Cameroon and the IMF
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The International Monetary Fund (IMF) today approved a 12-month stand-by credit for Cameroon totaling the equivalent of SDR 67.6 million (about $101 million) in support of the Government's economic and financial reform program for 1995/96.
Following a disappointing performance under an IMF-supported program that was adopted immediately after the devaluation of the CFA franc in January 1995, the Cameroonian authorities have made major efforts to tackle the country's severe imbalances. These efforts have been helped by much- improved external conditions, including a strong rise in international prices for Cameroon's major export commodities. Overall, the economy has responded well to the change in relative prices brought about by the devaluation, with exports and import substitution fueling a strong recovery of real GDP after years of decline. On the structural front, after considerable delays in the first half of 1994, a number of important reforms were carried out in trade liberalization, labor market regulations, further enterprise divestiture, and the regulatory framework.
The Program for 1995/96
The Government's macroeconomic objectives for 1995/96 are to achieve real GDP growth of 5 percent, up from 3 percent in 1994/95, lower inflation to about 8 percent from 13 percent, and reduce the external current account deficit (including official grants) to about 1 percent of GDP. To realize these objectives, the Government has adopted a program that entails a substantial strengthening of the fiscal position, a tight monetary policy, and major structural reforms in the civil service, public enterprises, and the financial sector. A key element of the program is the 1995/96 budget, which involves expenditure and revenue measures designed to reduce the overall fiscal deficit to about 1.5 percent of GDP, from 4.5 percent in 1994/95.
Structural Reform Policies
The Government has launched comprehensive structural reforms aimed at reducing the weight of the public sector and improving resource allocation by a) downsizing the civil service; b) strengthening public sector management; c) divesting public enterprises; d) restructuring the financial sector; and e) liberalizing the economy through an improved institutional, legal, and regulatory framework.
Addressing Social Concerns
The social spending under the Government's budget for 1995/96 will emphasize resource transfers to the poorest segments of the population. In this context, the resources allocated to the National Employment Fund will enable it to expand its activities in employment counseling, vocational training, and support of small enterprises. In addition, the Government has launched an emergency civil work program, which consists mainly of conducting urban sanitation operations, including waste management, extending water and electricity services, and maintaining roads in cities. The program also covers health services in rural areas, with support being given to local pharmacies and purchases of essential medicines.
The Challenge Ahead
The successful implementation of the fiscal program hinges upon a determined revenue mobilization effort, including a considerable strengthening of customs revenue and a fully transparent management of the national oil company's finances. It is also conditioned by the successful implementation of structural reforms, which pose major challenges in the period ahead. Delays in its implementation will have direct ramifications for the economy.
Cameroon joined the IMF on July 10, 1963; its quota1 is SDR 135.1 million (about $202 million), and its outstanding obligations to the IMF currently total SDR 27 million (about $40 million).
Sources: Cameroonian authorities; and IMF staff estimates and projections.
1. A member's quota in the IMF determines, in particular,the amount of its subscription, its voting weight, its access to IMF financing, and its allocation of SDRs.
IMF EXTERNAL RELATIONS DEPARTMENT