## 1cmrea2024004 ## Source details **Canonical URL:** [1cmrea2024004](https://www.imf.org/-/media/files/publications/cr/2024/english/1cmrea2024004.pdf) ## Other formats - [Markdown version](/-/media/files/publications/cr/2024/english/1cmrea2024004.pdf.md) - [Structured JSON version](/-/media/files/publications/cr/2024/english/1cmrea2024004.pdf.json) --- ### Executive summary and program decisions - IMF Executive Board completed the sixth reviews under Cameroon’s Extended Credit Facility (ECF) and the Extended Fund Facility (EFF), enabling an immediate disbursement of SDR 55.2 million (about US$ 72.7 million), bringing total disbursements under the arrangements to SDR 483 million (US$ 644.6 million). - Executive Board completed the first review under the Resilience and Sustainability Facility (RSF); completion makes available SDR 34.5 million (US$ 45.4 million). - Board approved waivers of nonobservance for two performance criteria: the floor on the non-oil primary fiscal balance at end-December 2023 and the continuous zero ceiling on the accumulation of new external payment arrears (breaches judged minor and temporary). - Board approved a waiver of applicability for four end-June 2024 performance criteria because data are not yet available. ### Macroeconomic outlook and key indicators - Growth and inflation: - Preliminary GDP growth in 2023: 3.3 percent. - Growth forecast for 2024: 3.9 percent. - Growth expected to remain above 4 percent in the medium term (various projections: 2025 Proj. 4.2; 2026 Proj. 4.3; 2027 Proj. 4.7; 2028 Proj. 4.8). - Inflation (end-2023): 5.9 percent. - Inflation expected (end-2024): 5.5 percent; consumer prices (average) projected: 2024 5.9; 2025 5.9; 2026 5.5; 2027 4.9; 2028 3.4; 2029 2.5. - External and fiscal balance snapshots: - Current account balance (excluding official grants): 2023 Est. -4.2 percent of GDP; 2024 Proj. -2.9 percent of GDP; 2025 Proj. -2.6 percent of GDP. - Stock of public debt: 2022 46.3 percent of GDP; 2023 44.5 percent of GDP; 2024 39.0 percent of GDP; 2025 42.0 percent of GDP; 2026 39.5 percent of GDP; 2027 37.6 percent of GDP; 2028 35.8 percent of GDP; 2029 34.1 percent of GDP. ### Program financing, structure, and disbursements - ECF-EFF arrangements: - Originally approved July 2021: SDR 483 million (US$ 689.5 million, or 175 percent of quota). - Extension approved December 2023: 12 months; access augmented by SDR 110.4 million (US$ 145.4 million, or 40 percent of quota). - Total disbursements after sixth reviews: SDR 483 million (US$ 644.6 million). - Immediate disbursement on sixth reviews: SDR 55.2 million (about US$ 72.7 million); separate paragraph cites SDR 55.2 million (about US$73.8 million). - RSF arrangement: - 18-month RSF approved January 2024: SDR 138 million (US$ 181.7 million, or 50 percent of quota). - Completion of first RSF review makes available SDR 34.5 million (US$ 45.4 million); elsewhere cited as SDR 34.5 million (about US$46.1 million). ### Program performance, conditionality, and corrective measures - Quantitative performance: - Four of six quantitative performance criteria (QPCs) were met at end-December 2023. - Two QPCs with minor and temporary breaches: floor on the non-oil primary fiscal balance; continuous zero ceiling on accumulation of new external payment arrears (each breach cited as 0.005 percent of GDP in one section). - Four of six indicative targets (ITs) were not met: ceilings on net accumulation of domestic payment arrears; direct interventions of the National Hydrocarbons Company (SNH); the share of expenditure through exceptional procedures; ceiling on Treasury advances without a budget allocation. - Corrective measures and adjustments: - Prior action: revised 2024 budget law allocations for spending likely to generate Treasury advances (President signed decree on revised 2024 budget law on June 20, 2024 allowing immediate execution). - Upgrade of IT on the ceiling on Treasury advances without a budget allocation to a continuous QPC effective from July 1, 2024. - All external arrears have since been cleared. - Structural benchmarks (SBs): - Four of five SBs under the sixth ECF-EFF reviews were implemented on time (SB1, SB4, SB7, SB13). - SB not met: include the stock of domestic arrears at end-2023 in the 2024 budget law (SB8). - Both reform measures under the first RSF review were implemented (RM1 and RM3); modification proposed for forestry management reform measure (RM8). ### Fiscal performance and revenue developments - Key fiscal figures (selected, percent of GDP or exact figures preserved): - Non-oil primary balance: -3.9 (2022), -2.5 (2023), -2.6 (2024), -1.9, -2.0 (projections elsewhere show slight variant: -4.2 (2022), -2.6 (2023), -2.7 (2024)). - Non-oil revenues: 12.3 percent of GDP (2022) → 13.5 percent of GDP (2023). - Total revenue and grants: 16.2 (2022), 16.0 (2023), 17.0 (2024 RSFProj.). - Total expenditure: 17.4 (2022), 16.6 (2023), 17.6 (2024). - Capital expenditure: 4.7 (2022), 4.6 (2023), 3.9 (2024). - Overall balance: -1.1 (2022), -0.7 (2023), -0.7 (2024). - Fuel subsidy reform and mitigation: - Authorities increased domestic pump prices by 15 percent in early 2024 (second adjustment since 2016). - Staff estimates 2024 increase would reduce the subsidy by about CFAF 190 billion (0.6 percent of GDP) given current assumptions. - 2024 revised budget includes carry-over of fuel subsidy about CFAF 196 billion (0.6 percent of GDP) from 2022 and 2023, plus an additional levy of CFAF 48 billion (0.2 percent of GDP) on fuel products for infrastructure rehabilitation. - Authorities note 2022 cost of fuel subsidy exceeded CFAF 1000 billion (3.7 percent of GDP) and commit to phasing out the fuel subsidy by the end of the program. ### Public debt, debt management operation, and external position - Public debt and external debt: - Public debt-to-GDP: 46.3 percent (2022) → 44.5 percent (end-2023) → projections: 39.0 (2024) / 42.0 (2025) / 39.5 (2026)... - External debt-to-GDP: 31.3 percent (2022) → 29.1 percent (2023). - Despite declines, Cameroon remains at high risk of debt distress; two out of four external DSA indicators breach thresholds under baseline scenario. - Debt management operation (2024): - Objective: borrow external debt to clear domestic unpaid obligations and improve debt profile. - Authorities aim to carry out a debt management operation totaling CFAF 467 billion in 2024 (pre-program unpaid obligations at end-2020). - First tranche implemented in January 2024: CFAF 131 billion via a euro-denominated loan. - Exemption: debt contracted under the debt management operation up to CFAF 467 billion is exempt from the disbursement ceiling for non-concessional debt if it improves liquidity/solvency indicators. - External sector projections and trade: - Trade balance (percent of GDP): -0.7 (2022), -1.7 (2023), -2.9 (2024). - Oil exports (percent of GDP): 7.9 (2022), 5.5 (2023), 5.6 (2024). - Non-oil exports (percent of GDP): 7.9 (2022), 8.4 (2023), 7.7 (2024). - Oil price ($US dollars per barrel): 96.4 (2022), 80.5 (2023), 80.6 (2024). ### Banking sector resilience and vulnerabilities - Solvency and asset quality: - Banks' capital adequacy ratio (CAR): 10.7 percent (2020) → 15.3 percent (end-2023). - Non-performing loans (NPLs): 12.9 percent (end-2023); slightly lower relative to end-2022 but remains high. - Sovereign-bank nexus and exposures: - Banks' exposure to CEMAC public sector: 27 percent of total assets (2019) → 37 percent (December 2023). - Banks’ sovereign portfolios: CFAF 3,402 billion, with significant exposures to Congo, Gabon, and Chad. - COBAC authorized Cameroon authorities in July 2023 to enter the capital of two undercapitalized banks; recapitalization to comply with 8 percent CAR by November 2024 and with COBAC regulations (R2010-01 and R2016-03) and Basel framework (new SB16). - Privatization of another public bank expected to be completed in 2024. ### Governance, SOEs, and structural reforms - SOE management and arrears: - Inventory and clearance plan of government–SOE cross-debts compiled as of end-2020 (SB1). - Plan to repay CFAF 467 billion with long-term external financing in 2024; plan to clear remaining CFAF 277 billion over 2025-27. - SONARA restructuring: firm selected for technical-financial and economic feasibility study; study likely delayed (SB12). - Procurement and PFM: - Increase to 80 percent (number and value) procurement through COLEPS in selected key ministries (January–May 2024) achieved (SB13). - Transform common budget chapters to reduce share from over 18 percent in 2024 to 10 percent in 2025 via phased approach; decree to establish procedures for managing budgetary authorizations (SB5). - Governance diagnostic and anticorruption: - Governance-and-Corruption-Diagnostic-Report published November 2023; identified persistent weaknesses in PFM, procurement, SOE oversight, transparency, and land ownership. - Selected recommendations include publishing asset declarations, criminalizing illicit enrichment, publishing audited financial statements of top SOEs, and improving procurement transparency with timelines (selected ST/MT measures preserved). ### Climate, RSF progress, and DRM - RSF reform measures implemented: - RM1 (institutional framework for climate action): May 21, 2024 decree (Arrêté No 00002/CAB/MINEPDED) establishing MINEPDED as coordinating authority — Status: Met. - RM3: MINEPAT defined and published project prioritization criteria and manual (published on MINEPAT website) — Status: Met. - Forestry management reform (RM8) modified: - Revised RM8 focuses on operationalizing SIGIF2, integrating modules with aerial satellite imagery, establishing annual evaluation procedures for traceability, and interconnecting SIGIF2 with tax and customs systems to enhance taxation of the forestry sector. - Disaster risk management: - TOR prepared to hire consultant for disaster risk financing strategy (RM7); timetable being prepared for reform measures. - Draft Law on Civil Protection finalized and transmitted to Parliament in June 2024. ### Recent developments, risks, and vulnerabilities (Risk Assessment Matrix highlights) - Recent drivers of 2023 performance: - Growth dampened by supply chain and energy disruptions and contraction of oil production. - Inflation averaged 7.4 percent in 2023 (up from 6.3 percent in 2022) driven by food prices, recovery in domestic demand, and fuel price adjustment. - Current account deficit estimated at 4.0 percent of GDP in 2023 versus 3.5 percent in 2022. - Key risks (balance of risks tilted to the downside): - Domestic: persisting security challenges, possible social tensions around Presidential elections expected in late 2025, increasing frequency of climate shocks, high food insecurity, rising IDPs. - Fiscal: PFM weaknesses, electricity sector structural issues, liquidity shortfalls under tight international/regional financial conditions. - External: prolonged geopolitical tensions, commodity price volatility, abrupt global slowdown scenarios. - Recommended policy responses (from RAM): - Create fiscal space via wage bill control, spending review, revenue mobilization; prioritize and target public spending; enhance banking supervision and enforce prudential regulations; accelerate SOE restructuring and PFM reforms; strengthen social safety nets and disaster risk financing. ### Program monitoring, TMU reporting, and capacity to repay the Fund - Monitoring and reporting: - Quantitative targets and data to be reported monthly within six weeks after month end (exceptions for end-December data and select items); specific deadlines and responsible agencies listed in TMU (selected exact reporting deadlines preserved). - Several criteria monitored continuously and require immediate reporting (e.g., signing/guaranteeing external debt; occurrence of external payment arrears). - Capacity to repay the Fund and exposures: - As of end-December 2023, total outstanding credit from the Fund amounted to 395 percent of quota. - Total Fund credit outstanding (based on existing and prospective drawings) peaks at 3.1 percent of GDP in 2024. - Annual obligations to the Fund peak at about 3.0 percent of revenues in 2027. - Financing assurances: - World Bank, African Development Bank, and French Development Agency expected to provide budget support in 2024. - Program remains fully financed with firm commitments for the upcoming 12 months; memorandum item: Cameroon’s current quota is SDR 276.0 million. *Source: 1cmrea2024004 — IMF staff report excerpts and Technical Memorandum of Understanding (TMU).* ### 3.9 percent in 2024. Inflation moderated to 5.9 percent at end-2023. A continued decline ### 1cmrea2024004 - 3.9 percent in 2024. Inflation moderated to 5.9 percent at end-2023. A continued decline ### Executive summary and program decisions - The IMF Executive Board completed the sixth reviews under Cameroon’s Extended Credit Facility (ECF) and the Extended Fund Facility (EFF) arrangements, enabling an immediate disbursement of SDR 55.2 million (about US$ 72.7 million), bringing total disbursements under the arrangements to SDR 483 million (US$ 644.6 million). - The Executive Board completed the first review under the Resilience and Sustainability Facility (RSF) arrangement. Completion of this review makes available SDR 34.5 million (US$ 45.4 million). - The Board approved waivers of nonobservance of two performance criteria: the floor on the non-oil primary fiscal balance at end-December 2023 and the continuous zero ceiling on the accumulation of new external payment arrears, on the ground that the nonobservance was minor and temporary. - The Board approved a waiver of applicability for four end-June 2024 performance criteria for which data are not yet available and there is no evidence they were not observed. ### Macroeconomic outlook and key indicators - Growth and inflation: - Preliminary GDP growth in 2023: 3.3 percent. - Growth forecast for 2024: 3.9 percent. - Growth is expected to remain above 4 percent in the medium term. - Inflation (end-2023): 5.9 percent. - Inflation expected (end-2024): 5.5 percent. - Table highlights (selected projected values): - GDP at constant prices: 2023 Est. 3.3; 2024 RSF Proj. 3.9; 2025 Proj. 4.2; 2026 Proj. 4.3; 2027 Proj. 4.7; 2028 Proj. 4.8. - Consumer prices (average): 2022 6.3; 2023 7.4; 2024 5.9; 2025 5.9; 2026 5.5; 2027 4.9; 2028 3.4; 2029 2.5. - Consumer prices (eop): 2022 7.3; 2023 5.9; 2024 5.5; 2025 5.5; 2026 5.2; 2027 3.6; 2028 2.0; 2029 2.0. - Current account balance (excluding official grants): 2023 Est. -4.2 percent of GDP; 2024 Proj. -2.9 percent of GDP; 2025 Proj. -2.6 percent of GDP. - Stock of public debt: 2022 46.3 percent of GDP; 2023 44.5 percent of GDP; 2024 39.0 percent of GDP; 2025 42.0 percent of GDP; 2026 39.5 percent of GDP; 2027 37.6 percent of GDP; 2028 35.8 percent of GDP; 2029 34.1 percent of GDP. ### Program financing, structure, and amounts (as reported in the text) - ECF-EFF arrangements: - Originally approved in July 2021 for a total amount of SDR 483 million (US$ 689.5 million, or 175 percent of quota). - An extension of these arrangements of 12 months was approved in December 2023 and access was augmented by SDR 110.4 million (US$ 145.4 million, or 40 percent of quota). - Total disbursements under the arrangements reported as SDR 483 million (US$ 644.6 million) after the sixth reviews disbursement. - Immediate disbursement on sixth reviews: SDR 55.2 million (about US$ 72.7 million). - (Later text cites completion of sixth reviews would allow a disbursement of SDR 55.2 million (about US$73.8 million) in a separate paragraph.) - RSF arrangement: - The 18-month RSF was approved in January 2024 in the amount of SDR 138 million (US$ 181.7 million, or 50 percent of quota). - Completion of the first RSF review makes available SDR 34.5 million (US$ 45.4 million). - (Elsewhere the document notes the first RSF review would allow a disbursement of SDR 34.5 million (about US$46.1 million).) ### Program performance, conditionality, and corrective measures - Quantitative performance: - Four of the six quantitative performance criteria (QPCs) were met at end-December 2023. - QPCs with minor and temporary breaches: floor on the non-oil primary fiscal balance; continuous zero ceiling on accumulation of new external payment arrears. - Four of six indicative targets (ITs) were not met: ceilings on net accumulation of domestic payment arrears; direct interventions of the National Hydrocarbons Company (SNH); the share of expenditure through exceptional procedures; ceiling on Treasury advances without a budget allocation. - Corrective actions and adjustments: - Corrective measures include revised 2024 budget law allocations for spending likely to generate Treasury advances (prior action). - Upgrade of the IT on the ceiling on Treasury advances without a budget allocation to a continuous QPC. - All external arrears have since been cleared. - Structural benchmarks (SBs): - Four of five SBs under the sixth ECF-EFF reviews were implemented on time. - The SB on including the stock of domestic arrears at end-2023 in the 2024 budget law was not met. - Both reform measures under the first RSF review were implemented; a modification to the reform measure on forestry management is proposed. - Waivers and requests: - Authorities requested waivers of nonobservance of the end-December 2023 QPC on the floor on the non-oil primary balance and the continuous QPC on non-accumulation of external arrears. - Authorities requested waivers of applicability for four end-June 2024 QPCs given that data will not be available by the time of the Executive Board meeting. ### Policy priorities and IMF recommendations - Fiscal policy and public financial management: - Maintain a fiscal path in line with program objectives by strengthening domestic non-oil revenue mobilization and public financial management. - Limit spending done through exceptional procedures to achieve budget discipline and integrity. - Financial sector: - Advance bank recapitalization in compliance with COBAC regulations and the Basel capital adequacy framework to address remaining vulnerabilities. - Structural reforms and governance: - Accelerate structural reforms to support private sector-led inclusive growth. - Implement governance reforms, address corruption vulnerabilities, and strengthen the AML/CFT regime to improve the business environment and support inclusive growth. - Climate and resilience: - Maintain momentum under the RSF to integrate climate considerations into institutional and regulatory frameworks, build resilience to climate shocks, and catalyze new investments from donors and the private sector. - Other reforms: - Foster structural transformation and advance climate change adaptation and mitigation efforts. ### Recent developments, risks, and vulnerabilities - Recent drivers of 2023 performance: - Growth in 2023 was dampened by supply chain and energy disruptions and a contraction of oil production. - Inflation averaged 7.4 percent in 2023, up from 6.3 percent in 2022, driven by food prices, recovery in domestic demand, and a fuel price adjustment. - External balance deteriorated: current account deficit estimated at 4 percent of GDP in 2023 versus 3.5 percent in 2022, reflecting maturing oil production, adverse weather conditions, and slow project implementation. - Key risks: - Balance of risks remains tilted to the downside. - Domestic risks include persisting security challenges, possible social tensions around Presidential elections expected in late 2025, increasing frequency of climate shocks, high food insecurity, and rising numbers of internally displaced persons (IDPs). - Fiscal risks from persisting weaknesses in public financial management, structural issues in the electricity sector, and liquidity shortfalls under tight international and regional financial conditions. - Policy stance and commitment: - Authorities increased domestic fuel pump prices in early February 2024, in line with program commitments, and reiterated commitment to implement reforms under the Fund arrangements. *Prepared from the IMF staff report and related text for Cameroon’s sixth ECF-EFF reviews and first RSF review as presented in the supplied content.* ### 2.3 percent of GDP. ### 1cmrea2024004 - 2.3 percent of GDP. ### Fiscal Performance and Revenue Developments - Non-oil primary balance (NOPB) improved from a deficit of 3.9 percent of GDP in 2022 to 2.6 percent of GDP in 2023, driven mainly by higher-than-projected non-oil revenues and grants. - Non-oil revenues increased from 12.3 percent of GDP in 2022 to 13.5 percent of GDP in 2023, despite weaker growth, due to policy measures, administrative efforts, and one-off factors (one-off factors expected to contribute to revenues only in 2023). - Higher-than-budgeted current expenditures offset the revenue overperformance and crowded out public investment. - Text Table 2 fiscal figures (percent of GDP): - Total revenue and grants: 16.2 (2022), 16.0 (2023), 17.0 (2024 RSFProj.), 15.9, 16.5 - Oil revenue: 3.6 (2022), 2.9 (2023), 3.0 (2024), 2.5, 2.6 - Non-oil revenue: 12.3 (2022), 12.7 (2023), 13.5 (2024), 13.1, 13.6 - Grants: 0.4 (2022), 0.3 (2023), 0.5 (2024), 0.3, 0.3 - Total expenditure: 17.4 (2022), 16.6 (2023), 17.6 (2024), 16.3, 16.9 - Current expenditure: 12.7 (2022), 11.8 (2023), 13.7 (2024), 10.9, 11.7 - Wages and salaries: 4.4 (2022), 4.4 (2023), 4.7 (2024), 4.5, 4.8 - Goods and services: 3.3 (2022), 2.8 (2023), 4.0 (2024), 2.9, 2.9 - Transfers and subsidies: 4.2 (2022), 3.5 (2023), 4.0 (2024), 2.6, 3.0 - Interest payments: 0.8 (2022), 1.1 (2023), 1.1 (2024), 1.0, 1.0 - Capital expenditure: 4.7 (2022), 4.6 (2023), 3.9 (2024), 5.3, 5.1 - Overall balance: -1.1 (2022), -0.7 (2023), -0.7 (2024), -0.4, -0.4 - Non-oil primary balance: -3.9 (2022), -2.5 (2023), -2.6 (2024), -1.9, -2.0 ### Public Debt and External Position - Public debt-to-GDP ratio declined from 46.3 percent at end-2022 to 44.5 percent of GDP at end-2023. - Note: 2023 level was higher than projected at the RSF approval; main drivers include recognition of government debt to SOEs and a lower nominal GDP. - External debt-to-GDP declined from 31.3 percent of GDP in 2022 to 29.1 percent of GDP in 2023, remaining on a downward path. - Text Table 1 projections (selected rows, percent of GDP): - GDP growth (percent): 3.6 (2022 Est.), 4.0 (2023 Est.), 3.3 (2024 RSFProj.), 4.3 (2025), 3.9 (2026), 4.2 (2027), 4.3 (2028), 4.7, 4.8 - Consumer Price Inflation, average (percent): 6.3 (2022), 7.2 (2023), 7.4 (2024), 5.9, 5.9, 5.5, 4.9, 3.4, 2.5 - Overall balance, including grants (percent of GDP): -1.1 (2022), -0.7 (2023), -0.7 (2024), -0.4, -0.4, -0.6, -1.0, -1.0, -1.0 - Current Account (percent of GDP): -3.5 (2022), -3.0 (2023), -4.0 (2024), -2.8, -2.3, -2.5, -3.2, -2.9, -2.3 - Public Debt (percent of GDP): 46.3 (2022), 41.8 (2023 Est.?), 44.5 (2023 reported elsewhere), 39.0, 42.0, 39.5, 37.6, 35.8, 34.1 ### Banking Sector Resilience and Vulnerabilities - Banks' capital adequacy ratio (CAR) improved from 10.7 percent in 2020 to 15.3 percent by end-2023. - Share of non-performing loans (NPLs) has slightly decreased but remains high. - Banks' balance sheets have grown, driven by deposits and profitability. - Banks' exposure to the CEMAC’s public sector, including SOEs, increased from 27 percent of total assets in 2019 to 37 percent in December 2023. - Cameroon is among five Sub-Saharan African countries with the highest sovereign-bank nexus (Text Figure 3). - Banks’ sovereign portfolios are CFAF 3,402 billion, with significant exposures to Congo, Gabon, and Chad. - The growing sovereign-bank nexus partly explains CAR improvement as a large share of sovereign exposure benefits from zero-risk weights, creating vulnerability to contagion risk and commodity price cycles. ### Climate and Disaster Risks - Cameroon’s geographical diversity exposes it to droughts, floods, and rising sea levels. - In 2023, the country experienced elevated temperatures, floods, landslides, and droughts, posing significant risks to its predominantly agricultural and livestock-dependent population. ### Outlook and Risks - Medium-term outlook: GDP growth expected to increase to above 4 percent in the medium term as output approaches potential, domestic demand strengthens, and the external environment stabilizes. - Inflation: expected to remain elevated in the near term before returning to the CEMAC convergence level of below 3 percent over the medium term. - External position: expected to continue strengthening with growing non-oil and gas exports and continued investment inflows to government and private sector. - Balance of risks tilted to the downside: - External risks: prolonged geopolitical tensions (e.g., Ukraine and Middle East), global supply chain disruptions, and lower-than-expected growth in large economies could lead to terms of trade shocks and lingering tight global financial conditions. - Domestic risks: increasing social tensions over political transition in the runup to the Presidential elections, violence in conflict-affected regions, structural and liquidity difficulties in the domestic electricity sector, and climate-related shocks. - Regional risks (SSA): deterioration in regional stability, recent coups, geopolitical fragmentation, and growing insecurity could affect regional trade, financial flows, and population displacement. ### Program Performance and Compliance - At end-December 2023, four out of six QPCs were met. Two QPCs (floor on NOPB and ceiling on accumulation of external payment arrears) had minor and temporary breaches of 0.005 percent of GDP each. - Four out of six indicative targets were missed. - Key causes of misses: spending execution through exceptional procedures (including Treasury advances), postponement to 2024 of a debt operation for repayment of CFAF 200 billion of unpaid domestic obligations, shortfall in budget support and domestic and regional financing, and liquidity difficulties in the electricity sector leading to breaches of the ceiling on Treasury advances without a budget allocation. - Authorities committed corrective measures: - Submit to Parliament a revised 2024 budget law which includes expenditures likely to generate Treasury advances (prior action). - Upgrade the IT on the ceiling on Treasury advances without a budget allocation to a continuous QPC starting from July 1, 2024. ### Structural Benchmarks, Reforms, and Implementation Progress - Four of five SBs under the sixth ECF-EFF reviews were met on time: - SB1: Completed an inventory of respective debts and a clearance plan between government and SOEs, and an inventory of respective cross debts between SOEs. - SB4: Adopted a timetable for transforming common chapters into allocations for authorizing officers and managers as part of decentralization. - SB7: Prepared a detailed action plan to recover the first 100 outstanding tax and customs debts. - SB13: Increased to 80 percent (number and total value) the proportion of procurement through COLEPS in selected key ministries from January to May 2024. - SB not met: including the stock of arrears at end-2023 in the 2024 budget law (SB8). - Plan: repay CFAF 467 billion with long-term external financing in 2024; develop a plan to clear the remaining CFAF 277 billion over 2025-27. - Pending SBs for end-June 2024: - SB2: Revised Mining Code adopted in November 2023; implementation texts expected by end-June 2024. - SB12: Firm identified for technical-financial and economic feasibility study for SONARA; study likely delayed. ### RSF-supported Reform Measures (selected progress) - May 21, 2024 decree (Arrêté No 00002/CAB/MINEPDED) established the institutional framework for coordination of the climate action agenda, defining MINEPDED as the key authority (RM1). - MINEPAT, with World Bank support, defined criteria for prioritizing and selecting projects integrating climate change criteria and developed a manual of selection procedures; manual published on the MINEPAT website (RM3). ### Policy Priorities and Recommendations - Maintain fiscal path in line with program objectives; tighten fiscal stance from NOPB of 2.6 percent of GDP in 2023 to 2.0 percent of GDP in 2024 via expenditure rationalization (including lower fuel subsidy spending) and improved non-oil revenue mobilization. - Further implement tax policy and revenue administration reforms: - Tax base readjustment for excise tax on beverages. - Taxation of benefits in kind. - Introduction of excise duties on several goods. - Removal of tax exemptions on certain products (e.g., precooked and flavored rice). - Implementation of an electronic transaction monitoring system. - Establish a comprehensive wages and salaries database for PIT simulation (SB6). - Study of Law No. 2013/004 on private investment incentives to inform revision (SB3). - Detailed action plans to recover top unpaid tax and customs debts including those owed by SOEs (SB7). - Sustain fuel subsidy reform while protecting vulnerable groups: - Authorities increased domestic pump prices by 15 percent in early 2024 (second adjustment since 2016). - Staff estimates the 2024 increase would reduce the subsidy by about CFAF 190 billion (0.6 percent of GDP) given current assumptions. - 2024 revised budget includes a carry-over of the fuel subsidy of about CFAF 196 billion (0.6 percent of GDP) from 2022 and 2023, and an additional levy of CFAF 48 billion (0.2 percent of GDP) on fuel products for infrastructure rehabilitation. - Measures to mitigate impact in 2024 revised budget: increase in family allowances, increase in municipal transfers, and continued higher allocations for monetary transfers (filets sociaux) introduced in 2023. - Staff recommends strengthening social safety nets for more targeted mitigation. - Authorities note the 2022 cost of fuel subsidy exceeded CFAF 1000 billion (3.7 percent of GDP) and commit to phasing out the fuel subsidy by the end of the program. - Strengthen Public Financial Management and reform SOEs: - Second external long-term loan of CFAF 336 billion planned in 2024 to clear CFAF 467 billion of unpaid domestic obligations (corresponding to pre-program stock at end-2020). - Create an escrow account at the BEAC and share monthly statements with staff to monitor clearance. - Develop plan to clear remaining CFAF 277 billion of unpaid obligations over 2025-27. - Revised 2024 budget to include allocation to support liquidity needs in the electricity sector and other potential emergency spending by prioritizing and reducing other current spending; revised budget law to be submitted to Parliament (prior action). - Upgrade IT on ceiling on Treasury advances without a budget allocation to a continuous QPC. - Transform common budget chapters to reduce from over 18 percent in 2024 to 10 percent in 2025 via phased approach; enact decree establishing procedures for managing budgetary authorizations (revised SB5). - Expand and increase procurement through COLEPS; target achieved over 80 percent in selected key ministries between January and May 2024 (SB13). *Source: 1cmrea2024004 - 2.3 percent of GDP.* ### 26. The authorities are taking steps to improve management of SOEs. They have compiled ### 1cmrea2024004 - 26. The authorities are taking steps to improve management of SOEs. ### SOE management and restructuring - Inventory and clearance plans: - Inventory of cross-debts between SOEs and the government compiled as of end-2020; clearance plan to settle these debts finalized (SB1, MEFP ¶28). - Inventory of cross-debts between SOEs completed; authorities investigating differences in mutual claims found in the inventories. - SONAMINES and Mining Code: - Implementing texts of the revised Mining Code adopted in December 2023 (which incorporates the definition of the role of the National Mining Corporation (SONAMINES)) are being prepared for publication (SB2, MEFP ¶29). - SONARA (refinery) restructuring: - Measures being taken to ensure restructuring and rehabilitation of SONARA. - Firm selected to conduct a study on technical, economic, and financial feasibility of options for the new refinery; study will likely be completed with a delay (SB12, MEFP ¶27). ### Boosting priority investment spending and efficiency - Public investment management weaknesses identified, including management of multi-year projects. - 2025 budget law measures: - Inclusion of commitment authorizations (CAs) and payment appropriations (PAs) that comply with the Medium-Term Budget Framework (MTBF) and are consistent with investment project timetables (SB9, MEFP ¶23). - Procurement and arrears mitigation: - Government will develop comprehensive and realistic procurement plans to ensure consistency between commitment plans and monthly cash flow plans and to avoid accumulation of domestic arrears (SB10, MEFP ¶25). - Alignment with IMF recommendations: - Reforms aim to improve planning and execution of investment projects in line with the IMF’s Public Investment Management Assessment (PIMA) recommendations. ### Electricity sector — liquidity crisis and investment program - Sector challenges: - Weak operational performance, poor payment discipline by public agencies, weak enforcement of sector regulations have undermined financial viability. - Sector receives government subsidies and is not financially self-sufficient. - Investment needs and program: - Energy sector program requires an investment of US$945 million (1.8 percent of GDP) over 2024-28 and will be implemented with support from international development partners. - World Bank planning a US$300 million project over 2024-28 to support transmission line construction, with the first disbursement of US$60 million expected in 2024. - African Development Bank (AfDB) planning sectoral budget support of US$80 million. - Key reform measures: - Tariff increase and installation of electricity meters in public agencies. - Construction of Nachtigal hydro power plant (HPP) expected to significantly improve energy supply and generation mix; however, substantial investments needed for transmission and distribution, and fixed charges to be borne by the state until HPP connected to consumers. ### Maintaining debt sustainability and reducing debt vulnerabilities - Risk assessment: - Despite a relatively low and declining debt-to-GDP ratio, Cameroon remains at high risk of debt distress. - Two out of four external debt sustainability indicators continue to breach thresholds under the baseline scenario, suggesting a high risk of external debt distress. - Above-the-benchmark present value (PV) of public debt-to-GDP ratio and weak Composite Index (CI) score show a high risk of overall debt distress and a low debt carrying capacity. - External debt service indicators trend downwards; debt service-to-revenue ratio expected to stop breaching the threshold in the medium term. - Risks: - Downside: challenging global environment, geopolitical tensions, tight global financial conditions, delays in SONARA’s debt restructuring, contingent liabilities related to SOEs and PPP projects. - Upside: improved export prospects from progress with iron ore and bauxite projects. - Policy actions and ceilings: - Program ceilings and active debt management have constrained debt accumulation and improved liquidity profile. - Overall debt ceiling in 2024 remains unchanged at a PV of CFAF 512.9 billion with an adjustor to accommodate concessional infrastructure and social projects by the World Bank. - Avoiding treasury advances and strengthening budget discipline recommended; recent IMF capacity development to support these efforts. ### Debt management operation (2024) - Objective: - Borrow external debt to clear domestic unpaid government obligations and improve debt profile in 2024. - Operation details: - Authorities aim to carry out a debt management operation totaling CFAF 467 billion in 2024, corresponding to outstanding unpaid obligations pre-program at end-2020. - First tranche of CFAF131 billion implemented in January 2024 through a euro-denominated loan from an external creditor. - Expected effects: - External debt stock and service indicators would deteriorate with the new external borrowing, but the overall public debt stock indicator would remain unchanged while debt service ratios would improve. - Operation aligned with authorities’ 2023-25 debt strategy to increase average maturity and reduce refinancing risk. ### Strengthening financial sector resilience and inclusion - Bank sector recommendations: - Banks need to: i) implement COBAC’s recommendations on provisioning and capitalization; ii) strengthen credit risk assessment frameworks; iii) diversify away from the sovereign—both Cameroonian and other CEMAC governments; iv) follow a strategy to reduce the high share of NPLs; v) ensure data submission to the movable collateral registry (RNSM). - Recapitalization and privatization: - COBAC authorized Cameroon authorities in July 2023 to enter the capital of two undercapitalized banks. - Authorities will recapitalize these banks to comply with the 8 percent capital adequacy ratio (CAR) by November 2024, in compliance with COBAC regulations (R2010-01 and R2016-03) and the Basel capital adequacy framework (new SB16, MEFP ¶33). - Ongoing privatization of another public bank to be completed in 2024. - State Asset Management Company (SRC): - SRC recovered from 2022 losses related to internal restructuring and is considering broadening its scope. - Emphasis on ensuring sound governance, operational and budgetary independence, transparency, and accountability. - Staff recommended SRC commit to a sunset clause for asset recovery activities for NPLs transferred by each financial institution. - Caisse des Dépôts et Consignations (CDEC): - Authorities will define ToR for CDEC and submit to the Fund for review. - Staff emphasized CDEC should receive full supervisory recognition by COBAC as a financial institution without specific exemptions due to state ownership; ToR and implementing texts should make this explicit. ### Strengthening governance and transparency - Diagnostic and PFM reforms: - November 2023 Diagnostic-Report published on governance and corruption vulnerabilities, with findings and recommendations based on IMF expert discussions (Annex 2). - Progress on strengthening legal basis for PFM, moving procurement transactions to an online public procurement platform (MEFP ¶24), and reforming the budget’s common chapters (MEFP ¶42). - 2023 action plan published to strengthen frameworks for preparing, publishing, and monitoring public expenditure audits, including recommendations to strengthen institutions such as the Supreme Court’s Audit Bench. - Anticorruption legal and institutional challenges: - Diagnostic report highlights immediate and short-term measures and longer-term structural reforms needed to address gaps in legal frameworks. - Authorities plan to align legal and institutional provisions for the fight against corruption with international standards (MEFP ¶39) and implement the asset declaration law. - Need for a comprehensive action plan to address core risks and reinforce PFM, public procurement, expenditure auditing processes, and to amend the Penal Code to criminalize all acts of corruption in accordance with the United Nations Convention against Corruption (UNCAC), including illicit enrichment. - SOE transparency: - Authorities intend to intensify efforts on SOE management and transparency; measures include publishing on the Ministry of Finance website a list of the 25 largest SOEs that have published audited annual financial statements on the Ministry of Finance website (new SB14, MEFP ¶40). ### EITI suspension and civil society engagement - EITI status: - In February 2024, Cameroon was suspended from the EITI until the next validation (starting April 2027). - Suspension motivated by concerns about progress in civil society engagement and government constraints on civil society’s freedoms of expression and association. - EITI Board will take stock of progress within 18 months of its February decision and may conduct targeted assessments if remedial actions insufficient. - Cameroon remains an EITI member country (except for nomination of representatives to EITI organizational structures) and retains rights and obligations including publication of reports. - Follow-up: - EITI technical assistance expected to support corrective actions related to stakeholder engagement and beneficial ownership and integration of EITI into national reporting systems. - Government issued a new decree to govern EITI implementation in Cameroon; engagement with civil society representatives is ongoing. ### AML/CFT and related reforms - Grey-list status and remediation: - Following strategic AML/CFT deficiencies identified in the 2021 Mutual Evaluation Report (published March 2022) by GABAC, Cameroon was placed on a “grey list” by FATF. - Government actions to be removed from the “grey list” include increasing resources for the Financial Intelligence Unit and building capacity among criminal law enforcement and judicial bodies. - Authorities are working with FATF, GABAC, and the Fund to implement an agreed action plan expeditiously. ### Addressing climate vulnerabilities and DRM - Institutional framework and climate governance: - Decree adopted in May 2024 (Arrêté No 00002/CAB/MINEPDED dated May 21, 2024) formally establishes the institutional framework, defining the role of MINEPDED as central coordinating body for the climate agenda (RM1, MEFP ¶46). - Decree integrates climate considerations into main planning tools. - Project selection and prioritization: - With World Bank support, authorities developed a manual outlining criteria for prioritizing and selecting projects that incorporate climate-related considerations (RM3, MEFP ¶46); criteria published on the Ministry of Economy, Planning and Land Planning (MINEPAT) website. - Disaster risk management (DRM): - Authorities preparing law governing civil protection to outline disaster risk prevention, response, and recovery. - Revising 2003 presidential decree on the National Risk Observatory to redefine its mission (RM6, MEFP ¶48). - TOR prepared to hire a consultant to support development of a disaster risk financing strategy (RM7); a timetable is being prepared for further reform measures (MEFP ¶48). - Forest management reform measure modification (RM8): - Original RM8 aimed to encourage sustainable forestry through fiscal incentives. - Authorities proposed modifying RM8 to focus on enhancing traceability and legality system of timber and integrating it with fiscal infrastructure as an interim step. - SIGIF2 (second-generation Computerized Forest Information Management System) developed to digitalize forest management procedures, enhance traceability, and improve legality in the forest sub-sector. - Revised RM8 aims at: - ensuring full operational functionality of all SIGIF2 modules and integrating them with aerial satellite imagery for real-time monitoring of forest loss; - establishing procedures for an annual evaluation of the traceability function of the SIGIF2 platform; - interconnecting SIGIF2 with tax and customs information systems and developing a roadmap to use these data to enhance taxation of the forestry sector. *Source: 1cmrea2024004 - 26. The authorities are taking steps to improve management of SOEs. (PDF chapter/section).* ### 43. Regional assurances. BEAC met its end-December 2023 Net Foreign Assets (NFA) target and ### 1cmrea2024004 - 43. Regional assurances. BEAC met its end-December 2023 Net Foreign Assets (NFA) target and ### Regional assurances and program condition - BEAC met its end-December 2023 Net Foreign Assets (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 2024. - Adequate policies and assurances are a condition for the conclusion of the review. - The regional assurances on regional NFA are described as critical for the success of Cameroon’s Fund-supported program and to help bolster the region’s external sustainability. ### Waivers and arrears - The authorities request waivers for nonobservance of performance criteria related to: - the floor on the non-oil primary balance for end-December 2023, and - the ceiling on the accumulation of external payments arrears. - The breach of the continuous zero ceiling on accumulation of external payment arrears was due to unpaid obligations by a ministry to a foreign commercial supplier for services provided in 2021, which the commercial supplier claimed through its state insurance company. - The authorities committed to repay all outstanding obligations by end-March 2024, but payment delays led to a breach of the related QPC in 2024. All arrears have since been cleared. - Waivers for nonobservance are requested due to the minor and temporary nature of the nonobservance of both criteria, and all arrears have been cleared. ### Waivers of applicability and data timelines - The authorities request waivers of applicability for four end-June 2024 QPCs because data to assess observance will not be available by the Board date scheduled in early July 2024. - The program is expected to be successfully implemented and there is no clear evidence that these QPCs will not be met. - According to the TMU, the cutoff date for reporting information under the program is within six weeks from the end of the month, except for end-December data, for which the cutoff date includes an additional 30 days due to the complementary period. ### Program monitoring and target resets - Program performance reviews will continue semi-annually through six-monthly and continuous QPCs, quarterly ITs, and SBs. - QPCs and ITs for end-June, end-September, and end-December 2024 have been reset to reflect changes in the macroeconomic framework, budget projections, and program commitments; new targets were set for end-March 2025. - The reset QPCs for June and December-2024 include: - the floor on the non-oil primary balance, - the ceiling on the net domestic financing of the central government (excluding IMF financing), and - the ceiling on net borrowing of the central government from the central bank (excluding IMF financing). ### Capacity to repay the Fund and risks - As of end-December 2023, total outstanding credit from the Fund amounted to 395 percent of quota. - Total Fund credit outstanding (based on existing and prospective drawings) peaks at 3.1 percent of GDP in 2024. - Annual obligations to the Fund peak at about 3.0 percent of revenues in 2027. - Risks to the program and the capacity to repay the Fund are elevated. Potential risks include: - external spillover risks, - longer-than-expected tight financial conditions, - increased domestic political and social tensions, - further delays in implementing critical reforms, and - security risks. - Recommended mitigation: Accelerating the pace of reforms, strong political support for the program’s objectives, and support of international partners are critical. ### Financing assurances - The World Bank, the African Development Bank, and French Development Agency are expected to provide budget support in 2024. - The program remains fully financed with firm commitments for the upcoming 12 months, with good prospects for the remainder of the program. - Memorandum item: Cameroon’s current quota is SDR 276.0 million. ### Staff appraisal — macroeconomic performance - Growth and inflation: - Based on preliminary data, GDP growth weakened slightly from 3.6 percent in 2022 to an estimated 3.3 percent. - Inflation remained relatively elevated but is expected to decelerate following the appropriate monetary policy stance by the regional central bank (BEAC), continued fiscal consolidation, and easing pressures from food prices. - Program performance: - Two of the six QPCs and four of the six ITs at end-2023 were not met. - The QPCs on the floor on the NOPB (payment order basis) and the ceiling on accumulation of external payment arrears were not met. - Four out of five structural benchmarks for the sixth reviews were met. - The SB on including the stock of domestic arrears at end-2023 in the 2024 budget law was not implemented. - As a corrective measure for the missed QPCs, the authorities will submit to Parliament a revised 2024 budget law, which includes an allocation for spending likely to generate Treasury advances (prior action). - To accelerate clearance of domestic unpaid obligations, the authorities will look for external financing to settle CFAF 467 billion by end-2024. ### Staff appraisal — fiscal, financial, and governance considerations - Fiscal stance and revenue mobilization: - Staff welcomes the authorities' commitment to fiscal consolidation. - The authorities' fiscal stance remained in line with the program objectives despite a minor and temporary breach of the NOPB target in 2023. - Performance was driven by stronger domestic revenue mobilization, including one-off factors, while part of spending was executed through exceptional procedures that undermined budget discipline and integrity and led to repetitive breaches of related IT targets. - Recommendation: Accelerate reforms to improve domestic non-oil revenue mobilization and strengthen PFM. - Financial soundness: - Financial soundness indicators have generally improved, but vulnerabilities remain. - The commitment to advance bank recapitalization in compliance with COBAC regulations and Basel capital adequacy framework is welcome. - Concern: High exposure of Cameroon’s banks to public sector entities in CEMAC, described as one of the highest sovereign-banks nexuses in SSA’s region, requires close monitoring in consultation with COBAC. - Governance and anti-corruption: - Engaging in structural governance and anti-corruption reforms is critical. - Authorities are encouraged to formulate a concrete action plan to follow the governance diagnostic report published in 2023. - Continue working with international bodies responsible for anti-corruption and financial integrity and accelerate implementation of actions to strengthen the AML/CFT regime. - More efforts are needed on criminalization of acts of corruption and asset declarations. - Concern: Cameroon’s suspension from the EITI; efforts toward validation at the next round remain crucial. - Debt and contingent liabilities: - Cameroon remains at high risk of debt distress, but its debt is sustainable. - Staff urges the authorities to advance SONARA’s debt restructuring, reforms in the electricity sector, and other SOEs reforms to limit contingent liabilities. - RSF progress: - The authorities have made commendable progress under the RSF. - Maintaining reform momentum under the RSF and strengthening the institutional framework for climate policies is essential for building resilience to climate shocks and for catalyzing new investments from donors and the private sector. *Source: IMF staff report extract (1cmrea2024004).* ### 57. Based on Cameroon’s performance under the program, the implementation of the end- ### 1cmrea2024004 - 57. ### Program assessment, waivers, and review completion - Based on Cameroon’s performance under the program and implementation of the end-December 2023 regional policy assurances and regional policy assurances established in the June 2024 union-wide paper, staff supports the authorities’ request for the waivers of nonobservance of the QPCs on: - the floor on the NOPB, and - the ceiling on accumulation of external payment arrears, - and completion of the sixth reviews under the ECF-EFF and the first review under the RSF. - Staff supports the authorities’ requests for: - (i) the modification of the program quantitative performance criteria and indicative targets, - (ii) setting new indicative targets and a modification of a reform measure, and - (iii) waivers of applicability for four end-June 2024 QPC targets as data will not be available by the time of the Board meeting, the program will be successfully implemented, and there is no clear evidence that such PCs will not be met. - Staff proposes that the completion of the seventh reviews under the ECF-EFF arrangements, and the second review under the RSF arrangement, be conditional on the implementation of critical policy assurances on NFAs at the union level established in the June 2024 union-wide background paper. ### Real sector developments (2017–23) - Growth continued, driven by a dynamic tertiary sector. - Private consumption continued to recover while public spending continued to contract. - Inflation accelerated rapidly due to food and energy prices, but seems to have peaked, with some regional variations. - Exports recovered from pandemic lows, driven by oil exports, which are projected to slow down, with imports slowing in parallel. - Data sources: Country authorities, BEAC, and IMF staff calculations. ### Fiscal developments (2019–24) - Revenues improved in 2023 following strong non-oil revenue mobilization. - Public spending increased with high current expenditures crowding out public investment. - Fuel subsidy cost declined in 2023 and is expected to decline further in 2024 following two pump price adjustments and lower international oil prices. - The overall balance and the NOPB are estimated to have improved in 2023. - Weak public financial management resulted in accumulation of domestic payment obligations. - The lower deficit and an exchange rate appreciation supported favorable public debt dynamics in 2023. Key fiscal and budget figures (selected, as presented) - Nominal GDP (at market prices, CFAF billions): 27,223 (2022 est.), 29,704 (2023 est.), 28,996 (2024 est.), 32,063 (2025 RSF proj.), 31,267 (2026 RSF proj.), 33,746 (2027 proj.), 36,338 (2028 proj.), 39,209, 42,343. - Total revenue (including grants) (percent of GDP): 16.2 (2022), 16.0 (2023), 17.0 (2024), 15.9 (2025 RSF), 16.5 (2026 RSF), 15.6 (2027), 15.7 (2028), 15.7, 15.8. - Total expenditure (percent of GDP): 17.4 (2022), 16.6 (2023), 17.6 (2024), 16.3 (2025 RSF), 16.9 (2026 RSF), 16.3 (2027), 16.7 (2028), 16.7, 16.8. - Overall fiscal balance (payment order basis, excluding grants, percent of GDP): -1.5 (2022), -1.0 (2023), -1.1 (2024), -0.7 (2025 RSF), -0.7 (2026 RSF), -0.8 (2027), -1.1 (2028), -1.1, -1.1. - Non-oil primary balance (payment order basis, percent of non-oil GDP): -4.2 (2022), -2.6 (2023), -2.7 (2024), -2.0 (2025 RSF), -2.0 (2026 RSF), -1.3 (2027), -1.6 (2028), -1.6, -1.6. - Domestic Payment Obligations (bn CFAF): accumulation noted in figures (no single numeric series extracted in text). ### External sector developments (2016–24) - Current account deteriorated in 2023 amidst a larger goods trade deficit but is expected to improve somewhat in 2024. - Most export good prices were lower in 2023, in tandem with lower import prices. - The currency appeared stronger after a sharp depreciation in 2022. - External balance is expected to improve in 2024 with improved trade balance and stronger project disbursement. - Declining oil price and volume are expected to put pressure on overall exports but be supported by rising cocoa price in 2024; declining import prices will help contain import-to-GDP ratio. - Sources: Country authorities, BEAC and IMF staff calculations. Selected external sector numbers (as presented) - Trade balance (percent of GDP): -0.7 (2022), -1.7 (2023), -2.9 (2024), -1.5 (2025 RSF), -1.7 (2026 RSF), -1.9 (2027), -2.5 (2028), -2.2, -1.5. - Oil exports (percent of GDP): 7.9 (2022), 5.5 (2023), 5.6 (2024), 5.1 (2025 RSF), 4.6 (2026 RSF), 4.2 (2027), 3.4 (2028), 3.1, 3.4. - Non-oil exports (percent of GDP): 7.9 (2022), 8.4 (2023), 7.7 (2024), 8.5 (2025 RSF), 8.9 (2026 RSF), 8.4 (2027), 8.0 (2028), 7.9, 8.2. - Imports (percent of GDP): 16.6 (2022), 15.6 (2023), 16.2 (2024), 15.1 (2025 RSF), 15.2 (2026 RSF), 14.4 (2027), 14.0 (2028), 13.2, 13.1. - Current account balance (excluding official grants, percent of GDP): -3.8 (2022), -3.3 (2023), -4.2 (2024), -2.9 (2025 RSF), -2.6 (2026 RSF), -2.8 (2027), -3.4 (2028), -3.1, -2.4. - Oil price ($US dollars per barrel): 96.4 (2022), 80.5 (2023), 80.6 (2024), 79.9 (2025 RSF), 81.3 (2026 RSF), 76.4 (2027), 72.9 (2028), 70.4, 68.6. ### Monetary sector developments (2017–24) - BEAC tightened monetary policy in response to accelerating inflation. - Tightening contributed to upward shift in government yield curve amid high issuances from CEMAC countries. - Tightening had little impact on broad money and credit dynamics due to weak monetary policy transmission. - Capital adequacy continues to rise as banks increase exposure to the sovereign while applying zero-risk weights. - NPLs at end-2023 were slightly lower relative to end-2022 but remain high. - Excess reserves continue to be important, though decreasing, following BEAC's absorption operations to strengthen monetary policy transmission. - Sources: Country authorities, BEAC and IMF staff calculations. Monetary figures (selected) - Broad money (M2) annual change: 11.7 (2022), 9.0 (2023), 4.4 (2024), 8.4 (2025 RSF), 9.3 (2026 RSF), 7.6 (2027), 7.4 (2028), 7.4, 7.4. - Net foreign assets (contribution to growth of M2, percent of beginning-of-period broad money): 7.7 (2022), -0.8 (2023), -2.6 (2024), 6.0 (2025 RSF), 10.7 (2026 RSF), 4.2 (2027), 1.3 (2028), 1.4, 4.4. - Credit to the private sector (annual percentage change): 13.6 (2022), 11.2 (2023), 13.5 (2024), 9.5 (2025 RSF), 9.5 (2026 RSF), 7.7 (2027), 7.4 (2028), 7.2, 7.2. - Net foreign assets (CFAF billions): 3,193 (2022), 3,152 (BEAC foreign assets cited in tables), with IMF credit and other detailed central bank and commercial bank positions presented in Table 4. ### Debt sustainability and public debt indicators - Cameroon remains at high risk of debt distress while overall debt sustainability indicators have been broadly stable compared to the previous DSA report published in February 2024. - Cameroon’s external debt stock indicators continue to lie below the threshold, but external debt service indicators remain above the threshold; both external debt service indicators are on a downward trend. - External debt service-to-revenue ratio is expected to fall beneath the threshold post-2028. - A debt management operation in 2024 will lead to a deterioration of external debt indicators but will improve short-to-medium term debt service capacity and enhance the debt profile, without affecting the public debt-to-GDP ratio. Key debt statistics (selected) - Stock of public debt (percent of GDP): 46.3 (2022), 41.8 (2023), 44.5 (2024), 39.0 (2025 RSF), 42.0 (2026 RSF), 39.5 (2027), 37.6 (2028), 35.8, 34.1. - Of which: external debt (percent of GDP): 31.3 (2022), 28.6 (2023), 29.1 (2024), 28.6 (2025 RSF), 29.9 (2026 RSF), 29.0 (2027), 27.9 (2028), 26.6, 25.7. - Debt service indicators: external debt service indicators are above thresholds but trending down; external debt service-to-revenue ratio expected to fall beneath threshold post-2028. ### Capacity to repay the Fund (2023–44) and IMF exposures - Quota (in SDRs): 276,000,000. - Principal and charges/interest schedules presented in Table 5 with detailed SDR and CFAF projections across 2023–2044. - Outstanding IMF credit (SDR millions) and net use of Fund credit series provided (e.g., outstanding IMF credit: 1,090.2 SDR millions in 2023; net use of Fund credit: 124.2 SDR millions in 2023). - Fund obligations based on existing and prospective credit are detailed with memorandum items including Nominal GDP, Exports, Government revenue, Debt service, Gross reserves, and CFAF per SDR. ### Financing, RSF, and disbursements schedules - Schedule of disbursements and purchases under ECF and EFF (2021–25) and RSF availability dates provided in Tables 7 and 8 with percent-of-quota and SDR amounts. - RSF total availability: 50.0 percent of quota, SDR 138.0 (total). - Table 9 presents external financing needs and sources (CFAF, billions) for 2023–28: - Total Financing Requirements (CFAF billions): 152 (2023), 622 (2024), 811 (2025), 806 (2026), 1860 (2027), 1991 (2028), 2118 (subsequent). - Financing Gap: 18 (2023), 325 (2024), 410 (2025), 600 (2026), 0 (2027), 0 (2028), 0. - Additional/Exceptional Financing Sources include IMF Financing (134 in 2023; 894 in 2024; 500 in 2025; 0 thereafter in table), ECF (45 in 2023; 30 in 2024; 15 in 2025; 0 thereafter), EFF (89 in 2023; 59 in 2024; 30 in 2025; 0 thereafter), Budget Support (excl. IMF) (49 in 2023; 16 in 2024; 416 in 2025; 561 in 2026; 0 thereafter), AfDB (23 in 2023; 18 in 2024; 0 thereafter), WB (0 in 2023; 12 in 2024; 201 in 2025; 226 in 2026; 1000 in 2027), France (27 in 2023; 26 in 2024; 26 in 2025), EU and Other listed as 0 in table. - RSF disbursement memorandum item: 0 (2023), 56 (2024), 56 (2025), 0 (2026 onward) as presented. *Source: Country authorities, BEAC, and IMF staff calculations.* ### Annex I. Global Risk Assessment Matrix ### Annex I. Global Risk Assessment Matrix ### Conjunctural risks — main risks, impacts, and recommended policy responses - Intensification of regional conflicts - 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. - Could amplify existent social risks. - 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. - Commodity price volatility - Likelihood: High - 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. - Abrupt global slowdown (including downside scenarios for China, Europe, and the U.S.) - 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. - Monetary policy miscalibration - Likelihood: Medium - Impact if realized: - Impact on the vulnerable and food insecurity. - Increase in risk premia, including sovereign risk premium, 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. - Sovereign debt distress - Likelihood: Medium - Impact if realized: - Capital outflows. - Increase in borrowing costs. - Recommended policy response: - Enhance banking supervision and enforce prudential regulations. - Create fiscal space to absorb economic, financial, and other shocks. - Advance SOE restructuring and PFM reforms. - Social discontent - Likelihood: Medium - 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. Note: The Risk Assessment Matrix (RAM) shows events that could materially alter the baseline path. The relative likelihood categories are staff’s subjective assessments (“low” = probability below 10 percent, “medium” = probability between 10 and 30 percent, and “high” = probability between 30 and 50 percent). Conjunctural shocks and scenarios cover risks likely to materialize over a shorter horizon (between 12 to 18 months). ### Structural risks — main risks, impacts, and recommended policy responses - Deepening geoeconomic 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. - Diversify trade partners, especially by leveraging the potential of the AfCFTA. - Cyberthreats - Likelihood: Medium - Impact if realized: - Impact on public services that rely on digital infrastructure. - Could slow down financial inclusion progress. - 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. - Promote climate-smart agriculture. - Disorderly energy transition - Likelihood: Medium - Impact if realized: - Energy supply disruptions. - Stranded assets. - Recommended policy response: - Energy sector reform. - Regional instability (including recent events in Gabon) - Likelihood: Medium to High - Impact if realized: - Increased sovereign financing costs. - Intraregional banks’ exposure. - Recommended policy response: - Address bank vulnerability/advance bank restructuring. - Advance reforms supporting public debt sustainability. ### Annex II. Governance Diagnostic: Main Findings and Recommendations ### Diagnostic overview and key findings - An IMF mission (LEG/FAD/MCM) conducted a governance and corruption diagnostic in February/March 2023 under the IMF’s Framework for Enhanced Engagement on Governance (2018). - The Governance-and-Corruption-Diagnostic-Report (published in November 2023) finds steps to improve economic governance but identifies persistent weaknesses and vulnerabilities to corruption in key government functions, including: - Public financial management (budget formulation and execution). - Public procurement (tendering and contract execution). - Management and oversight of state-owned enterprises (SOEs). - Transparency in revenue policy and administration. - Land ownership (problems with clarity and security). - The report emphasizes the need for both short-term measures addressing immediate risks (including gaps in legal frameworks) and structural reforms requiring medium- and long-term initiatives and substantial resources, potentially with international partner support. - Recommendations are intended to inform governance and anti-corruption policies, legal and institutional architecture improvements, and implementation of the IMF-supported program. ### Selected recommendations and implementation timetable (as classified in the report) - Classification: short-term (ST) = within a maximum of 12 months; medium-term (MT) = within 24 to 30 months. - Selected measures: - Publish property and asset declarations on the Cameroonian government’s website, in accordance with the amended legislation and/or a presidential decree — ST - Bring the Criminal Code into full compliance with the mandatory provisions of the United Nations Convention against Corruption (UNCAC), in particular by making illicit enrichment a criminal offense — ST - Enact an anti-corruption law that guarantees the independence of the anti-corruption agency, which has a mandate and the power to conduct criminal investigations — MT - Establish a separate budget line for the Audit Bench in the Supreme Court chapter of the budget — ST - Ensure that the competent authorities have access to sufficient, accurate, and up-to-date beneficial ownership information — MT - Starting in 2024, reduce the use of “common chapters” in accordance with a decree on their use, in particular regarding chapters 57, 65, and 94, and set a timetable to limit the allocation to 3%-5% of the budget — ST - In 2025, set a ceiling for authorizing expenditures under exceptional procedures, in accordance with a decree restricting their use, and a timetable to limit these procedures to between 3% and 5% of expenditures — ST/MT - Starting in 2024, include public procurement monitoring in quarterly budget execution reviews and publish indicators/reports on public procurement in Cameroon — ST - Improve the governance of state-owned enterprises by strictly enforcing the provisions of the law on the term of office of managing directors and chairmen of the board of directors and the prohibition on holding multiple positions, and by ensuring the selection of qualified candidates, in accordance with a decree — MT - Publish the annual financial statements of the 15 largest state-owned enterprises — ST - Publish all production-sharing agreements in the extractive sector — ST - Starting in 2024, publish all transactions performed by the minister and the two directors general on official websites within 30 days of the action, produce and publish a detailed annual report on settlements, and take steps to eliminate the minister’s regulatory authority regarding transactions — ST - Starting in December 2024, publish on the Ministry of Finance website data on the number of complaints and sanctions concerning tax and customs officials, as well as the number of cases referred to the National Anti-Corruption Commission (CONAC) for further investigation — MT - Increase the transparency of the selection process for members of the Supreme Judiciary Council to guarantee its independence, and ensure adequate budget, resources, and staffing for the judiciary by December 2024 — MT - Establish an online digital cadaster and make progress in digitizing state land titles by December 2024 — MT/LT ### Appendix I. Letter of Intent — key program status and requests (June 21, 2024) - Context and objectives - The Government of Cameroon continues to implement its 2021-25 Economic and Financial Program supported by the IMF’s Extended Credit Facility (ECF), Extended Fund Facility (EFF), and the Resilience and Sustainability Facility (RSF). - Program objectives include reducing poverty, financing balance of payments needs, and rebuilding regional foreign exchange reserves, in line with the regional PREF-CEMAC program. - Authorities note a difficult domestic and regional context and a constraining external environment, including intensification of global geopolitical tensions, tight financial conditions, inflationary pressures, and oil price volatility. - Recent performance and program implementation - Program performance at end-December 2023: two of six quantitative performance criteria were not met: - The floor on the non-oil primary balance (on a payment order basis) at end-December 2023 was not met. - The ceiling on the accumulation of external payments arrears was not met. - Four of the six indicative targets were not met: - Ceilings on the net accumulation of domestic payments arrears. - Direct interventions by the National Hydrocarbons Company (SNH). - Treasury advances without a budget allocation. - The share of expenditure executed through exceptional procedures. - Corrective measures have been proposed to improve performance. - Progress on structural benchmarks (SBs) accelerated: four out of five SBs due for the sixth reviews were met on time. The SB relating to the inclusion, in the 2024 Budget Law (LF2024), of a budget allocation to clear the stock of domestic payment arrears dating back to more than 90 days at the end of the 2023 exercise was not met (SB8, December 2023). - Two reform measures due for the first review under the RSF arrangement were completed; actions underway on RMs due for the next review. - Requests to the IMF - Request waivers for the breaches of two quantitative performance criteria related to: - The floor on the non-oil primary balance (on a payment order basis) at end-December 2023. - The ceiling on the accumulation of external payments arrears. - Rationale: breaches are minor and temporary; all external arrears have been cleared. - Request waivers of applicability for four performance criteria for end-June 2024 as the data will not be known before the IMF Executive Board meeting scheduled for July 2024, and no clear evidence that such performance criteria will not be met. - Request IMF Executive Board approval for changes to program targets for end-June 2024, end-September 2024, and end-December 2024, and to establish new targets for end-March 2025, aligned with updated macroeconomic projections and adopted policies, and for modification of a reform measure. *Source: Annex I. Global Risk Assessment Matrix; Annex II. Governance Diagnostic; Appendix I. Letter of Intent (Cameroon) — material as provided in the source PDF.* ### 7. Based on Cameroon’s program achievements and commitments in the MEFP, Cameroon ### 1cmrea2024004 - 7. Based on Cameroon’s program achievements and commitments in the MEFP, Cameroon ### Program requests and disbursements - Requests completion of the sixth reviews of the ECF-EFF supported arrangements and the disbursement and purchase of SDR 18.4 million and SDR 36.8 million, respectively. - Requests completion of the first review under the RSF arrangement and the disbursement of SDR 34.50 million. ### Government commitments, consultations, and transparency - The government considers the policies and measures in the MEFP adequate for achievement of program targets and is committed to implementing reforms and taking any necessary additional measures. - Authorities will consult with the IMF on additional measures or before revising measures in the MEFP in accordance with the IMF policy on such consultations. - To facilitate program monitoring, the government will report the information required to IMF staff by the prescribed deadlines in accordance with the attached Technical Memorandum of Understanding (TMU). - The government agrees to the publication of this letter, the MEFP, the TMU, and the IMF staff report for this review. ### Supplementary Memorandum of Economic and Financial Policies in 2024-25 — INTRODUCTION - The National Development Strategy for 2020–30 (SND-30) remains central to strategic priorities. - Objectives: restore strong, sustained, and inclusive economic growth; accelerate Cameroon's march towards economic and social emergence; strengthen macroeconomic stability; ensure deep structural transformation through significant investments in priority sectors; maintain debt and fiscal sustainability; strengthen resilience to external shocks and climate change. ### RECENT ECONOMIC DEVELOPMENTS — Key outcomes and indicators - Real GDP growth: expected to increase from 3.6 percent in 2022 to 3.3 percent in 2023 (compared to 4 percent as initially expected). - Drivers of weaker growth: contraction in hydrocarbon and export agriculture sectors; weaker-than-expected manufacturing growth; disruptions in global supply chains; production cost increases; insufficient supply of electricity. - Inflation: declined to 6 percent by end-2023; remains high driven by February 2023 fuel pump price increase and stronger demand pressures. - Factors reducing inflationary pressures: continued monetary tightening, fiscal consolidation, exchange rate appreciation, lower food inflation. - Current account deficit: widened to 4.0 percent of GDP in 2023 from 3.5 percent of GDP in 2022 (reflecting lower oil exports, adverse weather, decline in disbursements linked to end of first-generation project cycles, late launch of SND-30 projects, and a drop in international reserves). - Non-oil primary deficit: contracted to about 2.6 percent of GDP in 2023 from 3.9 percent in 2022. - Non-oil revenues: increased from 12.3 percent of GDP in 2022 to around 13.5 percent of GDP in 2023. - Grants: increased from 0.4 percent of GDP in 2022 to 0.5 percent of GDP in 2023. - Public investment under-execution: 0.8 p.p. of GDP due to poor performance of FINEX projects. - Current expenditure overrun: about 1.9 p.p. of GDP compared to LFR2023 plan. - Public debt ratio: declined to about 44.5 percent of GDP by end-2023 from over 46 percent at end-2022. - External public debt: fell to 29.1 percent of GDP in 2023 from 31.3 percent in 2022. - Contingent liabilities (public enterprises and PPPs): increased from 12.8 percent in 2022 to 13.9 percent of GDP in 2023. - Banking sector soundness: - Banks' solvency ratio: rose from 10.7 percent in 2020 to 15.3 percent at end-2023. - Non-performing loans: decreased slightly to 12.9 percent compared to end-2022. - Bank balance sheet growth: 11 percent in 2023, driven by increase in deposits. - Banks' exposure to public sector: increased from around 27 percent in 2019 to 37 percent of total assets in December 2023. - Liquidity ratios: deteriorated slightly compared to 2022. ### IMPLEMENTATION OF THE ECONOMIC AND FINANCIAL PROGRAM — Performance assessment - Quantitative performance criteria: Two of six not met: - Floor of the non-oil primary fiscal balance (payment order basis) for end-December 2023 (not met). - Ceiling on the accumulation of external payments arrears (not met). All arrears have been cleared. - Indicative targets: Four of six not met: - Ceiling on net accumulation of domestic payment arrears (not met). - Ceiling on SNH's direct interventions (not met). - Share of expenditure through exceptional procedures (not met). - Ceiling on Treasury advances without a budget allocation (not met). - Causes: liquidity constraints due to lower-than-expected budget support disbursements; tight domestic and regional financing conditions; postponement of a debt operation to 2024; persistent PFM weaknesses and non-budgetary expenditures; non-compliance with expenditure chain. - Corrective actions: - Authorities will identify expenses that may require Treasury advances and submit to Parliament a 2024 Revised Budget Law (LFR2024) consistent with program macroeconomic framework and including expenditures likely to generate Treasury advances (prior action). - The indicative target on the ceiling on Treasury advances without a budget allocation will be reclassified as a continuous quantitative performance criterion (Table 1). ### Structural benchmarks (SBs) — progress and delays - Achieved on time (four of five SBs for the sixth review): - SB1 (April 2023): Establishment of an inventory of respective debts between public enterprises and government and adoption of a plan for clearance of respective debts. - SB4 (May 2024): Adoption of a timetable for transformation of common chapters for the benefit of authorizing officers of ministries and managers in context of devolution of authorization reform. - SB7 (April 2024): Preparation of a detailed action plan to recover the first 100 unpaid tax and customs debts. - SB13 (May 2024): Increase to at least 80 percent (in number and in total value) the proportion of public procurement contracts awarded through COLEPS in some key ministries for January–May 2024. - SB due for next review to be achieved on time: - SB2 (June 2024): Publication of all implementing texts of the Mining Code, including operations of SONAMINES. - SBs not met or delayed: - SB8 (December 2023): Stock of unpaid domestic obligations (RAPs) of more than 90 days at end-2023 exceeded the allocation included in LF2024 for clearing these arrears (not met). - SB12 (June 2024): Technical-financial and economic feasibility study for SONARA will not be completed on time. ### ECONOMIC AND FINANCIAL PROGRAM IN THE MEDIUM TERM — Macroeconomic framework and outlook - Real GDP growth: expected to accelerate to above 4.5 percent in the medium term, driven by primary (industrial agriculture, livestock and fisheries, and forestry and logging) and tertiary sectors. - Inflation: likely to remain high in the near term, before returning to below 3 percent in the medium term (in line with CEMAC convergence criterion). - Current account deficit (including grants): expected to deteriorate in the short term due to reinvestment in existing oil wells and delays in gas production, but narrow to below 2 percent of GDP by the end of the decade thanks to growth in non-oil exports, FDI, and regional integration. - Medium-term fiscal policy objective: reduce overall fiscal deficit (including grants) and non-oil primary deficit to sustainable levels and keep public debt on a sustainable path. - Domestic non-oil revenues target: around 13.8 percent of GDP in 2025 (from 13.5 percent in 2023). - Expenditure management: prioritize expenditure rationalization and eliminate spending through Treasury advances and other exceptional procedures. ### Building fiscal resilience — 2024 fiscal targets and measures - LFR2024 objectives: - Contain non-oil primary deficit to around 2 percent of GDP in 2024. - Maintain overall deficit (on a payment order basis) at 0.4 percent of GDP in 2024. - Increase domestic revenues from 13.5 percent in 2023 to 13.6 percent of GDP in 2024. - Reduce current primary expenditure from 12.7 percent in 2023 to 10.7 percent of GDP in 2024. - Contingency measures: implement measures to address revenue shortfalls, notably reduction of compressible current expenditures. ### Mobilizing domestic non-oil revenues — reforms and actions - Personal Income Tax (PIT) reforms: - Develop a database on wages and salaries suitable for simulating PIT calculations covering entire public sector and a representative sample of private sector employees (SB6, November 2024). - Tax expenditures: - Intend to abolish VAT exemptions on certain consumer products: pre-cooked rice, flavored rice, and luxury fish. - Continue rationalization through gradual transposition of the new CEMAC directive on VAT, instituting reduced rates on certain basic necessities. - Revise Law No. 2013/004 on investment incentives (SB3, November 2024); conduct study on implementation and effects to rationalize incentives. - Tax and customs administration strengthening: - Continue measures to improve governance, management and processing of tax and customs data and arrears, digitalization, institutional risk assessment, and tax compliance with support from technical and financial partners. - Prepare for TADAT (Tax Administration Diagnostic Assessment Tool) expected in the second half of 2025. - Recovery of tax and customs duty arrears: - Detailed action plan prepared to manage and recover at least 15 percent of outstanding recoverable tax arrears (as at end-June 2023) and implement 50 percent of measures in the action plan (SB7, April 2024). ### Fuel subsidy reforms and mitigation measures - Recent actions: - Domestic fuel pump price increases: February 2023 (first since 2016) and February 2024. - Policy objective: - Phase out fuel subsidies by 2025 to create room for priority spending and support fiscal sustainability; authorities committed to eliminating fuel subsidies by the end of the program, depending on world prices. - Medium-term measures: - Explore approaches for automatic adjustment of domestic fuel prices. - Any future increases in fuel pump prices should be accompanied by measures to mitigate economic and social impacts, including strengthening domestic social safety nets. ### Public Financial Management (PFM) — assessments and commitments - PFM objectives: improve budgetary integrity and execution, ensure discipline in budget execution, improve efficiency of investment expenditure, reduce domestic payment delays to less than 90 days. - Assessments completed: - Third PEFA review finalized and published in December 2023 (following 2007 and 2017 reviews), with European Union support. - Review of public spending completed with World Bank support. - Results to be used to develop a new program of structural PFM measures with a detailed action plan to be finalized by June 2024. - Measures to strengthen budget integrity: - Limit Treasury advances to 15 billion CFAF per quarter and use them only in cases of extreme urgency (new quantitative performance criterion, Table 1). - Submit to Parliament LFR2024 consistent with macroeconomic framework and prior action to include expenditures likely to generate Treasury advances. - Arrears clearance: - Authorities committed to clearing in 2023 the total stock of domestic arrears accumulated at end-2022 amounting to CFAF 200 billion. - Stock of domestic arrears at end-2023 estimated at CFAF 161 billion (higher than LF2024 allocation of CFAF 150 billion). - To ensure clearance of arrears, government will contract a second external non-concessional loan of CFAF 336 billion to repay stock of unpaid domestic obligations of CFAF 467 billion recorded at end-2020. - Resources from this operation to be deposited in an escrow account at the BEAC and used to clear obligations transparently; monthly report to IMF staff on use of the account with list of settled obligations. - To clear remaining stock of domestic obligations at end-2023 of about CFAF 277 billion, authorities will develop a clearance plan covering 2025-27. *Cameroon — Supplementary Memorandum of Economic and Financial Policies in 2024-25, May 2024* ### 23. The government intends to improve the effectiveness of public investment, in line with ### 1cmrea2024004 - 23. The government intends to improve the effectiveness of public investment, in line with ### Public investment management and procurement - Authorities will implement PIMA recommendations on project selection, planning and implementation. - LF2025 will include an annex on commitment authorizations (CAs) and payment appropriations (PAs) that comply with the medium-term budgetary framework and are consistent with the timetable for the implementation of investment projects (SB9, November 2024). - Efforts to master the management of CAs and PAs aim to better manage multi-year investment projects. - Improving public procurement practices is expected to strengthen public investment effectiveness and PFM governance. - Between January and May 2024, the authorities increased the number and total value of contracts awarded through the COLEPS system in some key ministries (infrastructure, education, health, post and telecommunications), to over 80 percent in order to monitor the award of public contracts at the level of central services (SB13, May 2024). - The government will increase the use of the COLEPS system from 11 to 24 ministries and intends to increase the total value of contracts awarded through COLEPS in these ministries in 2024 to 90 per cent by May 2025. - Authorities will ensure that the PRIDESOFT public procurement monitoring system is operational. ### Arrears prevention, cash management, and fiscal operations - Government will prepare comprehensive and realistic public procurement plans to enable commitment plans consistent with monthly cash flow plans (SB10, May 2025). - Procurement plans will aim to cap waiting times for suppliers to less than 90 days of the expenditure’s settlement date and to limit excessive commitments at year-end. - Directorate General for the Treasury, Financial and Monetary Cooperation (DGTCFM) will prepare and update an issuance schedule to improve cash management and limit settlement of unpaid obligations to a maximum of 90 days. - Following an audit, Minister of Finance will issue an instruction to strengthen the management of correspondent accounts with provisions on the closure of illegal accounts, the clearance of existing arrears, and relevant cash management rules consistent with the requirements of the annual budget law (SB11, December 2024). ### Civil service pensions - Authorities will conduct an actuarial study of the civil service pension scheme by end-December 2024, following the diagnosis of the scheme, to reduce quasi-fiscal risks and ensure sustainability. ### Fiscal risks from state-owned enterprises (SOEs) - SONARA restructuring: an in-depth technical-economic and financial feasibility study is underway on option no.3 relating to a complex refinery with a hydrocracking unit, accompanied by plans and design of the new refinery (SB12, June 2024). - Cross-debts: government drew up an inventory of debts between the state and public enterprises as at end-2020, and adopted a plan for clearance; inventory of debts between public enterprises themselves as of end-2020 completed (SB1, April 2024, met). Government committed to analyze information asymmetry between public companies and find concerted solutions by May 2025. - Mining Code: revised; creation of National Mining Company, SONAMINES; presented to Parliament in November 2023. Publication of implementing texts expected by end-June 2024 (SB2, June 2024). ### Maintaining debt sustainability and managing undisbursed balances - Debt policy focuses on slowing new external borrowing and favoring concessional loans; non-concessional borrowing limited to priority projects with proven cost-effectiveness. - Management operation in 2023 should continue to reduce outstanding domestic debt arrears of CFAF 467 billion, of which CFAF 131 billion were already used in early 2024. - Stock of undisbursed committed balances (SENDs) increased to 3,756.3 at end-2023, due in part to November 2023 financing agreements. Government developed a monitoring document covering 180 projects. - Authorities will consult with development partners to reduce undisbursed non-performing SENDs and, if necessary, reallocate unused funding to other projects. Timely disbursement in line with each project’s schedule is a prerequisite for containing SENDs and associated costs. ### Financial sector resilience and inclusion - Commitment to complying with regulations preserving monetary union and banking system stability; supports replenishing BEAC foreign exchange reserves. Cameroon ranks first in the CEMAC in terms of foreign exchange reserves. - Enforcement of foreign exchange regulations by state-owned enterprises, new concession contracts or revenue-sharing agreements with the extractive sector, and the new Petroleum Code. - Strengthening banking sector resilience through compliance with prudential standards and COBAC recommendations. - Recapitalization and privatization: COBAC authorized participation in capital of two troubled banks (NFC and UBC) per restructuring plans; authorities will provide a schedule for disbursement of remaining capital tranches by the deadline agreed with COBAC (December 31, 2024) and for recapitalization from the budget to bring the two banks in line with a net capital coverage ratio of 8 percent by November 2024 (COBAC regulations R2010-01 and R2016-03) and with the Basel capital framework (new SB16, November 2024). Privatization of CBC is well underway with a view to completion in 2024. - SME finance measures to improve access to credit include: establishment of credit registers, balance sheet registers and a rating system in collaboration with the BEAC; digitization of the land registry to enable a registry of land titles; training of commercial judges and establishment of competent commercial courts; implementation of a government guarantee fund for SMEs; prevention of crowding-out of SME financing in the public securities market. - Governance of Debt Collection Corporation (SRC) to be strengthened before expanding activities. CBC will provide an automatic sunset clause for asset recovery activities on outstanding receivables transferred by each financial institution. Government will ensure CBC has sufficient resources. - Caisse des dépôts et consignations (CDEC): authorities will speed up signing implementing texts, define ToR for the CDEC and share draft ToR with the IMF for review before end-September 2024. - National financial inclusion strategy: finalized February 2023 with an action plan for 2023-2027; authorities working with development partners to implement plan to increase banking penetration and reduce inequalities, including strengthening financial education. ### Governance, transparency, and anti-corruption - Steps taken: publication of COVID-19 expenditure reports and an action plan to strengthen frameworks for preparing, publishing, and monitoring public expenditure audits; recommendations to strengthen institutions, including the Supreme Court's Audit Chamber. Diagnostic of governance vulnerabilities published November 2023. - Authorities will develop an action plan to strengthen economic governance, prioritizing alignment of legal and institutional anti-corruption frameworks with international standards and improving SOE management and transparency and PFM practices. - Authorities will ensure publication on the Ministry of Finance's website of the list of the 25 largest public companies that have published their audited annual financial statements with hyperlinks or legal announcement references (new SB14, November 2024). - Commitment to bring national legal framework into compliance with the United Nations Convention against Corruption (UNCAC), including criminalization of illicit enrichment; IMF assistance may be provided if needed. - Budget common chapters reform: reduce accidental and unforeseeable expenditure to 5 percent of the government budget by 2026. Adopted timetable for transformation of common chapters (SB4, May 2024). Authorities will adopt a Prime Ministerial decree specifying rules for managing budgetary authorizations; limit common chapters to 10% of the budget in the 2025 Finance Bill (SB5, November 2024, reformulated). Reduction to 5 percent and decentralization of authorization effective in 2026. - EITI validation: 2020 Reconciliation Report published December 2022, 2021 Reconciliation Report published September 2023. Validation process launched October 2023 under the 2019 EITI Standard. Cameroon suspended from the EITI on 29 February 2024 due to insufficient progress on civil society engagement and constraints on civil society freedoms. Authorities working to implement EITI recommendations; EITI technical assistance expected to support corrective actions. New decree issued to govern EITI implementation; appointment process for civil society representatives ongoing. - AML/CFT: since MER adoption in October 2021 (published March 2022), progress made by increasing Financial Intelligence Unit resources and strengthening capacities of investigative and judicial authorities. Government continuing to work with FATF and GABAC to implement an action plan to remove the country from the grey list. ### Climate vulnerability and environmental management - Authorities recognize climate change impacts and aim to integrate climate commitments into a legal framework aligned with SND-30, the 2021 Nationally Determined Contributions, and the National Climate Change Adaptation Plan. - May 2024 decree established institutional coordination for the climate agenda, defining MINEPDED as the key authority responsible for coordination (RM1, April 2024). Roles of other sectoral ministries and public agencies defined. - With World Bank support, MINEPAT and other ministries defined criteria for prioritizing and selecting climate-integrated projects and developed a manual of selection procedures (RM3, April 2024). Manual published on the MINEPAT website. - Sustainable forest management: planned reforms revised to complete intermediate stages during program. Tax incentives require sustainability certification and traceability infrastructure per VPA/FLEGT. Government enhancing timber sector traceability per VPA/FLEGT. - SIGIF2 (Computerized Forest Information Management System, second generation) is functional and operational. Plans include: - fully operationalize all SIGIF2 modules and integrate SIGIF2 with satellite aerial imagery; - establish procedures for annual evaluation of the traceability function of SIGIF2, including activation of the existing Comité Nationale de Suivi for VPA/FLEGT, with a first assessment no later than one year after activation, and publish the independent evaluation report on the VPA and MINFOF websites with an action plan to address recommendations; - interconnect SIGIF2 with IT infrastructure (DGI and DGD) and establish a roadmap for using this data to improve taxation of the forestry sector (revised RM8, April 2025). - Other reforms: - Draft Law on Civil Protection finalized and transmitted to Parliament in June 2024. - Update of the decree on creation, organization, and operation of the National Risk Observatory (ONR) underway (RM6, October 2024). - Authorities shared ToR for development of a national disaster risk financing strategy that will identify roles, responsibilities and measures to strengthen financial resilience to disasters (RM7, April 2025); IMF technical assistance to support the strategy. - Continuing work on a National Climate Plan (RM2, April 2025), adoption of climate-related public investment management measures (RM4, October 2024 and RM5, April 2025), and traceability measures in the forest sector (revised RM8, April 2025). - Authorities will prepare a timetable for implementing remaining reform measures and continue dialogue with development partners for RSF support. *Source: IMF staff report content (excerpts provided).* ### 49. The authorities request the IMF Executive Board to grant waivers for non-observance ### The authorities request the IMF Executive Board to grant waivers for non-observance ### Waiver requests and program modifications - Authorities request waivers for non-observance of two criteria because the breaches were minor and temporary: - (i) the performance criterion on the floor on the non-oil primary fiscal balance (payment order basis) - (ii) the performance criterion on non-accumulation of external arrears, as these arrears have since been cleared. - Authorities also request waivers of applicability for four performance criteria for end-June 2024 because: - data on the end-June 2024 quantitative performance criteria will not be available for assessment before the IMF Executive Board meeting scheduled for July 2024; and - there is no clear evidence that such performance criteria will not be met. - Authorities request approval to: - modify program objectives and a reform measure; - approve modifications to the quantitative performance criteria for end-June 2024 and end-December 2024; - approve modifications to the indicative targets for end-September 2024; - set new indicative targets for end-March 2025; and - modify a reform measure. ### Monitoring, reviews, and government commitment - The government will take all necessary measures to meet the targets and criteria presented in Tables 1, 2 and 3 of the memorandum and the attached Technical Memorandum of Understanding. - Program monitoring: - semiannual reviews using the performance criteria, indicative targets, SBs and reform measures defined in Tables 1, 2 and 3 and in the TMU. - The seventh review based on end-June 2024 targets is expected to be completed from December 15, 2024. - The eighth review based on end-December 2024 targets is expected to be completed by June 3, 2025. ### Key quantitative performance criteria and indicative targets (selected entries from Table 1) - A. Quantitative Performance Criteria 1/ - Floor on the non-oil primary fiscal balance (payment order basis) 2/ - Values shown: -745 -746.4 Not met -30 -508 -214 -480 -382 -610.5 -610.7 95 - Ceiling on the net domestic financing of the central government (excluding IMF financing) 3/ - Values shown: 3911849 Met 122249112 -3 -176 -333 -122 - Ceiling on net borrowing of the central government from the central bank (excluding IMF financing) 3 - Values shown: 111190139 Met 00 -4.50 -340 -64 -27 - Ceiling on the disbursement of non-concessional external debt - Values shown: 691254 Met 18525 Met 370370554554739739200 - B. Continuous Quantitative Performance Criteria (starting from the program approval) - Ceiling on the accumulation of new external payments arrears 4/ - Values shown: 0 Not met Not met 0000 - PV of contracting and guaranteeing of new external borrowing 5/ - Values shown: 512.9 381 Met 512.9 148 Met 512.9 512.9 512.9 - Ceiling on Treasury advances without a budget allocation 6/ - Values shown (noted): ...15...1515 - C. Indicative Targets - Floor on non-oil revenue - Values shown: 3,754 3906 Met 1038 1974 1915 2958 2900 4200 4246 1053 - Ceiling on the net accumulation of domestic payment arrears 7/ - Values shown: -37471 Not met -55 -110 -210 -165 -265 -220 -537 -43 - Floor for poverty-reducing social spending - Values shown: 1325 1418 Met 2655 3953 959 959 1368 1368 399 - Ceiling on direct interventions of SNH - Values shown: 145185 Not met 40808011011014514540 - Share of spending executed through exceptional procedures on authorized (payment order) spending 8/ - Value shown: 49.7 Not met 44444444 - Ceiling on Treasury advances without a budget allocation 9/ - Values shown: 15135 Not met 151515 - Memorandum items 10/: - Cumulative external budget support, excluding IMF (earliest disbursement) - Values shown: 129501818782678441641640 - Balance of the special account for the unused statutory advances - Values shown: 11111111111 (Note: The terms in this table are defined in the TMU. Footnotes and adjustors affecting ceilings and monitoring are specified in Table 1.) ### Structural benchmarks, prior actions, and RSF reform measures (selected) - Prior action: - Submission to Parliament of a revised 2024 Budget Law consistent with the macroeconomic framework of the program and which includes expenditures likely to generate Treasury advances. - Status: Prior action — The revised budget is submitted to Parliament. - Structural Benchmarks (selected entries and statuses): - Public Finance and Debt Management - Apr-24: Establish an inventory of the respective debts between public enterprises and the government as at end-2020, and adopt a plan for clearance. - Status: Met — Audited Inventory report and arrears clearance plan shared with IMF staff. - Extractive Sector - June-24: Finalize and publish all implementation texts of the 2016 Mining Code (Law n ° 2016/017 of December 14, 2016). - Status: The draft implementing texts have not been finalized; government will publish implementing texts of the new mining code as soon as possible. - Revenue Mobilization - Nov. 24: Create a dataset of wages and salaries suitable for simulating PIT calculations including public sector and representative private sector sample. - Status: Share the database with IMF staff. - Apr. 24: Prepare a detailed action plan to manage and recover at least 15 percent of outstanding recoverable tax arrears (outstanding as at end June 2023) and implement 50 percent of the measures included in the action plan. - Status: Met — Submit to IMF staff a detailed and sequenced action plan. - Public Financial Management - Dec-23: Include in the budget law of year N+1 an allocation for clearance of outstanding unpaid obligations (RAPs) of more than 90 days at end of year N. - Status: Not met — Allocation in the 2024 initial budget law not included. - Financial sector - Nov. 24: Recapitalize the two undercapitalized banks to comply with the 8 percent capital adequacy ratio, in compliance with COBAC regulations (R2010-01 and R2016-03) and the Basel capital framework. - Status: Progress ongoing; recapitalization needs to be finalized. - RSF Reform Measures (selected entries and statuses): - RM1. Issue a regulatory act defining the central role of MINEPDED and roles of MINEPAT and MINFI in climate coordination. - Target Date: End-April 2024 — Status: Met. - RM2. Develop and adopt an NCP validated by the Prime Minister, in line with the 2021 NDC, published on the MINEPDED website. - Target Date: End-April 2025. - RM3. MINEPAT to define and publish project prioritization criteria integrating climate change-related criteria and a manual of selection procedures. - Target Date: End-April 2024 — Status: Met. - RM4. MINEPAT to define a methodology for ex-ante evaluation of investment projects including climate guidelines and integrate into a project maturation guide. - Target Date: End-October 2024. - RM6. Adopt and promulgate the revised Civil Protection Law and update Order no. 037/PM on National Risk Observatory (ONR). - Target Date: End-October 2024. - RM7. Develop and adopt a Disaster Risk Financing Strategy. - Target Date: End-April 2025. - RM8. (modified) Interim focus on enhancing traceability and legality system of timber (SIGIF2) and integrating it with fiscal infrastructure. - Target Date: End-April 2025. *Source: Excerpts from the memorandum and associated Tables 1–3 and Technical Memorandum of Understanding.* ### 1. This Technical Memorandum of Understanding (TMU) defines the quantitative ### Technical Memorandum of Understanding (TMU) — Quantitative performance criteria for Cameroon’s program (2021-25) ### Conditionality - The TMU defines the quantitative performance criteria and indicative objectives to assess performance in the framework of Cameroon’s program supported by arrangements under the Extended Credit Facility (ECF), the Extended Fund Facility (EFF), and the Resilience and Sustainability Facility over the period 2021-25. - Quantitative performance criteria and indicative objectives from end-June 2023 until end-March 2025 are provided in Table 1 of the Memorandum of Economic and Financial Policies (MEFP) attached to the Letter of Intent. - Structural benchmarks and reform measures are provided in Table 2 and Table 3 of the MEFP. ### Definitions — Government and public sector coverage - Government: central government of the Republic of Cameroon as defined under GFSM 2001 (paragraphs 2.48–50); excludes local governments, the Central Bank, or other public entities with autonomous legal status whose operations are not included in the TOFE. - Nonfinancial public enterprise: commercial or industrial unit, fully or partially owned by the central government, selling goods and services at large scale. From June 2017, all operations between the government and these public enterprises should be treated on a gross basis in the TOFE. ### Revenue definitions - Total government resources: tax and nontax fiscal revenue (as defined in Chapter 5 of GFSM 2001) and grants; recorded on a cash basis. Proceeds from the sale of assets and revenue from privatizations (paragraph 8) 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's (tax and nontax) revenue excluding oil revenue; VAT recorded net of VAT refunds. Pipeline fees paid by COTCO recorded under nontax revenue. - Privatization revenue: funds paid to the government in connection with sale/transfer of public enterprises, concessions, or sale of shares; must be recorded on a gross basis; any costs of sales/concessions recorded separately under expenditure. ### Expenditure definitions - Total government expenditure and net lending: includes wages and salaries, goods and services, transfers (subsidies, grants, social security benefits, and other outlays), interest payments, 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 included in government expenditure (e.g., emergency payments on behalf of the government). - Social expenditure: public expenditure in budget connected with priority social programs, including: - Education: total expenditure (current and capital) of Ministries (Basic Education, Secondary Education, and Employment and Vocational Training). - Health: current and capital expenditure of the Ministry of Public Health, including COVID-19 related expenditures. - Other social sectors: current and capital expenditure of Ministries of Labor and Social Security, Youth and Civic Education, Social Affairs, and Promotion of Women and Family. - Administered price subsidies (fuel at the pump, electricity to households), gas subsidy, and expenditures for the Social Safety Net Program. ### Balance and financing definitions - Primary balance: difference between total government revenue (paragraph 5) and total government expenditure and net lending (paragraph 9) not including interest payments on external and domestic debt. - Debt: definition aligned with Guidelines on Public Debt Limits in Fund-Supported Programs (Executive Board Decision 16919– (20/103), October 28, 2020), including commitments contracted or guaranteed for which values not yet received; includes arrears, penalties, and judicially awarded damages arising from failure to make payment under a contractual obligation that constitutes debt. - External debt: any borrowing or debt service in a currency other than the CFA franc; includes debt between CEMAC countries and debt from BDEAC; applies to government, public enterprises receiving transfers, and public entities where government holds more than 50 percent of capital stakes, or any private debt guaranteed by government. - Guaranteed debt: explicit legal obligation incumbent on the government to reimburse a debt in the event of payment default by the debtor. - Concessional external debt: considered concessional if it comprises a grant component of at least 35 percent. The grant component = (face value − present value) / face value. Present value calculated at the date contractually arranged using a discount rate of 5 percent. - Domestic debt: all government debts and obligations denominated in CFA francs; includes unreimbursed balances, advances from BEAC, Treasury bills and bonds, structured debt, domestic payment arrears, and SONARA’s domestic debt. - Structured debt: debt subject to a formal agreement or securitization. - Structured bank debt: all claims of local banks on government, except Treasury bills and bonds. - Structured non-bank debt: government's balances payable to local non-bank institutions, individuals, or CEMAC subject to securitization or formal reimbursement agreement. - Net domestic financing of the government: sum of (i) net bank credit to the government; and (ii) net non-bank financing. - Net bank credit: change in balance between government commitments and assets with the national banking system; assets include Treasury cash resources on hand; Treasury deposits with the Central Bank (excluding HIPC and C2D accounts); credit balance of Caisse Autonome d'Amortissement (CAA) accounts with commercial banks earmarked for debt reimbursement. Commitments include financing from the Central Bank (net IMF financing, refinancing of guaranteed bonds, Treasury paper held by the Central Bank) and financing from commercial banks (loans, direct advances, Treasury securities held by local banks). Calculated from BEAC data and subject to monthly reconciliation between the Treasury and BEAC. - Net non-bank financing: change in outstanding balance of government securities issued in CFA francs on the regional market not held by local banks; change in outstanding balance of structured non-bank domestic debt; privatization revenue; change in balance of correspondent bank accounts (including Account 42) and consignment accounts; change in balance of outstanding claims on government abandoned by the private sector. Calculated by the public treasury. - Domestic payment arrears: sum of (i) payment arrears on expenditure; (ii) payment arrears on structured domestic debt; and (iii) unstructured debt. - Payment arrears on expenditure: "balances payable" with payment lag exceeding regulatory period of 90 days; balances payable under 90 days represent payments in progress. Treasury will monitor monthly. - Payment arrears on structured domestic debt: difference between amount due under domestic debt arrangement or reimbursement of matured Treasury securities and amount effectively paid after payment deadline or maturity. - Unstructured debt: i. Unstructured debt of the CAA: balances payable and liabilities transferred to the CAA not subject to reimbursement or securitization agreement. Stock of unstructured debt estimated at CFAF 53 billion at end-December 2023. ii. Domestic "floating" debt: government commitments for services provided without budget commitment; includes unpaid invoices to public and private enterprises but excludes tax debt from offsetting operations with public enterprises and externally financed public procurement not covered due to insufficient appropriations. Directorate General of Budget to conduct monthly assessment with public treasury. - External payment arrears: external debt obligations (principal and interest) not paid 30 days after the due date specified in the agreement, taking into account contractual grace periods. Excludes arrears subject to rescheduling. - Treasury advances: payments made by the Treasury in absence of a commitment or payment order issued by the General Directorate of Budget and regularized retroactively. ### Quantitative program objectives — general rules and reporting - All quantitative targets (QTs) are as specified in Table 1 of the MEFP and, unless otherwise indicated, assessed on a cumulative basis from the beginning of the calendar year to which they apply. - Reporting cutoff and frequency rules: - Detailed data on government financial operations (primary balance, oil revenue, miscellaneous expenditure) to be submitted monthly within six weeks from the end of the month, except end-December data. - End-year data on government financial operations to be submitted by March 15 of the following year (Cameroon’s Law No 2018/012 provides a complementary period of 30 days after the end of the calendar year to complete pending payments). - Detailed data on net domestic financing (bank and non-bank) and status of budget support disbursements, reimbursement of external debt service, and status of external arrears to be submitted monthly within six weeks after the end of the month. ### A. Non-Oil Primary Balance (Performance criteria and adjustments) - Non-oil primary balance floor (based on payment order) defined as quantitative objective in Table 1 of the MEFP. - Non-oil primary balance = primary balance (paragraph 12) − oil revenue (paragraph 6). - Data consistency rule: cumulative level of financing discrepancies in the TOFE (including errors and omissions) for a given month should not exceed 5 percent of the cumulative expenditure for that month, in absolute value. If exceeded, a comprehensive reconciliation exercise will be undertaken with IMF staff. - Adjustment: starting from end-June 2024, the non-oil primary balance floor will be adjusted by the amount of budget spending for the recapitalization of the two undercapitalized banks to comply with the 8 percent capital adequacy ratio. ### B. Net Domestic Financing of the Government Excluding Net IMF Financing (Performance criteria and adjustments) - Ceiling on net domestic financing excluding net IMF financing defined as quantitative objective in Table 1 of the MEFP. - For program purposes, this excludes IMF financing related to disbursements under ECF-EFF and RSF arrangements. - Adjustments: - If disbursements of external budget support net of external debt service and payment of external arrears, and rescheduling of bilateral external debt service, are lower than program forecasts, the ceiling will be adjusted. - At end of each quarter, if disbursements of external budget support are below (above) programmed amounts, the relevant quarterly ceilings will be adjusted upward (downward) commensurately, within the limit of CFAF 120 billion for each quarter of 2023 and 2024. This ceiling may be reviewed depending on the rate of budget aid disbursements during the year. - At end of each quarter, if rescheduling of bilateral external debt service is below (above) programmed amounts, corresponding quarterly ceilings will be adjusted upward (downward) pro-tanto. - Starting from end-June 2024, ceilings will be adjusted by the amount of budget spending for the recapitalization of the two undercapitalized banks to comply with the 8 percent capital adequacy ratio. ### C. Disbursement of Non-Concessional External Debt (Performance criteria and exemptions) - Ceiling on disbursements of non-concessional external debt defined as quantitative objective in Table 1 of the MEFP. Applicable to debt contractually arranged to finance projects. - Based on external debt definition (paragraph 14) and concessionality concept (paragraph 15). - Exemption: debt contracted or disbursed under the debt management operation for clearance of domestic arrears is exempted up to the amount of new borrowing related to the operation (CFAF 467 billion), provided it demonstrates improvement in key liquidity and/or solvency debt burden indicators without adversely affecting the risk rating. *Source: Technical Memorandum of Understanding (TMU) — Cameroon, excerpts provided in content unit 1cmrea2024004* ### 32. Detailed information on disbursements of external debt contracted by the government must ### 32. Detailed information on disbursements of external debt contracted by the government must ### Detailed reporting requirement for external debt disbursements - Detailed information on disbursements of external debt contracted by the government must be reported within six weeks after the end of the month. - Reports must indicate the date on which the loans were signed and make the distinction between concessional and non-concessional loans. *D. Net Claims of the Central Bank on the Central Government* ### Performance criteria: ceiling on net claims of the Central Bank on government - A ceiling on net claims of the Central Bank on government is defined as a quantitative objective in Table 1 of the MEFP. - Definition: difference between the Central Bank’s claims on government, excluding IMF financing, and cash and total deposits of the Treasury with the Central Bank, including the balance of the special account of unused statutory advances. - Exclusions and inclusions: - Excludes IMF financing related to disbursement under ECF-EFF and RSF arrangements (¶35). - Includes the agreed use of the 2021 SDR allocation (¶34). - Adjustments: - Quarterly ceilings will be adjusted if disbursements of external budget support are below (above) programmed amounts, upward (downward) commensurately, within the limit of CFAF 120 billion for each quarter of 2023 and 2024 (¶36). This ceiling may be reviewed depending on the rate of budget aid disbursements during the year. - Starting from end-June 2024, ceilings will be adjusted by the amount of budget spending for the recapitalization of the two undercapitalized banks to comply with the 8 percent capital adequacy ratio (¶37). ### Cutoff/reporting dates - The BEAC must report detailed information on all financing from the Central Bank to the government and the statement on the balance of the special account of unused statutory advances within six weeks after the end of the month (¶38). *E. Non-Accumulation of External Payment Arrears* ### Performance criterion: zero ceiling on accumulation of new external payment arrears - A ceiling of zero on the accumulation of new external payment arrears is defined as a continuous quantitative objective in Table 1 of the MEFP (¶39). - Applies to accumulation of external arrears as defined in paragraph 20. - Government undertakes not to accumulate any external payment arrears on its debt, with the exception of arrears subject to rescheduling. - Measured on a cumulative basis on approval of the program. ### Cutoff/reporting dates - Data on balances, accumulation, and reimbursement of external arrears will be reported within six weeks after the end of each month (¶40). - Any new external arrears should be reported immediately to the Fund. *F. Present Value (PV) of External Debt Contracted or Guaranteed by the Government and Certain Other Public Entities* ### Performance criterion: ceiling on PV of new external debt contracted or guaranteed - A ceiling (performance criterion) applies to the PV of new external debt contracted or guaranteed by the government and certain other public entities (¶41). - Applies also to debt contracted or guaranteed for which value has not yet been received, including private debt for which official guarantees have been extended. - Scope includes external debt defined in paragraph 14 and contingent public liabilities as defined in paragraph 13, and debt by: - public enterprises receiving transfers from the government (paragraph 4), - municipalities, - agencies of general government including professional, scientific, and technical organizations. - Exemptions (not applicable to this performance criterion): - borrowing arranged in CFA francs, - Treasury bills and bonds issued in CFA francs on the CEMAC regional market, - regular short-term loans from suppliers, - regular import credits, - loans from the IMF, - budget support loans from the World Bank, - debt relief or rescheduling. - Specific exemption: New debt contracted or disbursed for debt management operation in the amount of CFAF 467 billion resulting in an improvement in the overall debt profile is exempt (¶41). ### PV calculation methodology and rates - PV at contracting is calculated by discounting the future stream of payments of debt service due on this debt (¶42). - For debts with a grant element equal to or below zero, PV is set equal to nominal value. - Discount rate: unified discount rate of 5 percent set forth in Executive Board Decision No. 15248-(13/97) (¶42). - PV of external debts in currencies other than the U.S. dollar will be calculated in U.S. dollar terms at program exchange rates as specified in TMU Text Table 1 (¶42). - Variable-rate debt: PV calculated using a program reference rate plus the fixed spread (in basis points) specified in the debt contract (¶42). - Program reference rate for the six-month USD SOFR is 0.04 percent and will remain fixed for the duration of the program (¶42). - Spreads relative to six-month USD SOFR: - 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 (¶42). - Where variable rate is linked to a benchmark other than six-month USD SOFR, a spread reflecting the difference (rounded to the nearest 50 bps) will be added (¶42). ### Adjustors to the PV ceiling - Budget support adjustor: upward (downward) by the amount by which budget support exceeds (falls short of) projected amounts; capped at 10 percent of the external debt ceiling set in PV terms and must be consistent with maintaining debt sustainability (¶43). - COVID-19 vaccine financing adjustor: external debt ceiling in PV terms will be adjusted upward by the full PV amount of any project financing dedicated to COVID-19 vaccine interventions not anticipated at time of setting the performance criterion; authorities will consult IMF staff before such loans are contracted or guaranteed (¶44). - Financing-terms adjustor: up to 5 percent of the external debt ceiling set in PV terms applies if deviations are prompted by a change in financing terms (interest, maturity, grace period, payment schedule, upfront commissions, management fees); cannot be applied when deviations are prompted by an increase in the nominal amount of total debt contracted or guaranteed (¶45). - World Bank loans adjustor: if the PV of World Bank loans signed in 2023 and 2024, respectively, is greater than the PV of World Bank loans signed in 2022 (CFAF 179.4 billion), the ceiling will be adjusted upward pro-tanto; adjustment capped at a maximum of CFAF 182.5 billion (PV) in 2023 and 2024, respectively (¶46). ### Cutoff/reporting dates - Detailed information on all loans (conditions and creditors) contracted by the government must be reported within six weeks after the end of the month (¶47). - Same obligation applies to guarantees issued by the government. - Signing or guaranteeing of debt should be reported immediately to the Fund. *G. Treasury Advances Without a Budget Allocation* ### Performance criterion and timing - A ceiling on Treasury advances without a budget allocation is defined as a continuous quantitative objective in Table 1 of the MEFP (¶48). - This quantitative performance criterion becomes effective from July 1, 2024, and will be tested on a cumulative basis starting from the beginning of each quarter (¶48). - Exclusions: ceiling excludes Treasury advances related to assigned revenues (recettes affectées) (¶49). ### Cutoff/reporting dates - Monthly accounting statements showing the amount of Treasury advances must be reported to IMF staff within six weeks after the end of each month (¶50). *OTHER INDICATIVE QUANTITATIVE TARGETS* ### Non-oil revenue - A floor on non-oil revenue (as defined in paragraph 7) is an indicative objective in Table 1 of the MEFP (¶51). ### Accumulation of domestic payment arrears - Ceiling on net accumulations of domestic payment arrears is an indicative objective in Table 1 of the MEFP (¶52). - Starting from end-June 2024, this ceiling will include payments in progress defined as balances payable under 90 days (¶52). - Adjustment: ceiling will be adjusted if disbursements of external financing for the debt management operation are below programmed levels; from end-June 2024 relevant quarterly ceilings will be adjusted upward commensurately. Adjustor applies only to balances payable of more and under 90 days as defined in paragraph 19 (¶53). ### Social expenditure - A floor on social expenditure pursuant to paragraph 11 is an indicative objective in Table 1 of the MEFP (¶54). - Data on government's financial position, detailed revenue highlighting oil revenue, domestic payment arrears, and status of social expenditure execution must be reported within six weeks after the end of the month, except end-December data as indicated in paragraph 25 (¶55). ### Share of exceptional expenditure - Ceiling on the share of exceptional expenditure in total authorized expenditure not including debt is an indicative objective in Table 1 of the MEFP (¶56). - Calculation: 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). - Cutoff/reporting: monthly accounting statements showing cash advances, provisional budget commitments, and advance funds must be reported to IMF staff within three weeks after the end of each month (¶57). ### Upgrade of Treasury advances target - The previous indicative target on Treasury advances without a budget allocation will be upgraded to a continuous quantitative performance criterion starting from July 1, 2024 (¶58). *STRUCTURAL BENCHMARKS AND REFORM MEASURES* ### Structural benchmark: common chapters expenditures - A limit on the share of common chapters expenditures in budget is included as a structural benchmark in Table 2 of the MEFP (¶59). - Calculation: ratio between common chapters (expenditures on chapters 60, 65, 92, 93, 94, and 95) and total expenditures (excluding debt service). ### Reform measure: SIGIF2 traceability evaluation (RSF Reform Measure 8 on forestry) - Procedures for the annual evaluation of the traceability feature of the SIGIF2 platform are to be established. - An independent evaluation committee (reactivation of Comité National de Suivi set up for the APV/FLEGT) will be constituted including concerned administrations, civil society, industry experts, development partners, and NGOs. - First annual review to be completed within one year of the committee's activation; review to outline key performance indicators, recommendations, and an implementation roadmap. - Annual evaluation reports will be published on the APV and the MINFOF websites within three months of the evaluation (¶60). *DATA SUBMISSION REQUIREMENTS* ### General reporting obligations - Quantitative data on the government’s quantitative and indicative objectives will be reported to IMF staff with the periodicity described in Table 1 (¶61). - All data revisions will be reported promptly to IMF staff. - Authorities undertake to report any information or data not specifically addressed in the TMU but required for program implementation, and to keep IMF staff abreast of the situation in achieving program objectives (¶61). ### Selected reporting deadlines and responsibilities from Table 1 (preserved exact values) - Summary situation of Treasury Operations (SROT): Monthly, 6 weeks — Responsible: Ministry of Finance (MINFI)/DGTC. - TOFE and customary annex tables: Monthly, 6 weeks except end-December data reported by March 15 of the following year — Responsible: MINFI/DP. - Domestic budget financing (net bank credit to government, stock of Treasury bills and bonds pending reimbursement, etc.): Monthly, 6 weeks — Responsible: MINFI/BEAC. - Implementation status of social expenditure: Monthly, 6 weeks — Responsible: MINFI/DGB. - 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): Monthly, 4 weeks — Responsible: MINFI/CAA. The signing or guaranteeing of external debt, and the occurrence of external payment arrears must be reported immediately to the IMF. - Monthly monitoring report on calls for funds and effective disbursements: Monthly, 4 weeks — Responsible: CAA/MINEPAT. - Monthly accounting statements showing amount of cash advances, advance funds, and balance of provisional budget commitments: Monthly, 6 weeks — Responsible: MINFI. - Monthly accounting statements showing the amount of Treasury (cash) advances without a budget allocation by type of expenditures: Monthly, 6 weeks — Responsible: MINFI. - Publish the oil product price structure: Monthly, First week of the current month — Responsible: MINFI/CSPH. - VAT refund balance: Monthly, 6 weeks — Responsible: MINFI/DGI. - The balance of the escrow account at the BEAC for payment of domestic arrears and the list of all unpaid domestic obligations cleared: Monthly, 2 weeks — Responsible: MINFI/DGTCFM/BEAC. - Consolidated balance sheets of monetary institutions: Monthly, 6 weeks — Responsible: BEAC. - The situation of the balance of the special account of undisbursed statutory advances: Monthly, 6 weeks — Responsible: BEAC. - Final data on the integrated monetary survey: Monthly, 10 weeks — Responsible: BEAC. - Disaggregated consumer price indices for Douala and Yaoundé: Monthly, 4 weeks — Responsible: INS. - Consumer price indices disaggregated by city, product and national level: Monthly, 6 weeks — Responsible: INS. - Quarterly National Accounts: Quarterly, 3 months — Responsible: INS. - Preliminary annual balance of payments data: Annual, 9 months — Responsible: MINFI. - Any official report or study devoted to Cameroon’s economy: On publication or finalization, 2 weeks — Responsible: MINEPAT. - Any decision, decree, law, order, or circular having economic or financial implications: From its publication date or effective date, 2 weeks — Responsible: MINFI/MINEPAT. *Text Table 1: Program exchange rates (preserved exact values)* - US Dollar: 595.082 per currency unit; Currency units per US Dollar: 1.00 - Euro: 655.957 per currency unit; Currency units per US Dollar: 0.9072 - AfDB XUA: 800.090 per currency unit; Currency units per US Dollar: 1.3333 - STG Pound: 757.867 per currency unit; Currency units per US Dollar: 0.7852 - Japanese Yen: 4.193 per currency unit; Currency units per US Dollar: 141.910 - Chinese Yuan: 83.303 per currency unit; Currency units per US Dollar: 7.144 *Final notes on monitoring and immediate reporting* - Several criteria are monitored continuously and require immediate reporting to the Fund upon occurrence (e.g., signing or guaranteeing of external debt, occurrence of external payment arrears) (¶47, Table 1). *Italic source: IMF staff report text for Cameroon (TMU excerpts).* ### 1. The President signed a decree on the revised 2024 budget law on June 20, 2024 ### 1. The President signed a decree on the revised 2024 budget law on June 20, 2024 ### Revised 2024 budget law and prior action - The President signed a decree on the revised 2024 budget law on June 20, 2024 allowing its immediate execution. - The revised budget law has been published and is aligned with the macroeconomic framework of the program and includes expenditures likely to generate Treasury advances, consistent with the agreed corrective measure to address a breach of an indicative target. - The revised budget law has not yet been submitted to Parliament as called for under the prior action requiring “submission to Parliament of a revised 2024 Budget Law.” - Staff’s view: the adoption of the revised budget law by a Presidential decree accomplishes the objective of the prior action, and the overall judgment is that the objective of Cameroon’s program will be achieved. - Staff recommendation: completion of the six reviews. ### Program performance at end-March 2024 (summary) - Based on preliminary data, program performance at end-March 2024 remained mixed (MEFP Table 1). - The continuous QPC on the ceiling on the present value of contracting and guaranteeing of new external borrowing was met. - Five out of ten ITs were met at end-March 2024. - ITs not met at end-March 2024: - Floor on non-oil revenues. - Ceilings on accumulation of domestic payment arrears. - Share of spending executed through exceptional procedures. - SNH direct interventions. - Treasury advances without a budget allocation. - Performance details and contextual notes: - Although not meeting the performance target, non-oil revenues increased by over six percent in 2024Q1 year-on-year. - Spending through Treasury advances and other exceptional procedures have decreased in Q1. - Lack of financing in early 2024 impeded clearance of the large stock of domestic unpaid obligations at end-2023, which became arrears by end-March 2024. - Full implementation of the agreed remedial measures is expected to improve performance on ITs. ### Quantitative performance (extracts from Table 1) - A. Quantitative Performance Criteria (selected) - Floor on the non-oil primary fiscal balance (payment order basis) entries: -745 -746.4 Not met -30119 Met -508 -214 -480 -382 -610.5 -610.7 95 - Ceiling on the net domestic financing of the central government (excluding IMF financing) entries: 3911849 Met12 -188 Met2249112 -3 -176 -333 -122 - Ceiling on net borrowing of the central government from the central bank (excluding IMF financing) entries: 111190139 Met0 -89 Met0 -4.50 -340 -6 4 -27 - Ceiling on the disbursement of non-concessional external debt entries: 691254 Met18530 Met370370554554739739200 - B. Continuous Quantitative Performance Criteria (selected) - Ceiling on the accumulation of new external payments arrears: 0 Not met Not met 0000 - PV of contracting and guaranteeing of new external borrowing: 512.9381 Met512. 9148 Met512.9512.9 ...... 512.9512.9 ... - Ceiling on Treasury advances without a budget allocation: ... 15 ... 15 15 - C. Indicative Targets (selected) - Floor on non-oil revenue entries: 3,7543906 Met10381023 Not met1974191529582900420042461053 - Ceiling on the net accumulation of domestic payment arrears entries: -37471 Not met -55298 Not met -110 -210 -165 -265 -220 -537 -43 - Floor for poverty-reducing social spending entries: 13251418 Met265329 Met53953995995913681368399 - Ceiling on direct interventions of SNH entries: 145185 Not met4051 Not met808011011014514540 - Share of spending executed through exceptional procedures on authorized (payment order) spending: 49.7 Not met44.1 Not met4444444 - Ceiling on Treasury advances without a budget allocation (IT): 15 135 Not met1535 Not met1515 - Memorandum item (selected) - 1. Cumulative external budget support, excluding IMF (earliest disbursement): 129501818782678441641640 *Approved By Vitaliy Kramarenko (African Department) and Bergljot Barkbu (Strategy, Policy, and Review); African Department; July 1, 2024* ### 2. Balance of the special account for the unused statutory ### 2. Balance of the special account for the unused statutory advances ### I. Introduction - Authorities thanked Management and staff for policy dialogue in the context of the sixth reviews under the Extended Credit Facility (ECF) and Extended Fund Facility (EFF) Arrangements, and the first review under the Resilience and sustainability Facility (RSF) Arrangement. - Program discussions focused on: building fiscal resilience; preserving debt sustainability and reducing debt vulnerabilities; strengthening financial sector resilience and inclusion; improving governance and transparency in public resources management; and addressing climate vulnerabilities to accelerate private sector-led inclusive growth. - Cameroon’s objectives are aligned with the National Development Strategy (SND-30) to restore strong, sustained, and inclusive growth and strengthen climate resilience. ### II. Recent Economic Developments and Outlook - Growth and inflation: - Real GDP growth decelerated to 3.3 percent from 3.6 percent in 2022 and against a forecast of 4 percent. - Inflation remained elevated at 6 percent, notably underpinned by the February 2023 upward adjustment of fuel pump prices. - Fiscal developments: - Non-oil primary deficit narrowed to 2.6 percent of GDP in 2023 from 3.9 percent of GDP in 2022. - Non-oil revenues and grants were higher than projected in the 2023 revised budget (LFR 2023) and under the program. - Public investment budget was under-executed despite increases in expenditures on goods and services, transfers and subsidies. - Public debt reduced to around 44.5 percent of GDP at end-2023, down from over 46 percent of GDP in 2022. - External sector: - Current account deficit widened to 4 percent of GDP against 3.5 percent of GDP in 2022 due to lower oil prices/exports, contracted agricultural output, and rising net food imports. - Declines in capital inflows and disbursements for externally funded projects contributed to a decline in international reserves. - Financial sector: - Solvency ratio improved from 10.7 percent to 15.3 percent at end-2023. - Non-performing loans ratio remained elevated at 12.9 percent. - Banks’ exposure to the public sector rose from 27 percent of total assets in 2019 to 37 percent in 2023. - Outlook and risks: - Authorities expect real GDP growth to accelerate and exceed 4.5 percent in the medium term under SND–30. - Inflation expected to remain high in the short term before returning below 3 percent in the medium term. - Current account deficit expected to deteriorate in the short term but improve over the medium term with stronger non-oil exports, FDI inflows, and regional integration progress. - Outlook remains susceptible to uncertain external developments. ### III. Program Performance under the ECF, EFF and RSF Arrangements - Quantitative and indicative targets: - Four of six quantitative performance criteria (QPC) were met. - Two of six indicative targets (ITs) were met. - All QPC at end-December 2023 were met except the floor on the non-oil primary fiscal balance and the zero ceiling on accumulation of new external arrears which saw minor and temporary breaches; all external arrears have been cleared. - Four of six ITs were missed: net accumulation of domestic arrears; ceilings on direct financing of government operations by the National Hydrocarbons Company (SNH); share of expenditures using exceptional procedures; ceiling on Treasury advances without a budget allocation. - Structural benchmarks and RSF measures: - Four of five structural benchmarks (SBs) for the sixth reviews were met on time; the SB on the stock of domestic obligations of more than 90 days was not achieved. - RSF: reform measure 1 (RM1) met by decree establishing institutional framework for coordinating climate action, designating MINEPDED as central authority; reform measure 3 (RM3) met via published manual defining criteria for prioritizing climate-informed projects. - Program challenges and corrective actions: - Budget difficulties reflected severe liquidity constraints from lower-than-expected budget support disbursements, tight financing conditions, and postponement of a major debt restructuring to 2024. - Authorities adopted corrective measures including ex-ante identification of expenditures that could require cash advances and integration into a revised budget adopted by presidential decree and published. ### IV. Medium-term Macroeconomic Policies and Structural Reforms - Fiscal policy and revenue measures: - Authorities committed to a prudent fiscal stance to preserve fiscal and debt sustainability and finance priority social and infrastructure spending. - Target to increase non-oil domestic revenues from 12.3 percent in 2022 to 13.6 percent of GDP in 2024. - Revenue measures include reform of personal income tax, reduction of tax expenditures (including removing VAT exemptions on certain consumer products), transposition of new CEMAC directive on reduced rates for essential goods, revision of Law on private investment incentives, and strengthening tax and customs administration, governance, data management, recovery of tax and customs arrears, and digitalization. - Expenditure measures and subsidies: - Continued phasing out of energy subsidies; fuel prices increased twice, in February 2023 and February 2024. - Authorities aim to eliminate fuel subsidies by the end of the program period and explore automatic adjustment of fuel pump prices to reflect international market fluctuations in the medium term. - Fuel price increases will be accompanied by measures to mitigate economic and social impacts on the most vulnerable, including reform of existing social safety net mechanisms. - Public financial management (PFM) reforms: - Commitments to enhance budget credibility, discipline, and transparency; improve public investment efficiency; reduce delays in settling domestic financial obligations to less than 90 days. - PFM reforms anchored on recent public finance reviews with EU and World Bank support; action plan of structural measures to reduce exceptional procedures including Treasury advances and direct SNH interventions. - Additional PFM reforms include strengthening the civil service pension framework, improving selection/planning/execution of investment projects, and reinforcing governance and management of SOEs. - Debt policy and management: - Continued efforts to strengthen debt sustainability and debt management given high risk of debt distress. - Policy to favor concessional borrowing; limit non-concessional borrowing to priority projects with proven returns when no concessional financing is available. - Early-2024 implementation of the first tranche of a debt management operation to borrow external debt to reduce outstanding unpaid government obligations and short-term public debt service pressure. - Structural reforms for financial resilience, governance, and climate: - Measures to ensure compliance with foreign exchange regulations by public companies and under new concession contracts/revenue sharing in extractives to support the regional foreign exchange pool. - Strengthening banking sector resilience through compliance with prudential standards and COBAC recommendations; recapitalization and privatization of troubled banks progressing. - Implementation of the national financial inclusion strategy and action plan 2023-2027 to increase banking penetration and reduce inequalities, including financial education. - Governance and anti-corruption: publication of COVID-19 spending reports and an action plan to strengthen preparation, publication, and monitoring of public expenditure audits; priority to upgrade anti-corruption framework to international standards and improve SOE transparency and management. - Continued implementation of Extractive Industries Transparency Initiative (EITI) recommendations and strengthening AML/CFT frameworks. - Climate agenda remains a priority, building on completion of RM1 and RM3 under the RSF and continued efforts to improve the climate policy framework consistent with SND-30. ### V. Conclusion - Authorities remain committed to the objectives of the ECF, EFF, and RSF Arrangements and to implementing policies and reforms to preserve macroeconomic and regional stability, improve public financial management and the business environment, and advance the climate agenda to support strong and sustainable growth. - In view of satisfactory performance under Fund-supported programs amid challenging circumstances and continued commitment to reforms, authorities seek Executive Directors’ approval of completion of the sixth reviews under the ECF and EFF Arrangements and the first review under the RSF Arrangement, and request favorable consideration. *Statement by Regis N'Sonde, Executive Director for Cameroon, Mbuyamu Matungulu, Alternate Executive Director, and Oumar Diakite, Senior Advisor to Executive Director, July 3, 2024.* --- _Source: https://www.imf.org/-/media/files/publications/cr/2024/english/1cmrea2024004.pdf_