Cameroon: Selected Issues

IMF Staff Country Reports, August 13, 2018

Source details

Purpose: Provide an empirical underpinning to fiscal policy reforms implemented by the authorities by estimating the size of fiscal multipliers in Cameroon using a novel long quarterly data set.
Scope: Separately assesses the impact of changes in revenue, government consumption, and government investment on output.
Context: Notes that the impact of government spending and taxes depends on country characteristics and the stage of the business cycle.

Revenue and capital expenditure multipliers in Cameroon are small and comparable to those of other sub-Saharan African and low-income countries.
The revenue multiplier is close to nil, implying that revenue-based fiscal consolidation would be less harmful to growth in the medium term.
Compared to peers in sub-Saharan Africa:
- Cameroon’s revenue multiplier is smaller.
- Cameroon’s tax burden is smaller relative to the regional average.
Government expenditure can more significantly affect output in the medium term.
The consumption multiplier is unexpectedly much higher than the investment multiplier.

Revenue-based fiscal consolidation is likely to have limited negative effects on medium-term growth, given the revenue multiplier is close to nil.
Given that government consumption has a relatively larger medium-term effect on output (consumption multiplier > investment multiplier), policymakers should:
- Consider the composition of public spending when designing fiscal consolidation or stimulus, recognizing that different spending types have distinct output impacts.
- Account for Cameroon’s lower-than-average tax burden in Sub-Saharan Africa when assessing the room for revenue measures.

Subjects covered in the paper: Banking, Financial inclusion, Financial markets, Gender, Gender inequality, Income inequality, National accounts, Personal income, Poverty, Women.
Keywords listed: bank, Cameroon, capital expenditure, CR, education gender gap, Financial inclusion, GDP, gender gaps in Cameroon, Gender inequality, gender inequality index, Global, IMF staff, IMF staff calculation, Income inequality, ISCR, Personal income, Policy recommendation, Policy simulation, poverty headcount, poverty impact, poverty reduction goal, Sub-Saharan Africa, West Africa, Women.
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