Press Release: IMF Approves Three-Year ESAF Loan for Cameroon

August 20, 1997

The International Monetary Fund (IMF) today approved a three-year loan for Cameroon under the Enhanced Structural Adjustment Facility (ESAF),1 in an amount equivalent to SDR 162.1 million (about US$219 million), to support the government’s economic program during 1997/98-1999/2000. The first annual loan, in an amount equivalent to SDR 54.0 million (about US$73 million), is available in two equal semiannual installments.


Following an eight-year period of economic decline, the Cameroonian economy has gradually strengthened as a result of the positive effects of the 1994 devaluation of the CFA franc and accompanying reform measures. Real GDP, which had declined an annual average of 4 percent during those eight years, rose by 3.3 percent in 1994/95 and by an annual average of 5 percent during 1995/96-1996/97. Average annual inflation, as measured by the change in consumer prices, fell to 6.4 percent in 1995/96 from 30.9 percent in 1994/95 and eased further to an estimated 4.3 percent in 1996/97. Significant progress was made in strengthening government finances, with budgetary improvements surpassing program targets, notwithstanding shortfalls in non-oil revenue. The pace of structural reform picked up in 1996/97; progress was achieved in the privatization program, civil service reform, the restructuring of the banking sector, and the securitization of domestic debt. The external current account deficit (including official transfers) is estimated to have narrowed in 1996/97 by about 1 percentage point to 1.3 percent of GDP, reflecting a 6-7.5 percent growth in volume of both oil and non-oil exports, while import volume is estimated to have increased by 6 percent.

Medium-Term Strategy and the 1997/98 Program

The main objectives of Cameroon’s medium-term strategy are to place the economy on a sustainable growth path and to restore internal and external viability. Because of the magnitude of the deterioration in physical and human capital during 1986/87-1993/94, the rebuilding of the physical and economic infrastructure will require a firm and long-term commitment to structural reforms with a view to unlocking the country’s considerable resources. Over the three-year period, the authorities’ program aims at achieving a real annual GDP growth of at least 5 percent, limiting average annual consumer price inflation to 2 percent, and stabilizing the external current account deficit at around 2 percent of GDP.

The key policies in support of the government’s medium-term strategy include (1) maintaining external competitiveness through efficiency-enhancing structural reforms; (2)reducing fiscal imbalances through a steady increase in the ratio of non-oil revenue to GDP and firm control over expenditure; (3) strengthening efficiency of the tax system by strictly enforcing tax laws, combating fraud and corruption, introducing a value-added tax (VAT), rationalizing income taxes, reforming forestry and agricultural taxation, and phasing out export taxes; (4) increasing public expenditure on social services, especially health and education, and the rehabilitation of infrastructure; (5) accelerating state enterprise reforms; (6) completing the financial sector reform, including insurance companies and the social security system; and, (7) improving public sector management and efficiency.

Consistent with this medium-term strategy, the program supported by the first annual ESAF loan aims at achieving a real annual GDP growth of 5 percent, reducing inflation to 2 percent, and containing the external current account deficit (including official transfers) to 2.3 percent of GDP. To achieve these objectives, a major emphasis of fiscal policy will be to increase non-oil revenue to 12.2 percent of GDP in 1997/98 from 10.9 percent in 1996/97, particularly from improvements in tax administration, as well as from the forestry industry, to ensure that Cameroon captures a larger share of its natural resources and protects the environment. In order to maintain this momentum in the medium-term, a consolidated tax law will be introduced in the 1998/99 budget, as well as a VAT and a general income tax. Expenditure policy will give priority to increasing outlays for education, health, and basic infrastructure. In the area of monetary policy, the Cameroonian authorities, in concert with the Bank of Central African States (BEAC), will aim at making interest rates more market determined.

Cameroon’s external debt burden constitutes a formidable obstacle to a return to external viability. Without further restructuring of the claims of both bilateral official and commercial creditors, annual debt service is projected to remain above one-third of exports of goods and services and over 45 percent of government revenue for the program period. The authorities intend to approach Paris Club creditors to request a rescheduling on concessional terms of all eligible bilateral official debt service falling due during the program period and an eventual stock of debt operation. The authorities further intend to initiate formal negotiations on debt and arrears to commercial banks (London Club) after the Paris Club rescheduling is concluded.

Structural Policies

At the core of Cameroon’s medium-term program is a comprehensive structural reform agenda aimed at further reducing the public sector’s burden on the economy, liberalizing the energy and transport sectors, deepening the financial market, and consolidating the gains in external competitiveness. Key structural measures under the 1997/98 program relate to taxes, the civil service, the financial sector, public enterprises, the petroleum industry, the transport sector, and the legal framework. Noteworthy are the steps to enhance transparency and efficiency in the petroleum sector.

Addressing Social and Environmental Needs

Cameroon’s objectives in the social area and in poverty alleviation are to be achieved through higher economic growth and new budgetary priorities to improve primary health and education, and to provide access to clean drinking water and to generic drugs. In addition, the rural poor will benefit from investment in roads and measures to reduce transport costs, which should help expand agricultural production and exports. In the environmental area, sustainable forest management plans are now required before new 15-year forestry concessions are granted. These, together with the new tax regime for the forestry sector, should also benefit conservation.

The Challenge Ahead

Maintaining and reinforcing the income gains achieved since the devaluation of the CFA franc in 1994 remains a key challenge. This development objective will require increased spending on physical and social infrastructure, which in turn will require the unwavering commitment of the authorities to mobilize non-oil revenue, as well as to further liberalize the economy.

Cameroon joined the IMF on July 10, 1963. Its quota2 is SDR 135.1 million (about US$182 million). Its outstanding use of IMF financing currently totals SDR 47 million (about US$64 million).

Cameroon: Selected Economic Indicators







(Percent change)

Real GDP







Consumer prices

(12-month average)







(Percent of GDP)

Current account balance,

including grants (deficit -)







Overall fiscal balance (deficit-)







Sources: Cameroonian authorities; and IMF staff estimates.

* Preliminary.

** Program.


1The ESAF is a concessional IMF facility for assisting eligible members that are undertaking economic reform programs to strengthen their balance of payments and improve their growth prospects. ESAF loans carry an interest rate of 0.5 percent a year and are repayable over 10 years, with a 5½-year grace period.

2A member’s quota in the IMF determines, in particular, the amount of its subscription, its voting weight, its access to IMF financing, and its share of the allocation of SDRs.


Public Affairs    Media Relations
E-mail: E-mail:
Fax: 202-623-6278 Phone: 202-623-7100