## 1. Real Sector Developments, 2017– 23

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### Recent Economic Developments
- Real GDP growth: "3.8 percent in 2022" (estimated), up from "3.4 percent in late 2022" (text reporting); driven by agroindustry and service sectors.
- Headline inflation: "7.3 percent at end-2022 year-over-year", up from "3.5 percent at end-2021".
- Food insecurity: "Over three million people were severely food-insecure between January and May 2023, a 5 percent increase compared to the same period in 2022."
- BEAC monetary policy: policy rate raised by "50 bps to 5 percent on March 27" (cumulative "175 bps increase since November 2021"); weekly liquidity injections discontinued after being steadily scaled back.
- Region-wide inflation: "6.5 percent at end-2022."
- Current account: deficit narrowed from "4.0 percent of GDP in 2021" to "1.8 percent of GDP in 2022" (reflecting higher global hydrocarbon prices and REER depreciation).
- Overall fiscal deficit: reduced to "1.1 percent of GDP in 2022" from "3 percent of GDP in 2021."
- Non-oil primary balance (NOPB): "remained unchanged at 3.9 percent of GDP in 2022."
- Classification: Cameroon recently classified as fragile and conflict affected state (FCS); IMF preparing a country engagement strategy (CES).

### Outlook and Risks
- Growth projections:
  - "Real GDP growth projected at 4.0 percent in 2023."
  - "Medium-term average growth projected at 4.4 percent."
- Inflation projections:
  - "Average inflation projected to moderate from 7.3 percent at end-2022 to 5.9 percent at end-2023 and decline to below 3 percent in the medium term."
- External and fiscal projections:
  - Current account deficit: "expected to stabilize around 3 percent of GDP in the medium term."
  - Public debt-to-GDP ratio: "expected to decline to below 40 percent by 2025."
- Near-term risks (selected): security situation; slow reforms; regional risks; global recession risks; persistence of Russia’s war in Ukraine; volatile global hydrocarbon prices; tighter global financial conditions; potential rollover challenges; climate-related shocks.
- Mitigating factors: strong program implementation record, close donor engagement, comprehensive CD program, scheduled completion of several infrastructure projects.

### Program Performance (through end-December 2022 and end-March 2023)
- QPCs and ITs:
  - "All QPCs except one met at end-December 2022." Continuous QPC on non-accumulation of external arrears missed due to late debt service payments in early 2023.
  - Breaches described as minor: "0.2 percent of GDP" and temporary.
- Domestic obligations and procedures:
  - Unpaid domestic obligations at end-2022: "1.7 percent of GDP"; of which "0.7 percent of GDP were over 90 days" (domestic arrears under CEMAC definition).
  - Share of expenditures through exceptional procedures exceeded "10 percent of total spending at end-2022" (program target: "4 percent").
  - Treasury advances: "1.3 percent of GDP in 2022."
- End-March 2023: four out of nine indicative targets missed — ceiling on SNH direct interventions; share of spending executed through exceptional procedures; net accumulation of domestic payment arrears; and floor on poverty-reducing social spending.
- Revenue developments Q1 2023:
  - Oil revenue: "increased by 50 percent year-on-year in the first quarter of 2023."
  - Non-oil revenue: "increased by 13 percent year-on-year in the same period."
- Primary spending execution lagged, contributing to lower-than-planned social spending in Q1 2023.

### Fiscal Consolidation with Growth: Key Fiscal Numbers and Projections
- Selected fiscal ratios (percent of GDP) — Text Table 1:
  - Total revenue and grants: "16.0 (2022 Est.), 15.5 (3rd Rev.), 15.9 (Proj.)"
  - Oil revenue: "3.5 (2022 Est.), 2.8 (3rd Rev.), 2.9 (Proj.)"
  - Non-oil revenue: "12.1 (2022 Est.), 12.4 (3rd Rev.), 12.7 (Proj.)"
  - Grants: "0.4 (2022 Est.), 0.3 (3rd Rev.), 0.3 (Proj.)"
  - Total expenditure: "17.1 (2022 Est.), 16.2 (3rd Rev.), 16.7 (Proj.)"
  - Current expenditure: "12.5 (2022 Est.), 11.0 (3rd Rev.), 11.5 (Proj.)"
  - Transfers and subsidies: "4.2 (2022 Est.), 3.1 (3rd Rev.), 3.5 (Proj.)"
  - Interest payments: "0.8 (2022 Est.), 1.1 (3rd Rev.), 1.1 (Proj.)"
  - Capital expenditure: "4.6 (2022 Est.), 5.0 (3rd Rev.), 5.0 (Proj.)"
  - Overall balance: "-1.1 (2022 Est.), -0.8 (3rd Rev.), -0.8 (Proj.)"
  - Non-oil primary balance: "-3.9 (2022 Est.), -2.4 (3rd Rev.), -2.5 (Proj.)"
- Contributions to changes in overall deficit in 2024 (Text Table 2, Percent of GDP):
  - Oil revenue: "2.9 (2022), 2.1 (2023), Change -0.7"
  - Non-oil revenue: "12.7 (2022), 13.1 (2023), Change 0.3"
  - Grants: "0.3 (2022), 0.3 (2023), Change 0.0"
  - Subsidies and transfers: "3.5 (2022), 2.4 (2023), Change -1.1"
  - Capital expenditure: "5.0 (2022), 5.4 (2023), Change 0.5"
  - Other current expenditure: "8.2 (2022), 8.3 (2023), Change 0.1"
  - Deficit: "-0.8 (2022), -0.6 (2023), Change -0.2"
- NOPB projected to increase slightly: "from 2.4 percent to 2.5 percent of GDP."
- Authorities intend to reduce overall fiscal deficit in 2024 to "0.6 percent of GDP" and NOPB to a deficit of "1.7 percent of GDP."
- Planned 2024 consolidation measures: expenditure rationalization on subsidies and transfers ("~1.1 percent of GDP") and stronger non-oil revenue mobilization ("~0.3 percent of GDP").

### Fuel Subsidy Reform
- Fuel subsidy costs:
  - "Total cost of the fuel subsidy in 2022 estimated at over CFAF 900 billion (3.4 percent of GDP)" compared to "CFAF 600 billion (2.2 percent of GDP) in the revised 2022 budget."
  - "Around one third of the cost of the fuel subsidy was carried over to 2023."
  - Additional carry-over: "CFAF 330 billion (1.1 percent of GDP)", bringing fuel subsidy spending in the 2023 budget to "CFAF 453 billion (1.5 percent of GDP)."
- Retail fuel price increases in February 2023: "16 percent for gasoline and 25 percent for diesel"; under prevailing assumptions, this would reduce the fuel subsidy to "0.5 percent of GDP in 2023 (excluding the carry-over from 2022)."
- Staff recommendation: introduce an automatic fuel price adjustment mechanism with price smoothing in "2025", accompanied by mitigating measures (expand social transfers, improve access to education and health services, accelerate SONARA restructuring, achieve the energy transition).
- Authorities have not yet decided to implement an automatic fuel price adjustment mechanism.

### Public Investment and Priority Spending
- Authorities committed to improve investment spending efficiency in line with IMF PIMA recommendations.
- Legislative acts to implement decree on monitoring units responsible for project management (SB12) rephased to "August 2023."
- Need to prioritize projects based on impact on growth, revenues, and fiscal sustainability given limited fiscal space and slow capital execution.
- Measures to improve procurement transparency and launch an information system for monitoring project procurement (new SB14, "May 2024").

### Monetary and External Sector
- External position improved in 2022 due to higher oil export prices and REER depreciation.
- Compliance with CEMAC foreign exchange regulations expected to increase repatriation of export earnings and curb illicit outflows, helping consolidate regional foreign exchange reserves.
- BEAC policy tightening: policy rate at "5 percent" after cumulative "175 bps" increase since November 2021; discontinued weekly liquidity injections.

### Program Implementation and Institutional Measures
- Corrective measures: reduce and better monitor expenditures through exceptional procedures; comply with new IT on cash advances without a budget allocation; introduce SB to include stock of arrears into the budget law to clear unpaid obligations at end-2022.
- Committee set up to monitor SNH direct interventions and quarterly reporting to IMF on SNH interventions by type of expenditure starting Q1 2023.
- Structural benchmarks (SBs) status:
  - Met: SB8 (Audit Chamber audit report on COVID-19 expenditures, March 2023) and SB7 (action plan to strengthen supreme audit institutions, April 2023).
  - Rephased/delayed: SB12 and SB4. SB2 (PPPs) and SB10 (VAT taxpayers increase) met.

### Energy Project Contingent Liability and Supporting Financing
- Expected contingent fiscal cost: "0.3 percent of GDP."
- Risk: start of operation of the Nachtigal Hydro Power Plant could lead to losses to ENEO in the absence of transmission infrastructure, a potential contingent liability for the budget.
- Supporting financing: "The World Bank is planning a US$300 million project to support a transmission line construction, with disbursements during 2024-28."
- Reform package: tariff increase and other measures "estimated to generate about US$384 million in savings over the medium term."

### Non-Oil Revenue Mobilization
- Historical level: "Non-oil tax revenue has fluctuated around 12 percent of GDP over the past decade."
- Recovery: after 2020 decline, non-oil revenue "is expected to recover to its historic average in 2023."
- Planned 2024 measures (in line with IMF TA):
  - "the reform of the personal income tax;"
  - "the transformation of the simplified tax system into a synthetic tax based on the turnovers;"
  - "the rationalization of tax exemptions, including by reducing the number of goods exempted from VAT."
- Expected impact: improve non-oil revenue to GDP ratio "from 12.7 in 2023 to 13.1 percent in 2024."
- Revenue administration progress: VAT taxpayers increased "from 13,500 to 14,850 between end-December 2022 and April 2023 (SB10, October 2023)." Authorities plan to increase to "16,000 by end-2023."

### Structural Fiscal Reforms and Public Financial Management
- Domestic arrears:
  - Audits of government payment arrears over "2000–2019" completed; authorities will adopt a settlement plan (SB1, "September 2023").
- SOE cross-debts:
  - Inventory and plan for settling SOE cross-debts as of 2020 underway, focusing on the "14 main public enterprises (SB3, September 2023)."
- Legal framework for PPPs:
  - Preliminary PPP framework submitted to Parliament (SB2).
- Mining code:
  - Draft decrees completed but entry into force delayed to integrate SONAMINES (SB4, rephased to "September 2023").
- SONARA restructuring:
  - Action plan delayed (SB9, rephased to "September 2023").
  - Authorities will: (i) "conclude debt restructuring negotiations with traders as soon as possible on the same terms as with banks"; (ii) "validate any shortfalls or overpayments on a monthly basis and settle the amounts owed by the debtor party within a maximum period of 60 days"; (iii) "require SONARA to pay the taxes and customs duties it owes to the Treasury on a regular basis"; (iv) "ensure that marketers are authorized to import a volume of petroleum products compatible with their financial commitments."
  - Further delay could increase fiscal risks and jeopardize debt sustainability.
- Treasury advances and budget realism:
  - Indicative target ceiling: "CFAF 15 billion per quarter on the Treasury advances without a budget allocation."
  - New structural benchmark requires including a budget allocation in the Budget law of year N+1 for clearance of unpaid obligations beyond 90 days in year N.
- Civil service pensions:
  - "Spending on pensions has doubled in nominal terms in the last ten years and will continue to increase."
  - Need to improve pension projections regularly.

### Maintaining Debt Sustainability Under Active Debt Management
- Risk assessment:
  - "Cameroon remains at high risk of debt distress, but its debt is sustainable."
  - "The risk of external debt distress is high as two out of four indicators breach the thresholds under the baseline scenario."
  - PV of public debt-to-GDP ratio "is above the benchmark."
  - External debt stock indicators remain below thresholds; external debt service indicators are on a downward trend.
  - Debt service-to-revenue ratio "is expected to stop breaching the threshold in the medium term."
- Proposed debt operation:
  - Authorities aim for a debt management operation totaling "CFAF 200 billion" via a euro-denominated loan from an external development partner to reduce unpaid domestic obligations.
  - While external debt stock and service indicators would deteriorate modestly, overall public debt stock indicator would remain unaffected, and debt service ratios would improve.
  - Operation aligned with 2023-25 debt strategy to increase average maturity.
- Program ceilings and adjustor:
  - Program ceiling on PV of newly contracted or guaranteed external public debt, with an adjustor for World Bank projects in 2023.
  - Adjustor accommodates concessional infrastructure and social projects.
- Public debt maturity:
  - Average term-to-maturity of public debt as of March 2023: "8.1 years."
- SENDs:
  - Authorities plan to address elevated levels of contracted but undisbursed loans (SENDs) and low disbursement rates through the October 2021 decree establishing monitoring procedures for PMUs.

### Strengthening Good Governance, Transparency, and Anti-Corruption
- Transparency milestones:
  - Publication of 2021 COVID-19 expenditure report on "March 30, 2023" (SB8).
  - Action plan to strengthen public expenditure audit frameworks published (SB7).
  - Launch and planned publication of a governance and anti-corruption vulnerabilities diagnosis (SB6).
- Audit and institutional support:
  - Government commitment to facilitate timely audits and provide sufficient resources to the Audit Chamber.
  - Recommended follow-ups from COVID-19 audits: introduce a public register of beneficial owners; improve regulation/management of special accounts and emergency fund disbursement; strengthen public procurement regulations.
- Public enterprise governance:
  - Reforms to 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.
- International transparency and AML/CFT engagement:
  - "Published the 2020 report by the Extractive Industries Transparency Initiative (EITI)" and working to implement corrective measures for the October 2023 validation session.
  - Undergoing mutual evaluation by GABAC and implementing a FATF ICRG action plan.

### Unlocking Growth Potential and Strengthening Resilience
- National development target:
  - SND30 envisages increasing the annual growth rate to "8.1 percent on average by 2030."
- Private sector and reform needs:
  - Achieving SND30 targets "will require a substantial acceleration in structural reforms."
  - Identified needs: improve public/private sector dialogue; avoid distortions in tax, legal, and judicial systems that hamper competitiveness.
  - Private sector feedback: remaining impediments to growth and need to deepen dialogue.

### Strengthening Financial Stability and Inclusion
- Banking sector fragilities:
  - NPLs: "13 percent in 2022."
  - Banks’ exposure to the sovereign: "35.3 percent of total assets in 2022."
  - Capital adequacy ratio (CAR): "15 percent in 2022" average, masking breaches of COBAC solvency ratio by some banks.
- Regulatory recommendations:
  - Implement COBAC’s recommendations on provisioning and capitalization and regulate the new CDEC by COBAC.
  - Authorities agreed to coordinate with COBAC although they considered COBAC regulation not necessary.
- Measures to increase private credit:
  - Create a movable collateral registry (RNSM) and a credit incident registry.
  - Systematic transmission of data from banks and micro-finance institutions to the existing credit registry (centrale des risques et des bilans).
  - Simplify judiciary procedures, train magistrates, transform commercial chambers into specialized commercial courts as budget allows.
  - Strengthen the credit recovery agency (SRC) with robust governance, operational and budgetary independence, transparency and accountability, and a sunset clause for banking asset recovery activities; SRC to focus uniquely on credit recovery and refrain from managing recovered immovable assets.

### Bank Restructuring and Financial Inclusion Strategy
- Bank restructuring:
  - Signature of the authorizing agreement with COBAC postponed to "July 2023" (from March 2023).
  - Transfer of NPLs to SRC carried out in "February 2022"; first recapitalization installment paid in 2022.
  - Recapitalizations in line with approved restructuring plans; historical shareholders not bailed out.
  - Completing recapitalizations will incur fiscal cost; remaining transfers planned in "2023 and 2024"; 2023 installment part of the budget.
  - Aim to finalize restructuring by the end of the ECF-EFF program and exit capital of both banks within "three to five years."
  - Privatization of the CBC to be completed within "a year."
- Financial inclusion strategy:
  - Strategy for "2023-27" finalized with UNDP; expected cost "CFAF 38 billion."
  - Six pillars listed including improving financial product availability, facilitating access for agricultural value chains and MSMEs, promoting innovation and digital finance, promotion of Islamic finance, consumer protection and financial education (especially for women), and improving regulatory and fiscal framework.

### Program Monitoring, External Financing and Capacity to Repay the Fund
- Regional assurances:
  - BEAC met end-December 2022 NFA target and provided updated policy assurances; review of regional policies scheduled by Executive Board in June 2023.
- Fund exposure and repayments:
  - As of end-December 2022, total outstanding credit from the Fund: "370 percent of quota."
  - Total Fund credit outstanding (existing and prospective drawings) peaks at "3.0 percent of GDP in 2023."
  - Annual obligations to the Fund peak at "about 3.2 percent of revenues in 2027."
  - Cameroon’s capacity to repay the Fund assessed as adequate but subject to significant risks.
- Financing plan (selected):
  - Total Financing Requirements (CFAF billions): "2022: 150; 2023: 618; 2024 (Proj.): 681; 2025 (Proj.): 695; 2026 (Proj.): 695; 2027 (Proj.): 1,691; 2028 (Proj.): 1,827; 2029 (Proj.): 1,874; 2030 (Proj.): 1,969."
  - Financing gap (CFAF billions): "2022: 280; 2023: 265; 2024 (Proj.): 134; 2025 (Proj.): 0; 2026 (Proj.): 0; 2027 (Proj.): 0; 2028 (Proj.): 0."
  - IMF Financing (CFAF billions): "2022: 115; 2023: 136; 2024 (Proj.): 460; 2025 (Proj.): 0; 2026 (Proj.): 0."
  - ECF: "384 in 2022"; EFF: "779 in 2022"; Budget Support (excl. IMF): "165 in 2022"; AfDB: "53 in 2022"; WB: "66 in 2022"; France: "46 in 2022."
- Arrears and safeguards:
  - Waiver granted in the third review for the nonobservance of continuous QPC on non-accumulation of external arrears (breach described as minor and temporary).
  - Authorities reported temporary external payment delays in early 2023 amounting to "0.2 percent of GDP." All arrears cleared; no current outstanding external payment arrears.

### Staff Appraisal — Macroeconomic Outlook and Policy Priorities
- Macroeconomic outlook:
  - Growth estimated at "3.8 percent in 2022"; expected to increase modestly to "4 percent in 2023."
  - Headline inflation "7.3 percent year-on-year at end-2022" expected to moderate to "5.9 percent at end-2023."
- Program performance:
  - Mixed performance: minor temporary breaches of the QPC on external arrears; four IT breaches in March 2023.
  - Authorities submitted a revised 2023 budget and remain committed to reducing the overall fiscal deficit to "0.8 percent of GDP" and the non-oil primary fiscal deficit to "2.5 percent of GDP in 2023."
  - Need to improve cash management and limit spending through exceptional procedures due to repeated minor breaches.
- Policy priorities:
  - Advance SONARA debt restructuring to limit contingent liabilities.
  - Accelerate structural reforms to unlock growth: enhance investment efficiency, strengthen financial inclusion, improve business climate, and strengthen transparency, governance, and anti-corruption frameworks.
  - Strengthen public financial management to ensure credible budgets and disciplined execution to avoid unpaid domestic obligations and support infrastructure completion.
  - Support private sector-led growth, noting launch of the financial inclusion strategy and diagnostic of economic governance.

*Source: IMF staff and country authorities, "Recent Economic Developments, Outlook, Risks, and Program Performance" as presented in the provided content.*

### 1. Real Sector Developments, 2017– 23 __________________________________________________________ 22

### 1. Real Sector Developments, 2017– 23

### Recent Economic Developments
- GDP growth is estimated at 3.8 percent in 2022, up from 3.4 percent in late 2022, driven by agroindustry and service sectors.
- Headline inflation stood at 7.3 percent at end-2022 year-over-year, up from 3.5 percent at end-2021.
- Over three million people were severely food-insecure between January and May 2023, a 5 percent increase compared to the same period in 2022.
- BEAC monetary policy: policy rate raised by 50 bps to 5 percent on March 27 (cumulative 175 bps increase since November 2021); weekly liquidity injections discontinued after being steadily scaled back.
- Region-wide inflation reached 6.5 percent at end-2022.
- Current account deficit narrowed from 4.0 percent of GDP in 2021 to 1.8 percent of GDP in 2022, reflecting higher global hydrocarbon prices and REER depreciation.
- Overall fiscal deficit reduced to 1.1 percent of GDP in 2022 from 3 percent of GDP in 2021.
- Non-oil primary balance (NOPB) remained unchanged at 3.9 percent of GDP in 2022.
- Cameroon classified as fragile and conflict affected state (FCS) recently based on multiple indicators; IMF preparing a country engagement strategy (CES).

### Outlook and Risks
- Real GDP growth projected at 4.0 percent in 2023; medium-term average growth projected at 4.4 percent.
- Average inflation projected to moderate from 7.3 percent at end-2022 to 5.9 percent at end-2023 and decline to below 3 percent in the medium term.
- Current account deficit expected to stabilize around 3 percent of GDP in the medium term.
- Public debt-to-GDP ratio expected to decline to below 40 percent by 2025.
- Noted near-term downside risks: security situation, slow reforms, regional risks, global recession risks, persistence of Russia’s war in Ukraine, volatile global hydrocarbon prices, tighter global financial conditions, potential rollover challenges, climate-related shocks.
- Mitigating factors: strong record of macroeconomic program implementation, close donor engagement, comprehensive CD program, scheduled completion of several infrastructure projects.

### Program Performance (through end-December 2022 and end-March 2023)
- QPCs: All QPCs except one met at end-December 2022. Continuous QPC on non-accumulation of external arrears missed due to late debt service payments in early 2023 (mainly Exim Bank China, Exim Bank Turkey, Deutsche Bank Spain).
- Breaches were minor (0.2 percent of GDP) and temporary.
- Unpaid domestic obligations at end-2022: 1.7 percent of GDP; of which 0.7 percent of GDP were over 90 days (domestic arrears under CEMAC definition).
- Share of expenditures through exceptional procedures exceeded 10 percent of total spending at end-2022 (program target: 4 percent).
- Treasury advances stood at 1.3 percent of GDP in 2022.
- End-March 2023: four out of nine indicative targets missed — ceiling on SNH direct interventions, share of spending executed through exceptional procedures, net accumulation of domestic payment arrears, and floor on poverty-reducing social spending.
- Oil revenue increased by 50 percent year-on-year in the first quarter of 2023; non-oil revenue increased by 13 percent year-on-year in the same period.
- Primary spending execution lagged, contributing to lower-than-planned social spending in Q1 2023.

### Fiscal Consolidation with Growth: Key Fiscal Numbers and Projections
- Text Table 1 (Percent of GDP), selected lines:
  - Total revenue and grants: 16.0 (2022 Est.), 15.5 (3rd Rev.), 15.9 (Proj.)
  - Oil revenue: 3.5 (2022 Est.), 2.8 (3rd Rev.), 2.9 (Proj.)
  - Non-oil revenue: 12.1 (2022 Est.), 12.4 (3rd Rev.), 12.7 (Proj.)
  - Grants: 0.4 (2022 Est.), 0.3 (3rd Rev.), 0.3 (Proj.)
  - Total expenditure: 17.1 (2022 Est.), 16.2 (3rd Rev.), 16.7 (Proj.)
  - Current expenditure: 12.5 (2022 Est.), 11.0 (3rd Rev.), 11.5 (Proj.)
  - Transfers and subsidies: 4.2 (2022 Est.), 3.1 (3rd Rev.), 3.5 (Proj.)
  - Interest payments: 0.8 (2022 Est.), 1.1 (3rd Rev.), 1.1 (Proj.)
  - Capital expenditure: 4.6 (2022 Est.), 5.0 (3rd Rev.), 5.0 (Proj.)
  - Overall balance: -1.1 (2022 Est.), -0.8 (3rd Rev.), -0.8 (Proj.)
  - Non-oil primary balance: -3.9 (2022 Est.), -2.4 (3rd Rev.), -2.5 (Proj.)
- Text Table 2: Contributions to changes in overall deficit in 2024 (Percent of GDP)
  - Oil revenue: 2.9 (2022), 2.1 (2023), Change -0.7
  - Non-oil revenue: 12.7 (2022), 13.1 (2023), Change 0.3
  - Grants: 0.3 (2022), 0.3 (2023), Change 0.0
  - Subsidies and transfers: 3.5 (2022), 2.4 (2023), Change -1.1
  - Capital expenditure: 5.0 (2022), 5.4 (2023), Change 0.5
  - Other current expenditure: 8.2 (2022), 8.3 (2023), Change 0.1
  - Deficit: -0.8 (2022), -0.6 (2023), Change -0.2
- NOPB projected to increase slightly from 2.4 percent to 2.5 percent of GDP (to accommodate recent developments while keeping fiscal path on track).
- Authorities intend to reduce overall fiscal deficit in 2024 to 0.6 percent of GDP and NOPB to a deficit of 1.7 percent of GDP.
- Planned consolidation measures for 2024 include expenditure rationalization on subsidies and transfers (~1.1 percent of GDP) and stronger non-oil revenue mobilization (~0.3 percent of GDP).

### Fuel Subsidy Reform
- Total cost of the fuel subsidy in 2022 estimated at over CFAF 900 billion (3.4 percent of GDP) compared to CFAF 600 billion (2.2 percent of GDP) in the revised 2022 budget.
- Around one third of the cost of the fuel subsidy was carried over to 2023.
- Additional fuel subsidy carry-over from 2022: CFAF 330 billion (1.1 percent of GDP), bringing fuel subsidy spending in the 2023 budget to CFAF 453 billion (1.5 percent of GDP).
- Retail fuel price increases in February 2023: 16 percent for gasoline and 25 percent for diesel; under prevailing assumptions, this would reduce the fuel subsidy to 0.5 percent of GDP in 2023 (excluding the carry-over from 2022).
- Staff recommendation: introduce an automatic fuel price adjustment mechanism with price smoothing in 2025, accompanied by mitigating measures (expand social transfers, improve access to education and health services, accelerate SONARA restructuring, achieve the energy transition).
- Authorities have not yet decided to implement an automatic fuel price adjustment mechanism.

### Public Investment and Priority Spending
- Authorities committed to improve investment spending efficiency in line with IMF PIMA recommendations.
- Legislative acts to implement decree on monitoring units responsible for project management (SB12) rephased to August 2023.
- Need to prioritize projects based on impact on growth, revenues, and fiscal sustainability given limited fiscal space and slow capital execution.
- Measures to improve procurement transparency and launch an information system for monitoring project procurement (new SB14, May 2024).

### Monetary and External Sector
- External position improved in 2022 due to higher oil export prices and REER depreciation.
- Compliance with CEMAC foreign exchange regulations expected to increase repatriation of export earnings and curb illicit outflows, helping consolidate regional foreign exchange reserves.
- BEAC policy tightening: policy rate at 5 percent after cumulative 175 bps increase since November 2021; discontinued weekly liquidity injections.

### Program Implementation and Institutional Measures
- Authorities committed to corrective measures: reduce and better monitor expenditures through exceptional procedures; comply with new IT on cash advances without a budget allocation; introduce SB to include stock of arrears into the budget law to clear unpaid obligations at end-2022.
- Committee set up to monitor SNH direct interventions and quarterly reporting to IMF on SNH interventions by type of expenditure starting Q1 2023.
- Structural benchmarks: two SBs met on schedule (Audit Chamber audit report on COVID-19 expenditures SB8, March 2023; action plan to strengthen supreme audit institutions SB7, April 2023). SB12 (procedures for project management units) and SB4 (implementing texts of mining code) delayed and rephased. SB2 (PPPs) and SB10 (VAT taxpayers increase to 14,850 by end-October 2023) met; SB9 (SONARA restructuring) rephased to September 2023.

*Source: IMF staff and country authorities, "Recent Economic Developments, Outlook, Risks, and Program Performance" as presented in the provided content.*

### 0.3 percent of GDP. There is also an expected cost related to the start of the operation of the

### 1cmrea2023002 - 0.3 percent of GDP. There is also an expected cost related to the start of the operation of the

### Energy project contingent liability and supporting financing
- "0.3 percent of GDP."
- "There is also an expected cost related to the start of the operation of the Nachtigal Hydro Power Plant, which would lead to losses to the national distribution company, ENEO, in the absence of transmission infrastructure, a potential contingent liability for the budget."
- "The World Bank is planning a US$300 million project to support a transmission line construction, with disbursements during 2024-28."
- "Work is underway on a package of supporting reforms, including tariff increase, estimated to generate about US$384 million in savings over the medium term."

### Non-Oil Revenue Mobilization
- "Non-oil tax revenue has fluctuated around 12 percent of GDP over the past decade."
- "After declining in 2020 due to economic downturn and COVID-19 related tax accommodation measures, non-oil revenue is expected to recover to its historic average in 2023."
- Planned tax policy and administration measures for 2024 (in line with IMF TA recommendations) include:
  - "the reform of the personal income tax;"
  - "the transformation of the simplified tax system into a synthetic tax based on the turnovers;"
  - "the rationalization of tax exemptions, including by reducing the number of goods exempted from VAT."
- Expected impact: "These measures will help improve non-oil revenue to GDP ratio from 12.7 in 2023 to 13.1 percent in 2024."
- Revenue administration progress: "increase in the number of VAT taxpayers from 13,500 to 14,850 between end-December 2022 and April 2023 (SB10, October 2023)." Authorities plan to "increase this number further to 16,000 by end-2023."

### Structural Fiscal Reforms and Public Financial Management
- Domestic arrears:
  - "The authorities have successfully completed the audits of government payment arrears over the period 2000–2019 and will adopt a settlement plan guaranteeing public debt sustainability (SB1, September 2023)."
- SOE cross-debts:
  - "Work is underway to develop an inventory and a plan for settling SOE cross-debts as of 2020, focusing on the 14 main public enterprises (SB3, September 2023)."
- Legal framework for PPPs:
  - "The authorities have prepared a preliminary version of the new PPP framework ... The new version of PPP framework has been submitted to Parliament and will be published following its adoption by Parliament (SB2)."
- Mining code:
  - "Draft decrees for the application of the Code have been completed" but entry into force delayed to integrate SONAMINES (SB4, not met in March 2023, rephased to September 2023).
- SONARA restructuring:
  - Development of a detailed action plan delayed (SB9, June 2023, rephased to September 2023).
  - Authorities will: (i) "conclude debt restructuring negotiations with traders as soon as possible on the same terms as with banks"; (ii) "validate any shortfalls or overpayments on a monthly basis and settle the amounts owed by the debtor party within a maximum period of 60 days"; (iii) "require SONARA to pay the taxes and customs duties it owes to the Treasury on a regular basis"; (iv) "ensure that marketers are authorized to import a volume of petroleum products compatible with their financial commitments."
  - "A further delay of the restructuring plan could increase fiscal risks and jeopardize debt sustainability."
- Treasury advances and budget realism:
  - "The indicative target sets a ceiling of CFAF 15 billion per quarter on the Treasury advances without a budget allocation."
  - "The new structural benchmark requires including a budget allocation in the Budget law of year N+1 for the clearance of the stock of unpaid obligations beyond 90 days in year N."
- Civil service pensions:
  - "Spending on pensions has doubled in nominal terms in the last ten years and will continue to increase."
  - "There is a need to improve pension projections regularly both in terms of revenue and expenditure."

### Maintaining Debt Sustainability Under Active Debt Management
- Risk assessment:
  - "Cameroon remains at high risk of debt distress, but its debt is sustainable."
  - "The risk of external debt distress is high as two out of four indicators breach the thresholds under the baseline scenario."
  - "The present value (PV) of public debt-to-GDP ratio is above the benchmark, indicating a high risk of overall debt distress."
  - "External debt stock indicators remain below the threshold, and external debt service indicators are on a downward trend."
  - "The debt service-to -revenue ratio is expected to stop breaching the threshold in the medium term."
- Proposed debt operation:
  - "the authorities aim to carry out a debt management operation totaling CFAF 200 billion to help reduce unpaid domestic obligations, through a euro-denominated loan from an external development partner."
  - "While external debt stock and service indicators would deteriorate modestly with the new external borrowing, the overall public debt stock indicator would remain unaffected, and the debt service ratios would improve."
  - "The operation would result in an improvement of the public debt profile and is aligned with the authorities’ 2023-25 debt strategy to further increase average maturity of the public debt."
- Program ceilings and adjustor:
  - "Cameroon is subject to a program ceiling on the PV of newly contracted or guaranteed external public debt, with an adjustor for World Bank projects in 2023."
  - "To accommodate concessional infrastructure and social projects financed by the World Bank, an adjustor applies to the 2023 ceiling, which is kept at the 2022 level."
- Public debt maturity:
  - "As of March 2023, the average term-to-maturity of public debt was 8.1 years."
- SENDs and disbursement rates:
  - Authorities plan to address "elevated levels of contracted but undisbursed loans (SENDs) and low disbursement rates, including through the October 2021 decree establishing procedures for monitoring the performance of project management units."

### Strengthening Good Governance, Transparency, and Anti-Corruption
- Transparency milestones:
  - "Cameroon continues to implement its governance commitments related to Rapid Credit Facility (RCF), notably on publication of audit reports on COVID-related expenditures."
  - "The 2021 COVID-19 expenditure report was published on March 30, 2023 (SB8)."
  - "The authorities have developed and published an action plan to strengthen frameworks for preparing, publishing, and monitoring public expenditure audits ... (SB7)."
  - "They have launched and will publish a diagnosis of the country's vulnerabilities in governance and anti-corruption (SB6)."
- Audit and institutional support:
  - "Government commitment to facilitating timely conduct and publication of future audits is critical."
  - "It is essential for the government to follow through by supporting and providing the Audit Chamber with sufficient financial resources for implementing its action plan."
  - Recommended follow-up actions from COVID-19 audits include: "introducing a public register of beneficial owners; improving the regulation and management of special accounts and the disbursement of emergency funds; and strengthening public procurement regulations."
- Public enterprise governance:
  - Ongoing reforms include "strengthening internal controls, requiring the publication of audited annual financial statements, and the submission of business plans in accordance with Law n°2017/11 of July 12, 2017."
- International transparency and AML/CFT engagement:
  - "The authorities published the 2020 report by the Extractive Industries Transparency Initiative (EITI) and are working to implement corrective measures for the validation session in October 2023 (MEFP ¶45)."
  - "Cameroon has also recently undergone a mutual evaluation ... by the Task Force on Money Laundering in Central Africa (GABAC) and is currently in the process of implementing an action plan by the Financial Action Task Force's (FATF's) International Cooperation and Review Group (ICRG)."

### Unlocking Growth Potential and Strengthening Resilience
- National development target:
  - "Cameroon’s National Development Strategy 2030 (SND30) ... envisages increasing the annual growth rate to 8.1 percent on average by 2030."
- Private sector and reform needs:
  - Acceleration to reach SND30 targets "will require a substantial acceleration in structural reforms."
  - Identified needs: "improving public/private sector dialogue, and avoiding distortions in the tax, legal, and judicial systems that hamper competitiveness."
  - Private sector feedback: "there are still many impediments to private sector growth and that the dialogue, while improving, needs to be deepened."

### Strengthening Financial Stability and Inclusion
- Banking sector fragilities:
  - "The ratio of non-performing loans (NPLs) remaining high at 13 percent in 2022 (Text Figure 5)."
  - "Banks’ exposure to the sovereign ... reached 35.3 percent of total assets in 2022, while classified as zero-risk weighted when backed by escrow accounts."
  - "The high average capital adequacy ratio (CAR) of 15 percent in 2022 masks the distressed position of the banks that breach COBAC’s solvency ratio."
- Regulatory recommendations:
  - "Staff therefore strongly encourages the implementation of COBAC’s recommendations on provisioning and capitalization as well as the regulation of the new CDEC by COBAC."
  - Authorities agreed to coordinate with COBAC to discuss a framework of regulation, although they considered regulation by COBAC not necessary.
- Measures to increase private credit:
  - Strengthen credit risk assessment frameworks, including:
    - Creation of a movable collateral registry (RNSM) and of a credit incident registry.
    - "Systematic transmission of data from banks and micro-finance institutions to the existing credit registry (centrale des risques et des bilans)."
    - Simplification of judiciary procedures, training of magistrates, and transformation of commercial chambers into specialized commercial courts as budget allows.
    - Strengthening the credit recovery agency (Société de Recouvrement des Créances, SRC) to ensure "a robust governance framework, operational and budgetary independence, and strong transparency and accountability rules, with a sunset clause for banking asset recovery activities."
    - "The SRC should also uniquely focus on its credit recovery activities and refrain from managing recovered immovable assets."

*Source: IMF staff and country authorities, as presented in the provided content unit.*

### 38.      The government continues resolving the banks in difficulty. The signature of the

### 1cmrea2023002 - 38.      The government continues resolving the banks in difficulty. The signature of the

### Bank restructuring and resolution
- The signature of the authorizing agreement with COBAC to complete the implementation of the restructuring plans for the two banks in difficulty has been postponed to July 2023 (from March 2023).
- The transfer of the NPLs to the credit recovery agency (SRC) was carried out in February 2022, and a first installment of the recapitalizations was paid in 2022.
- Recapitalizations are in line with the approved restructuring plans in which historical shareholders have not been bailed out.
- Fulfilling the asset shortfall for one of the banks will come at a fiscal cost; its financing needs must be discussed and assessed in line with regulatory requirements.
- A significant amount is still left to be transferred by the government in 2023 and 2024 to complete the recapitalization; authorities have confirmed that the 2023 installment is part of the budget.
- The authorities aim to finalize the restructuring in a timely manner to redress the prudential situation of the two banks in difficulty, with this objective to be reached by the end of the ECF-EFF program.
- The government will then be able to exit the capital of both banks within three to five years as it has committed.
- The government will continue the privatization process of the CBC (Commercial Bank of Cameroon), which should be completed within a year.
- Footnote: There were delays in the nomination of administrators and the new board of the two banks and in reaching agreement with existing shareholders regarding tax payments to the State.

### Financial inclusion strategy
- Cameroon has finalized its Strategy for Financial Inclusion over 2023-27, prepared with the UNDP and as part of a broader CEMAC effort.
- The strategy is expected to cost CFAF 38 billion.
- The strategy comprises six pillars:
  - (i) improving the quality, availability and accessibility of financial products and services;
  - (ii) facilitating access to finance for agricultural and agri-food value chains and MSMEs;
  - (iii) promoting innovation and digital finance;
  - (iv) promotion and development of Islamic finance;
  - (v) promoting consumer protection and financial education, especially for women to reduce financial inclusion inequalities;
  - (vi) improving the regulatory and fiscal framework.
- These pillars aim to advance both traditional and digital dimensions of financial inclusion; Cameroon currently lags the average level of inclusion in neighboring countries (Text Figure 7).

### Program implementation and monitoring
- Regional assurances:
  - BEAC met its end-December 2022 NFA target and provided updated policy assurances in support of CEMAC countries’ Fund-supported programs.
  - A review of regional policies and policy assurances is scheduled to be discussed by the Executive Board in June 2023; adequate policies and assurances are a condition for the conclusion of the review.
- Program reviews and targets:
  - Program performance reviews will continue semi-annually through six-monthly and continuous QPCs, quarterly ITs, and SBs.
  - Staff supports the authorities’ request to reset end-September and end-December 2023 QPCs and ITs to reflect the current macroeconomic framework, budget projections, and program commitments.
- Arrears and safeguards:
  - The authorities requested a waiver for nonobservance of a performance criterion on non-accumulation of external arrears on the grounds that the breach is minor and temporary; a waiver was granted in the third review for the nonobservance of the continuous QPC on non-accumulation of external arrears (Country Report No. 23/114, March 2023).
  - The authorities reported other temporary delays on external payments due early 2023 in the amount of 0.2 percent of GDP. All arrears have been cleared, and there are no current outstanding arrears on external payments.
  - The mission agreed to introduce a new IT on limiting Treasury advances and an SB on managing unpaid obligations (MEFP, Tables 1 and 2) to help prevent both domestic and external payment arrears.

### External financing and capacity to repay the Fund
- As of end-December 2022, total outstanding credit from the Fund amounts to 370 percent of quota.
- Total Fund credit outstanding (based on existing and prospective drawings) peaks at 3.0 percent of GDP in 2023.
- Annual obligations to the Fund peak at about 3.2 percent of revenues in 2027.
- Cameroon’s capacity to repay the Fund is assessed as adequate but subject to significant risks (Table 5).
- Financing assurances: the program remains fully financed with firm commitments for the upcoming 12 months and good prospects for the remainder of the program.
- Text Table 5 provides detailed external financing and financing gap figures.

### Program risks and mitigation
- Risks:
  - Global uncertainties, including financial conditions and hydrocarbon prices, compounded by the war in Ukraine.
  - A weaker CFAF to the US dollar and lower projected hydrocarbon prices affecting Cameroon’s external balance and projected level of NFA at end-2023.
- Mitigations:
  - Cameroon’s strong record of implementing macroeconomic programs, close engagement with donors, a comprehensive CD program, and contingency planning.
  - Authorities plan to use an existing mechanism that enables them to block up to 15 percent of budgeted current expenditures on goods and services to avoid spending overruns.
  - New proposed measures on limiting spending through exceptional procedures and improving budget realism (MEFP) are expected to support effective budget implementation and program performance.
- Consistency with regional strategy:
  - Projections should remain broadly in line with CEMAC projections despite external pressures.

### Staff appraisal — macroeconomic outlook and policy priorities
- Recent performance and outlook:
  - Economic recovery continued; growth is estimated at 3.8 percent in 2022.
  - Headline inflation reached 7.3 percent year-on-year at end-2022, up from 3.5 percent at end-2021, driven by domestic food prices. Non-food and non-energy prices have also increased.
  - The economic outlook for 2023 and the medium term remains positive provided reforms continue and the external environment is supportive; growth is expected to increase modestly to 4 percent while inflation is expected to moderate from 7.3 percent year-on-year at end-2022 to 5.9 percent at end-2023.
- Program performance and fiscal stance:
  - Program performance is mixed: the QPC on accumulation of external arrears experienced further minor and temporary breaches in early 2023; preliminary data for March 2023 show breaches in four ITs (ceilings on net accumulation of arrears on domestic payments; floor on poverty-reducing social spending; direct interventions of SNH; share of expenditure executed through exceptional procedures).
  - The authorities submitted a revised budget for 2023 and remain committed to maintaining macroeconomic stability and reducing the overall fiscal deficit to 0.8 percent of GDP and the non-oil primary fiscal deficit to 2.5 percent of GDP in 2023.
  - The non-oil primary deficit target under the program was met, though a substantial part of the subsidies for petroleum products for 2022, validated only in 2023, has been integrated into the revised 2023 budget.
  - Repeated temporary and minor breaches of the target on non-accumulation of external payment arrears point to the need to improve cash management and limit spending through exceptional procedures.
  - The government will continue policies consistent with regional external stability, which requires rebuilding foreign exchange reserves at the BEAC.
- Debt and structural reform priorities:
  - Cameroon remains at high risk of debt distress, but its debt is sustainable.
  - Planned 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 need to be accelerated to unlock growth potential: enhance investment efficiency, strengthen financial inclusion, improve the business climate, and strengthen transparency, governance, and anti-corruption frameworks.
  - Continued progress needed on SOE management and rehabilitating SONARA.
  - Strengthening public financial management is critical to ensure a credible budget with disciplined budget execution to avoid accumulation of unpaid domestic obligations and to support timely completion of major infrastructure projects in transport and energy.
  - Staff welcomes steps to boost private sector-led growth, including the launch of the financial inclusion strategy, and recent steps to strengthen governance (launch of a broad diagnostic of economic governance and plans to strengthen the Supreme Court’s Audit Bench).

*Source: IMF staff and country authorities (excerpt).*

### 55.      Based on Cameroon’s performance under the program, the implementation of the end-

### CAMEROON

### Program review and staff recommendations
- 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 June 2023 union-wide paper, staff supports the authorities’ request for the completion of the fourth reviews.
- Staff supports the authorities’ request for:
  - the modification of quantitative targets for end-September and end-December 2023; and
  - a waiver for nonobservance of the non-accumulation of external arrears on the grounds that it is temporary and minor.
- Staff proposes that completion of the fifth review be conditional on the implementation of critical policy assurances at the union level established in the June 2023 union-wide background paper.

### Real sector developments (selected)
- GDP at constant prices (annual percentage change): 2021: 3.6; 2022: 3.4; 2023 (Est. 3rd Rev.): 3.8; 2024 (Proj.): 4.3; 2025 (Proj.): 4.0; 2026 (Proj.): 4.2; 2027 (Proj.): 4.4; 2028 (Proj.): 4.5; 2029 (Proj.): 4.5; 2030 (Proj.): 4.6.
- Oil GDP at constant prices (annual percentage change): 2021: -3.2; 2022: -5.1; 2023: 1.9; 2024: 0.7; 2025: -1.8; 2026: -1.3; 2027: -1.4; 2028: -1.0; 2029: -0.6; 2030: -0.4.
- Non-Oil GDP at constant prices (annual percentage change): 2021: 3.8; 2022: 3.6; 2023: 3.8; 2024: 4.4; 2025: 4.1; 2026: 4.3; 2027: 4.6; 2028: 4.6; 2029: 4.6; 2030: 4.7.
- Consumer prices (average): 2021: 2.3; 2022: 5.3; 2023: 6.3; 2024 (Proj.): 5.9; 2025 (Proj.): 6.2; 2026 (Proj.): 4.8; 2027 (Proj.): 3.0; 2028 (Proj.): 2.3; 2029 (Proj.): 2.0; 2030 (Proj.): 2.0.
- Export volume (percentage change): 2021: 14.1; 2022: 4.2; 2023: 7.5; 2024 (Proj.): 6.3; 2025 (Proj.): 6.5; 2026 (Proj.): 4.8; 2027 (Proj.): 5.6; 2028 (Proj.): 6.5; 2029 (Proj.): 7.1; 2030 (Proj.): 8.3.
- Oil exports (percent of GDP): 2023: 4.9; 2024: 7.1; 2025: 7.8; 2026: 5.4; 2027: 5.2; 2028: 4.5; 2029: 4.2; 2030: 3.7; 2031: 3.3; 2032: 2.9.

### Fiscal developments (selected)
- Nominal GDP (at market prices, CFAF billions): 2021: 25,158; 2022: 27,210; 2023: 27,591; 2024 (Proj.): 29,749; 2025 (Proj.): 29,457; 2026 (Proj.): 31,521; 2027 (Proj.): 33,691; 2028 (Proj.): 35,661; 2029 (Proj.): 37,760; 2030 (Proj.): 40,066.
- Total revenue (including grants) (percent of GDP): 2021: 14.0; 2022: 16.1; 2023: 16.0; 2024 (Proj.): 15.5; 2025 (Proj.): 15.9; 2026 (Proj.): 15.5; 2027 (Proj.): 15.3; 2028 (Proj.): 15.3; 2029 (Proj.): 15.3; 2030 (Proj.): 15.4.
- Oil revenue (CFAF billions): 2021: 80; 2022: 1,107; 2023: 1,152; 2024 (Proj.): 907; 2025 (Proj.): 872; 2026 (Proj.): 797; 2027 (Proj.): 761; 2028 (Proj.): 735; 2029 (Proj.): 716; 2030 (Proj.): 702.
- Non-oil revenue (CFAF billions): 2021: 24,357; 2022: 26,137; 2023: 26,439; 2024 (Proj.): 28,841; 2025 (Proj.): 28,585; 2026 (Proj.): 30,724; 2027 (Proj.): 32,930; 2028 (Proj.): 34,926; 2029 (Proj.): 37,044; 2030 (Proj.): 39,364.
- Total expenditure (percent of GDP): 2021: 16.9; 2022: 18.0; 2023: 17.1; 2024 (Proj.): 16.2; 2025 (Proj.): 16.7; 2026 (Proj.): 16.1; 2027 (Proj.): 15.7; 2028 (Proj.): 16.0; 2029 (Proj.): 16.3; 2030 (Proj.): 16.4.
- Overall fiscal balance (payment order basis, excluding grants) (percent of GDP): 2021: -3.2; 2022: -2.4; 2023: -1.5; 2024 (Proj.): -1.1; 2025 (Proj.): -1.1; 2026 (Proj.): -1.0; 2027 (Proj.): -0.6; 2028 (Proj.): -0.9; 2029 (Proj.): -1.1; 2030 (Proj.): -1.0.
- Overall fiscal balance (cash basis, including grants) (percent of GDP): 2021: -2.4; 2022: -2.3; 2023: -1.2; 2024 (Proj.): -1.3; 2025 (Proj.): -2.0; 2026 (Proj.): -1.5; 2027 (Proj.): -0.9; 2028 (Proj.): -1.2; 2029 (Proj.): -1.0; 2030 (Proj.): -1.0.
- Non-oil primary balance (payment order basis, percent of non-oil GDP): 2021: -4.1; 2022: -4.6; 2023: -4.0; 2024 (Proj.): -2.5; 2025 (Proj.): -2.6; 2026 (Proj.): -1.7; 2027 (Proj.): -1.2; 2028 (Proj.): -1.5; 2029 (Proj.): -1.6; 2030 (Proj.): -1.5.
- Fuel subsidy effect: public spending increase in 2022 driven by increased fuel subsidies to protect population from surge in international oil prices and limit inflationary pressures; high cost of fuel subsidy keeps non-oil primary balance at 2021 level despite improved overall balance.

### Debt and debt sustainability (selected)
- Stock of public debt (percent of GDP): 2021: 46.8; 2022: 46.4; 2023: 45.5; 2024 (Proj.): 42.8; 2025 (Proj.): 43.2; 2026 (Proj.): 41.1; 2027 (Proj.): 38.8; 2028 (Proj.): 37.3; 2029 (Proj.): 36.2; 2030 (Proj.): 35.2.
- Of which: external debt (percent of GDP): 2021: 31.7; 2022: 32.7; 2023: 30.9; 2024 (Proj.): 30.5; 2025 (Proj.): 30.7; 2026 (Proj.): 29.7; 2027 (Proj.): 28.7; 2028 (Proj.): 28.2; 2029 (Proj.): 27.8; 2030 (Proj.): 27.8.
- IMF capacity to repay (selected):
  - Quota (in SDRs): 276,000,000.
  - Principal (CFAF billions) scheduled: 2023: 48.3; 2024: 76.9; 2025: 106.0; 2026: 159.3; 2027: 183.4; 2028: 170.7; 2029: 160.1; 2030: 130.9; 2031: 90.6; 2032: 63.3; 2033: 38.8; 2034: 17.1; 2035: 12.8; 2036: 12.8; 2037: 12.8; 2038: 12.8; 2039: 12.8; 2040: 12.8.
  - Charges and interest (CFAF billions) scheduled: 2023: 15.2; 2024: 25.0; 2025: 25.0; 2026: 24.6; 2027: 23.4; 2028: 21.8; 2029: 20.1; 2030: 18.4; 2031: 16.7; 2032: 15.4; 2033: 14.9; 2034: 14.8; 2035: 14.8; 2036: 14.8; 2037: 14.8; 2038: 14.8; 2039: 14.8; 2040: 14.8.
- Cameroon remains at high risk of debt distress. External debt stock indicators are below thresholds while external debt service indicators remain above the threshold with a downward trend.
- A debt management operation in 2023 will lead to a slight deterioration of external debt indicators but will improve debt service capacity and enhance overall debt maturity profile without affecting the public debt-to-GDP ratio.

### Balance of payments and external sector (selected)
- Current account balance (CFAF billions): 2021: -997; 2022: -429; 2023: -495; 2024 (Proj.): -846; 2025 (Proj.): -863; 2026 (Proj.): -958; 2027 (Proj.): -904; 2028 (Proj.): -1,030; 2029 (Proj.): -1,098; 2030 (Proj.): -1,200.
- Trade balance (percent of GDP): 2021: -1.1; 2022: 0.4; 2023: 0.1; 2024 (Proj.): -1.3; 2025 (Proj.): -1.4; 2026 (Proj.): -1.6; 2027 (Proj.): -1.4; 2028 (Proj.): -1.6; 2029 (Proj.): -1.7; 2030 (Proj.): -1.8.
- Exports, goods (CFAF billions): 2021: 3,336; 2022: 4,366; 2023: 4,347; 2024 (Proj.): 3,998; 2025 (Proj.): 3,944; 2026 (Proj.): 3,940; 2027 (Proj.): 4,148; 2028 (Proj.): 4,228; 2029 (Proj.): 4,354; 2030 (Proj.): 4,550.
- Imports, goods (CFAF billions): 2021: -3,624; 2022: -4,266; 2023: -4,316; 2024 (Proj.): -4,382; 2025 (Proj.): -4,367; 2026 (Proj.): -4,431; 2027 (Proj.): -4,633; 2028 (Proj.): -4,806; 2029 (Proj.): -4,999; 2030 (Proj.): -5,274.
- Terms of trade (percentage change): 2021: 9.4; 2022: 3.6; 2023: -6.8; 2024 (Proj.): -8.4; 2025 (Proj.): -7.6; 2026 (Proj.): -1.6; 2027 (Proj.): 0.2; 2028 (Proj.): -4.0; 2029 (Proj.): -4.1; 2030 (Proj.): -4.1.
- Oil price (US$ per barrel): 2021: 69.2; 2022: 96.4; 2023: 96.4; 2024 (Proj.): 81.9; 2025 (Proj.): 75.3; 2026 (Proj.): 69.8; 2027 (Proj.): 67.6; 2028 (Proj.): 60.6; 2029 (Proj.): 54.7; 2030 (Proj.): 53.7.

### Monetary and financial sector (selected)
- Broad money (M2) annual percentage change: 2021: 17.2; 2022: 11.4; 2023: 11.4; 2024 (Proj.): 8.1; 2025 (Proj.): 9.0; 2026 (Proj.): 8.0; 2027 (Proj.): 7.2; 2028 (Proj.): 7.0; 2029 (Proj.): 7.0; 2030 (Proj.): 7.0.
- Net foreign assets (contribution to M2 growth, percentage points): 2021: 4.3; 2022: 7.7; 2023: 7.7; 2024 (Proj.): 1.0; 2025 (Proj.): 2.9; 2026 (Proj.): 0.7; 2027 (Proj.): 1.7; 2028 (Proj.): 2.0; 2029 (Proj.): 1.4; 2030 (Proj.): 1.9.
- Credit to the private sector (annual percentage change): 2021: 9.7; 2022: 13.6; 2023: 13.6; 2024 (Proj.): 8.8; 2025 (Proj.): 10.4; 2026 (Proj.): 9.2; 2027 (Proj.): 7.6; 2028 (Proj.): 7.0; 2029 (Proj.): 7.0; 2030 (Proj.): 7.0.
- Net foreign assets (CFAF billions): 2021: 2,627; 2022: 3,193; 2023: 3,193; 2024 (Proj.): 3,278; 2025 (Proj.): 3,432; 2026 (Proj.): 3,494; 2027 (Proj.): 3,654; 2028 (Proj.): 3,857; 2029 (Proj.): 4,009; 2030 (Proj.): 4,232.
- Broad money (CFAF billions): 2021: 7,324; 2022: 8,157; 2023: 8,157; 2024 (Proj.): 8,815; 2025 (Proj.): 8,893; 2026 (Proj.): 9,603; 2027 (Proj.): 10,295; 2028 (Proj.): 11,015; 2029 (Proj.): 11,791; 2030 (Proj.): 12,618.

### External financing needs and financing plan (selected)
- Total Financing Requirements (CFAF billions): 2022: 150; 2023: 618; 2024 (Proj.): 681; 2025 (Proj.): 695; 2026 (Proj.): 695; 2027 (Proj.): 1,691; 2028 (Proj.): 1,827; 2029 (Proj.): 1,874; 2030 (Proj.): 1,969.
- Current account deficit (CFAF billions): 2022: 495; 2023: 863; 2024 (Proj.): 958; 2025 (Proj.): 904; 2026 (Proj.): 1,030; 2027 (Proj.): 1,098; 2028 (Proj.): 1,200.
- Amortization of PPG Debt (CFAF billions): 2022: 589; 2023: 738; 2024 (Proj.): 712; 2025 (Proj.): 738; 2026 (Proj.): 757; 2027 (Proj.): 814; 2028 (Proj.): 724.
- Financing sources (selected): IMF Financing (CFAF billions): 2022: 115; 2023: 136; 2024 (Proj.): 460; 2025 (Proj.): 0; 2026 (Proj.): 0; ECF (CFAF billions): 384 in 2022; EFF (CFAF billions): 779 in 2022; Budget Support (excl. IMF) (CFAF billions): 165 in 2022; AfDB (CFAF billions): 53 in 2022; WB (CFAF billions): 66 in 2022; France (CFAF billions): 46 in 2022.
- Financing gap (CFAF billions): 2022: 280; 2023: 265; 2024 (Proj.): 134; 2025 (Proj.): 0; 2026 (Proj.): 0; 2027 (Proj.): 0; 2028 (Proj.): 0.

*Source: IMF staff report content as provided.*

### Annex I. Global Risk Assessment Matrix (February 13, 2023)

### Annex I. Global Risk Assessment Matrix (February 13, 2023)

### Conjunctural risks: likelihood, impacts, and recommended policy responses
- Intensification of regional conflict(s)
  - Likelihood: High
  - Impact if realized:
    - Higher inflation and increased food insecurity would intensify.
    - Supply chain disruptions would continue to affect businesses.
    - Spending pressures (including on fuel subsidies) would increase, with extension of tax exemptions, which jeopardize fiscal strategy.
  - Recommended policy response:
    - Create fiscal space through wage bill control, spending review, and revenue mobilization for new policies to mitigate supply shocks in the economy.
    - Prioritize and target public spending towards the most vulnerable people.
    - Review and reprioritize tax exemptions for programs with higher economic and social impact.

- Social discontent
  - Likelihood: High
  - Impact if realized:
    - Social unrest could delay fiscal adjustment.
    - Social discontent and spillovers from regional crises (e.g., displacements of populations) could fuel existing internal tensions.
    - Rising unrest would further disrupt agricultural production and growth.
    - Delays in investment projects might be exacerbated.
  - Recommended policy response:
    - Review and reprioritize public spending towards programs with higher economic and social impact.
    - Create fiscal space to tackle financial vulnerabilities.
    - Mobilize additional grants and concessional loans from financial and technical partners to cover prioritized needs.

- Abrupt global slowdown or recession
  - Likelihood: Medium
  - Impact if realized:
    - Slower growth due to weaker demand from trade partners, with worsening current account. Weaker demand could cool inflation.
  - Recommended policy response:
    - Adjust fiscal policy to anchor expectations of economic agents.
    - Prioritize and target public spending towards the most vulnerable people.
    - Monitor macro-financial risks.

- Commodity price volatility
  - Likelihood: Medium
  - Impact if realized:
    - Worsening terms of trade in case of lower commodity prices, improvement in case of higher prices for Cameroon’s main commodity exports (e.g., timber and cocoa).
    - Unstable fiscal position, with delays in fiscal adjustment and reform efforts.
    - Further social unrest.
  - Recommended policy response:
    - Review export promotion incentives to ensure that they encourage higher growth and diversification of the economy.
    - Prioritize and target public spending towards the most vulnerable people.

- Monetary policy miscalibration
  - Likelihood: Medium
  - Impact if realized:
    - Increase in risk premia, heightened financial sector instability risk.
  - Recommended policy response:
    - In the short term, the regional central bank will need to remain vigilant, adjusting the monetary stance as needed.
    - In the medium-term, Cameroon needs to accelerate implementation of reforms to strengthen the resilience of the financial sector.

- Systemic financial instability
  - Likelihood: Medium
  - Impact if realized:
    - Limited credit extension would hamper investment and growth.
    - Potential contingent liabilities would add to fiscal pressures.
  - Recommended policy response:
    - Enhance banking supervision and enforce prudential regulations.
    - Improve processes and procedures for collection of debts and collateral.
    - Create fiscal space to absorb financial shocks.

### Structural risks: likelihood, impacts, and recommended policy responses
- Deepening geo-economic fragmentation
  - Likelihood: High
  - Impact if realized:
    - Risk of reconfiguration of relations with traditional partners.
    - Further supply disruptions.
    - High input costs, financial instability.
    - Lower potential growth.
  - Recommended policy response:
    - Accelerate labor and product market reforms to support diversification of exports and extend trade relations.

- Cyberthreats
  - Likelihood: Medium
  - Impact if realized:
    - Impact on public services that rely on digital infrastructure.
  - Recommended policy response:
    - Create contingent plans for cyberattacks.

- Extreme climate events
  - Likelihood: Medium
  - Impact if realized:
    - Harm agricultural production, worsening the livelihood of people in rural areas and exacerbating extreme poverty and inequalities.
    - Higher recovery spending, higher financing costs, and lower revenues.
    - Supply disruptions and weaker confidence.
  - Recommended policy response:
    - Improve capacity for monitoring and assessing climate policies and strengthening early warning systems.
    - Address infrastructure gaps and income/developmental disparities among regions, while instituting appropriate social safety nets.

- Domestic risks (worsening security situation, slow reform progress, fiscal policy slippages, etc.)
  - Likelihood: Medium
  - Impact if realized:
    - Spending pressures jeopardizing fiscal performance.
    - Weak program performance.
  - Recommended policy response:
    - Create fiscal space to absorb spending on security purposes.
    - Reflect security spending in the budget.
    - Accelerate priority reforms in the PFM and governance areas.

### Methodological note on the RAM
- The RAM shows events that could materially alter the baseline path.
- Relative likelihood categories: “low” = probability below 10 percent, “medium” = probability between 10 and 30 percent, and “high” = probability between 30 and 50 percent.
- Conjunctural shocks and scenarios highlight risks that may materialize over a shorter horizon (between 12 to 18 months). Structural risks are those likely to remain salient over a longer horizon.

*Source: Annex I. Global Risk Assessment Matrix (February 13, 2023).*

### Letter of Intent and Supplementary MEFP — key findings, performance, and policy commitments
- Program context and objectives
  - The Government of Cameroon is implementing its 2021-24 Economic and Financial Program supported by the IMF’s Extended Credit Facility (ECF) and Extended Fund Facility (EFF).
  - The government adopted an economic recovery program in line with the regional economic and financial reform program (PREF-CEMAC) and commitments from CEMAC Heads of State Summits.

- External environment risks
  - Cameroon faces renewed risks from the external environment, including tight global financial conditions and increased oil price volatility.

- Use of SDR allocation
  - The government welcomed the SDR allocation made available to Cameroon by the IMF in August 2021.
  - The government used CFAF 50 billion in 2021, CFAF 70 billion in 2022, CFAF 60 billion in January 2023 and expects to use another CFAF 20 billion by the end-2023, totaling around 96 percent of the allocation to attenuate the socio-economic impact of the crisis.

- Recent economic developments and key statistics
  - Growth:
    - Growth reached 3.6 percent in 2021.
    - Growth should reach 3.8 percent in 2022, compared to 4.2 percent originally projected in the 2022 budget law.
  - Inflation:
    - Average inflation reached 6.3 percent in December 2022, with much larger increases for some food items.
  - Fiscal position and subsidies:
    - Overall deficit narrowed to 1.1 percent of GDP in 2022 compared to 3 percent of GDP in 2021.
    - Fuel subsidies estimated around CFAF 900 billion (3.4 percent of GDP) in 2022.
    - Non-oil primary balance should remain around 3.9 percent of GDP in 2022.
  - Public and external debt:
    - Public debt fell from 46.8 percent of GDP at end-2021 to 45.5 percent at end-2022.
    - External public debt fell from 31.7 percent to 30.9 percent of GDP over the same period.
  - External balance:
    - Current account deficit (including grants) is estimated to have narrowed from 4 percent of GDP in 2021 to 1.8 percent in 2022.

- Program implementation and performance
  - Overall program performance at end-December 2022 is mixed:
    - The continuous performance criterion on the non-accumulation of external payment arrears was missed in 2022 and early 2023 (described as a temporary and minor breach).
    - All other quantitative performance criteria (QPCs) at end-December 2022 were met.
    - Three of the five indicative targets (ITs) at end-December 2022 were not met: ceilings on the net accumulation of domestic payment arrears, on direct interventions by the National Hydrocarbons Company (SNH), and on the share of expenditure executed under exceptional procedures were exceeded.
    - Causes cited include spending through exceptional procedures, Treasury advances, cash management issues, and security concerns leading to greater use of SNH direct interventions and exceptional budget procedures.
  - Structural benchmarks (SBs):
    - Two of the four structural benchmarks due for the Fourth Review were met.
    - SB12 (implementing texts for the October 2021 decree governing project management) was delayed and rephased from April 2023 to August 2023.
    - SB4 (implementing texts of the mining code) was rephased to September 2023; texts are now ready for submission to Parliament.
    - SB2 on Public Private Partnerships (PPPs), due end-June 2023, was met.
    - SB9 on the restructuring plan of SONARA was rephased from June 2023 to September 2023.

- Government commitments and requests
  - The government will continue policies consistent with regional external stability and supports BEAC and COBAC enforcement of new foreign exchange regulations.
  - Authorities will ensure compliance with obligations to repatriate export proceeds, particularly oil revenues.
  - The government requests IMF Executive Board approval to revise program targets for end-September and end-December 2023 in line with updated macroeconomic projections and adopted policies.
  - The government requests a waiver for the non-observance of the continuous performance criterion on the non-accumulation of external payment arrears in 2023 on the grounds that the breach is minor and temporary.
  - The government requests conclusion of the fourth reviews of ECF-EFF supported arrangements and disbursement and purchase of SDR 18.4 million and SDR 36.8 million, respectively.
  - The government commits to accelerate implementation of reforms, consult the IMF before revising measures in the MEFP, and report required information according to the attached Technical Memorandum of Understanding (TMU).
  - The government agrees to publication of the letter, the MEFP, the TMU, and the IMF staff report on the program.

*Source: Annex I. Global Risk Assessment Matrix; Letter of Intent and Attachment I. Supplementary Memorandum of Economic and Financial Policies in 2023 (June 14, 2023).*

### 8. Performance on indicative targets at end-March 2023 remained mixed. Four out of nine

### 1cmrea2023002 - 8. Performance on indicative targets at end-March 2023 remained mixed. Four out of nine

### Performance on quantitative and structural targets
- Four out of nine quantitative targets were missed at end-March 2023.
  - Ceilings not respected: net accumulation of domestic payment arrears; direct interventions by SNH; share of expenditures through exceptional procedures.
  - Floor not respected: poverty-reducing social spending.
- Progress on structural benchmarks (SBs):
  - Two of four SBs due for the Fourth Review were met:
    - SB8 (March 2023): Supreme Court’s Audit Bench (Chambre des Comptes) published the audit report on COVID-related expenditures in 2021.
    - SB7 (April 2023): Authorities published the action plan to strengthen frameworks for public spending audits.
  - Two Fourth Review SBs delayed and rephased:
    - SB12 (April 2023 → rephased to August 2023): Issuance of implementing texts for the October 2021 decree governing project management units delayed.
    - SB4 (March 2023 → rephased to September 2023): Publication of implementing texts of the mining code delayed.
  - Two SBs due for the Fifth Review were met before due dates:
    - SB2 on PPPs (due end-June 2023) was met.
    - SB10 increased VAT taxpayers from 13,500 at end-December 2022 to 14,850 by end-October 2023 and was implemented before the due date.

### Macroeconomic outlook and projections
- Real GDP growth:
  - Projected at 4.0 percent in 2023.
  - Projected to average 4.4 percent through the medium term.
  - Growth drivers: robust primary sector (agrobusiness, and forestry) and services; hydrocarbon output recovery in 2023 with broadly unchanged thereafter.
- Inflation:
  - Projections: average inflation could exceed 6 percent by end-2023 following a retail fuel price adjustment, then stabilizing below 3 percent through the medium term.
- Hydrocarbons: increasing gas production offsets oil field depletion; hydrocarbon output to recover in 2023 and then remain broadly unchanged.
- Current account:
  - Expected to remain around 3 percent of GDP in the medium term.
  - Policies to stabilize it: promote non-oil exports, import substitution, regional integration, and compliance with CEMAC foreign exchange regulations to raise regional foreign reserves to at least five months of imports in the medium term.
- Monetary policy:
  - Geared to achieve CEMAC objectives for inflation and foreign reserves.
  - Continued recovery and reduced budget deficits should allow BEAC to reduce liquidity growth and raise foreign reserve coverage without destabilizing the financial system.

### Fiscal framework and consolidation objectives
- Policy direction:
  - Implement SND-30 while ensuring public finance sustainability.
  - Fiscal consolidation aligned with IMF program and CEMAC convergence criteria while protecting priority SND-30 expenditures.
- Revenue and spending targets:
  - Non-oil domestic revenues target: raise from 12.1 percent in 2022 to around 13.3 percent of GDP in 2025.
  - Total primary spending (excluding interest) target: reduce from 16.4 percent of GDP in 2022 to 14.6 percent of GDP in 2025.
- 2023 budget and deficits:
  - Fuel subsidy cost in 2022 estimated at around CFA 900 billion (about 3.4 percent of GDP).
  - Retail fuel prices raised by an average of 21 percent in February 2023; under current international oil price projections, fuel subsidy cost in 2023 would reduce to CFAF 145 billion (0.5 percent of GDP), excluding carry-over from 2022.
  - Mitigation package cost: 0.3 percent of GDP, including a 15.5 percent increase in the minimum wage (SMIG) and a 5.2 percent increase in civil service salaries.
  - LFR23 envisages reducing the overall budget deficit (payment order basis, including grants) to 0.8% of GDP in 2023, from 1.1% of GDP in 2022.
  - Non-oil primary deficit projected to decline to 2.5% of GDP in 2023 from 3.9% of GDP in 2022.
  - LFR23 requires submission to Parliament (prior action) with non-oil primary fiscal balance and parameters consistent with program macro framework.
- 2024 fiscal outlook:
  - Budget revenues expected to decline relative to GDP due to lower oil-related budget revenues; mobilization of non-oil domestic revenues (0.3 percent of GDP) to help offset decline.
  - Overall deficit expected to decline to around 0.6 percent of GDP in 2024.
  - Non-oil primary deficit expected to fall to 1.7 percent of GDP in 2024.

### Fuel subsidy reform and mitigating measures
- Rationale: fuel subsidies are costly, poorly targeted, and constrain fiscal space.
- Reform approach:
  - Gradual reduction of fuel subsidies to create fiscal space for priority spending and sustain public finances.
  - Review existing fuel pricing structure; consider medium-term options for automatic adjustments of domestic fuel prices to reflect international price movements.
- Mitigation measures:
  - Strengthen social safety nets and improve access to basic public services (education and health).
  - Doubling social support through direct social transfers with World Bank support for targeting (filets sociaux).

### Prioritizing investment and public enterprise subsidies
- Investment priorities:
  - Limited fiscal space necessitates prioritizing productive investments to boost activity, revenues, and exports.
  - Government to prioritize budget contribution for jointly financed projects, focusing on completion of key infrastructure in energy and transport and ancillary projects to harness spillovers.
  - Prioritization to be guided by comprehensive macroeconomic and social impact assessments.
- Public enterprise subsidies:
  - Subsidies should be better prioritized and reduced for weakest performers.
  - Diagnostic study of approved/ administered prices of public enterprise products to be finalized in November 2023 to review pricing formulas and possible liberalization.

### Mobilizing domestic non-oil revenues and tax administration reforms
- Current situation:
  - Non-oil tax revenue collection remains below 13 percent of GDP and below its real potential.
  - Challenges: weight of tax expenditures, large informal sector, low yield of personal income tax.
- DGI reforms (three-year plan 2023-25):
  - Modernize and align tax system with international standards.
  - Improve revenue collection, combat tax evasion and fraud, ensure integrity of taxpayer records.
  - Gradual reduction of exemptions and audit application of the 2013 law (2013/004) on investment incentives.
  - 2024 envisaged measures: (i) reform of personal income tax; (ii) transformation of the simplified tax system into a synthetic tax based on business turnover; (iii) rationalization of tax exemptions.
- DGD reforms and 2024 strategy:
  - Optimize revenues through tighter controls and digitization of records.
  - Implement LF23 measures with high tax impact, broaden tax base, reduce exploitation of loopholes.
  - Four pillars for medium-term customs revenue mobilization:
    - (i) improve spontaneous revenue via better control of tax bases and accounting/valuation of exports,
    - (ii) strengthen and digitize controls,
    - (iii) consolidate collection by strengthening monitoring of State, SONARA, marketers and public enterprises’ debt; extend electronic payment platform to all customs units; continue auction automation,
    - (iv) improve administration of customs taxes prioritizing digitization and trade facilitation and centralization of port taxes and fees in customs declarations.
- DGI-DGD FUSION platform priorities:
  - Strengthen interconnection between CAMCIS and FISCALIS.
  - Transfer collection of certain taxes/levies from DGI via DGD CAMCIS.
  - Implement a single database for customs clearance and the ANR of the DGI.
  - Automate stamping by networking CAMCIS and the Delarue information system; end manual stamping; conduct preliminary audit of current stamping device; profile sticker orderers.
  - Automate NIU transmission.
  - Create a single window for customs clearance of vehicles; interface information systems of DGD, DGI, MINTRANSPORTS, etc.
  - Expected outcomes: increase registered taxpayers; VAT payers increased from 13,500 to 14,850 between end-December 2022 and April 2023 (SB10, October 2023); authorities plan to increase to 16,000 by end-2023.
  - DGI and DGD to provide IMF with performance indicator tables (in line with the TMU).

### Extractive and forestry sectors
- Potential: significant to boost growth and generate government revenues.
- Mining sector actions:
  - Mining code adopted in 2016; legislative framework finalized.
  - SONAMINES (state mining company) created in 2020; revision of 2016 Mining Code needed to reflect SONAMINES’ creation — contributed to delays in implementing texts (SB4 rephased to September 2023).
  - Authorities published a decree implementing the Petroleum Code to promote oil operations.
  - Commitment to further monitor gold and forestry production to optimize contribution to budgetary and export revenues.

### Public financial management and treasury reforms
- PEFA:
  - Third PEFA review launched with EU support; expected completion in August 2023 to inform a new public finance reform plan for 2024-27.
- Budget realism and cash management reforms:
  - Improve quarterly projections of public expenditure; limit Treasury advances, release of funds and advance payments (régies d’avance).
  - Reduce volume of budgetary appropriations entered in common budget chapters to reduce concentration of payment orders.
  - Subject Treasury correspondents to an annual disbursement plan consistent with underlying fiscal policy.
  - New SB13 (December 2023): include a budget allocation in the budget law of year N+1 for clearance of stock of outstanding balances on unpaid obligations (‘Restes à Payer’, RAP) of more than 90 days at end of year N.
  - Limit Treasury advances without budget allocation; such advances prohibited by law and to be used only in extreme urgency, restricted to CFAF 15 billion per quarter (new IT, Table 1).
- Commitment and Treasury plan coordination:
  - DGB and DGTCFM to ensure coordination between expenditure commitment plans and Treasury plans to contain supplier waiting time to within 90 days from expenditure liquidation.
  - Adjustments to the Ministry of Finance information system required to implement aligned plans.
- Government securities issuance:
  - Well-planned issuance schedule to improve Treasury management and keep RAPs within 90 days.
  - DGTCFM to strengthen issuance planning and execution, including monthly issuances; publish tender notices timely.
  - Enabling decree authorizing Minister of Finance to issue public securities must be available on time to avoid constraining execution of issues.
- Treasury Single Account (TSA) and repatriation:
  - Public sector accounts being inventoried before transfer to TSA.
  - Planned repatriation of funds amounting to CFAF 165 billion over three years: CFAF 50 billion in 2023, CFAF 50 billion in 2024, and CFAF 65 billion in 2025.
  - Gradual transfers to begin once BEAC IT platform is operational and following a memorandum of understanding between authorities and BEAC.
- Management of SNH interventions and pensions:
  - Committee established (including SNH and Ministry of Finance) to reconcile and evaluate SNH current expenditures and provide IMF with quarterly reports on SNH interventions by expenditure type starting Q1 2023 (TMU Table 1).
  - Actuarial study of the civil service pension system’s sustainability committed by end-December 2023 to reduce quasi-fiscal risks and guide reforms.

*Source: IMF staff report excerpt (content unit 1cmrea2023002).*

### 32. To enhance the efficiency of investment spending, the government will continue

### To enhance the efficiency of investment spending, the government will continue

### Investment selection, planning, execution, and transparency
- Continue reforms in line with the PIMA recommendations on the selection, planning, and execution of investment projects.
- Improve the selection and budgeting of investment projects; preparing a manual identifying project selection criteria to enhance transparency.
- Put in place an integrated project management system.
- Set up a website containing information on the execution of investment projects by sector and region to improve transparency.
- Issuance of texts relating to the implementation of the October 2021 decree setting procedures for monitoring the performance of project management units was delayed (SB12, April 2023, rephased to August 2023).
- Additional government aims:
  - (i) create a maturation and payment fund for public investment projects to ensure that projects are completed on schedule as planned;
  - (ii) establish a mechanism to evaluate and incorporate recurrent maintenance costs of state assets;
  - (iii) implement the regulations of the public procurement, particularly those relating to the establishment of internal structures for the administrative management of procurement;
  - (iv) operationalize the COLEPS system (Cameroon Online E-Procurement System) to ensure the monitoring of the process of awarding all public contracts throughout the process (new SB14, May 2024).
- Structural measures expected to improve project and debt management.

### Public Enterprise Management (¶33–36)
- Commitment to strengthen public enterprise management to improve service delivery and limit fiscal risks.
- Initial steps: assess and improve financial situation, contain cross-debts, and assess risks.
- Required actions:
  - (i) validate and implement recommendations from diagnostic studies of four public enterprises (PAD, CAMTEL, CAMAIR-Co and CAMWATER) and then assess other public enterprises (SEMRY, SIC, CDC, et PAMOL);
  - (ii) assess, and if necessary, revise, administered prices for consumer goods and services supplied by public enterprise by November 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 oblige utility companies to meet their obligations on taxes, customs, and on obligations on loans guaranteed or borrowed on their behalf and on-lent by the State;
  - (v) regularly update the public enterprise risk dashboard maintained by the CTR to map the risks of the State's portfolio as well as to implement AFRITAC’s tool for assessing financial risks.
- Governance strengthening measures:
  - Ensure executive boards include qualified directors.
  - Strengthen internal controls and, in the context of performance contracts, oblige publication by September 2023 of audited annual financial statements and submission of business plans in accordance with law n°2017/11 of July 12, 2017 (to date, fifteen (15) public enterprises published their financial statements for 2021 in 2022).
  - Put in place a cross-functional structure responsible for steering governance issues and the State’s shareholder policy, following a review of the State's shareholder policy.
  - Revise criteria for classification of public enterprises and establishments by the end of the current three-year evaluation cycle.
  - Government submitted to Parliament the legal and regulatory framework governing PPPs (SB2, June 2023, met).
- Measures to improve performance:
  - (i) implement requirement (instituted July 2022) for performance contracts specifying obligation to meet public service mission, evaluation of unit costs (basis for paying subsidies), and quality indicators; contracts to be published with evaluation reports. First-phase contracts to be concluded in November 2023 with CAMTEL, CICAM, CAMAIR, and PAD. Second phase to include CAMWATER, SODECOTON, FEICOM, ART, and ALUCAM.
  - (ii) gradually reduce subsidies to under-performing public enterprises.
  - (iii) list large industrial public enterprises on the regional stock market (BVMAC), notably PAD, CHC, ADC, SODECOTON.
- SONARA restructuring/rehabilitation commitments:
  - Draw up a detailed action plan to be appended to the restructuring plan validated by the President (SB9, rephased from June 2023 to September 2023).
  - (i) rapidly complete negotiations on restructuring traders’ claims on same terms as with 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 volumes of petroleum products consistent with their financial commitments.
- Energy sector viability:
  - Accelerate projects to fully connect hydroelectrical dams to existing electrical networks and reinforce the transport segment.
  - Pursue measures to ensure viability of the pricing formula, including revising tariffs for medium and high voltages.
  - Ensure public sector consumption and tariff shortfalls are paid on a regular basis.
  - Ensure private sector participation in distribution is in line with international best practices.

### Maintaining Debt Sustainability Under Active Debt Management (¶38–41)
- Reaffirm central role of National Committee on Public Debt (CNDP); debt policy focuses on slowing new external borrowing and favoring concessional loans.
- Limit non-concessional borrowing to priority projects with proven socioeconomic and financial cost-effectiveness and no concessional alternatives.
- CNDP to approve all public debt proposals and requests for guarantees, endorsements and sureties; annual borrowing plans must be consistent with the medium-term debt strategy.
- Government aims to carry out a debt management operation of CFAF 200 billion in 2023.
- Contain stock of signed but undisbursed loans (SENDs) and limit accumulation of new SENDs:
  - Between January and December 2023, reduce stock of non-performing SENDs by cancelling projects already closed or reallocating financing to new priority investment needs.
  - Present value ceiling on new external borrowing contracted or guaranteed integrated into debt strategy.
  - Use an adjuster for the 2023 ceiling on concessional debt commitments to accommodate concessional World Bank loans of around CFAF 700 billion that will be absorbed in the medium term, while ensuring these do not alter the high risk of over-indebtedness.
  - Ensure funding is absorbed by priority projects adopted in accordance with the decree on project maturation and disbursed on schedule in line with program budget deficit objectives to contain SENDs.
- Domestic arrears:
  - Finalized audits of government payment arrears due over 2000-2019 and will adopt a clearance plan while assuring viability of public debt (SB1, September 2023).
  - Work underway to establish inventory and clearance plan of debts between public enterprises as of end-2020, focusing on 14 largest enterprises (SB3, September 2023).
  - Government will take appropriate measures for prescription of any new debt instrument that falls during period covered by audits.
- Caisse des dépôts et consignations (CDEC):
  - Management appointed.
  - Authorities drafting regulatory texts to align CDEC with international best practices and principles of good governance and transparency for public banks; CDEC will draw on prudential regulations of the COBAC.
  - CDEC working on identifying resources to prepare transfer of these funds within three years.

### Strengthening Good Governance, Transparency and Anti-Corruption (¶42–45)
- Publish diagnosis of economic governance vulnerabilities and fight against corruption in consultation with the IMF (a mission took place in March 2023) (SB6, September 2023). Diagnosis covers:
  - (i) fiscal governance;
  - (ii) supervision of the financial sector;
  - (iii) regulation of the market for goods and services;
  - (iv) the rule of law;
  - (v) the fight against money laundering and the financing of terrorism (AML/CFT).
- Support institutional efforts to control governance:
  - Supreme Court’s Audit Bench published audit report on 2021 COVID-19 expenditures (SB8, March 2023) and intends to review implementation of its recommendations in early 2024.
  - Government prepared and published an action plan to strengthen frameworks for preparation, publication, and follow-up of public spending audits (SB7, April 2023).
  - Government to facilitate timely completion and publication of future audits and provide sufficient financial resources to the Supreme Court’s Audit Bench.
- Improve management of public expenditure in emergency situations by acting on COVID-19 audit recommendations:
  - (i) introduce a public register of beneficial owners and regular implementation of declarations of conflicts of interest;
  - (ii) improve regulation and management of special accounts and disbursement of emergency funds;
  - (iii) strengthen public procurement regulations on contract compliance, control and monitoring and ledger management.
- Engagement with international transparency and financial integrity bodies:
  - Published 2020 Extractive Industries Transparency Initiative (EITI) report in December 2022; working on implementing 15 corrective measures for validation session in October 2023.
  - Plan to publish 2021 EITI report in August 2023.
  - Pursue systematic disclosure of beneficial owners and integrate EITI into national reporting systems; LF23 sets legal framework for a register for disclosure of beneficial owners of the extractive sector.
  - Undergoing mutual evaluation of AML/CFT effectiveness by the Task Force on Money Laundering in Central Africa (GABAC) and implementing an action plan by FATF's ICRG; FATF will determine whether Cameroon has strategic AML/CFT deficiencies at end of process.

### Unlocking Growth Potential and Strengthening Resilience (¶46–52)
- Accelerating private sector-led growth and diversification:
  - Strengthen regular consultations with the private sector.
  - Initiate an audit of the law on private investment incentives to encourage a competitive business environment (SB5, December 2023).
  - Formulate an action plan with recommendations to eliminate corporate tax holidays to promote healthy competition, excluding companies operating in agriculture, livestock, and fishery sectors (SB11, October 2023).
- Trade facilitation and regional integration:
  - Support initiatives to reduce administrative barriers to trade.
  - Support implementation of the National Strategy for the implementation of the African Continental Free Trade Area (AfCFTA).
- Strengthening financial stability and inclusion:
  - Support regional efforts to preserve stability of the monetary arrangement and rebuild the BEAC’s foreign reserves.
  - Enforce all aspects of foreign exchange regulations under its jurisdiction; require compliance by public enterprises, new concession contracts, revenue-sharing agreements with extractive sector, and with the new Petroleum Code.
  - Ministry of Finance to establish a data 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 resilience measures:
  - Strengthen banking sector resilience via compliance with prudential standards and implementation of COBAC’s recommendations on provisioning bad debt.
  - Emphasize strengthening credit risk assessment frameworks for banks and systemic submission of data by banks and microfinance institutions to the registry of movable collateral (RNSM), BEAC’s credit risk database, and future registry of credit incidents.
  - Continue training magistrates in resolution of bank disputes and transform commercial chambers into specialized commercial courts as budget allows.
  - Strengthen operation of the Asset Recovery Agency (SRC) with robust governance, operational and budgetary independence, transparency and accountability, and a sunset clause for bank asset recovery activities; SRC to sell seized real estate assets to focus on collection activity.
  - Prepare a strategy to promote public securities to encourage participation of non-bank investors, first in long maturity issues, in line with the medium-term debt strategy and assuring sustainability of public debt.
- Resolution of distressed banks:
  - Complete process with COBAC in July 2023 to implement restructuring plans for two banks in difficulty after transfer of non-performing loans to the SRC.
  - Government released first quarter of State's share in capital of these banks in accordance with regulations.
  - Recapitalizations aligned with approved restructuring plans where historical shareholders not bailed out; fulfilling asset shortfall for one bank will come at additional fiscal cost.
  - Bank managers appointed; two banks to open capital to private sector within maximum of five years as stipulated in performance contracts.
  - Complete privatization of the Commercial Bank of Cameroon (CBC) within one year.
- Financial inclusion strategy:
  - Finalized Strategy for Financial Inclusion over 2023-27 prepared with UNDP; expected cost CFAF 38 billion.
  - Five (5) pillars (noted as five in text, with an additional item listed as sixth):
    - (i) improving quality, availability and accessibility of financial products and services;
    - (ii) facilitating access to finance for value chains and agricultural and agri-food MSMEs;
    - (iii) promoting innovation and digital finance;
    - (iv) promotion and development of Islamic finance;
    - (v) protection of consumers and promoting financial education, especially for women, to reduce inequalities in financial inclusion;
    - (vi) improving the regulatory and fiscal framework.
- Climate change and environmental management:
  - SND-30 aims to mitigate effects and enhance adaptation to climate change and ensure sustainable management of the environment.
  - National Observatory of Climate Change (ONACC) published the Climate Perspective in 2019 and the Atlas of Deforestation in 2021.
  - World Bank published its Climate and Development Report in November 2022.
  - Authorities will take climate change into account in the budget, including in the public investment program.
  - Conduct a Public Investment Management Assessment for Climate Change Risks (C-PIMA) with IMF assistance to estimate capacities to manage infrastructure in relation to climate and identify institutional and process improvements for low-emission and climate-resilient infrastructure.

*Content based on the supplied IMF chapter text.*

### 53. The authorities will take all necessary measures to meet the targets and criteria

### 53. The authorities will take all necessary measures to meet the targets and criteria

### Program monitoring and reviews
- The authorities will take all necessary measures to meet the targets and criteria presented in Tables 1 and 2 of this memorandum.
- The program will be monitored through semiannual reviews and the performance criteria, indicative targets, and structural benchmarks defined in Tables 1 and 2 of this memorandum and in the attached Technical Memorandum of Understanding (TMU) (which also defines the requirements for data reporting to IMF staff).
- The fifth review based on end-June 2023 targets is expected to be completed from December 15, 2023.
- The sixth review based on end-December 2023 targets is expected to be completed from June 3, 2024.
- The government requests that the IMF Executive Board grant a waiver of non-observance for the continuous performance criterion on the non-accumulation of external payment arrears on the grounds that the breach is minor and temporary.
- The government is requesting approval of modifications to the program targets for end-September and end-December 2023 in line with the updated projections.

### Key quantitative performance criteria and indicative targets (summary)
- The TMU defines the quantitative performance criteria and indicative objectives for end-December 2022 until end-December 2023 as provided in Table 1 of the MEFP.
- The Standard Continuous Performance Criteria also apply: (i) Not to impose new or intensify existing restrictions on the making of payments and transfers for current international transactions; (ii) Not to introduce new or intensify existing multiple currency practices; (iii) Not to conclude bilateral payments agreements inconsistent with the IMF’s Articles of Agreement (Article III); and (iv) Not to impose new or intensify existing import restrictions for balance of payments reasons.
- Adjustment rule for ceilings: The ceiling on the net domestic financing (excluding payment of arrears) of the budget and the ceiling on the net borrowing from the central bank will be adjusted if the amount of disbursements of external budgetary assistance excluding IMF financing falls short of or exceeds program forecasts. If disbursements are less (higher) than the programmed amounts, the ceiling will be raised (reduced) pro tanto, up to a maximum of CFAF 120 billion at the end of each quarter.
- The ceiling on borrowing from the Central Bank includes the use of 2021 SDR allocation of 80 billion CFAF.
- The zero ceiling applies until the end of the arrangement.
- Cumulative ceiling on contracting and guaranteeing of new external borrowing calculated from January 1, 2022, reset annually, and monitored on a continuous basis from completion of the first review under the ECF/EFF arrangement; excludes ordinary credit for imports, debt relief obtained in the form of rescheduling or refinancing, and budget support loans from the World Bank.
- Treasury payment orders without prior authorization (expenditure carried out without prior authorization) are monitored; an indicative target limiting Treasury advances without a budget allocation to CFAF 15 billion per quarter will come into effect from July 1, 2023.

### Structural benchmarks and prior actions (high-level summary)
- Prior Action: Submit to Parliament revised 2023 budget law consistent with the non-oil primary fiscal balance and key fiscal parameters in the program.
- Public Finance and Debt Management:
  - Complete audits of government payment arrears and adopt an arrears settlement plan for arrears certified by these audits (Sept-23; communication of the audit report and clearance plan to IMF staff).
- Public Investment Management:
  - Submit to Parliament a legal and regulatory framework governing Public-Private Partnerships (PPP) so that all PPP projects follow a single framework (June-23; legal and regulatory framework submitted to Parliament — Met).
  - Establish an inventory of debts between public enterprises and the State and between public enterprises themselves (end-2020) and adopt a plan for clearance (Sept-23; inventory and plan shared with IMF staff).
- Extractive Sector:
  - Finalize and publish all texts of application of the mining code of 2016 (Law n ° 2016/017 of December 14, 2016) (Mar-23 rephased to Sept-23; Implementation texts published — Not met).
- Business Climate:
  - Revise Law No. 2013/004 of April 18, 2013, to rationalize incentives and promote healthy competition (Dec-23; a revised law is published).
  - Formulate an action plan with recommendations to eliminate CIT holidays (including the minimum tax), excluding companies operating in agriculture, livestock, and fishery sectors (Oct-23; action plan submitted to IMF staff).
- Good Governance and Anti-Corruption:
  - Publish a diagnostic of vulnerabilities in governance including fiscal governance, financial sector oversight, market regulation, rule of law, and AML/CFT (Sept-23; publication of the report).
  - Prepare and publish an action plan for strengthening frameworks for preparation, publication, and follow-up of public spending audits, with recommendations for relevant institutions, especially the Supreme Court’s Audit Bench (Apr-23; submission of action plan to IMF staff — Met).
  - Publish an audit by the Supreme Court audit bench of fiscal year 2021 expenses related to COVID-19 (Mar-23 — Met).
  - SONARA Restructuring Plan: Elaborate a restructuring plan for SONARA, including industrial and financial options (June-23 rephased to Sept-23; elaborate and submit to IMF staff the new restructuring plan).
- Revenue Administration:
  - Increase the number of VAT taxpayers from 13,500 at end-December 2022 to 14,850 by end-October 2023 (Oct-23; list of new taxpayers sent to IMF staff — Met).
- Project and Debt Management:
  - Implement the decree of October 2021 governing project management units (Apr-23 rephased to Aug-2023; issuance of order specifying procedures for monitoring PMU performance — Not met).
- Public Financial and Debt Management:
  - Enter a budget allocation in the Budget Law of year N+1 for the clearance of the stock of outstanding payments (RAPs) of more than 90 days at the end of year N (Dec-23; allocation in LF2024).
- Public Investment Management:
  - Operationalize the COLEPS system (Cameroon Online E-Procurement System) to monitor the award of all public contracts throughout the process (May-24; operationalization of COLEPS).

### TMU: Definitions, reporting, and key fiscal constructs
- The TMU defines the quantitative performance criteria and indicative objectives and establishes the framework and cutoff dates for reporting data to IMF staff.
- Government: Defined as the central government of the Republic of Cameroon, including all implementing agencies, institutions, and organizations receiving special public funds as per GFSM 2001 (paragraphs 2.48–50). Excludes local governments, the Central Bank, or other public entities with autonomous legal status not included in the TOFE.
- Nonfinancial public enterprise: A commercial or industrial unit, fully or partially owned by the central government, selling goods and services to the public on a large scale. From June 2017, government–public enterprise operations should be treated on a gross basis in the TOFE.
- Revenue:
  - Total government resources comprise tax and nontax fiscal revenue (GFSM 2001) and grants; recorded on a cash basis.
  - Proceeds from sale of assets and privatizations are not considered government revenue.
  - Oil revenue: Total transferable balance of the Société Nationale des Hydrocarbures (SNH), and income tax on oil companies and gas operators; recorded on a cash basis.
  - Non-oil revenue: All government tax and nontax revenue excluding oil revenue; VAT is recorded net of VAT refunds; pipeline fees paid by COTCO are nontax revenue.
  - Privatization revenue: Funds paid to the government in connection with sale or transfer of management of public enterprises, concessions, sale of shares; must be recorded on a gross basis; related costs recorded under expenditure.
- Expenditure:
  - Total government expenditure and net lending include wages, goods and services, transfers (subsidies, grants, social security benefits), interest payments, and capital expenditure; recorded on payment order basis unless otherwise indicated; includes expenditure carried out without prior payment authorization and pending regularization.
  - Direct interventions by SNH are included in government expenditure (emergency payments, exceptional sovereignty and security outlays).
  - Social expenditure includes budgeted spending for priority programs: education (Basic Education, Secondary Education, Employment and Vocational Training), health (Ministry of Public Health, including COVID-19 related expenditures), other social sectors (Labor and Social Security, Youth and Civic Education, Social Affairs, Promotion of Women and Family), administered price subsidies (fuel at the pump, electricity to households), gas subsidy, and Social Safety Net Program expenditures.
- Balance and financing:
  - Primary balance: Total government revenue (paragraph 5) minus total government expenditure and net lending (paragraph 9), not including interest payments on external and domestic debt.
  - Debt: As set out in paragraph 8(a) of the Guidelines on Public Debt Limits in Fund-Supported Programs (Executive Board Decision 16919– (20/103) adopted October 28, 2020) and includes commitments contracted or guaranteed for which values have not been received. Debt is a current contractual liability; includes arrears, penalties, and judicially awarded damages arising from failure to pay contractual obligations.
  - 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 the government, public enterprises receiving transfers, other public entities where government holds more than 50 percent, and any private debt guaranteed by the government.
  - Guaranteed debt: Any explicit legal obligation of the government to reimburse a debt in the event of debtor default.
  - Concessional external debt: Considered concessional if it comprises a grant component of at least 35 percent. The grant component is the difference between face value and present value (PV) expressed as a percentage of face value. PV at contract date is calculated by discounting debt service payments at the contract date using a discount rate of 5 percent. Concessionality calculations reflect maturity, grace period, schedule of maturities, commitment fees, and management fees; calculations for IsDB loans reflect existing IsDB–IMF agreement.

*Source: Memorandum of Economic and Financial Policies and Technical Memorandum of Understanding (TMU) — Tables 1 and 2 and accompanying text.*

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

### 1cmrea2023002 - 16. Domestic debt is defined as all government’s debts and obligations denominated in CFA

### Definitions of debt and financing
- Domestic debt: all government’s debts and obligations denominated in CFA francs, including unreimbursed balances, advances from the Bank of Central African States, Treasury bills and bonds, structured debt, domestic payment arrears, and SONARA’s domestic debt.
- Structured debt: debt subject to a formal agreement or securitization. Under the program:
  - Structured bank debt: all claims of local banks on government, with the exception of Treasury bills and bonds.
  - Structured non-bank debt: all government's balances payable to local non-bank institutions, individuals, or the CEMAC that have been securitized or subject to a formal reimbursement agreement according to a clearly defined schedule.
- Net domestic financing of the government: sum of (i) net bank credit to the government; and (ii) net non-bank financing.

### Net bank credit (components and calculation)
- Net bank credit to the government = change in the balance between the government’s commitments and assets with the national banking system.
- Government assets included:
  - the Treasury’s cash resources on hand;
  - Treasury deposits with the Central Bank, not including the Heavily Indebted Poor Counties (HIPC) account and the Debt Reduction and Development Contract (C2D) account;
  - 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 included:
  - financing from the Central Bank: net IMF financing (disbursements net of reimbursements), refinancing of guaranteed bonds, and Treasury paper held by the Central Bank;
  - 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 BEAC data and subject to monthly reconciliation between the Treasury and the BEAC.

### Net non-bank financing (components and calculation)
- Net non-bank financing includes:
  - the 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;
  - the change in outstanding balance of structured non-bank domestic debt;
  - privatization revenue;
  - the change in the balance of correspondent bank accounts (including Account 42) and consignment accounts;
  - the change in the balance of outstanding claims on government abandoned by the private sector.
- The government’s net non-bank financing is calculated by the public treasury.

### Domestic payment arrears (classification and rules)
- Domestic payment arrears = (i) payment arrears on expenditure; (ii) payment arrears on structured domestic debt; and (iii) unstructured debt.
- Payment arrears on expenditure:
  - defined as "balances payable" for which the payment lag exceeds the regulatory period of 90 days;
  - balances payable reflect unpaid obligations for which normal expenditure execution procedures were followed;
  - 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 or reimbursement of matured Treasury securities, bills, or bonds and the amount effectively paid after the payment deadline indicated in the agreement or after maturity.
- Unstructured debt:
  - i. Unstructured debt of the CAA: all balances payable and liabilities of the government transferred to the CAA not subject to a reimbursement or securitization agreement. The stock of unstructured debt is estimated at CFAF 55.6 billion at end-2022.
  - ii. Domestic "floating” debt: government commitments for which a service was provided but that has not been subject to any budget commitment (invoices payable and not settled to public and private enterprises). Excludes tax debt from debt offsetting with public enterprises and externally financed public procurement not covered by the budget due to insufficient appropriations. Directorate General of Budget will conduct a monthly assessment with the public treasury.

### External payment arrears and treasury advances
- External payment arrears: external debt obligations of the government not paid when due per contractual terms (including contractual grace periods); excludes arrears on external financial obligations subject to rescheduling.
- Treasury advances: payments made by the Treasury in the absence of a commitment or payment order issued by the relevant authorizing officer at the General Directorate of Budget (DGB) and regularized retroactively.

### Quantitative Program Objectives (overview)
- Quantitative targets (QTs) in Table 1 of the MEFP are assessed cumulatively from the start of the calendar year unless indicated otherwise.
- Data reconciliations: 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 with IMF staff.

### Reporting cutoff dates and timelines
- Detailed data on government financial operations (primary balance, oil revenue, miscellaneous expenditure) submitted monthly 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 for a complementary period of 30 days after the end of the calendar year).
- Detailed data on net domestic financing and status of budget support disbursements, reimbursement of external debt service, and status of external arrears: monthly within six weeks after the end of the month.
- BEAC must report detailed information on all financing from the Central Bank to the government and the balance of the special account of unused statutory advances within six weeks after the end of the month.
- Data on balances, accumulation, and reimbursement of external arrears: reported within six weeks after the end of each month; any new external arrears should be reported immediately to the Fund.

### Specific performance criteria and adjustors
- 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).
- Net Domestic Financing Excluding Net IMF Financing: a ceiling is defined in Table 1 of the MEFP. Net domestic financing excluding net IMF financing = net domestic financing (paragraph 16) not including net IMF financing.
- Adjustments to the ceiling on net bank financing excluding net IMF financing:
  - If external budget support disbursements net of external debt service and payment of external arrears, and rescheduling of bilateral external debt service are below program forecasts, ceilings will be adjusted.
  - At end of each quarter, if disbursements of external budget support are below (above) programmed amounts, quarterly ceilings adjusted upward (downward) commensurately, within the limit of CFAF 120 billion for each quarter of 2022 and 2023.
  - At end of each quarter, if rescheduling of bilateral external debt service is below (above) programmed amounts, corresponding quarterly ceilings adjusted upward (downward) pro-tanto.
- Disbursement of Non-Concessional External Debt: a ceiling on disbursements of non-concessional external debt is a quantitative objective; exemption for debt contracted or disbursed under the debt management operation for clearance of domestic arrears subject to conditions.
- Net Claims of the Central Bank on the Central Government:
  - A ceiling defined as difference between Central Bank’s claims on government (excluding IMF financing) and cash and total deposits of the Treasury with the Central Bank, including special account of unused statutory advances.
  - Ceiling includes the agreed use of the 2021 SDR allocation.
  - Ceiling adjusted if external budget support disbursements are below programmed levels, within limit of CFAF 120 billion for each quarter of 2022 and 2023.
- Non-Accumulation of External Payment Arrears:
  - Ceiling of zero on accumulation of new external payment arrears; applies continuously. Measured cumulatively on approval of the program.

### Present value (PV) ceiling on new external debt (scope, calculation, and adjustors)
- A performance criterion (ceiling) applies to the PV of new external debt contracted or guaranteed by the government and certain other public entities.
- Applies also to debt contracted or guaranteed for which value has not yet been received, including private debt with official guarantees.
- Coverage includes external debt as defined in paragraph 14 and debt guaranteed by the government that constitutes a contingent public liability (paragraph 13); applicable to debt contracted or guaranteed by:
  - public enterprises that receive transfers from the government;
  - municipalities;
  - agencies of general government including professional, scientific, and technical organizations.
- Exclusions: 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, debt relief or rescheduling. New debt for debt management operations that improve debt profile (paragraph 29) is exempt.
- PV calculation:
  - Discount future stream of payments of debt service due on the debt.
  - For debts with grant element equal to or below zero, PV set equal to nominal value.
  - Discount rate: unified discount rate of 5 percent (Executive Board Decision No. 15248-(13/97)).
  - PV of external debts in currencies other than the U.S. dollar calculated in U.S. dollar terms at program exchange rates specified in TMU Text Table 1.
  - For variable interest rates of benchmark plus fixed spread, PV calculated using program reference rate plus the fixed spread (in basis points) specified in the debt contract.
  - Program reference rate for the six-month USD SOFR is 0.04 percent and will remain fixed for the duration of the program.
  - Spreads:
    - six-month Euro EURIBOR over six-month USD SOFR: -56 basis points.
    - six-month JPY OIS over six-month USD SOFR: -8 basis points.
    - six-month GBP SONIA over six-month USD SOFR: 1 basis point.
    - For interest rates on currencies other than Euro, JPY, and GBP, the spread over six-month USD SOFR is 15 basis points.
  - If variable rate linked to a benchmark other than six-month USD SOFR, a spread reflecting the difference between the benchmark and six-month USD SOFR (rounded to the nearest 50 bps) will be added.

### Program exchange rates (TMU Text Table 1)
- CFA franc per currency unit / Currency units per US Dollar:
  - US Dollar 617.546 1.00
  - Euro 655.957 0.9414
  - AfDB XUA 821.855 0.7514
  - STG Pound 745.254 0.8286
  - Japanese Yen 4.655 132.650
  - Chinese Yuan 88.398 6.986

### Adjustors to PV external debt ceiling
- Upward (downward) adjustor by the amount by which budget support exceeds (falls short of) projected amounts; any adjustment capped to 10 percent of the external debt ceiling set in PV terms and must be consistent with maintaining debt sustainability.
- External debt ceiling in PV terms adjusted upward by full PV amount of any project financing dedicated to COVID-19 vaccine interventions not anticipated at time of setting the performance criterion; authorities will consult with IMF staff before contracting or guaranteeing such loans.
- An adjustor of up to 5 percent of the external debt ceiling set in PV terms applies in case deviations are prompted by changes in financing terms (interest, maturity, grace period, payment schedule, upfront commissions, management fees). The adjustor cannot be applied when deviations are prompted by an increase in the nominal amount of total debt contracted or guaranteed.

*Source: 1cmrea2023002 - 16. Domestic debt is defined as all government’s debts and obligations denominated in CFA francs.*

### 42. If the PV of the amount of the World Bank loans signed in 2023 is greater than the PV of the

### 1cmrea2023002 - 42. If the PV of the amount of the World Bank loans signed in 2023 is greater than the PV of the

### World Bank loans PV adjustment (paragraph 42)
- If the PV of the amount of the World Bank loans signed in 2023 is greater than the PV of the World Bank loans signed in 2022 (CFAF 179.4 billion), the ceiling will be adjusted upward pro-tanto.
- The amount of upward adjustment to the ceiling will be capped at a maximum of CFAF 182.5 billion (PV) in 2023, according to the identified projects.

### Cutoff dates for reporting information (paragraph 43)
- Detailed information on all loans (conditions and creditors) contracted by the government must be reported within six weeks after the end of the month.
- The same obligation applies to guarantees issued by the government.
- This criterion is monitored continuously by the authorities and any signing or guaranteeing of debt should be reported immediately to the Fund.

### Other indicative quantitative targets — G. Non-Oil Revenue (paragraph 44)
- A floor on non-oil revenue as defined in paragraph 7 is defined as an indicative objective in Table 1 of the MEFP.

### Other indicative quantitative targets — H. Accumulations of Domestic Payment Arrears (paragraph 45)
- A ceiling on net accumulations of domestic payment arrears is defined as an indicative objective in Table 1 of the MEFP.
- Domestic payment arrears covered by the Treasury are defined in paragraph 19 and do not include unstructured floating debt not covered by the Treasury.
- Exception: at end-September 2023 and end-December 2023 this ceiling will include payments in progress defined as balances payable under 90 days in paragraph 19.

### Other indicative quantitative targets — I. Social Expenditure (paragraph 46)
- A floor on social expenditure pursuant to paragraph 11 is defined as an indicative objective in Table 1 of the MEFP.
- These expenditure items will be monitored regularly in connection with program implementation.
- Cutoff dates for reporting information (paragraph 47):
  - The data on the government's financial position as presented in the table of government financial operations, the detailed listing of revenue highlighting oil revenue, domestic payment arrears, and the status of social expenditure execution must be reported within six weeks after the end of the month with the exception of end-December data as indicated in paragraph 25.

### Other indicative quantitative targets — J. Share of Exceptional Expenditure in Total Authorized Expenditure Not Including Debt (paragraph 48)
- A ceiling on the share of exceptional expenditure in total authorized expenditure not including debt is defined as an indicative objective in Table 1 of the MEFP.
- Calculation basis: 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 of information (paragraph 49):
  - Monthly accounting statements showing the amount of cash advances, provisional budget commitments, and advance funds must be reported to IMF staff within three weeks after the end of each month.
  - Authorized expenditure presented in Table M1 of the table of government financial operations will be used to compute this ratio.

### Other indicative quantitative targets — K. Treasury advances without a budget allocation (paragraph 50)
- A ceiling on Treasury advances without a budget allocation is defined as an indicative target in Table 1 of the MEFP and will be tested on a quarterly basis.
- Treasury advances are defined in paragraph 21.
- Cutoff dates for reporting of information (paragraph 51):
  - Monthly accounting statements showing the amount of Treasury advances must be reported to IMF staff within six weeks after the end of each month.

*Source: 1cmrea2023002 - 42. If the PV of the amount of the World Bank loans signed in 2023 is greater than the PV of the (IMF PDF).*

### 52. The quantitative data on the government’s quantitative and indicative objectives will

### 1cmrea2023002 - 52. The quantitative data on the government’s quantitative and indicative objectives will

### Data reporting requirements (summary)
- 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.
- 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 progress toward program objectives.
- Examples of reporting items, responsible institutions, frequencies, and reporting lags (as described in Table 1):
  - Summary situation of Treasury Operations (La situation résumée des Operations du Trésor (SROT)): Ministry of Finance (MINFI)/DGTC; Monthly; 6 weeks.
  - Table of government financial operations (TOFE) and customary annex tables (including execution of investments financed with external grants and loans): MINFI/DP; Monthly; 6 weeks (except end-December 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): MINFI/BEAC; Monthly; 6 weeks.
  - Implementation status of social expenditure defined in Paragraph 11: Ministry of Economy and Finance (MINEFIN)/DGB; Monthly; 6 weeks.
  - Statistics on external debt contracted and guaranteed (detailed listing of external debt service matured/paid, list of new loans specifying financial conditions, loans guaranteed and external arrears, and list of contracts in negotiation): MINFI/CAA; Monthly; 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: MINFI/CAA; Monthly; 6 weeks.
  - Monthly monitoring report on calls for funds and effective disbursements: CAA/MINEPAT; Monthly; 4 weeks.
  - Data on implementation of the public investment program, including a detailed listing of financing sources: MINFI/MINEPAT/CAA; Quarterly; 6 weeks.
  - Publish the oil product price structure: MINFI/CSPH; Monthly; First week of the current month.
  - Prices, consumption, and taxation of oil products (including current price structure; detailed calculation based on free on board price; volumes purchased and distributed; 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 situation of shortfalls and overpayments): MINFI/CTR/CSPH; Monthly; 6 weeks.
  - VAT refund balance (refund requests, payments made, and VAT refund account status): MINFI/DGI; Monthly; 6 weeks.
  - Consolidated balance sheets of monetary institutions: BEAC; Monthly; 6 weeks.
  - Final data on the integrated monetary survey: BEAC; Monthly; 10 weeks.
  - Preliminary annual balance of payments data: MINFI; Annual; 9 months.
  - Quarterly National Accounts: INS; Quarterly; 3 months.
  - Disaggregated consumer price indices for the cities of Douala and Yaoundé: INS; Monthly; 4 weeks.
  - Any official report or study devoted to Cameroon’s economy, from its date of publication or finalization: MINEPAT; 2 weeks.
  - Any decision, decree, law, order, or circular having economic or financial implications, from its publication date or effective date: MINFI/MINEPAT; 2 weeks.
- Additional reporting items include multiple quarterly and monthly fiscal, monetary, balance of payments, and structural reform datasets and reports as listed in Table 1 (with specified responsible institutions, frequencies, and reporting lags).

### Fiscal performance indicators and reporting
- Table 2 lists Fiscal Performance Indicators focused on taxpayer counts and tax types across administrative centers (DGE, CIMES, CDI), including:
  - VAT, CIT, Tax on industrial and commercial profits, Salary deductions, Withholding tax, and Number of active taxpayers versus Total number of taxpayers.
- Authorities commit to publish quarterly budget execution reports: MINFI; Quarterly; 8 weeks.
- Fiscal performance reporting includes publication of the situation of SNH (volumes exported, prices, exchange rates, costs of operations, direct interventions, commitments towards the State, balance transferable to the Treasury): MINFI; Quarterly; 6 weeks. SNH oil revenue and direct interventions are to be included in monthly TOFE: MINFI; Monthly; 6 weeks.

### Recent information and staff statement highlights (Statement by the Staff Representative on Cameroon, June 29, 2023)
- New information since the staff report does not alter the thrust of the staff appraisal.
- Prior action met: submission to Parliament of revised 2023 budget law on June 19, 2023; consistent with the non-oil primary fiscal balance and key fiscal parameters in the current ECF-EFF program.
- As of June 23, 2023, Cameroon identified as a jurisdiction with strategic AML/CFT deficiencies by FATF; Cameroon committed to implementing an action plan to resolve deficiencies identified by GABAC. Main action-plan items: understanding ML/TF risks, application of AML/CFT preventive measures by reporting entities, AML/CFT supervision, and enforcement of the money laundering offense. IMF staff stands ready to support Cameroon through capacity development.

### Authorities’ statement and macroeconomic context (Statement by Mr. Sylla, Mr. N'Sonde, and Mr. Diakite on Cameroon, June 29, 2023)
I. Introduction and program context
- Authorities express appreciation for IMF support under the post-COVID-19 recovery plan and SND-30; note adverse domestic and external circumstances including security issues, tightening global financial conditions, and increased volatility of international oil prices.
- Program implementation affected but: all but one quantitative performance criteria (QPCs), two out of five indicative targets (ITs), and two of the four structural benchmarks (SBs) for the period under review were met.
- Authorities have taken corrective actions and remain committed to program objectives and addressing vulnerable populations while supporting growth and reserve accumulation.

II. Recent economic developments and outlook
- 2022 outcomes:
  - Real GDP growth estimated at 3.8 percent, up from 3.6 percent in 2021.
  - Average inflation rose to 6.3 percent in December 2022.
  - Overall fiscal deficit dropped to 1.1 percent of GDP, from 3 percent in 2021.
  - Non-oil primary deficit around 3.9 percent of GDP.
  - Public debt-to-GDP ratio dropped from 46.8 percent of GDP at end-2021 to 45.5 percent at end-2022.
  - Current account deficit (including grants) narrowed to 1.8 percent of GDP, down from 4 percent of GDP in 2021.
- Medium-term outlook and projections:
  - Real GDP growth expected to reach 4 percent in 2023 and 4.4 percent on average in the medium term.
  - Average inflation projected to decline below the CEMAC convergence threshold of 3 percent in the medium term.
  - Current account deficit expected to remain around 3 percent of GDP over the medium term.

III. Program performance under the ECF/EFF-supported program
- Program performance constrained by domestic and external environments.
- All QPCs at end-December 2022 were met except the continuous QPC on non-accumulation of external payment arrears; the breach was described as trivial and temporary, explained by spending through exceptional procedures (notably for security) and cash management issues that resulted in late debt service payments to some creditors.
- Corrective measures taken to address missed ITs, including improved monitoring of expenditures related to direct interventions of SNH and reducing expenditures subject to exceptional procedures.
- Structural benchmarks:
  - Two of four SBs for March and April 2023 were met on time: publication of the report on expenditures related to the COVID-19 pandemic in 2021, and publication of the action plan to strengthen Supreme audit institutions.
  - Two SBs for the fifth review already met: increasing VAT taxpayers from 13,500 to 14,850 and publishing legal and regulatory framework for public-private partnerships (PPPs).
  - Other SBs have been rephased; authorities will strive to implement them.

IV. Medium-term macroeconomic policies and structural reforms
- Fiscal strategy and priorities:
  - Authorities committed to maintaining a fiscal consolidation path to create fiscal space for priority productive investments and social protection.
  - Aim to bring overall budget deficit (payment order basis, including grants) and non-oil primary deficit to sustainable levels while keeping public debt on a viable trajectory.
  - Emphasis on mobilizing domestic non-oil revenue, rationalizing public expenditures, and improving public investment efficiency.
- Revenue-side measures:
  - DGI to pursue tax policy and administration reforms to broaden tax base; follow up on recommendations of 2022 diagnostic tax policy study.
  - DGD to implement medium-term program focused on revenue mobilization, strengthening/digitizing controls, and extending electronic payment platform to all customs units.
  - Enhance DGI–DGD collaboration to increase registered taxpayers; target extractive and forestry sectors to boost fiscal revenue.
- Expenditure-side measures:
  - Improve transparency and management of current expenditures; conduct actuarial study to strengthen pension system and reduce quasi-fiscal risks.
  - Fuel subsidies considered unsustainable and not well-targeted; fuel prices increased in February 2023.
  - Authorities intend to gradually reduce fuel subsidies, review fuel pricing structure, and consider medium-term options for automatic adjustments of domestic fuel prices to international price movements.
  - Mitigating measures include strengthening social safety nets and improving access to education and health.
  - Review and prioritize other government subsidies to public enterprises; diagnostic studies of each public enterprise to assess subsidies with aim to reduce those for less efficient enterprises.
  - Study to review approved or administered prices to be finalized in November 2023, with view to liberalize if necessary.
- Public financial management (PFM) and public investment:
  - Continue PFM reforms guided by PEFA expected to be completed in August 2023 and guide a new public finance reform plan for 2024-27.
  - Major PFM reforms: improve public expenditure projections, align commitment plans with Treasury plans to avoid accumulation of unpaid obligations, transfer public sector accounts to Treasury Single Account (TSA).
  - Pursue reforms to enhance efficiency of public investment projects based on PIMA recommendations.
  - Improve management and governance of public enterprises to limit fiscal risks.
- Debt management:
  - Authorities vigilant about debt sustainability; focused on slowing new external borrowing and favoring concessional loans.
  - Non-concessional loans limited to high-priority, cost-effective projects with proven socioeconomic returns.
  - National Committee on Public Debt (CNDP) to continue approving all public debt proposals and requests for government guarantees.
  - Clearing of domestic arrears within public sector remains a concern.
- Structural reforms, governance, financial inclusion, and climate:
  - Continue reforms to accelerate private sector-led growth and economic diversification; prepare action plan to eliminate corporate tax holidays and promote fair competition outside agriculture, livestock, and fishery.
  - Support regional trade facilitation and AfCFTA implementation; interconnection of customs information systems and simplification of cross-border procedures.
  - Address governance and anti-corruption vulnerabilities; implement action plan to strengthen frameworks for public expenditure audits and consider supporting Supreme Court Audit Chamber.
  - Address weaknesses identified in Fund-supported governance diagnostic: fiscal governance, financial sector supervision, market regulation, rule of law, AML/CFT.
  - Commit to accelerate FATF ICRG action plan implementation to remove Cameroon from jurisdictions with strategic AML/CFT deficiencies.
  - Financial inclusion strategy finalized for 2023-27 focusing on quality, availability, accessibility of financial products; facilitating access to finance for value chains and agricultural SMEs; promoting innovation and digital finance; consumer protection and financial education.
  - In collaboration with COBAC, continue resolution of two banks and finalize restructuring plans in July 2023; privatization of the third bank expected to be completed within a year.
  - Climate agenda: integrate climate change dimension in budget formulation and public investment program; conduct C-PIMA with Fund assistance to build low-emission and climate-resilient infrastructure.

V. Conclusion and authorities’ request
- Authorities determined to accelerate economic transformation under SND-30 while maintaining macroeconomic and CEMAC external stability.
- Remain committed to sound macroeconomic policies and structural reforms in public financial management, debt, governance, and business environment.
- Authorities seek Executive Directors’ support for completion of the fourth reviews under the ECF and EFF arrangements, waiver for nonobservance of performance criterion, and modification of performance criteria.

*Source: 1cmrea2023002 - 52. The quantitative data on the government’s quantitative and indicative objectives will (PDF chapter/section).*

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_Source: https://www.imf.org/-/media/files/publications/cr/2023/english/1cmrea2023002.pdf_