Press Release: IMF Executive Board Completes Third Review Under the PRGF Arrangement with Cameroon and Approves US$4 Million Disbursement

June 18, 2007

Press Release No. 07/134

The Executive Board of the International Monetary Fund (IMF) today completed the third review of Cameroon's economic performance and the review of financing assurances under a three-year Poverty Reduction and Growth Facility (PRGF)1 arrangement. In completing the third review, the Executive Board also approved Cameroon's request for a waiver of the non-observance of a performance criterion pertaining to net claims of the banking sector on the central government, on the basis of a minor deviation and corrective action taken. The completion of these reviews enables the release of an amount equivalent to SDR 2.65 million (about US$4 million), bringing total disbursements under the arrangement to SDR 10.6 million (about US$16 million).

The three-year PRGF arrangement for Cameroon was approved by the Executive Board in October 24, 2005 (see Press Release No 05/236) in an amount equivalent to SDR 18.57 million (about US$27.9 million).

At the conclusion of the Executive Board's discussion, Mr. John Lipsky, First Deputy Managing Director and Acting Chair, stated:

"The Cameroonian authorities are to be commended for implementing policies and reforms that led to improvements in macroeconomic performance over the past decade. The satisfactory implementation of the PRGF-supported program, notably in the areas of fiscal policy and public finance management, contributed to the strengthening of macroeconomic conditions in recent years. The challenge going forward is to build on recent gains in order to resume the path to sustained growth and poverty reduction. This will require continued efforts to preserve fiscal sustainability and improve the business environment.

"The authorities' ability to mobilize nonoil revenues in the context of declining oil reserves and the expected trade liberalization will be critical to the maintenance of fiscal sustainability. Given this, efforts to expand the tax base should be accelerated, including, if necessary, additional measures at the level of tax policy to safeguard fiscal objectives.

"The authorities should monitor closely spending levels while enhancing the quality of public spending. Growth and poverty reduction objectives would be better served by strengthening the execution of capital expenditure and reorienting spending toward priority areas. The authorities should refrain from undertaking any extrabudgetary spending and continue efforts to strengthen public expenditure management and transparency, notably by better monitoring budgets and tracking expenditures. Improved transparency in the use of budget resources, including oil and debt relief, remains a priority.

"Prudent debt management should remain a priority in the post-debt relief period. Borrowing over the medium term should continue to be on concessional terms, and the related resources should be put into effective use.

"Strengthening the business environment requires decisive action to improve infrastructure, deepen financial intermediation, liberalize trade, reform public enterprises, and enhance governance. In the period ahead, the authorities should build on the recommendations of the national Financial Sector Assessment Program mission to prepare a financial sector strategy, pursue the reform agenda within Central African Economic and Monetary Community, including a lowering of the common external tariff, and accelerate the reform of public enterprises in a timely and transparent manner to reduce the burden on public finances and improve services. Anticorruption efforts should be pursued with the goal of lowering uncertainty in the regulatory and judicial environment," Mr. Lipsky said.

1 The PRGF is the IMF's concessional facility for low-income countries. PRGF loans carry an annual interest rate of 0.5 percent and are repayable over 10 years with a 5 ½-year grace period on principal payments.


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