IMF Executive Board Concludes the Second Reviews of the Extended Credit Facility and Extended Fund Facility Arrangements for Cameroon
IMF News, July 25, 2022
Source details
- Canonical URL
- IMF Executive Board Concludes the Second Reviews of the Extended Credit Facility and Extended Fund Facility Arrangements for Cameroon
Other formats
Bibliographic details
- Published: July 25, 2022
Access and Program Status
- Completion of the Second Reviews provides Cameroon with access to the equivalent of US$ 72.9 million from the IMF.
- The completion of the second reviews enables the disbursement of SDR 18.4 million (about US$ 24.3 million) under the ECF Arrangement, and purchases of SDR 36.8 million (about US$ 48.6 million) under the EFF Arrangement.
- Total access under the arrangements is SDR 262.2 million (about US$ 346.1 million).
- The Executive Board approved the authorities’ request for a waiver of applicability for the end-June 2022 performance criteria.
- Cameroon’s three-year ECF-EFF arrangements were approved on July 29, 2021 and are built around five pillars:
- mitigating the health, economic, and social consequences of the pandemic while ensuring fiscal and external sustainability;
- reinforcing good governance and strengthening the transparency and the anti-corruption framework;
- accelerating structural fiscal reforms to modernize the tax and customs administrations, mobilize revenue, improve public financial management, increase public investment efficiency, and reduce fiscal risks from state-owned enterprises;
- strengthening debt management and ensuring debt levels remain sustainable;
- implementing structural reforms to accelerate economic diversification, boost financial sector resilience and inclusion, and promote gender equality and a greener economy.
Economic Performance and Outlook
- Cameroon experienced a record low real GDP growth rate of -2.2 percent year on year (yoy) in Q2-2020.
- Real GDP growth rate gradually recovered to reach 3.6 percent in 2021.
- The nascent recovery from mid-2021 is subject to greater uncertainties due to spillovers from the war in Ukraine, high inflationary pressures (especially food and fuel prices), and tightening global financial conditions.
- Low vaccination rates leave the country vulnerable to further COVID-19 waves.
- Real GDP growth is projected at 3.8 percent in 2022, down from 4.5 percent at the time of the program’s First Reviews.
- Inflation is projected to rise to 4.6 percent in 2022, but to remain below 3 percent in the medium term.
Risks and Shocks
- Downside risks highlighted:
- rising and volatile food, fertilizers, and energy prices, and supply disruptions;
- new outbreaks of lethal and highly contagious COVID-19 variants;
- a sharp increase in global risk premia following ongoing monetary policy tightening in advanced economies;
- inadequate progress on fuel price subsidies.
- Upside factors noted:
- potential benefits from new oil and gas opportunities;
- completion of major hydroelectric plants.
- Risk mitigants:
- authorities’ strong implementation record of macro-economic programs;
- close engagement with donors;
- a comprehensive capacity development program;
- contingency planning, including its COVID-19 response plan.
Fiscal and External Position Developments
- As a crude oil exporter, Cameroon has experienced some positive effects on its external and fiscal positions.
- Intensified higher global prices and supply disruptions have significantly increased the cost of fuel subsidies and are placing additional pressure on domestic prices, especially for food and fertilizers.
- Authorities’ fiscal strategy highlighted:
- maintain fiscal consolidation path;
- reduce fuel subsidies gradually, starting in 2023, while protecting the vulnerable;
- continue non-oil revenue mobilization and expenditure rationalization to rebuild fiscal space for strengthening social safety nets and boosting the recovery, while preserving debt sustainability.
- IMF advice: manage debt cautiously and limit reliance on non-concessional borrowing.
Structural Reforms and Financial Sector Policy Recommendations
- Structural reforms are advancing, albeit with delays in some key areas.
- Recommended priorities:
- effective and resolute implementation of structural reforms to further strengthen transparency, good governance, and the anti-corruption framework to promote growth and catalyze additional donor financing;
- closely monitor rising non-performing loans and proceed with bank restructuring within the timetable set by COBAC to ensure financial sector resilience;
- further efforts to tackle gender inequality and climate change related challenges.
Selected Economic and Financial Indicators (highlights from Table 1)
- GDP at constant prices:
- 2021: 3.5
- 2022 (Est.): 3.6
- 2023 (1st Rev. Proj.): 4.5
- 2024 (Proj.): 3.8
- 2025 (Proj.): 4.6
- 2026 (Proj.): 4.7
- 2027 (Proj.): 5.0
- 2027 (alternate): 4.9
- Oil GDP at constant prices:
- 2021: 0.1
- 2022: -3.2
- 2023: 4.2
- 2024: -3.0
- 2025: 0.2
- 2026: 0.3
- GDP deflator:
- 2021: 2.6
- 2022: 3.3
- 2023: 2.9
- 2024: 2.4
- 2025: 2.1
- 2026: 2.0
- Nominal GDP (at market prices, CFAF billions):
- 2021: 24,951
- 2022: 25,158
- 2023: 26,828
- 2024: 27,389
- 2025: 29,325
- 2026: 31,506
- 2027: 33,766
- additional projections: 36,152; 38,682
- Oil revenue (CFAF billions):
- 2021: 929
- 2022: 801
- 2023: 1,009
- 2024: 1,187
- 2025: 1,090
- 2026: 992
- 2027: 927
- further: 883; 859
- Non-Oil revenue (CFAF billions):
- 2021: 24,021
- 2022: 24,357
- 2023: 25,819
- 2024: 26,201
- 2025: 28,235
- 2026: 30,513
- 2027: 32,839
- further: 35,269; 37,823
- Consumer prices (average):
- 2021: 2.3
- 2022: 2.8
- Consumer prices (eop):
- 2021: 4.1
- Broad money (M2) (percent of GDP, unless otherwise indicated):
- 2021: 13.8
- 2022: 17.2
- 2023: 10.7
- 2024: 15.6
- 2025: 10.1
- 2026: 8.1
- 2027: 6.7
- additional: 6.1; 7.0
- Net foreign assets (percent of broad money at the beginning of the period):
- 2021: 1.9
- 2022: 4.3
- 2023: 6.5
- 2024: 4.0
- 2025: 1.7
- 2026: 1.5
- Domestic credit to the private sector (percent of GDP):
- 2021: 5.4
- 2022: 9.7
- 2023: 5.6
- 2024: 9.1
- 2025: 12.4
- 2026: 10.9
- 2027: 7.4
- further: 7.5; 3.1
- Gross national savings:
- 2021: 26.9
- 2022: 14.0
- 2023: 29.8
- 2024: 16.3
- 2025: 17.3
- 2026: 18.8
- 2027: 20.4
- additional: 21.8; 23.2
- Gross domestic investment:
- 2021: 30.3
- 2022: 17.9
- 2023: 31.8
- 2024: 18.4
- 2025: 20.0
- 2026: 22.0
- 2027: 23.6
- additional: 25.0; 26.0
- Public investment (percent of GDP):
- 2021: 5.5
- 2022: 5.8
- 2023: 6.0
- 2024: 6.8
- Private investment (percent of GDP):
- 2021: 24.9
- 2022: 13.4
- 2023: 26.2
- 2024: 13.2
- 2025: 14.6
- 2026: 16.2
- 2027: 17.6
- additional: 18.3; 19.2
- Central government operations:
- Total revenue (including grants) as percent of GDP:
- 2021: 13.9
- 2022: 14.1
- 2023: 14.9
- 2024: 15.4
- 2025: 15.9
- 2026: 15.7
- 2027: 15.5
- Non-oil revenue as percent of GDP:
- 2021: 11.7
- 2022: 12.0
- 2023: 12.8
- 2024: 13.1
- 2025: 13.6
- 2026: 13.7
- Non-oil revenue (percent of non-oil GDP):
- 2021: 12.1
- 2022: 12.5
- 2023: 13.3
- Total expenditure as percent of GDP:
- 2021: 17.0
- 2022: 16.5
- 2023: 16.7
- 2024: 17.4
- 2025: 16.1
- 2026: 16.0
- Overall fiscal balance (payment order basis) excluding grants:
- 2021: -3.4
- 2022: -2.6
- 2023: -2.4
- 2024: -2.5
- 2025: -0.5
- 2026: -0.6
- 2027: -1.4
- Including grants:
- 2021: -3.1
- 2022: -1.8
- 2023: -1.9
- 2024: -0.2
- 2025: -0.3
- 2026: -0.4
- 2027: -1.3
- Overall fiscal balance (cash basis):
- 2021: -3.8
- 2022: -2.7
- 2023: -1.0
- 2024: -0.9
- 2025: -0.8
- 2026: -3.5
- 2027: -2.8
- additional figures: -2.2; -0.7
- Non-oil primary balance (payment basis, percent of non-oil GDP):
- 2021: -4.0
- 2022: -4.2
- 2023: -2.3
- 2024: -1.7
- External sector:
- Trade balance:
- 2021: -1.1
- 2022: -1.5
- 2023: -2.0
- 2024: -2.1
- Non-oil exports (percent of GDP):
- 2021: 8.0
- 2022: 8.6
- 2023: 9.4
- 2024: 8.7
- 2025: 7.9
- 2026: 7.7
- Imports (percent of GDP):
- 2021: 14.5
- 2022: 13.5
- Current account balance excluding official grants:
- 2021: -3.7
- 2022: -4.4
- 2023: -3.6
- Current account balance including official grants:
- 2021: -3.3
- 2022: -2.9
- Terms of trade:
- 2021: 7.1
- 2022: -7.1
- 2023: -6.9
- 2024: -4.6
- Public debt:
- Stock of public debt:
- 2021: 47.2
- 2022: 45.5
- 2023: 45.0
- 2024: 44.0
- 2025: 40.8
- 2026: 37.9
- 2027: 35.3
- additional projections: 33.9; 32.6
- Of which: external debt:
- 2021: 31.6
- 2022: 32.8
- 2023: 31.2
- 2024: 29.2
- 2025: 28.2
- 2026: 27.6
Sources: Cameroonian authorities; and IMF staff estimates and projections using updated nominal GDP.