IMF Executive Board Completes Fifth Reviews under Extended Credit Facility and Extended Fund Facility for Cameroon and Concludes 2023 Article IV Consultation

Press Release No. 23/469

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IMF Executive Board Completes Fifth Reviews under Extended Credit Facility and Extended Fund Facility for Cameroon and Concludes 2023 Article IV Consultation

December 20, 2023

The IMF Executive Board completed the Fifth Reviews under the Extended Credit Facility (ECF) and the Extended Fund Facility (EFF) arrangements and approved a 12-month extension and augmentation of access. The completion of the Fifth Reviews allows for an immediate disbursement of about US$ 73.8 million. The IMF Board also concluded the 2023 Article IV consultation.
Cameroon has remained resilient in the face of successive shocks . Real GDP growth reached 3.6 percent in 2022 and is expected to accelerate to around 4 percent in 2023. Inflation is expected to decelerate from 7.3 percent at end-2022 to 6.2 percent by end 2023.
Cameroon’s economic reform program is broadly on track. Sustaining broad-based reform efforts will be key to create additional fiscal space, maintain debt sustainability, foster structural transformation, and boost growth and resilience. Integrating climate agenda in institutional and budget frameworks will be needed to advance adaptation and mitigation efforts.

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Washington, DC: The Executive Board of the International Monetary Fund (IMF) completed today the 2023 Article IV Consultation and the Fifth Reviews of Cameroon’s Fund-supported program. The US$ 689.5 million, three-year blended arrangements under the Extended Credit Facility(ECF) and the Extended Fund Facility (EFF) approved on July 29, 2021 seek to support the country’s economic and financial reform program (see press release 21/237). The completion of the reviews allows for the immediate disbursement of SDR 55.2 million (about US$ 73.8 million) bringing total disbursements under the arrangements to SDR 427.8 million (around US$ 571.9 million).

The ECF and EFF arrangements continue to provide a strong anchor for the authorities’ economic and fiscal program, and their implementation has been broadly on track. In completing the reviews, the Executive Board approved the waiver of nonobservance of the performance criterion on the non-accumulation of new external payments arrears on grounds that the breach was temporary and minor. The extension of the ECF and EFF arrangements by another 12 months (from July 28, 2024, to July 28, 2025) will allow for more time to implement the policies and reforms foreseen under the arrangements given the additional external shocks since the start of the program in 2021. The augmentation of access by SDR 110.4 million (about US$ 147.6 million) over the extension will help respond to the additional balance of payments needs created by these external shocks.

Cameroon’s economic recovery continued in 2023 despite strong external headwinds. Growth is estimated at 3.6 percent in 2022, on the back of buoyant agroindustry and service sectors and is expected to reach 4 percent in 2023. Inflation is projected to decelerate to around 6.2 percent by end-2023 from 7.3 percent at end-2022. The overall fiscal deficit is expected to improve from 1.1 percent of GDP in 2022 to 0.7 percent in 2023 reflecting efforts in non-oil revenue mobilization and ongoing recovery. The non-oil primary deficit is projected to improve to 2.5 percent of GDP from 3.9 percent of GDP in 2022 owing to both stronger revenues and lower fuel subsidies. The medium-term outlook remains positive, provided reforms progress, and the external environment becomes more supportive.

Article IV discussions focused on policies to enhance growth potential, achieve structural transformation, and export diversification as well as measures to address macro-critical climate challenges. The policy focus will need to be on enhancing efforts to invest in human capital and infrastructure, strengthening institutions, including governance, and enhancing product and labor markets by removing regulations that hinder competition to allow more market flexibility and encourage more formalization of existing firms. Achieving more inclusive growth and resilience will require mainstreaming climate agenda in the national institutional, regulatory, and budget frameworks, and advancing climate change mitigation and adaptation measures in line with Cameroon’s commitments under the Paris Agreement.

At the conclusion of the Executive Board’s discussion, Mr. Kenji Okamura, Deputy Managing Director and Acting Chair, made the following statement:

“Cameroon has remained resilient in the face of increasing external and domestic challenges. The ECF-EFF arrangements have supported the authorities’ efforts to sustain macroeconomic stability, promote growth, and advance longstanding reforms. While the medium-term outlook remains positive, the 12-month extension of the arrangements will allow more time to implement policies and reforms foreseen under the program, given additional external shocks.

“Cameroon’s performance under the program has been mixed, with the QPC on the non-accumulation of external payment arrears being breached due to minor and temporary delays on two debt service payments. The authorities have however made welcome progress in some key areas, including governance, public financial management, and revenue administration. Continued implementation of corrective measures to address missed targets and accelerate reforms will be important.

“The authorities are committed to maintaining a fiscal consolidation path consistent with program objectives. Additional room for productive investment and social spending needs to be created through greater non-oil revenue mobilization, enhanced investment efficiency, improved public financial management, and gradually phasing out fuel subsidies, while mitigating the impact on the vulnerable. Improving cash management and limiting spending through exceptional procedures will also be crucial.

“Fragilities in the banking system have increased with the banks' increased exposure to the Cameroonian government. The authorities are urged to work with COBAC to ensure that banks reduce and account adequately for sovereign risk.

“To unlock Cameroon’s abundant growth potential, structural reforms need to be accelerated. Further steps are needed to improve the business climate, including by strengthening financial sector stability and inclusion.

“These efforts should be accompanied by strong actions to strengthen governance, transparency, and the anti-corruption framework, including the AML/CFT framework. The publication of the governance diagnostic report is an important step forward.”

Executive Board Assessment[1]

Executive Directors agreed with the thrust of the staff appraisal. They commended the authorities for maintaining stability amid strong external headwinds and internal fragilities. Directors noted however that program performance has been mixed, and while welcoming the authorities’ commitment to program objectives and the corrective actions taken, they called for strengthened program implementation going forward.

Directors emphasized the importance of maintaining a fiscal consolidation path consistent with program objectives, which will require further deep public financial reforms. In this regard, they stressed the need to continue to gradually phase out fuel subsidies accompanied by mitigation measures for the most vulnerable. Directors urged the authorities to strengthen domestic non‑oil revenue mobilization and to enhance public expenditure efficiency and prioritization. They also called for strictly limiting recourse to direct interventions and exceptional spending procedures, improving cash management, strengthening fiscal transparency and budget credibility, and limiting non‑concessional borrowing. Noting the high risk of debt distress and continued debt vulnerabilities, Directors reiterated that the delayed restructuring of the public oil refining company (SONARA) should be implemented in a timely manner.

Directors expressed concern that fragilities in the banking system have increased with the banks' increased exposure to the Cameroonian government. They urged the authorities to work with the Banking Commission of Central Africa (COBAC) to ensure that banks reduce and account adequately for sovereign risk.

Directors welcomed the authorities’ plans to foster structural transformation and export diversification. They stressed the importance of horizontal policies as a necessary condition to ensure the success of any industrial policy, especially efforts to increase investment in human capital and infrastructure, strengthen institutions, and enhance product and labor markets.

Directors noted Cameroon’s increasing vulnerability to climate change impacts and welcomed the authorities’ efforts to integrate climate considerations into Cameroon’s institutional, regulatory, and budget frameworks, to support progress toward the national adaptation and mitigation objectives.

Directors commended the authorities’ efforts to promote good governance and reduce corruption. They welcomed the publication of the governance diagnostic as a critical step forward as well as the authorities’ commitment to strengthen the effectiveness of its AML/CFT regime, following the country’s addition to the FATF grey list.

Directors noted that Cameroon’s program is supported by the implementation of policies and reforms by the CEMAC regional institutions, which are critical to the program’s success. Completion of the sixth review will be conditional on the implementation of critical policy assurances at the Union level, as established in the December 2023 Union‑wide background paper.

It is expected that the next Article IV Consultation with Cameroon will be held in accordance with the Executive Board decision on consultation cycles for members with Fund arrangements.

Table 1. Cameroon: Selected Economic and` Financial Indicators, 2022-28
(CFAF billion, unless otherwise indicated)
		2022	2023		2024		2025	2026	2027	2028
		Est.	4th Rev.	Proj.	4th Rev.	Proj.	Proj.	Proj.	Proj.	Proj.
	(Annual percentage change, unless otherwise indicated)
National account and prices
GDP at constant prices		3.6	4.0	4.0	4.2	4.3	4.5	4.5	4.5	4.6
Oil GDP at constant prices		2.1	-1.8	0.5	-1.3	2.7	1.3	0.2	0.2	0.2
Non-Oil GDP at constant prices		3.6	4.1	4.1	4.3	4.3	4.5	4.6	4.6	4.7
GDP deflator		6.3	2.7	3.1	2.7	3.5	4.0	3.1	2.6	1.7
Nominal GDP (at market prices, CFAF billions)		27,702	29,457	29,704	31,521	32,063	34,822	37,515	40,216	42,770
Oil		1,155	872	957	797	976	939	900	866	837
Non-Oil		26,548	28,585	28,747	30,724	31,088	33,884	36,615	39,349	41,933
Consumer prices (average)		6.3	6.2	7.2	4.8	5.9	5.5	4.9	3.4	2.5
Consumer prices (eop)		7.3	5.9	6.2	3.7	5.5	5.2	3.6	2.0	2.0

Money and credit
Broad money (M2)		11.4	9.0	9.0	8.0	8.4	7.6	7.4	7.2	7.1
Net foreign assets 1/		7.7	2.9	1.6	0.7	3.2	2.7	2.2	2.5	3.2
Net domestic assets 1/		3.6	6.1	7.4	7.3	5.3	5.0	5.2	4.7	3.8
Domestic credit to the private sector		13.6	10.4	11.2	9.2	9.5	7.7	7.4	7.2	7.2
	(Percent of GDP, unless otherwise indicated)
Savings and investments
Gross national savings		15.3	15.6	15.6	16.1	16.2	17.0	17.3	18.3	19.1
Gross domestic investment		18.7	18.5	18.6	19.2	19.0	19.4	20.1	20.9	21.8
Public investment		4.6	5.0	4.6	5.4	5.3	5.9	6.6	7.2	7.5
Private investment		14.1	13.5	13.9	13.7	13.7	13.6	13.5	13.8	14.4

Central government operations
Total revenue (including grants)		15.9	15.9	16.0	15.5	15.9	15.5	15.6	15.7	15.8
Oil revenue		3.5	2.9	2.9	2.1	2.5	2.0	1.9	1.8	1.7
Non-oil revenue		12.1	12.7	12.7	13.1	13.1	13.3	13.6	13.8	14.0
Non-oil revenue (percent of non-oil GDP)		12.6	13.1	13.1	13.4	13.5	13.7	13.9	14.1	14.3
Total expenditure		17.1	16.7	16.6	16.1	16.3	15.9	16.4	16.6	16.7
Overall fiscal balance (payment order basis)
Excluding grants		-1.5	-1.1	-1.0	-1.0	-0.7	-0.6	-0.9	-1.0	-0.9
Including grants		-1.1	-0.8	-0.7	-0.6	-0.4	-0.4	-0.8	-0.9	-0.9
Overall fiscal balance (cash basis)
Excluding grants		-1.6	-2.4	-2.3	-1.8	-1.4	-1.1	-1.3	-1.0	-0.9
Including grants		-1.2	-2.0	-1.9	-1.5	-1.1	-0.9	-1.2	-0.9	-0.9
Non-oil primary balance (payment order basis)		-3.9	-2.5	-2.5	-1.7	-1.9	-1.3	-1.6	-1.6	-1.6
Non-oil primary balance (payment order basis, percent of non-oil GDP)		-4.0	-2.6	-2.6	-1.7	-2.0	-1.4	-1.7	-1.7	-1.6

External sector
Trade balance		-0.7	-1.4	-1.7	-1.6	-1.5	-1.3	-1.6	-1.7	-1.7
Oil exports		7.8	5.2	5.5	4.5	5.1	4.9	4.2	3.5	3.0
Non-oil exports		7.8	8.2	8.4	8.0	8.5	8.3	8.2	8.2	8.3
Imports		16.3	14.8	15.6	14.1	15.1	14.6	14.0	13.4	13.0
Current account balance
Excluding official grants		-3.7	-3.3	-3.3	-3.1	-2.9	-2.7	-2.8	-2.7	-2.8
Including official grants		-3.4	-2.9	-3.0	-3.0	-2.8	-2.5	-2.8	-2.7	-2.7
Terms of trade		-10.6	-7.6	-2.2	-1.6	1.6	0.5	-4.4	-5.5	-4.5

Public debt
Stock of public debt		45.3	43.2	41.8	41.1	39.0	36.1	34.1	32.6	31.4
Of which: external debt		30.8	30.7	29.2	29.7	28.5	27.0	26.0	25.5	25.4
Sources: Country authorities; and IMF staff estimates and projections.
1/ Percent of broad money at the beginning of the period.

[1] At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country's authorities. An explanation of any qualifiers used in summings up can be found here: http://www.imf.org/external/np/sec/misc/qualifiers.htm .

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Press Release No. 23/469

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IMF Executive Board Completes Fifth Reviews under Extended Credit Facility and Extended Fund Facility for Cameroon and Concludes 2023 Article IV Consultation

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