IMF Executive Board Approves US$ 689.5 Million Arrangements Under the Extended Credit Facility and Extended Fund Facility for Cameroon
IMF News, July 29, 2021
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- Published: July 29, 2021
Program approval and financing
- Executive Board approved three-year arrangements under the Extended Credit Facility (ECF) and the Extended Fund Facility (EFF) for Cameroon for SDR 483 million (about US$ 689.5 million, or 175 percent of Cameroon’s quota).
- Approval enables immediate disbursement of about US$ 177.2 million, usable for budget support.
- This follows Fund emergency support under the Rapid Credit Facility (RCF) totaling SDR 276 million, about US$ 382 million or 100 percent of Cameroon’s quota.
Objectives and priorities of the ECF/EFF-supported program
- Aim: support authorities’ efforts to achieve a rapid post-COVID-19 recovery, restore the country’s fiscal and external sustainability, and unlock inclusive and private sector-driven growth.
- Urgent priorities: address financial and fiscal risks associated with state-owned enterprises (SOEs), strengthen public debt management, and limit non-concessional borrowing.
- Governance: steadfast commitment to strengthen transparency, good governance, and reduce corruption risks is crucial.
Program pillars and reform agenda
- The five pillars of the program will seek to:
- (i) mitigate the health, economic, and social consequences of the pandemic while ensuring domestic and external sustainability;
- (ii) reinforce good governance and strengthen transparency and the anti-corruption framework;
- (iii) accelerate structural fiscal reforms to modernize tax and customs administrations, mobilize revenue, improve public financial management, increase public investment efficiency, and reduce fiscal risks from state-owned enterprises;
- (iv) strengthen debt management and reduce debt vulnerabilities;
- (v) implement structural reforms to accelerate economic diversification, boost financial sector resilience and inclusion, and promote gender equality and a greener economy.
- Authorities adopted a revised budget with a larger deficit to accommodate the pandemic impact and committed to gradually return to fiscal consolidation once the pandemic abates.
- Success also depends on supportive policies and reforms by CEMAC regional institutions.
Economic context, recent performance, and risks
- COVID-19 developments: an upsurge in COVID-19 cases since January 2021 has raised concerns about growth prospects and the external and fiscal positions.
- Other risks: security risks in parts of the country persist; pandemic could reverse improvements in poverty reduction and jeopardize reform implementation.
- 2020 performance: economic activity decelerated markedly in 2020 but less than anticipated due to strong performance in agricultural and construction sectors.
- 2020 outcomes:
- Current account deficit narrowed to 3.7 percent of GDP, owing to lower imports and higher than expected non-oil exports.
- Inflation remained below 3.0 percent.
- Fiscal deficit contained to 3.6 percent of GDP due to proactive COVID-19 management by authorities.
- Near-term outlook: highly uncertain and dependent on program policy implementation. A gradual recovery could increase GDP growth to 3.6 percent in 2021 and 4.6 percent in 2022.
- Medium-term drivers: implementation of National Development Strategy for 2020-30 (SND30), large infrastructure projects, and recovery in trading partner economies.
Fiscal, debt, and external projections (selected highlights preserved exactly)
- GDP growth (annual percentage change):
- 2019: 3,7
- 2020: -1,5
- 2021: 3,6
- 2022: 4,6
- 2023: 4,9
- 2024: 5,3
- 2025: 5,4
- 2026: 5,6
- Nominal GDP (at market prices, CFAF billions):
- 2019: 22.855
- 2020: 22.955
- 2021: 24.265
- 2022: 25.865
- 2023: 27.687
- 2024: 29.670
- 2025: 31.922
- 2026: 34.359
- Central government operations (percent of GDP where indicated):
- Total revenue (including grants): 2019: 15,7; 2020: 13,7; 2021: 14,6; 2022: 15,5; 2023: 15,8; 2024: 16,4; 2025: 16,9; 2026: 17,5
- Non-oil revenue (percent of non-oil GDP): 2019: 13,1; 2020: 12,0; 2021: 12,6; 2022: 13,4; 2023: 14,0; 2024: 14,7; 2025: 15,4; 2026: 16,2
- Overall fiscal balance (payment order basis) excluding grants:
- 2019: -3,9
- 2020: -3,4
- 2021: -3,7
- 2022: -2,9
- 2023: -2,2
- 2024: -2,0
- 2025: -1,3
- 2026: -1,4
- Overall fiscal balance (cash basis):
- 2019: -3,8
- 2020: -4,1
- 2021: -2,7
- 2022: -2,3
- 2023: -3,6
- 2024: -3,0
- 2025: -1,9
- 2026: -1,0
- Non-oil primary balance (payment basis, percent of non-oil GDP): 2019: -5,0; 2020: -4,4; 2021: -4,6; 2022: -3,1
- External sector (percent of GDP where indicated):
- Gross national savings: 2019: 26,1; 2020: 22,9; 2021: 24,9; 2022: 27,1; 2023: 28,6; 2024: 30,1; 2025: 31,7; 2026: 33,4
- Gross domestic investment: 2019: 30,4; 2020: 26,6; 2021: 28,9; 2022: 30,7; 2023: 32,0; 2024: 33,2; 2025: 34,6; 2026: 35,9
- Current account balance excluding official grants: 2019: -4,7; 2020: -4,0; 2021: -3,5; 2022: -2,8
- Public debt:
- Stock of public debt (percent of GDP): 2019: 42,3; 2020: 45,8; 2021: 46,2; 2022: 45,6; 2023: 44,4; 2024: 43,1; 2025: 41,0; 2026: 39,2
- Of which: external debt (percent of GDP): 2019: 29,9; 2020: 31,1; 2021: 32,3; 2022: 31,8; 2023: 31,3; 2024: 30,6; 2025: 29,3
Key policy recommendations and conditionalities highlighted
- Implement reforms to further strengthen transparency, good governance, and the anti-corruption framework to help catalyze additional donor financing.
- Accelerate structural fiscal reforms: modernize tax and customs administrations, mobilize revenue, improve public financial management, increase public investment efficiency, and reduce fiscal risks from SOEs.
- Strengthen debt management and reduce debt vulnerabilities; limit non-concessional borrowing.
- Implement structural reforms to accelerate economic diversification, boost financial sector resilience and inclusion, and promote gender equality and a greener economy.
- Effective and resolute implementation of authorities’ reforms and supportive regional policies are critical to program success.
Source: IMF Press Release No. 21/237 (July 29, 2021).
References
- Mitsuhiro Furusawa
- Cameroon and the IMF
- Central African Republic and the IMF
- Chad and the IMF
- Gabon and the IMF
- The IMF and Good Governance -- A Factsheet
- Press Releases
- PRESS CENTER
- Extended Credit Facility
- Extended Fund Facility
- IMF Press Release No. 20/205
- IMF Press Release No. 20/318
- https://www.imf.org/en/home