IMF Executive Board Concludes the 2021 Article IV Consultation and First Reviews of the Extended Credit Facility and Extended Fund Facility Arrangements for Cameroon
February 23, 2022
- Cameroon to receive the equivalent of a further US$116 million in disbursements from the IMF.
- Growth has started to recover from the slowdown of the second quarter of 2020, reflecting stronger domestic demand and supported by the global economic recovery. Medium term economic prospects are positive but with considerable uncertainty.
- Overall program performance is mixed. While macroeconomic performance is broadly satisfactory, and efforts to promote good governance and transparency are gaining momentum, progress on structural reforms is slow.
Washington, DC: Today, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV Consultation [1] and First Reviews of the Extended Credit Facility (ECF) Arrangement and the Extended Arrangement under the Extended Fund Facility (EFF) for Cameroon. The completion of the first reviews enables the disbursement of SDR 82.8 million (about US$116 million), bringing total disbursements under the arrangements to SDR 207 million (about US$293.2 million).
Cameroon’s three-year ECF-EFF arrangements were approved on July 29, 2021 and are built around five pillars: (i) mitigating the health, economic, and social consequences of the pandemic while ensuring domestic and external sustainability; (ii) reinforcing good governance and strengthen transparency and the anti-corruption framework; (iii) accelerating structural fiscal reforms to modernize tax and customs administrations, mobilize revenue, improve public financial management, increase public investment efficiency, and reduce fiscal risks from state-owned enterprises; (iv) strengthening debt management and reduce debt vulnerabilities; and (v) implementing structural reforms to accelerate economic diversification, boost financial sector resilience and inclusion, and promote gender equality and a greener economy.
The Executive Board also concluded the 2021 Article IV consultation with Cameroon.
Cameroon’s economy has proved resilient. Economic growth in 2020 reached 0.5 percent, higher than expected, driven mainly by the resilience of the secondary sector. Growth hit a record low of -2.2 percent year on year in Q2-2020, before starting to gradually recover and reach 3.2 percent in Q2-2021. Growth is expected to reach 3.5 percent in 2021, supported by a domestic recovery and the general global economic rebound. Inflation remains moderate.
The economic outlook remains positive but with wide uncertainties. Assuming the pandemic gradually retreats, the recovery in 2021, supported by the non-oil sector, is projected to continue, with growth rates reaching 4.5 percent in 2022 and 4.8 percent from 2023 onwards. Budget execution at end-September 2021 is in line with the objectives of the revised budget law (RBL) approved in July 2021. Projected oil revenues for 2021 are below expectations but this shortfall should be offset by relatively robust non-oil revenues and expenditure restraint.
The outlook faces balanced risks. On the downside, risks include a new wave of COVID-19 infections with new variants and uncontrolled local outbreaks, slower pace of vaccination, a sharp increase in global risk premia following a monetary policy tightening in advanced economies, an international oil price decline, a further increase in imported inflation, and an intensification of socio-political tensions and conflicts. On the upside, Cameroon may benefit from ongoing structural reforms to accelerate economic growth with higher fiscal revenue and reduced debt vulnerabilities. An increase in gas production and oil and gas prices could also boost revenue. Risks are mitigated by the authorities’ strong implementation record of macro-economic programs, close engagement with donors, a comprehensive capacity development program, and contingency planning, including in Cameroon’s COVID-19 response plan.
At the conclusion of the Executive Board’s discussion, Mr. Kenji Okamura, Deputy Managing Director and Acting Chair, made the following statement:
“Cameroon’s economy has proved resilient and is gradually recovering from the COVID-19 pandemic, with broadly balanced risks. The ECF and EFF arrangements have supported the authorities’ efforts to achieve a rapid post-pandemic recovery, strengthen medium-term external and fiscal sustainability, and implement their structural reform agenda toward sustained, more inclusive, and diversified growth.
“Cameroon’s performance under the program remains on track and structural reforms are advancing, albeit with delays in some key areas. The authorities are committed to achieving the program’s objectives and accelerating the pace of reform implementation to support private sector-led economic diversification. Effective and resolute implementation of the authorities’ reforms, particularly to further strengthen transparency, good governance, and the anti-corruption framework, are essential to help catalyze additional donor financing.
“The authorities’ strategy to avoid premature tightening of fiscal policy will help mitigate the impact of the pandemic. A gradual fiscal consolidation, once the pandemic abates, will support the economic recovery and place public debt on a firmly downward path.
“Cameroon’s program is supported by the implementation of policies and reforms by the CEMAC regional institutions, which are critical to the program’s success. Completion of the second review will be conditional on the implementation of critical policy assurances at the Union level, as established in the December 2021 Union-wide background paper”.
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Table 1. Cameroon: Selected Economic Indicators, 2019-26
Sources: Cameroonian authorities; and IMF staff estimates and projections using updated nominal GDP. 1/ Percent of broad money at the beginning of the period. |
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[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.
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