - Reporting lag: 4 weeks
  - Data on the implementation of the public investment program, including a detailed listing of financing sources.
    - Responsible institutions: MINFI/Ministry of Economy, Planning and Regional Development (MINEPAT)/CAA
    - Frequency: Quarterly
    - Reporting lag: 6 weeks
  - Monthly accounting statements showing the amount of cash advances, advance funds, and the balance of provisional budget commitments.
    - Responsible institution: MINFI
    - Frequency: Monthly
    - Reporting lag: 6 weeks
  - Publish the oil product price structure.
    - Responsible institutions: MINFI/CSPH
    - Frequency: Monthly
    - Reporting lag: First week of the current month
  - Prices, consumption, and taxation of oil products, including: (i) the current price structure for the month in question; (ii) the detailed calculation of the price structure based on the free on board price to obtain the retail price; (iii) volumes purchased and distributed for consumption by the oil distributor (SONARA and marketers), with the distinction between retail sales and sales to industries; and (iv) a breakdown of tax revenue on petroleum products—customs duty, excise tax on petroleum products (TSPP), and value-added tax (VAT)—and support for the refinery and the situation of shortfalls and overpayments.
    - Responsible institutions: MINFI/CTR/CSPH
    - Frequency: Monthly
    - Reporting lag: 6 weeks
  - Provide revenue forecasts for the Directorate General of Taxes; Directorate General of Customs; and Directorate General of Budget by type of tax on an annual basis and on a monthly basis, and outturn as compared with forecasts.
    - Responsible institutions: DGI, DGD, DGB
    - Frequency: Monthly
    - Reporting lag: 6 weeks
  - VAT refund balance (refund requests, payments made, and VAT refund account status).
    - Responsible institution: MINFI/DGI
    - Frequency: Monthly
    - Reporting lag: 6 weeks
  - DGI/DGD joint quarterly collaboration reports indicating, in particular, the results in terms of identification of fraud and collection of additional revenue.
    - Responsible institutions: DGI/DGD
    - Frequency: Quarterly
    - Reporting lag: 6 weeks
  - The situation of the SNH, including the volumes exported, the prices, the exchange rates, the costs of operations, the direct interventions, the commitments towards the State, the balance transferable to the Treasury.
    - Responsible institution: MINFI
    - Frequency: Quarterly
    - Reporting lag: 6 weeks
  - Include the total amount of oil revenue from the national oil company SNH and direct interventions in the monthly table of government financial operations (TOFE).
    - Responsible institution: MINFI
    - Frequency: Monthly
    - Reporting lag: 6 weeks
  - Accounting and budgetary extract indicating the status of payment of State invoices to public service companies (ENEO, CAMWATER, CAMTEL, SONARA CAMPOST, SIC).
    - Responsible institution: MINFI
    - Frequency: Quarterly
    - Reporting lag: 6 weeks
  - Publish quarterly budget execution report.
    - Responsible institution: MINFI
    - Frequency: Quarterly
    - Reporting lag: 8 weeks

- Monetary Sector
  - Consolidated balance sheets of monetary institutions.
    - Responsible institution: BEAC
    - Frequency: Monthly
    - Reporting lag: 6 weeks
  - Provisional data on the integrated monetary survey.
    - Responsible institution: BEAC
    - Frequency: Monthly
    - Reporting lag: 6 weeks
  - Final data on the integrated monetary survey.
    - Responsible institution: BEAC
    - Frequency: Monthly
    - Reporting lag: 10 weeks
  - Net government position.
    - Responsible institution: BEAC
    - Frequency: Monthly
    - Reporting lag: 6 weeks
  - The situation of the balance of the special account of undisbursed statutory advances.
    - Responsible institution: BEAC
    - Frequency: Monthly
    - Reporting lag: 6 weeks
  - The key rate and the credit and debit interest rates.
    - Responsible institution: BEAC
    - Frequency: Monthly
    - Reporting lag: 6 weeks

- Balance of Payments
  - Preliminary annual balance of payments data.
    - Responsible institution: MINFI
    - Frequency: Annual
    - Reporting lag: 9 months
  - Foreign trade statistics.
    - Responsible institutions: MINFI/INS
    - Frequency: Monthly
    - Reporting lag: 6 weeks
  - Any revision of the balance of payments data (including services, private transfers, official transfers, and capital transactions).
    - Responsible institutions: BEAC/MINFI
    - Frequency: On revision
    - Reporting lag: 2 weeks

- Real Sector
  - Provisional national accounts and any revision of the national accounts.
    - Responsible institution: INS
    - Frequency: Annual
    - Reporting lag: 6 months
  - Quarterly National Accounts.
    - Responsible institution: INS
    - Frequency: Quarterly
    - Reporting lag: 3 months
  - Disaggregated consumer price indices for the cities of Douala and Yaoundé.
    - Responsible institution: INS
    - Frequency: Monthly
    - Reporting lag: 4 weeks
  - Consumer price indices disaggregated by city, product and at the national level.
    - Responsible institution: INS
    - Frequency: Monthly
    - Reporting lag: 6 weeks

- Structural Reforms and Other Data
  - Any official report or study devoted to Cameroon’s economy, from its date of publication or finalization.
    - Responsible institution: MINEPAT
    - Reporting lag: 2 weeks
  - Any decision, decree, law, order, or circular having economic or financial implications, from its publication date or effective date.
    - Responsible institutions: MINFI/MINEPAT
    - Reporting lag: 2 weeks
  - Report on the implementation of expenditure of the special allocations account (CAS) COVID-19.
    - Responsible institutions: MINFI/DGB
    - Frequency: Bi-annually
    - Reporting lag: 3 months
  - CAS-COVID-19 expenditure audit report.
    - Responsible institutions: MINFI/DGB
    - Frequency: Annually
    - Reporting lag: 6 months
  - Data on SNH interventions.
    - Responsible institution: MINFI/DGB
    - Frequency: Quarterly
    - Reporting lag: 6 weeks

### Debt sustainability assessment — key findings and risks
- Joint Bank-Fund Debt Sustainability Analysis
  - Risk of external debt distress: High
  - Overall risk of debt distress: High
  - Granularity in the risk rating: Sustainable
  - Application of judgement: No
- Summary assessment:
  - Cameroon remains at high risk of debt distress while its overall debt sustainability indicators have deteriorated somewhat compared to the previous DSA, mainly due to external shocks including a weaker exchange rate, as well as due to domestic factors such as lower real growth projections.
  - Debt carrying capacity is weaker as suggested by the latest score of the Composite Index (CI), and the bond spread is above the benchmark value.
  - Cameroon’s external debt stock indicators continue to lie below the threshold; its external debt service indicators remain above the threshold but have improved supported by the authorities’ active debt management. Both external debt service indicators are on a downward trend.
  - Staff maintains the assessment that Cameroon’s debt is sustainable given the authorities’ commitment to program objectives, including fiscal consolidation efforts, and active debt management. The likelihood that Cameroon will not be able to meet its current and future financial obligations is low.
- Approved by:
  - Vitaliy Kramarenko, Geremia Palomba (IMF) and Manuela Francisco, Abebe Adugna Dadi (IDA)
  - Prepared by the staff of the International Monetary Fund (IMF) and the International Development Association (IDA).
  - Date: February 27, 2023
- Key downside risks:
  - The ongoing war in Ukraine which could set back the global recovery and prolong supply disruptions.
  - Tightening global financial conditions could increase borrowing costs.
  - A downward adjustment of global energy prices could lead to deterioration of both exports and fiscal revenue.
  - On the domestic front, rising food and fuel prices while reducing subsidies could intensify socio-economic tensions, and delayed restructuring of SONARA’s debt would jeopardize debt sustainability.
  - Regional security conflicts—if not well contained—could compound fiscal challenges.

### Policy recommendations and mitigation measures
- Keep public debt dynamics on a sustainable path through a gradual fiscal consolidation.
- Set and achieve a further reduction in the non-oil fiscal deficit in the short term to ensure debt sustainability.
- Continue structural fiscal reforms, including further reducing fuel subsidies and enhancing revenue mobilization.
- Closely monitor debt service and actively manage the debt portfolio to minimize interest rate risks amid rising global financing costs.
- Improve competitiveness and achieve economic diversification to address vulnerable export-related debt indicators.
- Accelerate reform momentum to improve the domestic business and investment environment to invite more FDI and boost exports.
- Strengthen management of SOEs to reduce risks related to contingent liabilities.

### Public debt coverage and contingent liabilities
- Public debt coverage (as agreed in the TMU) includes: debt of the central government, expenditure floats and arrears, guarantees, debt of public oil company SONARA, and external arrears of other SOEs.
- DSA excludes debt of local governments, social security funds, and extra budgetary funds.
- Progress and data notes:
  - Debt of SOEs excluding SONARA amounts to CFAF 215 billion, around 0.9 percent of GDP (latest reports).
  - Diagnostic studies of large SOEs, including CAMTEL, PAD, and CAMWATER, and an inventory of cross-debts among SOEs and the state have been ongoing; some diagnostics expected to be published by June-2023 and late 2023 submissions anticipated for cross-debt inventory.
- Contingent liability stress test coverage (default and specific values used in the DSA):
  - Other elements of the general government not captured: 0.0 percent of GDP
  - SoE's debt (guaranteed and not guaranteed by the government): 2.0 percent of GDP (default shock for uncovered SOE debt)
  - PPP: 4.5 percent of GDP (35 percent of PPP stock; PPP stock updated from CFAF 1,227.9 billion in 2021 to CFAF 3,785.4 billion as of September 2022, about 12.8 percent of GDP)
  - Financial market contingent liability (default minimum): 5.0 percent of GDP
  - Total contingent liabilities included in the stress test: 11.5 percent of GDP

### Evolution and composition of public and external debt (selected figures)
- Preliminary staff estimates (Sep-2022, Prel.):
  - Total public and publicly guaranteed (PPG) debt: CFAF 12,674 billion (47.5 percent of GDP)
  - At end-2021: 46.8 percent of GDP
  - External debt stock (Sep-2022): CFAF 8,766 billion (32.8 percent of GDP)
  - Domestic debt (Sep-2022): CFAF 3,908 billion (14.6 percent of GDP)
  - Exchange rate movement: CFAF against US$ fell by around 18 percent from January to September 2022
- External debt composition (shares as of Sep-2022, Prel.):
  - Multilateral: 42.1 percent of total PPG external debt
  - Bilateral: 40.3 percent (declined relative to previous)
  - Commercial: 11.9 percent
  - China accounted for 65.0 percent of total bilateral debt; its share rose somewhat
- Total public debt (staff estimate series, selected points)
  - Total Public Debt (staff estimate) by Sep-2022 (Prel.): CFAF 12,669 (47.5 percent of GDP)
  - Total External (staff estimate) at Sep-2022 (Prel.): CFAF 8,766 (32.8 percent of GDP)
  - Total Domestic (staff estimate) at Sep-2022 (Prel.): CFAF 3,903 (14.6 percent of GDP)
- Notes on reporting and estimation:
  - Debt stock in 2021 revised due to updated estimate of float and arrears and inclusion of SDR usage as domestic debt.
  - Authorities' and staff estimates differ due to scope and coverage, particularly for SOE debt and unpaid obligations.

*International Monetary Fund staff summary of data reporting requirements, public debt assessment, and related fiscal recommendations drawn from the Cameroon TMU and DSA (February 27, 2023).*

### 6.      The composition of domestic debt has shifted

### 6.      The composition of domestic debt has shifted

### Domestic public debt composition and issuance
- Government bond issuance (including Bons du Trésor Assimilables (BTA) and Obligations du Trésor Assimilables (OTA)) continued to increase, reaching 40.3 percent of the total domestic public debt as of September 2022.
- Increase driven by new OTA issuances in February, March, and September with maturities of 4 to 7 years and an average 5.4 percent interest rate.
- Cameroon raised CFAF 235 billion in the regional securities market (BVMAC) in May with a maturity of 7 year, bearing interest rate of 6.25 percent.
- Issuance of longer-term debt is welcomed by institutional investors (banks and insurance companies) for portfolio diversification.
- The share of float and arrears (staff estimates), driven by a reduction of floats and other arrears, declined from 17.4 percent of total domestic debt in end-2021 to an estimated 13.3 percent in September 2022.

### Debt maturities and structure
- Average maturity of public debt as of September 2022 reached 8.0 years compared to 7.2 percent one year ago, but remains below the government target minimum of 11-year.
- Average maturities by component:
  - External debt: 9.1 years
  - Domestic debt: 5.2 years

### Stock of contracted-but-undisbursed debt (SENDs)
- SENDs (excluding budget support) as of September 2022 were estimated at CFAF 3,560 billion or around 13.3 percent of GDP, compared with CFAF 3,681 billion or 14.6 percent at end-2021.
- Composition of SENDs (as of Sep-22 prelim.):
  - 58.5 percent stem from multilateral creditors
  - 22.2 percent stem from bilateral creditors
- The drop from end-2021 was mainly driven by disbursements of a few multilateral creditors during the period.
- Q4 2023 note: a few more projects signed in Q4 2023 may raise the year-end SENDs level somewhat.
- Problematic SENDs definition (fulfilled at least one of six criteria); problematic SENDs were estimated at CFAF 1,926 billion (8.2 percent of GDP) at end-2020.
- Policy action: authorities plan to implement the October 2021 decree establishing procedures for monitoring the performance of project management units (SB20).
- The World Bank has been in discussion with the authorities to ensure effective disbursement for approved and future projects; some issues related to problematic SENDs remain to be addressed.

### Guaranteed debt and SOE arrears
- Outstanding stock of guaranteed debt declined to CFAF 17.5 billion in September 2022 (0.1 percent of GDP), from CFAF 21.3 billion at end-2021, following debt repayment by three public entities in Q2 2022.
- No new sovereign external arrears have been accumulated.
- DSA includes external arrears of SONARA and other SOEs estimated at CFAF 221.1 billion and CFAF 9 billion as of end-2021 respectively (non-payments to oil suppliers).
- Arrears of SOEs do not represent government insolvency/illiquidity as these liabilities fall on the indebted SOEs and not the government.

### Public debt monitoring and management capacity
- Cameroon’s capacity to monitor and manage public debt for the IMF’s debt limits policy is adequate, but further improvements needed.
- Improvements noted:
  - All project financing proposals and projects financed through PPPs are examined by the National Public Debt Committee (CNDP).
  - Signing of a new loan agreement is granted only when there is unconditional approval.
  - Procedures and responsibilities clarified in the 2019 manual.
- Remaining weaknesses:
  - CNDP engagement is often delayed until late in the debt contracting process.
  - Debt policy is yet to be firmly anchored by the medium-term debt management framework, causing significant discrepancies between announced plans and actual financing.
- Recommended further actions:
  - Strengthen active engagement of the CNDP.
  - Enhance effectiveness of the medium-term public debt strategy (MTDS), including improved estimates of financing needs and development of consistent annual borrowing plans.
  - Enhance communication strategy to facilitate creditors’ understanding of the authorities’ debt management objectives.
- Authorities’ planned measures and practices:
  - In collaboration with BEAC, authorities will develop a strategy in 2023 to encourage participation of non-bank investors (insurance companies, pension funds, individuals, etc.), especially in long-term issues.
  - Authorities continue to provision in an escrow account (sinking fund) housed at BEAC the resources necessary for payment of maturities of similar Treasury bonds (OTA) and bond issues, including Eurobonds.

### External private sector debt
- Non-guaranteed private external debt reached CFAF 620 billion (2.5 percent of GDP) at end-2021, compared to CFAF 921 billion at end-2020 (World Bank IDS data).

### Macroeconomic outlook and implications for debt
- Recent performance and near-term projections:
  - Real GDP growth: 3.6 percent in 2021; 3.4 percent in 2022 (contraction of oil GDP).
  - Overall fiscal deficit (payment order basis, excluding grants): expected to decline from 3.2 percent in 2021 to 2.4 percent in 2022.
  - Current account deficit: expected to narrow from 4.0 percent of GDP in 2021 to 1.6 percent of GDP in 2022, before returning to around 3 percent in the medium term.
- 2023 projections and risks:
  - Real GDP growth projected at 4.3 percent in 2023.
  - End-year inflation expected close to 6 percent; inflation projected to reach 5.9 percent in 2023 (compared to 2.8 percent in the second review).
  - Risks: global recession, prolonged war in Ukraine, elevated import prices, supply chain disruptions, tightening global financial conditions, lower availability of concessional financing, higher rollover risks.
  - Policy: increase in domestic fuel pump prices starting from 1 February 2023 expected to reduce gap with international prices and contain fiscal risks from fuel subsidies; government rolling out mitigation measures to reduce social impact (see Box 1 for further macro assumptions and mitigation measures).
- Medium-term prospects:
  - Growth expected to average around 4.5 percent in the medium term.
  - CPI inflation projected to stabilize between 2 and 3 percent in the medium term.
  - Baseline macro and financing assumptions underpinning projections include gradual fiscal consolidation, reduction of fuel subsidies to zero in 2025, implementation of PPAs on fiscal risk management and non-concessional debt contracting, and a gradually increasing share of longer maturity domestic bonds per MTDS.
- Financing assumptions and needs:
  - Public gross financing needs over 2022-24 estimated at around CFAF 4,800 billion (17.6 percent of 2022 GDP), with around 70 percent (on average) assumed to be financed externally.
  - DSA reflects IMF financing of CFAF 298 billion and prospective donor budget support of CFAF 399 billion in 2022-2024.
  - In 2022, authorities added new issuances including 4-Year OTA and 7-year ECMR to diversify treasury bonds.
  - After 2025, composition of financing gradually shifts towards commercial borrowing with a decreasing grant element; share of non-concessional loans accounts for around 20 percent of the stock of SEND.

*Source: 1cmrea2023001 - 6.      The composition of domestic debt has shifted*

### 18.      Financing assumptions regarding SONARA take into account SONARA’s performance in

### 18.      Financing assumptions regarding SONARA take into account SONARA’s performance in

### Financing and restructuring assumptions for SONARA
- The restructuring of SONARA is not assumed in the baseline; financing assumptions reflect SONARA’s performance in 2022.
- Authorities will pursue measures to ensure SONARA’s financial viability, including:
  - Rapidly concluding negotiations on restructuring of the debt vis-à-vis the marketers under the same conditions as those concluded with the banking traders, respecting the pari-passu clause.
  - Validating any shortfalls and/or overpayments on a monthly basis and settling amounts owed by the debtor party within a maximum period of 60 days.
  - Requiring SONARA to pay the taxes and customs duties it owes to the Treasury on a regular basis.
  - Ensuring that marketers are authorized to import a volume of petroleum products compatible with the financial commitments.
- Authorities are determined to pursue industrial, financial and functional restructuring of SONARA in accordance with recommendations of the Inter-ministerial Committee.
- A recent decree announced in October 2022, including a performance-based evaluation for the project coordinator, is expected to help accelerate disbursement.

### Debt restructuring developments and debt stock treatment
- Agreement reached with main supplier in September 2022 to pay down its debt: the value of debt was CFAF 183 billion in December 2022, accounting for 24 percent of the total debt and 48 percent of the external debt, to be repaid in the next 10 years with an interest rate of 5.5 percent.
- In October 2021, SONARA signed an agreement with local banks to restructure its debt: total amount owed to local banks 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 171.8 billion at end-2021) were excluded from SONARA’s debt stock given their short-term revolving nature.
- Restructuring of SONARA’s external debt is not assumed in the baseline. Short-term external debt to external oil traders (CFAF 213 billion) and medium- and long-term external debt due for repayments in 2020 and 2021 (estimated at around CFAF 31 billion respectively) were classified as arrears, reduced by CFAF 54 billion reflecting repayments made by the state.
- Other suppliers are expected to sign similar agreements in 2023, although concrete plans and timelines are yet to be formulated.
- Authorities approved a restructuring framework for SONARA in September 2022 and terms of reference for technical, economic, and financial studies, as well as a plan of action activities, to be finalized and submitted to IMF staff.

### SONARA operating performance and DSA treatment
- SONARA—functioning as an importer of refined oil—witnessed a drop of sales by 18 percent with an operating loss in 2022.
- Due to deteriorating operating performance, the DSA assumes a projected zero net income instead of positive income.
- The cost of potential reconstruction of refinery operation is not incorporated in the baseline. The assumption will be updated upon receiving the final plan of financial, industrial, and functional restructuring of SONARA.

### Macro and debt dynamics context
- The realism tool highlights risks to the baseline projections: the projected 3-year fiscal adjustment is considered ambitious but achievable; growth projections deviate from paths implied by fiscal consolidation but may not capture other growth drivers.
- The forecast realism tool indicates different debt dynamics compared to historical developments; real GDP growth is projected to reduce the external debt ratio further, while exchange rate changes are expected to have a very limited impact on external debt dynamics.
- Large unexplained residuals for past debt-creating flows may be explained by broadened debt perimeter including domestic arrears and SONARA’s debt.

### Debt-carrying capacity and classification
- Cameroon’s Composite Indicator (CI) score based on October 2022 WEO projections and the 2021 World Bank CPIA score is 2.568, signaling a weak debt-carrying capacity.
- Final classification: Weak (table entries include values "2.5682.672.70" as presented in the source).

### Stress tests and tailored shocks
- Standardized stress tests applied, with tailored additions:
  - Market financing shock and commodity price shock included due to an outstanding Eurobond and exports of fuel and other commodities making up more than 50 percent of total exports.
- Commodity price shock parameters: initial price drop of 51 percent for fuel products and 34 percent for other agricultural commodities, with a mitigating factor of 14 percent for fuel products. The gap is assumed to close in 6 years.

### External debt sustainability findings
- External risk of debt distress is assessed to be high as two indicators breach the thresholds under the baseline scenario: the external debt service-to-exports ratio and the external debt service-to-revenue ratio.
- The PV of debt-to-exports ratio declines somewhat below its threshold; debt service-to-revenue ratio shows a gradual downward path, declining below the threshold after 2028, but upticks reflect a jump in debt service due to the maturing Eurobond.
- Under stress tests, thresholds for all four indicators are breached; the commodity price shock is the most extreme shock scenario for external debt indicators.
- Historical scenario points towards exploding PV of debt-to-exports, reflecting large historical current account deficits.

### Public debt sustainability findings
- Overall risk of public debt distress is assessed to be high as the PV of debt-to-GDP ratio breaches the benchmark under the baseline scenario in 2022-23. The ratio is projected to fall below the benchmark in 2024 and remain below it onwards.
- PV of debt-to-revenue and debt service-to-revenue ratios are projected to decline gradually after a temporal uptick in 2023.
- The most extreme shock for public debt indicators, including PV of debt-to-GDP, PV of debt-to-revenue, and debt-service-to-revenue, is the commodity price shock.
- The historical scenario projects explosive paths for PV of debt-to-GDP and PV of debt-to-revenue ratios, driven by large historical primary deficits compared to projections.

### Market module and financing risks
- Cameroon’s maximum three-year gross financing needs are estimated at 6 percent of GDP (benchmark 14 percent).
- Latest available EMBI spread for Cameroon is 618 bps as of February 9, 2023 (benchmark 570 bps); the spread dropped significantly from a peak above-750 in early January 2023.
- Current spread data are based on a very thin market consisting of one bond with an outstanding value of US$200 million.
- Market financing module signals moderate market financing pressures given EMBI spread breach.

### Key vulnerability metrics and exposures
- Share of loans associated with variable interest rates is 15.9 percent of total debt as of September 2022.
- Commercial borrowing is 13 percent of external debt, or 8.5 percent of total debt as of September 2022.
- Other risks include contingent liabilities from bank restructuring and SOEs not included in the DSA baseline, accelerating disbursements due to large stock of SENDs, delayed restructuring of SONARA’s debt, and regional security conflicts.

### Policy recommendations to mitigate risks
- Maintain gradual fiscal consolidation to keep public debt dynamics on a sustainable path; improve fiscal deficit in the short term.
- Implement structural fiscal reforms, including further reducing fuel subsidies and enhancing revenue mobilization.
- Pursue a prudent borrowing policy skewed towards concessional loans and limit reliance on non-concessional borrowing; strengthen management of the SENDs.
- Redirect resources with targeted spending; use windfall oil revenue gains to protect the most vulnerable and prioritize growth-enhancing public investment.
- Closely monitor debt servicing costs and actively manage the debt portfolio to minimize interest rate risks amid rising global financing costs.
- Improve competitiveness and achieve economic diversification to address vulnerable export-related debt indicators; accelerate reforms to improve the domestic business and investment environment to invite more FDI and boost exports.
- Strengthen SOE management to reduce contingent liability risks; in particular, further strengthen SONARA’s debt restructuring efforts while fundamentally restoring its financial viability.

*Source: IMF staff.*

### 30.      The authorities emphasized that reducing debt vulnerabilities is a key priority to support

### 1cmrea2023001 - 30.      The authorities emphasized that reducing debt vulnerabilities is a key priority to support

### Debt vulnerabilities, risks, and authorities' commitments
- The authorities emphasized that reducing debt vulnerabilities is a key priority to support economic development.
- The authorities acknowledged that the risk of debt distress remains high and subject to significant downside risks, including intensified trade disruptions due to the war in Ukraine and intensifying socio-political tensions.
- SONARA debt restructuring:
  - The authorities remained committed and will push forward the negotiations with stakeholders in 2023, completing SONARA’s restructuring plan, including industrial and financial options.
- Debt risk assessment and drivers:
  - The authorities remain committed to an improvement of Cameroon’s debt risk assessment, which will depend on continued active debt management, exports, and budgetary revenue performance, as well as the country’s CI score, which reflects the country’s debt carrying capacity.
- Domestic financing strategy:
  - In 2023, the government will prepare a strategy to develop domestic financing by encouraging the participation of non-bank investors.

### Stress tests, scenarios, and market-financing indicators
- Stress testing approach (figures and notes):
  - The most extreme stress test is the test that yields the highest ratio in or before 2032. The stress test with a one-off breach is also presented (if any), while the one-off breach is deemed away for mechanical signals. When a stress test with a one-off breach happens to be the most extreme shock even after disregarding the one-off breach, only that stress test (with a one-off breach) would be presented.
  - The magnitude of shocks used for the commodity price shock stress test are based on the commodity prices outlook prepared by the IMF research department.
  - Note: All the additional financing needs generated by the shocks under the stress tests are assumed to be covered by PPG external MLT debt in the external DSA. Default terms of marginal debt are based on baseline 10-year projections.
- Market-financing risk indicators (Figure 5 notes and highlights):
  - Potential heightened liquidity needs: Moderate.
  - Breach of benchmark: Yes (GFN benchmark breach noted).
  - EMBI: 570 (Values: 6682 shown in figure annotations).

### Key sustainability indicators and projections (selected entries from External Debt Sustainability Framework, Baseline Scenario)
- External debt (nominal) (percent of GDP): 32.9; 32.3; 33.4; 34.5; 32.3; 31.4; 30.9; 30.8; 31.0; 27.9; 21.1; 24.2; 30.9
- Change in external debt (percent of GDP): 3.5; -0.6; 1.0; 1.1; -2.2; -0.8; -0.5; 0.0; 0.1; -0.8; -1.4
- Identified net debt-creating flows (percent of GDP): 2.2; 1.3; -1.3; -1.4; -0.5; -0.5; -0.9; -1.0; -1.1; -0.3; -0.1; 0.6; -0.8
- Non-interest current account deficit (percent of GDP): 3.2; 3.1; 3.2; 1.1; 2.1; 2.2; 1.9; 1.8; 1.8; 2.3; 1.7; 2.8; 1.9
- Exports (percent of GDP): 19.5; 15.0; 16.4; 20.2; 18.0; 17.2; 17.0; 16.9; 16.9; 16.7; 16.1
- Imports (percent of GDP): 22.9; 17.6; 19.9; 21.9; 20.8; 19.9; 19.5; 19.2; 19.2; 19.6; 18.5
- Net current transfers (negative = inflow) (percent of GDP): -1.3; -1.0; -1.1; -1.4; -1.1; -0.9; -1.0; -0.9; -0.9; -1.0; -1.1; -1.1; -1.0
- Net FDI (negative = inflow) (percent of GDP): -2.3; -1.5; -2.0; -1.8; -2.0; -2.1; -2.2; -2.2; -2.2; -1.9; -1.4; -2.0; -2.1
- Endogenous debt dynamics (percent of GDP): 1.3; -0.3; -2.4; -0.7; -0.6; -0.5; -0.6; -0.7; -0.7; -0.7; -0.4
  - Contribution from nominal interest rate: 1.0; 0.6; 0.8; 0.5; 0.7; 0.8; 0.7; 0.7; 0.7; 0.6; 0.5
  - Contribution from real GDP growth: -1.0; -0.2; -1.1; -1.2; -1.3; -1.3; -1.4; -1.4; -1.4; -1.3; -0.9
- Residual (percent of GDP): 1.2; -1.9; 2.3; 2.5; -1.7; -0.4; 0.4; 1.0; 1.2; -0.5; -1.3; 1.7; 0.4

- Sustainability indicators (selected):
  - PV of PPG external debt-to-GDP ratio: 23.9; 26.0; 23.7; 22.5; 21.7; 21.6; 21.5; 19.8; 15.9
  - PV of PPG external debt-to-exports ratio: 145.5; 128.2; 131.9; 130.7; 127.9; 127.9; 127.7; 118.4; 98.8
  - PPG debt service-to-exports ratio: 19.3; 10.2; 20.4; 13.2; 17.2; 16.6; 15.5; 14.2; 13.7; 12.5; 10.1
  - PPG debt service-to-revenue ratio: 25.2; 11.5; 23.6; 17.0; 20.3; 18.8; 17.5; 15.8; 15.1; 13.0; 8.7
  - Gross external financing need (Billion of U.S. dollars): 3.0; 1.6; 2.3; 1.1; 1.7; 1.7; 1.4; 1.3; 1.3; 2.1; 3.0

### Key macroeconomic assumptions (selected series)
- Real GDP growth (in percent): 3.4; 0.5; 3.6; 3.4; 4.3; 4.4; 4.5; 4.6; 4.7; 4.8; 4.4; 4.1; 4.5
- GDP deflator in US dollar terms (change in percent): -4.1; 2.4; 7.2; -6.8; 6.6; 3.6; 0.3; -1.0; -1.6; 1.8; 1.5; 0.2; 0.6
- Effective interest rate (percent): 3.5; 1.9; 2.7; 1.3; 2.3; 2.6; 2.5; 2.3; 2.3; 2.2; 2.5; 3.2; 2.2
- Growth of exports of G&S (US dollar terms, in percent): 5.5; -21.0; 22.1; 18.6; -1.1; 3.2; 3.7; 2.9; 3.1; 6.0; 5.8; 0.9; 5.4
- Growth of imports of G&S (US dollar terms, in percent): 7.6; -20.7; 25.5; 5.7; 5.5; 3.7; 2.8; 2.1; 2.9; 7.2; 5.1; 2.0; 5.0
- Grant element of new public sector borrowing (in percent): 30.3; 30.9; 30.5; 30.7; 28.1; 28.3; 24.8; 21.2; 28.3 (selected entries shown)
- Government revenues (excluding grants, in percent of GDP): 14.9; 13.3; 14.2; 15.7; 15.2; 15.1; 15.1; 15.2; 15.3; 16.1; 18.9; 14.9; 15.5
- Nominal dollar GDP growth (selected): -0.8; 3.0; 11.1; -3.7; 11.2; 8.2; 4.8; 3.6; 3.1; 6.7; 6.0; 4.3; 5.2

### Analysis implications and policy focus (drawn from authorities' statements and DSA signals)
- Short-term focus:
  - Complete SONARA restructuring in 2023 (industrial and financial components) to reduce debt vulnerabilities.
  - Prepare and implement a 2023 strategy to develop domestic financing by encouraging non-bank investor participation.
- Medium-term priorities:
  - Continue active debt management to improve debt risk assessment and CI score outcomes.
  - Strengthen exports and budgetary revenue performance to support improvements in debt carrying capacity and sustainability indicators.
- Monitoring and stress preparedness:
  - Maintain vigilance on commodity-price-related shocks, external financing needs, and market-financing risks as highlighted by stress-test outcomes and GFN/EMBI signals.

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

### 2. Cameroon: Public Sector Debt

### 2. Cameroon: Public Sector Debt

### Baseline scenario and key projections (2019–2042)
- Public sector debt (in percent of GDP)
  - 2019: 41.6
  - 2020: 44.9
  - 2021: 46.8
  - 2022: 46.4
  - 2023: 42.8
  - 2024: 40.4
  - 2025: 38.5
  - 2026: 37.5
  - 2027: 37.2
  - 2032: 33.0
  - 2042: 29.6
  - Historical average (reported): 32.5 and 37.8 (two historical rows present)
- Of which: external debt (percent of GDP)
  - 2019: 29.4
  - 2020: 30.5
  - 2021: 31.7
  - 2022: 32.7
  - 2023: 30.5
  - 2024: 29.7
  - 2025: 29.1
  - 2026: 29.2
  - 2027: 29.4
  - 2032: 26.7
  - 2042: 20.3
  - Historical rows: 22.1 and 29.3
- Change in public sector debt (percent of GDP)
  - 2019: 3.3
  - 2020: 3.3
  - 2021: 1.9
  - 2022: -0.4
  - 2023: -3.7
  - 2024: -2.4
  - 2025: -1.9
  - 2026: -1.0
  - 2027: -0.4
  - 2032: -0.6
  - 2042: 0.0

### Identified debt-creating flows and automatic dynamics
- Identified debt-creating flows (percent of GDP)
  - 2019: 1.9
  - 2020: -0.1
  - 2021: 1.7
  - 2022: -3.0
  - 2023: -3.1
  - 2024: -2.3
  - 2025: -2.5
  - 2026: -2.0
  - 2027: -1.6
  - 2032: -0.7
  - 2042: -0.1
  - Historical rows: 1.9 and -1.9
- Primary deficit (percent of GDP)
  - 2019: 1.9
  - 2020: 2.1
  - 2021: 1.5
  - 2022: 0.6
  - 2023: -0.4
  - 2024: -0.6
  - 2025: -0.9
  - 2026: -0.4
  - 2027: 0.0
  - 2032: 0.7
  - 2042: 0.8
  - Historical rows: 2.7 and 0.0
- Revenue and grants (percent of GDP)
  - 2019: 15.5
  - 2020: 13.5
  - 2021: 14.4
  - 2022: 16.2
  - 2023: 15.6
  - 2024: 15.4
  - 2025: 15.3
  - 2026: 15.3
  - 2027: 15.4
  - 2032: 16.1
  - 2042: 18.9
  - Historical rows: 15.1 and 15.6
  - Of which: grants
    - 2019: 0.6
    - 2020: 0.1
    - 2021: 0.3
    - 2022: 0.5
    - 2023: 0.3
    - 2024: 0.3
    - 2025: 0.2
    - 2026: 0.1
    - 2027: 0.1
    - 2032: 0.0
    - 2042: 0.0
- Primary (noninterest) expenditure (percent of GDP)
  - 2019: 17.5
  - 2020: 15.6
  - 2021: 16.0
  - 2022: 16.8
  - 2023: 15.2
  - 2024: 14.9
  - 2025: 14.4
  - 2026: 14.9
  - 2027: 15.4
  - 2032: 16.8
  - 2042: 19.7
  - Historical rows: 17.9 and 15.6
- Automatic debt dynamics (percent of GDP)
  - 2019: -0.3
  - 2020: -2.2
  - 2021: 0.1
  - 2022: -3.6
  - 2023: -2.7
  - 2024: -1.8
  - 2025: -1.6
  - 2026: -1.5
  - 2027: -1.6
  - 2032: -1.4
  - 2042: -0.9
- Contribution from interest rate/growth differential (percent of GDP)
  - 2019: -1.1
  - 2020: 0.1
  - 2021: -2.4
  - 2022: -3.6
  - 2023: -2.7
  - 2024: -1.8
  - 2025: -1.6
  - 2026: -1.5
  - 2027: -1.6
  - 2032: -1.4
  - 2042: -0.9
  - Of which: contribution from average real interest rate
    - 2019: 0.1
    - 2020: 0.3
    - 2021: -0.8
    - 2022: -2.1
    - 2023: -0.7
    - 2024: 0.0
    - 2025: 0.1
    - 2026: 0.2
    - 2027: 0.1
    - 2032: 0.1
    - 2042: 0.3
  - Of which: contribution from real GDP growth
    - 2019: -1.3
    - 2020: -0.2
    - 2021: -1.6
    - 2022: -1.5
    - 2023: -1.9
    - 2024: -1.8
    - 2025: -1.7
    - 2026: -1.7
    - 2027: -1.7
    - 2032: -1.5
    - 2042: -1.3
- Contribution from real exchange rate depreciation (percent of GDP)
  - 2019: 0.8
  - 2020: -2.3
  - 2021: 2.5
  - 2022: ... (ellipsis in source)

### Other identified flows, residuals, and contingency
- Other identified debt-creating flows (percent of GDP)
  - 2019: 0.2
  - 2020: 0.0
  - 2021: 0.0
  - 2022: 0.0
  - 2023: 0.0
  - 2024: 0.0
  - 2025: 0.0
  - 2026: 0.0
  - 2027: 0.0
  - 2032: 0.0
  - 2042: 0.0
  - Historical rows: -0.1 and 0.0
- Privatization receipts (negative): all years 0.0
- Recognition of contingent liabilities (e.g., bank recapitalization): all years 0.0
- Debt relief (HIPC and other)
  - 2019: -0.1
  - other years: 0.0
- Other debt creating or reducing flow (please specify)
  - 2019: 0.3
  - other years: 0.0
- Residual (percent of GDP)
  - 2019: 1.4
  - 2020: 3.4
  - 2021: 0.3
  - 2022: 2.6
  - 2023: -0.6
  - 2024: 0.0
  - 2025: 0.6
  - 2026: 1.0
  - 2027: 1.2
  - 2032: 0.1
  - 2042: 0.1
  - Historical rows: 1.3 and 0.6
- PV of contingent liabilities (not included in public sector debt): all years 0.0

### Sustainability indicators and debt service metrics
- PV of public debt-to-GDP ratio (values given with ellipses; selected projections present)
  - Projection years (selected): 40.1, 39.5, 36.0, 33.4, 31.4, 30.3, 29.7, 26.5, 25.5 (ellipsis present in source)
- PV of public debt-to-revenue and grants ratio (selected projections)
  - 278.4, 244.3, 231.2, 216.7, 205.2, 197.9, 192.6, 164.8, 135.3
- Debt service-to-revenue and grants ratio 3/
  - 2019: 24.3
  - 2020: 49.3
  - 2021: 46.2
  - 2022: 26.8
  - 2023: 42.4
  - 2024: 37.2
  - 2025: 36.3
  - 2026: 33.8
  - 2027: 33.6
  - 2032: 25.5
  - 2042: 22.0
- Gross financing need 4/
  - 2019: 7.7
  - 2020: 8.7
  - 2021: 8.2
  - 2022: 5.0
  - 2023: 6.2
  - 2024: 5.2
  - 2025: 4.7
  - 2026: 4.7
  - 2027: 5.1
  - 2032: 4.8
  - 2042: 4.9

### Key macroeconomic and fiscal assumptions (selected)
- Real GDP growth (in percent)
  - 2019: 3.4
  - 2020: 0.5
  - 2021: 3.6
  - 2022: 3.4
  - 2023: 4.3
  - 2024: 4.4
  - 2025: 4.5
  - 2026: 4.6
  - 2027: 4.7
  - 2032: 4.8
  - 2042: 4.4
  - Historical/projection rows: 4.1 and 4.5
- Average nominal interest rate on external debt (in percent)
  - 2019: 2.8
  - 2020: 2.1
  - 2021: 2.2
  - 2022: 1.2
  - 2023: 2.0
  - 2024: 2.5
  - 2025: 2.3
  - 2026: 2.2
  - 2027: 2.1
  - 2032: 2.1
  - 2042: 2.4
  - Historical/projection rows: 2.8 and 2.1
- Average real interest rate on domestic debt (in percent)
  - 2019: -1.2
  - 2020: 1.0
  - 2021: -1.5
  - 2022: -2.9
  - 2023: -0.9
  - 2024: -0.1
  - 2025: 1.4
  - 2026: 2.4
  - 2027: 2.5
  - 2032: 2.8
  - 2042: 3.8
  - Historical/projection rows: -1.2 and 1.4
- Real exchange rate depreciation (in percent, + indicates depreciation)
  - 2019: 3.0
  - 2020: -8.0
  - 2021: 8.9
  - 2022: ... (ellipsis)
  - Later projection: 2.2 (ellipsis in source)
- Inflation rate (GDP deflator, in percent)
  - 2019: 1.2
  - 2020: 0.5
  - 2021: 3.3
  - 2022: 4.6
  - 2023: 4.8
  - 2024: 4.3
  - 2025: 3.0
  - 2026: 2.0
  - 2027: 2.0
  - 2032: 1.8
  - 2042: 1.5
  - Historical/projection rows: 1.6 and 2.8
- Growth of real primary spending (deflated by GDP deflator, in percent)
  - 2019: 6.6
  - 2020: -10.3
  - 2021: 6.2
  - 2022: 9.0
  - 2023: -6.0
  - 2024: 2.3
  - 2025: 1.7
  - 2026: 7.7
  - 2027: 8.4
  - 2032: 7.5
  - 2042: 5.8
  - Historical/projection rows: 3.3 and 5.1
- Primary deficit that stabilizes the debt-to-GDP ratio 5/ (percent of GDP)
  - 2019: -1.3
  - 2020: -1.2
  - 2021: -0.4
  - 2022: 1.0
  - 2023: 3.2
  - 2024: 1.8
  - 2025: 1.0
  - 2026: 0.5
  - 2027: 0.3
  - 2032: 1.3
  - 2042: 0.8
  - Historical/projection rows: -1.0 and 1.3

### Sensitivity analysis (selected highlights, 2022–2032)
- Public and publicly guaranteed external debt indicators (Table 3, selected)
  - Baseline (2022–2032): 26, 24, 22, 22, 22, 22, 21, 21, 20, 20 (row labeled "Baseline")
  - A1. Key variables at their historical averages in 2022-2032 2/: values rising into the high 20s and 30s across 2022–2032 in some series (explicit table entries present)
  - Bound tests (B1–B6) and tailored tests (C1–C4) report scenario values; threshold values indicated (e.g., Threshold 30, 140, 10, 14 across different panels)
  - Note: A bold value indicates a breach of the threshold.
- Public debt sensitivity (Table 4, selected)
  - PV of Debt-to-GDP Ratio (Baseline, selected years 2022–2032): 40, 36, 33, 31, 30, 29, 27, 27, 26, 26, 26
  - PV of Debt-to-Revenue Ratio (Baseline, selected): 244, 231, 217, 205, 198, 193, 189, 181, 173, 168, 165
  - Debt Service-to-Revenue Ratio (Baseline, selected): 27, 42, 37, 36, 34, 34, 30, 28, 27, 26, 26
  - Alternative scenarios, bound tests, and tailored tests show higher ratios under adverse shocks (explicit table entries present, including scenarios labeled A1, B1–B6, C1–C4)

### Statement by authorities (March 8, 2023) — recent developments, program performance, and policy intentions
- Recent economic developments (selected facts)
  - Growth is expected to have reached 3.4 percent in 2022.
  - Inflation 6 percent at end-2022.
  - Non-oil primary deficit increased to 4.5 percent of GDP in 2022, from 3.9 percent in 2021.
  - Public debt-to-GDP ratio expected to remain stable at 46.4 percent of GDP in 2022.
  - Current account deficit (including grants) improved to 1.6 percent of GDP in 2022, down from 4 percent in 2021.
- Program performance under the ECF/EFF-supported program
  - All quantitative performance criteria at end-June 2022 were met.
  - The floor on the non-oil primary fiscal balance at end-December 2022 and the zero ceiling on accumulation of new external arrears were missed.
    - Underestimation of the fuel subsidy in the budget caused missing the non-oil primary fiscal balance floor.
    - Payments related to external arrears have since been cleared; corrective measures include a prior action on domestic fuel price increase.
  - Of 14 structural benchmarks under the third review, 7 have been completed (5 with delays); six of seven not met have been rephased.
- Medium-term outlook and macroeconomic targets
  - Authorities project growth of 4.3 percent in 2023.
  - Expect average inflation at 5.9 percent in 2023 and stabilization around 2 percent in the medium term.
  - Current account deficit expected to settle below 3 percent of GDP in the medium term.
  - Authorities aim to achieve an average annual growth rate of 8.1 percent by 2030 under the National Development Strategy (SND-30).
- Fiscal policy and reforms (selected policy measures)
  - Fiscal consolidation to preserve fiscal and debt sustainability while creating space for priority social and infrastructure spending.
  - Revenue-side measures to boost non-oil revenue from current low rate of 12 percent of GDP:
    - Reforms in tax policy and tax administration per October 2022 diagnostic study with Fund TA.
    - Improvement in VAT collection and rationalization of investment incentives.
    - Strengthen cooperation among revenue agencies, including creating a single taxpayer database.
  - Expenditure-side priorities:
    - Phasing out fuel subsidies and boosting social spending; measures to mitigate impact on vulnerable populations.
    - Plan for gradual increase in retail fuel prices to reduce subsidies’ fiscal impact to zero.
    - On February 1, 2023, the government increased fuel prices by 15.9 percent for gasoline and 25.2 percent for diesel.

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

### 2023. Going forward, further domestic retail fuel price adjustments are planned in 2024 and

### 1cmrea2023001 - 2023. Going forward, further domestic retail fuel price adjustments are planned in 2024 and

### Fuel price adjustments and mitigating measures
- Further domestic retail fuel price adjustments are planned in 2024 and 2025 as the authorities work on a broader fuel price mechanism reform.
- To mitigate the impact of these adjustments on disadvantaged households, the authorities announced a package that includes:
  - increasing the minimum wage by 15.5 percent;
  - increasing public wages by 5.2 percent;
  - an additional increase in conditional cash transfers on top of those provided for in the 2023 budget, to be included in a forthcoming supplemental budget.

### Public financial management (PFM) reforms and cash flow management
- Ongoing reforms aim to improve the quality of public expenditure and cash flow management by:
  - enhancing credibility and transparency of budget execution, including through credible monthly cash flow plans consistent with both the commitment and public procurement plans;
  - limiting the use of exceptional procedures.
- Treasury Single Account (TSA):
  - all accounts to be transferred have been identified;
  - repatriation to the TSA is contingent on the operationalization of the regional BEAC platform.
- Other PFM reforms will focus on:
  - reinforcing governance and management of state-owned enterprises (SOEs) while improving service delivery and limiting fiscal risks;
  - strengthening the civil service pension to reduce quasi-fiscal risks;
  - buttressing the framework for selection, planning, and execution of investment projects.

### Debt management and sustainability
- Authorities commit to improve debt management and sustainability given the high risk of debt distress.
- Borrowing policy:
  - implement a carefully paced borrowing policy that favors concessional loans;
  - limit non-concessional loans to financing high-priority and cost-effective projects with proven socioeconomic returns and for which concessional financing is not available.
- Institutional arrangements and arrears:
  - the National Committee on Public Debt (CNDP) will play a central role in approving all public debt proposals and requests for government guarantees;
  - authorities remain dedicated to clearing domestic arrears and settling outstanding public sector debts.

### Structural reforms, financial sector, and private sector development
- Remove structural impediments to private sector development and further economic diversification; promote a strong private sector as central to fostering robust and inclusive growth.
- Reform of business incentives is being initiated, notably the law on private investment incentives, following regular consultations with the private sector.
- Trade facilitation and regional integration:
  - support regional initiatives to interconnect customs information systems and simplify procedures and administrative formalities for cross-border exchanges.
- Financial sector reforms will prioritize:
  - strengthening system stability;
  - advancing financial inclusion;
  - improving asset quality.
- Bank restructuring:
  - in collaboration with the regional supervisor COBAC, implement the restructuring plan for the two distressed banks which are expected to be privatized within three years.

### Climate change, environment, and resilience
- Climate resilience is a key pillar under SND-30.
- Land restoration:
  - work to restore approximately 12 million hectares of degraded lands under the AFR 100 Initiative, consistent with the Glasgow Declaration on Forests and Land Use at the 2021 COP26.
- Priority areas for improving climate resilience:
  - agriculture, forestry, and land use;
  - urban development;
  - infrastructure;
  - human capital.

### Governance, anti-corruption, and transparency
- Tackle weaknesses in governance and the anti-corruption framework based on a governance diagnostic to be conducted with Fund assistance.
- Areas to address include:
  - fiscal governance;
  - supervision of the financial sector;
  - rule of law;
  - fight against money laundering and the financing of terrorism (AML/CFT).
- AML/CFT measures:
  - implement measures to strengthen the national AML/CFT framework in line with the March 2022 report by the Task Force on Money Laundering in Central Africa (GABAC).
- Extractive sector transparency:
  - the 2020 EITI report was published in December 2022;
  - authorities are working on implementing 15 corrective measures in preparation for the new validation session scheduled for April 2023;
  - publication of the 2021 EITI report is scheduled for June 2023.
- On Covid19-related expenditures:
  - the Accounting Chamber “Chambre des Comptes” has completed the report on 2021 expenditures and is finalizing the audit of these expenditures which had been delayed to allow beneficiary administrations to react to audit comments.

### Conclusion and requests
- Authorities remain committed to the objectives of the ECF/EFF program, consistent with SND-30, and will continue implementing policies and reforms to preserve macroeconomic and regional external stability, improve public financial management and the business environment, and achieve strong and sustainable economic growth.
- In view of challenges from external shocks and committed reform efforts, the authorities seek Executive Directors’ support for the completion of the third review under the ECF/EFF Arrangements and request:
  - waivers for performance criteria applicability;
  - waivers for nonobservance of performance criteria;
  - modification of performance criteria.

*Source: 1cmrea2023001 - 2023. Going forward, further domestic retail fuel price adjustments are planned in 2024 and 2025 as the authorities work on a broader fuel price mechanism reform.*

---


_Source: https://www.imf.org/-/media/files/publications/cr/2023/english/1cmrea2023001.pdf_