An IMF staff team has reached staff-level agreement with the authorities on policies that could support the Executive Board’s approval of the First Review; Growth starts to recover from the slowdown in Q2-2020, reflecting stronger domestic demand and supported by the global recovery. Medium term economic prospects are positive but with considerable uncertainty; The authorities and the staff team agreed on a body of measures and policies geared to strengthening budgetary discipline, addressing fiscal risks from state-owned enterprises (SOEs), and accelerating the implementation of structural reforms.

An International Monetary Fund (IMF) team led by Amadou Sy, concluded virtual discussions with the Cameroonian authorities during December 2–22 on the 2021 Article IV consultation and the First Review under the Extended Credit Facility (ECF) and the Extended Fund Facility (EFF) arrangements.

At the conclusion of the mission, Mr. Sy issued the following statement:

“The IMF team has reached a staff-level agreement with the Cameroonian authorities on the economic and financial policies that could support the approval of the First Review of the program under the ECF and EFF arrangements. The IMF Executive Board’s completion of the First Review in February 2022, would allow disbursement of SDR 82.8 million (about US$115.7 million).

“Economic growth slowed to 0.5% in 2020, affected by the COVID-19 pandemic and security tensions in the region. Growth rebounded in 2021 and should reach 3.5% for the year, supported by a domestic recovery and the general global economic recovery. Inflation remains moderate.

“The economic outlook remains positive but with wide uncertainties. Assuming the pandemic gradually retreats, the gradual recovery in 2021, supported by the non-oil sector, is projected to continue with growth rates reaching 4.5% in 2022 and 4.8% 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 mission agreed with the authorities’ fiscal policy objectives which will be geared to assuring the long-term sustainability of public finances while supporting the implementation of the national development strategy for 2030 (SND30) and protecting the most vulnerable. The authorities aim to avoid premature fiscal tightening and to gradually reduce the budget deficit to 3.1% in 2021, 1.9% in 2022 and then to below 1% in 2024 while reducing public debt below 50% of GDP. They also aim to review their medium-term revenue strategy with an emphasis on reinforcing non-oil revenue mobilization by widening the tax base and improving tax policy to help the country reach its revenue potential. The government will also seek to create fiscal space for the SND30 by improving the control and efficiency of public expenditures.

“The IMF team welcomed the authorities’ efforts at advancing their structural reform program. Important developments encompass changes in public financial management, including budget formulation and execution, public procurement, capital expenditure management, and in treasury and public debt management. However, further efforts are needed to ensure that all revenues and expenditures are passed through the budget. In parallel, efforts to reduce fiscal risks must be sustained, especially through strengthening the management of SOEs and contingent liabilities. The ongoing efforts to restructure the National Oil Refinery (SONARA) need to be accelerated, along with the clearance of government cross-debts with SOEs.

“The mission emphasized that the prospects for strong, durable, and inclusive growth requires intensification of structural reforms to enhance governance and transparency. In this regard, the mission welcomed the authorities’ recent steps to strengthen governance in line with commitments undertaken in the context of the IMF’s Rapid Credit Facility, notably the publication of the audit report of Covid-19 related spending in 2020. The mission also welcomed the publication of the 2019 Extractive Industries Transparency Initiative (EITI) report.

“The mission encouraged the authorities to accelerate reforms to unlock the potential of the economy. The authorities recognized the key role of the private sector in promoting growth and employment, and achieving the goals of the SND30. They also emphasized the need for closer formal dialogue with business to identify constraints and improve the business environment and governance.

“The mission emphasized that the need for steady progress on structural reforms to support participation of the broader population in the economy. In this regard, the mission noted the preparation of a strategy for financial inclusion, as well as the inclusion of an annex in the 2022 budget specifically dedicated to gender budgeting. The mission stressed the need to protect the poor and vulnerable in the population and to implement the national strategy for social protection with the support of the development partners. The authorities are working with development partners to develop a strategy to mitigate and adapt to the impact climate change.

“The IMF staff team met with the Prime Minister, Joseph Dion Ngute, the Minister and Secretary General of the Presidency, Ferdinand Ngoh Ngoh, the Minister of Finance, Louis Paul Motaze, the Minister of the Economy, Planning and Regional Development, Alamine Ousmane Mey, the National Director of the BEAC, Eugene Blaise Nsom, and other senior officials. The mission also met with representatives of development partners, the diplomatic community, the private sector, and civil society.

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