Reports on Observance of Standards and Codes

Cameroon and the IMF

Cameroon ROSC
I.  Fiscal Transparency
II.  Transparency of Monetary and Financial Policies
III.  Banking Supervision
IV.  Insurance Supervision
V.  Payment System

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REPORT ON THE OBSERVANCE OF          
STANDARDS AND CODES (ROSC)
Cameroon
  Queries/Comments  
   should be directed to:
   Director
   African Department
   700 19th Street, NW
   Washington, DC 20431
   202-623-7000
   http://www.imf.org
   scu-comment@imf.org
II. Transparency of Monetary
and Financial Policies
 
Prepared by a staff team from the International Monetary Fund and the World Bank in the context of a Financial Sector Assessment Program (FSAP), on the basis of information provided by the Cameroonian authorities.

May 2000

Consistency with Code of Good Practices on Transparency in Monetary and Financial Policies1

1.  Overall, monetary and financial policies in the CEMAC are rather transparent--a situation that is to some extent the result of institutional arrangements prevailing in the economic and monetary union. Such arrangements would be impossible to implement to the satisfaction of all countries involved without a large degree of transparency. A tabular summary of consistency with the Code of Good Practices on Transparency is provided in Table 1. Transparency practices in the following domains are reviewed: (i) monetary policy; (ii) financial policies, including banking supervision and payment system oversight.

Table 1. Cameroon: Consistency with Code of Good Practices on Transparency

Section Practice Full Part NC Comments
Monetary Policy

Clarity of roles, responsibilities, and objectives

Objectives, institutional framework, relationship between monetary and fiscal operations, and agency roles are clearly defined in the statutes of the BEAC and in the international treaties on the Central African Monetary Union.

X

   

The rules that determine how the BEAC can intervene in the rest of the economy are not made public.

Open process for formulating and reporting policy decisions

The monetary policy framework and decision making process are defined in broad terms in the statutes of the BEAC. Policy changes are promptly communicated and clearly explained. Fundamental modifications are, in practice if not in law, preceded by consultations with the parties concerned.

  X

 

The monetary policy framework could be better explained to the public, and the monetary policy decisions should be explained better within the context of that framework.

There is a tendency to limit the communication of policy measures to the affected parties, instead of to the public at large.

Public availability of information

Implementation of the GDDS is in process. The BEAC has a broad range of publications as well as a network of local branches to inform the public. Emergency assistance to banks is kept secret.

  X

 

The publications suffer from sometimes long delays.

Accountability and assurances of integrity

Governor is accountable to the Board, a Ministerial Committee and the Heads of State of the CEMAC. Financial statements are audited by an internal committee of censors. The code of conduct for BEAC staff is partially published in the BEAC statutes.

  X

 

Financial statements will be audited by external auditors from FY2000 onwards. The elaborate version of the code of conduct for BEAC staff is an internal document. BEAC staff do not enjoy special judicial protection.

Banking Supervision and Payment System Oversight

Clarity of roles, responsibilities, and objectives

Objectives, institutional framework, relationship between financial agencies are clearly defined in the Convention creating COBAC.

X

   

In the area of payment system oversight, BEAC could increase its efforts in communicating general policy principles to participants in the payment system.

Open process for formulating and reporting policy decisions

Overall conduct of policies is transparent. Fundamental modifications are, in practice if not in law, preceded by consultations with the parties concerned, and communicated in a timely manner. There is regular reporting on the achievement of its objectives.

X

   

The consultation process that currently takes place could be formalized.

Public availability of information

COBAC issues periodic reports on progress in achieving objectives and regulatory initiatives. A compendium of regulations has been issued recently.

  X

 

Delays in the publication of reports hinders the availability of information. A public information service would be useful to correct this problem..

Accountability and assurances of integrity

The President of COBAC is also Governor of BEAC, and is accountable to the Board of Governors, a Ministerial Committee and the Heads of State of the CEMAC.

X

     

A.  Monetary Policy

2. Monetary policy in Cameroon is conducted by the BEAC, and aims to maintain the external and internal value of the currency. Foreign reserves function as an intermediary monetary target, while the operational target consists of a series of BEAC refinancing limits for each country of the union. The interest rates charged on these refinancing operations are used as instruments. A maximum degree of transparency in such a policy framework can be beneficial, but is not crucial, especially not given the nascent stage of financial market development and the limited monetization of the CEMAC economies. As a result, transparency towards the general public has traditionally not been a top priority for the BEAC. However, the BEAC has ensured a high degree of transparency towards the governments of its member states.

3. For the four broad areas covered in the Code of Good Practices on Transparency in Monetary and Financial Policies (clarity of roles, responsibilities, and objectives; the process for formulating and reporting of policy decisions; public availability of information; and accountability and assurances of integrity), the BEAC overall demonstrates a fairly high degree of transparency.

4. The roles, responsibilities and objectives of the BEAC, are clearly defined in its statutes, in the Treaty on the Central African Monetary Union and in the Treaty on Monetary Cooperation between the member states of the BEAC and the Republic of France. The only practice that is not fully observed is the requirement that central bank involvement in the rest of the economy should be conducted in an open and public manner (1.2.4). The rules for such involvement are kept internal.

5. There is room for improvement in the area of open process for formulating and reporting monetary policy decisions. In particular, the BEAC could better communicate the monetary policy framework (instruments and final, intermediary, and operational targets as well as the relationships between those), and explain its general monetary policy stance and specific decisions within that framework. The publication of a reference paper explaining and motivating that framework in detail could be a useful tool to enhance the transparency of the monetary policy decision making process. Some practices are not fully implemented (advance publication of the calendar of Board meetings, publication of practical rules and procedures regarding monetary instruments and relations with counterparties). An evaluation of progress towards the realization of monetary policy objectives is completed only once a year, in the annual report. It would be useful if the BEAC could increase the frequency of these evaluations, and, for example, publish one after every Board meeting is held. The current practice of organizing consultations prior to substantive technical changes in the structure of monetary regulations could be formalized.

6. With regard to the public availability of information, the BEAC has an appropriate range of publications, but some of these publications have been issued with lengthy delays in the recent past, and thus have not been very useful as a means of providing the public with timely information. To avoid unnecessary delays, the BEAC should establish firm deadlines for the monthly bulletin. Consideration could be given to separating the monthly statistics from the research papers. To avoid that overdue research papers delay the publication of statistics. The BEAC should also consider publication of its accounting guidelines, to the extent possible without releasing confidential information. Communication with the general public could be enhanced by introducing sessions in the parliaments of the member states for the governor to explain monetary policy and developments.

7. There are some areas for improvement with regard to accountability and public assurances of integrity. In general, the BEAC could make available non-sensitive parts of its internal regulations for public scrutiny. This would reinforce confidence in the BEAC, and would give an incentive to control the quality of internal regulations. The BEAC member states could consider granting some kind of immunity to all BEAC staff, for their decisions taken in the exercise of their duty.

B.  Financial Policies

8. This section provides an overall assessment of transparency practices in financial policies with respect to banking supervision by the Banking Commission and of payment system oversight by BEAC. For the four broad areas covered in the Code of Good Practices on Transparency in Monetary and Financial Policies (clarity of roles, responsibilities, and objectives; the process for formulating and reporting of policy decisions; public availability of information; and accountability and assurances of integrity), COBAC overall demonstrates a fairly high degree of transparency. Although the Code has only a few explicit references to payment system oversight, BEAC could implement improvements in transparency practices in this area.

9. The roles, responsibilities and objectives of the COBAC are clearly defined in its founding convention. With regard to clarity of roles in the payment system oversight area, BEAC could enhance the communication to and consultation with payment system participants, in particular concerning risk management features of the payment system.

10. Similarly, COBAC has an open process for formulating and reporting financial policy decisions. The current practice of organizing consultations prior to substantive technical changes in the structure of financial regulations could be formalized.

11. With regard to the public availability of information, COBAC has an appropriate range of publications. However, some of these publications have been issued with lengthy delays, and thus have not been very useful as a means of providing the public with timely information. To avoid unnecessary delays, COBAC should establish firm deadlines for its bulletin and annual report. The upcoming move to new headquarters could provide an opportunity to improve its public information services, including a website.

12. COBAC displays overall observance of the Code with regard to accountability and public assurances of integrity. Its president, who is also Governor of the BEAC, is accountable to the Board of Directors of BEAC and the Council of Ministers of the CEMAC. Codes of conduct regarding financial affairs of staffs are made public. COBAC does not maintain separate accounts from BEAC.


1This module was prepared in consultation with the Cameroonian authorities, the BEAC, and the COBAC in the context of an FSAP mission conducted in Cameroon in March 2000. The work of the FSAP mission was coordinated by a joint IMF-World Bank team led by Mr. Durand (IMF) and Ms. A.C. Rennie (World Bank). The main contributors were Mr. Driessen and Mr. Fonteyne (both IMF).

 

I. Fiscal Transparency        Cameroon ROSC         III. Banking Supervision