IMF Executive Board Concludes the Second Reviews of the Extended Credit Facility and Extended Fund Facility Arrangements for Cameroon
July 25, 2022
- Completion of the Second Reviews provides Cameroon with access to the equivalent of US$ 72.9 million from the IMF.
- The nascent economy recovery from mid-2021 is now subject to greater uncertainties because of the spillovers from the war in Ukraine, high inflationary pressures- especially food and fuel prices-, and a tightening of global financial conditions. Low vaccination rates also leave the country vulnerable to further COVID-19 waves. However, the medium-term economic prospects remain positive.
- The overall program performance is mixed, with delayed structural reforms in some key areas.
Washington, DC: Today, the Executive Board of the International Monetary Fund (IMF) concluded the Second Reviews of the Extended Credit Facility (ECF) Arrangement and the Extended Arrangement under the Extended Fund Facility (EFF) for Cameroon. The completion of the second reviews enables the disbursement of SDR 18.4 million (about US$ 24.3 million) under the ECF Arrangement, and purchases of SDR 36.8 million (about US$ 48.6 million) under the EFF Arrangement, bringing total access under the arrangements to SDR 262.2 million (about US$ 346.1 million). The Executive Board also approved the authorities’ request for a waiver of applicability for the end-June 2022 performance criteria.
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 fiscal and external sustainability; (ii) reinforcing good governance and strengthening the transparency and the anti-corruption framework; (iii) accelerating structural fiscal reforms to modernize the 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 ensuring debt levels remain sustainable; and (v) implementing structural reforms to accelerate economic diversification, boost financial sector resilience and inclusion, and promote gender equality and a greener economy.
Cameroon had started to recover from the COVID-19 shock in 2021, prior to the war in Ukraine. After a record low of -2.2 percent year on year (yoy) in Q2-2020, real GDP growth rate gradually recovered to reach 3.6 percent in 2021, supported by a strong recovery in the primary and tertiary sectors. The nascent economic recovery in 2021 is now subject to greater uncertainties with spillovers from the war in Ukraine, high inflationary pressures, especially on food and fuel prices, and a tightening of global financial conditions.
The economic outlook for 2022 remains positive, but with great uncertainties. Real GDP growth is projected at 3.8 percent in 2022, down from 4.5 percent at the time of the program’s First Reviews. Inflation is projected to rise to 4.6 percent in 2022, but to remain below 3 percent in the medium term.
As a crude oil exporter, Cameroon has experienced some positive effects on its external and fiscal positions. However, intensified higher global prices and supply disruptions have significantly increased the cost of fuel subsidies and are placing additional pressure on Cameroon’s domestic prices, especially for food and fertilizers.
Risks relating to the war in Ukraine have compounded pandemic risks. Downside risks include rising and volatile food, fertilizers, and energy prices, and supply disruptions; new outbreaks of lethal and highly contagious COVID-19 variants; a sharp increase in global risk premia following the ongoing monetary policy tightening in advanced economies; and inadequate progress on fuel price subsidies.
On the upside, Cameroon may benefit from new oil and gas opportunities and the completion of major hydroelectric plants. 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 its 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 proved resilient to the COVID-19 shock, but the recovery is now subject to greater uncertainties, with increased inflationary pressures, low vaccination rates, and tightening global financial conditions. 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.
“The authorities’ strategy to maintain their fiscal consolidation path, and to reduce fuel subsidies gradually, starting in 2023, while protecting the vulnerable, will help mitigate the impact of recent shocks. Continued non-oil revenue mobilization and expenditure rationalization will help rebuild fiscal space for strengthening social safety nets, and boosting the recovery, while preserving debt sustainability. While debt sustainability indicators have improved, continued efforts are warranted to manage debt cautiously and limit reliance on non-concessional borrowing.
“Effective and resolute implementation of the authorities’ structural reforms, particularly to further strengthen transparency, good governance, and the anti-corruption framework, are essential to promote growth and help catalyze additional donor financing. To help ensure financial sector resilience, the authorities should closely monitor the rising non-performing loans and proceed with bank restructuring within the timetable set by COBAC. Further efforts are also needed to tackle gender inequality and climate change related challenges.”
Table 1. Cameroon: Selected Economic and Financial Indicators, 2021-27
(CFAF billion, unless otherwise indicated)
|
2021 |
2021 |
2022 |
2022 |
2023 |
2024 |
2025 |
2026 |
2027 |
|
|
1st Rev. |
Est. |
1st Rev. |
Proj. |
Proj. |
Proj. |
Proj. |
Proj. |
Proj. |
|
|
National account and prices |
|||||||||
|
GDP at constant prices |
3.5 |
3.6 |
4.5 |
3.8 |
4.6 |
4.7 |
5.0 |
4.9 |
4.9 |
|
Oil GDP at constant prices |
0.1 |
-3.2 |
0.1 |
4.2 |
-3.0 |
0.2 |
0.2 |
0.3 |
0.3 |
|
Non-Oil GDP at constant prices |
3.6 |
3.8 |
4.6 |
3.8 |
4.8 |
4.8 |
5.1 |
5.0 |
5.0 |
|
GDP deflator |
2.6 |
3.3 |
2.9 |
4.8 |
2.4 |
2.6 |
2.1 |
2.0 |
2.0 |
|
Nominal GDP (at market prices, CFAF billions) |
24,951 |
25,158 |
26,828 |
27,389 |
29,325 |
31,506 |
33,766 |
36,152 |
38,682 |
|
Oil |
929 |
801 |
1,009 |
1,187 |
1,090 |
992 |
927 |
883 |
859 |
|
Non-Oil |
24,021 |
24,357 |
25,819 |
26,201 |
28,235 |
30,513 |
32,839 |
35,269 |
37,823 |
|
Consumer prices (average) |
2.3 |
2.3 |
2.1 |
4.6 |
2.8 |
2.6 |
2.1 |
2.1 |
2.0 |
|
Consumer prices (eop) |
2.1 |
3.5 |
2.0 |
4.1 |
2.9 |
2.1 |
2.1 |
2.1 |
2.0 |
|
(Percent of GDP, unless otherwise Indicated) |
|||||||||
|
Money and credit |
|||||||||
|
Broad money (M2) |
13.8 |
17.2 |
10.7 |
15.6 |
10.1 |
8.1 |
6.7 |
6.1 |
7.0 |
|
Net foreign assets 1/ |
1.9 |
4.3 |
6.5 |
5.1 |
4.0 |
1.7 |
1.5 |
2.0 |
3.6 |
|
Net domestic assets 1/ |
11.9 |
12.9 |
4.2 |
10.5 |
6.1 |
6.4 |
5.2 |
4.1 |
3.4 |
|
Domestic credit to the private sector |
5.4 |
9.7 |
5.6 |
9.1 |
12.4 |
10.9 |
7.4 |
7.5 |
3.1 |
|
Savings and investments |
|||||||||
|
Gross national savings |
26.9 |
14.0 |
29.8 |
16.3 |
17.3 |
18.8 |
20.4 |
21.8 |
23.2 |
|
Gross domestic investment |
30.3 |
17.9 |
31.8 |
18.4 |
20.0 |
22.0 |
23.6 |
25.0 |
26.0 |
|
Public investment |
5.4 |
4.6 |
5.5 |
5.2 |
5.4 |
5.8 |
6.0 |
6.7 |
6.8 |
|
Private investment |
24.9 |
13.4 |
26.2 |
13.2 |
14.6 |
16.2 |
17.6 |
18.3 |
19.2 |
|
Central government operations |
|||||||||
|
Total revenue (including grants) |
13.9 |
14.1 |
14.9 |
15.4 |
15.9 |
15.7 |
15.5 |
15.5 |
15.4 |
|
Oil revenue |
1.9 |
1.9 |
2.4 |
2.9 |
2.7 |
2.3 |
2.0 |
1.7 |
1.6 |
|
Non-oil revenue |
11.7 |
12.0 |
12.0 |
12.0 |
12.8 |
13.1 |
13.4 |
13.6 |
13.7 |
|
Non-oil revenue (percent of non-oil GDP) |
12.1 |
12.4 |
12.5 |
12.5 |
13.3 |
13.6 |
13.8 |
13.9 |
14.0 |
|
Total expenditure |
17.0 |
16.5 |
16.7 |
17.4 |
16.1 |
16.0 |
15.9 |
16.7 |
16.7 |
|
Overall fiscal balance (payment order basis) |
|||||||||
|
Excluding grants |
-3.4 |
-2.6 |
-2.4 |
-2.5 |
-0.5 |
-0.6 |
-0.6 |
-1.4 |
-1.4 |
|
Including grants |
-3.1 |
-2.4 |
-1.8 |
-1.9 |
-0.2 |
-0.3 |
-0.4 |
-1.3 |
-1.3 |
|
Overall fiscal balance (cash basis) |
|||||||||
|
Excluding grants |
-3.8 |
-3.0 |
-2.7 |
-3.0 |
-1.0 |
-0.9 |
-0.8 |
-1.4 |
-1.4 |
|
Including grants |
-3.5 |
-2.8 |
-2.2 |
-2.5 |
-0.7 |
-0.6 |
-0.6 |
-1.3 |
-1.3 |
|
Non-oil primary balance (payment basis, percent of non-oil GDP) |
-4.0 |
-3.4 |
-3.4 |
-4.2 |
-2.3 |
-1.9 |
-1.7 |
-2.3 |
-2.2 |
|
External sector |
|||||||||
|
Trade balance |
-1.1 |
-1.5 |
-0.8 |
-0.7 |
-1.3 |
-2.0 |
-2.1 |
-2.1 |
-1.9 |
|
Oil exports |
4.7 |
4.9 |
5.2 |
7.5 |
6.0 |
4.8 |
4.1 |
3.6 |
3.3 |
|
Non-oil exports |
8.0 |
8.0 |
8.6 |
9.4 |
8.7 |
8.1 |
7.9 |
7.7 |
7.7 |
|
Imports |
13.8 |
14.5 |
14.6 |
17.6 |
16.0 |
14.9 |
14.1 |
13.5 |
12.9 |
|
Current account balance |
|||||||||
|
Excluding official grants |
-3.7 |
-4.4 |
-2.4 |
-2.6 |
-3.0 |
-3.5 |
-3.6 |
-3.5 |
-3.1 |
|
Including official grants |
-3.4 |
-4.0 |
-2.0 |
-2.1 |
-2.6 |
-3.2 |
-3.3 |
-3.2 |
-2.9 |
|
Terms of trade |
5.2 |
7.0 |
3.4 |
7.1 |
-7.1 |
-6.9 |
-4.6 |
-3.2 |
-2.5 |
|
Public debt |
|||||||||
|
Stock of public debt |
47.2 |
45.5 |
45.0 |
44.0 |
40.8 |
37.9 |
35.3 |
33.9 |
32.6 |
|
Of which: external debt |
33.9 |
31.6 |
32.8 |
31.2 |
30.3 |
29.2 |
28.2 |
27.6 |
26.9 |
|
|
|||||||||
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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