IMF Executive Board Concludes 2009 Article IV Consultation with Cameroon

Public Information Notice (PIN) No. 10/12
January 25, 2010

On July 02, 2009, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Cameroon.1 The Executive Board also approved a US$144.1 million disbursement for Cameroon under the Exogenous Shock Facility (ESF).


Despite a continued contraction in oil output, Cameroon’s real Gross Domestic Product (GDP) grew by about 3½ percent in 2008, driven by a pickup in nonoil economic activity. Economic growth remained constrained, however, by weak infrastructure and a poor business environment, limited financial sector development, and barriers to international trade and regional integration. A fuel price freeze and lower taxation of some staple goods helped contain average inflation to 5.3 percent in 2008. The overall external position remained in surplus, and prudent management of oil windfalls helped the authorities to accumulate government deposits at the regional central bank. While the exchange rate remains broadly in line with fundamentals, the structural weaknesses noted above continue to hamper Cameroon’s external competitiveness.

The global economic crisis has affected Cameroon severely in 2009, mainly via declining commodity prices, weaker external demand for some of the country’s main export commodities (cotton, timber and rubber), and lower remittances. As a result, economic activity is projected to slow to 2.4 percent in 2009 and the overall external position is expected to turn negative, requiring temporary additional external financial support to help the economy adjust to exogenous shocks. The fiscal position is also being adversely affected: the overall fiscal surplus of 2 percent of GDP observed in 2008 is expected to turn into a deficit close to 1 percent of GDP in 2009 as the authorities protect priority outlays while they face a decline in oil revenues.

Over the medium-term, exports are projected to gradually increase as the global economy recovers, although inadequate infrastructure and a poor investment climate will continue to hamper export diversification and economic growth. Real GDP growth is projected at about 2.5 percent in 2010 and 4 percent during 2011-12. Inflation is expected to remain below 3 percent, thus complying with the regional convergence criterion. There are, however, downside risks to these projections, should the global economic recovery be weaker or slower than anticipated.

The authorities are committed to stepping up implementation of their structural reform agenda and thereby increase the economy’s resilience to external shocks. Their efforts focus on expanding the tax base, improving the quality of public spending and fiscal transparency; creating a more favorable environment for foreign investment, and strengthening the banking system.

Executive Board Assessment

Executive Directors commended the Cameroonian authorities for their prudent management of oil windfalls, which has allowed them to accumulate savings that can be judiciously used to alleviate the impact of the global economic crisis. Nevertheless, the crisis confronts the authorities with difficult challenges. Weaker external demand, lower oil prices and tighter external financing conditions are adversely affecting exports, fiscal revenue and growth. Against this background, Directors supported the authorities’ commitment to deal with the effects of the crisis while preserving macroeconomic stability and stepping up structural reforms. Sustained further efforts to improve infrastructure and the business environment will be particularly important to accelerate growth, reduce poverty, and ease social tensions.

Directors agreed that the implementation of the 2009 budgetary priority spending plans should be maintained to avoid a public sector contraction in a year of declining economic growth. They supported the authorities’ efforts to achieve greater nonoil revenue mobilization, especially given the recent significant decline in oil revenue. In light of the reemergence of domestic payment arrears, Directors emphasized the need to strengthen further public expenditure management and transparency. They encouraged the authorities to work with regional agencies to speed up the development of the domestic bond market, and supported their efforts to improve debt management. Phasing out subsidies on fuel prices and moving towards a targeted social safety net also remain an important priority.

Directors noted that the exchange rate appears to be broadly in line with fundamentals, but nonprice factors continue to adversely affect competitiveness. Decisive actions are needed to improve governance, make the business environment more attractive, and enhance the still limited role of the financial sector in the development of the economy. In particular, Directors noted the need to step up infrastructure investment and reform public enterprises, and implement the financial sector action plan based on the recommendations of the 2007 Financial Sector Assessment Program mission.

Directors commended the authorities’ commitment to address these challenges through a medium-term economic program under a new Poverty Reduction Strategy. They generally welcomed their intention to request a new PRGF-supported program to support strong implementation of the unfinished reform agenda. While recognizing the challenges of tackling the impediments to growth in a crisis environment, Directors stressed that this would set Cameroon in a better position to reduce poverty in a sustainable way.

Directors called for continued vigilance against downside risks to the financial sector. They noted that a protracted economic slowdown could in turn act as a further drag on growth if asset quality deteriorates and credit conditions become tighter. They encouraged the authorities to monitor developments closely in cooperation with regional supervisors, and take corrective actions as needed.

Cameroon: Selected Economic and Financial Indicators, 2007-11

  (Annual percentage changes)

National income and prices


GDP at constant prices

3.5 3.4 2.4 2.6 4.0


-5.2 -6.4 -9.4 -10.0 13.1


4.1 4.1 3.1 3.3 3.6

Consumer price (12-month average)

1.1 5.3 2.7 2.0 2.0

External Trade


Export volume

2.3 0.7 -4.6 0.8 7.7

Of which: nonoil sector

4.1 1.7 -4.1 4.0 6.2

Import volume

23.1 8.7 -8.1 4.1 5.3

Terms of trade

-1.6 8.7 -20.9 12.5 4.4

Money and credit (end-of-period)


Net domestic assets1

-9.2 1.8 14.6 8.3 10.3

Net credit to the public sector1

-6.8 -6.5 1.7 1.7 3.4

Credit to the private sector

5.9 19.6 13.0 12.5 12.0

Broad money (M2)

  (Percent of GDP)

Central government operations


Total revenue (excluding grants)

18.8 20.4 18.1 17.3 18.4

Non-oil revenue (percent of non-oil GDP)

13.8 14.2 14.2 14.3 14.6

Total expenditure

15.5 19.9 18.7 18.7 18.7

Fiscal balance (including grants and net

changes in arrears)

3.7 2.0 -0.8 -0.7 0.2

Nonoil primary balance (percent of nonoil GDP)2

-1.5 -6.8 -4.3 -4.5 -4.6

External sector


Current account balance (including grants)

-0.8 -1.0 -5.9 -4.2 -3.6

Stock of external public debt

5.5 5.5 7.5 8.0 8.3

Stock of public debt

11.8 9.8 12.4 13.1 13.2

Sources: Cameroonian authorities; and IMF staff estimates and projections.

1 In percent of broad money at the beginning of the period.

2 Excluding external grants and foreign-financed investment.

1 Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country's economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board. 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:


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