IMF Executive Board Concludes 2011 Article IV Consultation with Cameroon

Public Information Notice (PIN) No. 11/83
June 30, 2011

Public Information Notices (PINs) form part of the IMF's efforts to promote transparency of the IMF's views and analysis of economic developments and policies. With the consent of the country (or countries) concerned, PINs are issued after Executive Board discussions of Article IV consultations with member countries, of its surveillance of developments at the regional level, of post-program monitoring, and of ex post assessments of member countries with longer-term program engagements. PINs are also issued after Executive Board discussions of general policy matters, unless otherwise decided by the Executive Board in a particular case.

On June 24, 2011, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Cameroon.1


Cameroon preserved macroeconomic stability conditions, and debt relief under HIPC and MDRI firmed up debt sustainability. However, there has been no growth in per capita income in the past five years, despite the productive base being relatively diversified. Growth has been constrained by underinvestment in critical infrastructure, an unfavorable business climate, poor public financial management, a shallow financial sector, and weak regional trade integration.

The country remains dependent on commodities for export earnings and fiscal revenues and is thus vulnerable to external shocks, as seen during the recent global financial crisis.

The economy continues to recover from the impact of the global crisis, and inflation remains low. Real GDP growth in 2010 is estimated at 3.2 percent, up from 2 percent in 2009, despite a drop of about 12 percent in oil output. Average annual inflation was contained at 1.3 percent, compared with 3 percent in 2009. Food price inflation was 1.2 percent in 2010, and the recent sharp increase in international commodity prices has so far had a limited impact. The external accounts have benefited from the global economic recovery. The current account deficit (including grants) declined to 2.8 percent of GDP, from 3.8 percent in 2009.

The fiscal accounts show a limited overall budget deficit in 2010. Total revenue was close to the supplementary budget target, because the oil revenue windfall generated by the recent oil price surge compensated for a shortfall in nonoil revenue. Nonetheless nonoil government revenue, as a ratio to nonoil GDP, remains among the lowest of sub-Saharan African oil exporters. Some efforts were made in 2010 in terms of arrears clearance to deal with the legacy of PFM problems incurred in 2009.

In terms of the composition of spending, current expenditure was higher than budgeted, while delays in issuing government bonds and mobilizing external financing negatively affected capital expenditure. The deficit on a cash basis, after accounting for the clearing of outstanding government obligations accumulated in previous years, was relatively modest (2.3 percent of GDP). The banking sector, however, continues to have pockets of vulnerability.

Economic growth is expected to pick up gradually under current policies. Real GDP growth in 2011 is projected at 3.8 percent and is expected to gradually increase to 5 percent in 2014. The positive outlook is conditional on the expected recovery of the global economy, the execution of infrastructure expenditure, and ongoing initiatives to improve the business climate. Inflation is projected to remain below the regional convergence criterion of 3 percent.

Executive Board Assessment

Executive Directors welcomed Cameroon’s economic recovery, low inflation, and positive economic prospects. At the same time, Directors noted risks from a slower global recovery, lower-than-projected oil production, and budgetary pressures. Important challenges remain in improving fiscal management, promoting a sound banking sector, and raising competitiveness and long-term growth.

Directors emphasized the need to address the risks to the 2011 budget through tight treasury management, reduction of fuel subsidies, and spending reprioritization. They encouraged further efforts to improve non-oil revenue by broadening the tax base, streamlining exemptions, and increasing the efficiency of tax and customs administration.

Directors expressed concern over the recurrence of systemic problems in public financial management as reflected in spending overruns on goods and services and large-scale accumulation of payment obligations. They welcomed the ongoing audit of outstanding arrears and encouraged the authorities to implement the planned measures to prevent new arrears. Directors also emphasized the need to rebuild fiscal buffers, strengthen the budget execution process, and accelerate efforts to operationalize the medium-term expenditure framework.

Directors welcomed that Cameroon’s risk of debt distress remains low, but noted the recent surge in nonconcessional borrowing to finance infrastructure projects. They encouraged the authorities to rely, to the extent possible, on grants and concessional loans to finance their investment program. They stressed the importance of working closely with regional institutions in developing a government securities market, which can reduce vulnerability to external financing shocks and, over time, lead to a more competitive financial system.

Directors noted with concern the banking sector vulnerabilities, which have been exacerbated by inadequate supervisory standards and protracted delays in settling government payment obligations. They encouraged the authorities to take resolute steps, in collaboration with the regional bank supervisor, to monitor vulnerabilities through regular analysis of banking sector soundness, press ahead with bank restructuring plans while containing budgetary liabilities, and promote the reform of the bank resolution framework.

Directors underscored the importance of redoubling efforts to address the severe infrastructure gap and improve the business climate and competitiveness. They saw the need to raise the execution rate of public investment projects, deepen the dialogue with the private sector, and improve public institutions and governance. Directors encouraged the authorities to improve the quality and timeliness of economic and financial data required for surveillance.

Cameroon: Selected Economic and Financial Indicators, 2009–12

  2009 2010 2011 2012
  Act. Est. Proj. Proj.
  (Annual percentage change, unless
otherwise indicated)

National income and prices


GDP at constant prices

2.0 3.2 3.8 4.5


-13.9 -12.3 -11.0 17.6


2.9 4.0 4.4 4.0

GDP deflator

-3.3 3.0 4.0 2.2

Consumer prices (12-month average)

3.0 1.3 2.6 2.5

External trade


Export volume

-4.8 -0.1 1.6 7.6

Of which: non-oil sector

-2.4 3.5 4.6 5.0

Import volume

-5.2 8.2 8.6 5.8

Terms of trade ("-" = deterioration)

-15.0 18.3 3.3 -1.4

Money and credit (end of period)


Net domestic assets 1

5.2 8.9 9.3 4

Net credit to the public sector 1

3.5 -1.6 5.0 -0.6

Credit to the private sector

9.1 8.2 7.6 9.6

Broad money (M2)

6.9 11.3 7.9 6.3
  (Percentage of GDP, unless otherwise indicated)

Central government operations


Total revenue (excluding grants)

17.6 16.8 17.5 18.1

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

13.5 13.3 13.7 14.0

Total expenditure

18.4 18.6 19.6 19.1

Overall fiscal balance (including payments of arrears)


Excluding grants

-1.0 -2.9 -5.6 -1.2

Including grants

-0.2 -2.3 -4.8 -0.5

Non-oil primary balance (percent of non-oil GDP)

-4.9 -5.7 -6.1 -5.5

External sector


Current account balance (including grants)

-3.8 -2.8 -4.0 -3.3

Imputed reserves (percent of broad money)

68.0 65.6 61.1 58.7

Public debt



10.6 12.1 14.4 14.6


5.5 6.5 6.5 7.3

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

1Percent of broad money at the beginning of the period.

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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