IMF Staff and the Cameroonian Authorities have Reached Staff-Level Agreement on the Third Review of the Extended Credit Facility and Extended Fund Facility for Cameroon

IMF News, January 30, 2023

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Canonical URL: IMF Staff and the Cameroonian Authorities have Reached Staff-Level Agreement on the Third Review of the Extended Credit Facility and Extended Fund Facility for Cameroon

IMF staff and Cameroonian authorities reached staff-level agreement on economic policies to conclude the third review of the program under the ECF and EFF arrangements.
Cameroon will have access to SDR 55.2 million (about US$74.6 million) in financing once the review is formally completed by the IMF Executive Board in early March 2023.
The staff report will be prepared based on the mission’s preliminary findings and, subject to management approval, will be presented to the IMF's Executive Board for discussion and decision.

Growth is estimated at 3.4 percent in 2022 and is projected to reach 4.3 percent in 2023.
Following an increase of 3.6 percent in 2021, real GDP growth is expected to remain stable at 3.4 percent in 2022.
Headline inflation is expected to reach 6 percent at end-2022, mainly driven by food prices due to higher import costs as well as domestic supply pressures.
Inflation is projected to remain at about 6 percent at end-2023.
The overall fiscal deficit is expected to decline to 1.7 percent of GDP in 2022.
The public debt-to-GDP ratio is estimated at 46.3 percent at end-2022.
The authorities aim to further reduce the non-oil primary fiscal deficit to 2.2 percent of GDP and contain public debt at 43 percent of GDP in 2023.

The performance of non-oil tax revenue is expected to offset the increase in current spending mainly from higher fuel subsidies.
Fuel subsidies are estimated to reach CFAF 800 billion (2.9 percent of GDP) in 2022.
The authorities recognized the need to reduce costly fuel subsidies to create fiscal space for productive investment and social spending.
The statement highlights that fuel subsidies represent:
- six times the budget allocated to agriculture,
- four times that to health,
- over three times that to energy and water.
Fuel subsidy reform should be accompanied by measures to mitigate the impact on the most vulnerable, including cash transfers.
The authorities agreed on the need to further mobilize domestic non-oil revenues through widening the tax base.

The authorities committed to accelerating structural reforms to unlock Cameroon’s growth potential and create fiscal space for priority spending, especially infrastructure to support the SND30 objectives.
Priorities include:
- sharply accelerating the pace of structural reforms,
- improving the business climate for private sector-led inclusive and resilient growth,
- reviewing tax policy to mobilize domestic non-oil revenues and broaden the tax base,
- strengthening public financial management to ensure disciplined budget execution and complete major infrastructure projects, especially in the transport and energy sectors,
- continuing progress in the financial management of public enterprises and the rehabilitation of SONARA.
The mission welcomed important steps to strengthen transparency and governance, especially the Supreme Court’s Audit Bench.

The recovery is subject to greater risks with spillovers from Russia’s war in Ukraine, including inflationary pressures, supply chain disruptions, and a tightening of global financial conditions.
Prolonged shortages and high prices of fertilizers have raised food security challenges.
The mission welcomed authorities’ efforts to ensure adequate supplies of fertilizer for the harvest, supported by the World Bank and African Development Bank.
The mission noted the authorities’ commitment to policies consistent with the stability of the CEMAC region’s monetary arrangement, including rebuilding foreign reserves at the Bank of Central African States (BEAC).
Authorities are working to strengthen compliance with foreign exchange regulations notably regarding the repatriation of export earnings, while not impeding legitimate payments overseas.

An IMF team, led by Cemile Sancak, IMF Mission Chief for Cameroon, visited Yaoundé from January 5-18 and held virtual meetings from January 19-27.
The mission met with the Prime Minister, Joseph Dion Ngute; the Minister of State and Secretary General of the Presidency, Ferdinand Ngoh Ngoh; the Minister of Finance, Louis Paul Motaze; the Minister of the Economy, Planning, and Regional Development, Alamine Ousmane Mey; the National Director of the BEAC, Emmanuel Nkoa Ayissi; other senior officials; and representatives of development partners, the diplomatic community, the private sector, civil society, and unions.
The mission thanked the Cameroonian authorities for their cooperation and the frank and constructive dialogue.
Conclusion of the third review by the IMF Executive Board scheduled in early March 2023 would enable the disbursement of SDR 55.2 million (about US$74.6 million).

IMF Communications Department — Press Release No. PR23/24, January 30, 2023.