Press Release No. 17/335

IMF Staff Concludes Visit to Cameroon

August 30, 2017

• Economic growth continues to slow due to weaker activity in the oil sector. Cameroon’s growth outlook is however positive, with a gradual rebound starting in 2018.

• Performance under the first ECF-supported program appears on track. Compliance with end-June targets will be assessed at the time of the first review in October.

• The budget framework for 2018 will need to incorporate a downward revision in oil and nonoil revenue as well as expenditure pressures while maintaining debt levels within program targets.

An International Monetary Fund (IMF) staff team, led by Corinne Deléchat, visited Yaoundé during August 22–29, 2017 to review recent economic developments and discuss the 2018 budget and medium-term budget framework.

On June 26, 2017, the IMF Executive Board approved a three-year arrangement under the Extended Credit Facility (ECF) with Cameroon for SDR 483 million (about US$666 million) or 175 percent of Cameroon’s IMF quota, to support the country’s economic and financial reforms (See Press Release 17/248 ).

The program will support the Cameroonian authorities’ reform plan to rebuild fiscal and external buffers and lay the foundations for sustainable, private sector-led growth. It will also contribute to the collective effort of restoring and preserving external stability for the Central African Economic and Monetary Union (CEMAC). The Executive Board’s decision enabled a disbursement of SDR124.2 million (about US$171.3 million) in early July. The remaining amount will be phased over the duration of the program, subject to semi-annual reviews.

At the conclusion of the visit, Ms. Deléchat issued the following statement:

“Economic growth for 2016 has been revised downward to 4.5 percent (from 4.7 percent) due to lower oil sector activity. Growth in 2017 is projected by staff to continue to decelerate to slightly under the initial projection of 4 percent, mainly owing to the continued decline in oil production and delays in the start of operations of the new natural gas field. Non-oil growth was supported by strong industrial production owing to improved energy supply and by a good performance of the primary sector, though other indicators such as private sector credit and tax revenue indicate weaker activity. Inflation remains low at 0.6 percent as of end-June (year-on-year). The trade balance continues to improve due to higher cocoa, timber and aluminum exports while imports have fallen somewhat.

“The economic outlook for 2018 is positive, albeit subject to downside risks. Growth should improve to about 4.2 percent, due to the entry into production of the new offshore natural gas platform. In the medium term, growth should gradually increase further to 5-5½ percent as key infrastructure projects are completed, including hydroelectrical power plants, the deep-sea port and roads. Construction related to the 2019 African Nations Cup (ACN) should also positively contribute to activity, albeit temporarily. External and domestic risks to this outlook include the possibility of a new round of lower commodity prices notably oil, cocoa and coffee, a resurgence of security challenges, and further delays in the coming on stream of large infrastructure projects.

“Pending confirmation during the first program review in October, performance under the ECF-supported program has remained in line with the end-June quantitative targets. In addition, the government has implemented key structural measures under the program, including the regular publication of the petroleum products price structure and enhanced cooperation between customs and tax administrations.

“However, budget implementation for the second half of 2017 could be impacted by an additional decline in oil production and revenue, and associated lower trade taxes. Non-oil revenue could also be under pressure from weaker activity. Given tight banking system liquidity, timely disbursement of planned external budget support will be key to ensure adequate budget financing. Nonetheless, staff considers that the program’s fiscal targets for the second half of 2017 remain within reach, provided cautious budget execution continues, along with additional tax collection efforts, and identification of contingency measures in case revenue shortfalls materialize.

“The preparation of the 2018 budget is progressing well and in accordance with the budget calendar. The authorities have revised their projections of revenue downward to take into account the lower contribution of the oil sector. The mission has urged them to revise their spending plans accordingly and endeavor to increase nonoil tax revenue by widening the tax base.

“The team will return to Yaoundé in October to conduct discussions for the first review of the Extended Credit Facility for Cameroon.

“The team met with Minister Secretary General at the Presidency Ferdinand Ngoh Ngoh, Minister Secretary General at the Prime Minister’s Office Seraphin Fouda, Minister of Finance Alamine Ousmane Mey, Minister of Economy, Planning, and Territorial Development Louis Paul Motaze, and other senior officials and representatives of the diplomatic community, development partners and private sector.

“The team wishes to thank the Cameroonian authorities for their warm hospitality, their excellent cooperation, and the constructive and frank dialogue.”