IMF Endorses Cameroon’s Economic Progress with 71.5 Billion FCFA Funding Boost
In a significant move to bolster Cameroon’s economy, the International Monetary Fund (IMF) has approved a substantial disbursement of funds to support the country’s ongoing economic and financial reforms. This decision comes as a part of the IMF’s Extended Credit Facility (ECF) and Extended Fund Facility (EFF) arrangements, which are designed to aid nations in fostering sustainable economic growth and financial stability.
The IMF’s approval for the immediate disbursement of about US$73.6 million, which is approximately 71.5 billion FCFA, marks a crucial step in Cameroon’s efforts to navigate through an uncertain domestic and global economic landscape. The country has demonstrated resilience and a commitment to reform, which is reflected in its estimated growth of 3.8 percent in 2022 and a projected increase to 4 percent in 2023, primarily driven by non-oil production.
Various sectors, including agroindustry, forestry, services, and LNG production support Cameroon’s economic recovery. These industries are expected to compensate for the declining oil output and propel the nation towards a positive medium-term outlook. The IMF’s financial support is not just a monetary boost but also a vote of confidence in Cameroon’s potential for sustainable development and economic diversification.
The IMF’s assistance is contingent upon Cameroon’s continued implementation of reforms aimed at creating fiscal space for productive investment and social spending. These reforms are essential for maintaining debt sustainability and enhancing the country’s growth prospects. The focus on non-oil primary deficits, inflation management, and the non-accumulation of new external payment arrears are some of the critical areas underlined by the IMF.
This financial support from the IMF is a testament to the international community’s trust in Cameroon’s economic strategy and its reform agenda. It underscores the importance of steadfast commitment to transparency, good governance, and anti-corruption measures, which are crucial for unlocking inclusive and private sector-driven growth.
As Cameroon moves forward with its reform program, the IMF’s backing will undoubtedly play a pivotal role in shaping the country’s economic trajectory. The disbursement of funds is not only a financial lifeline but also a catalyst for broader economic reforms that can lead to a more prosperous future for Cameroon.
Here is the IMF press release
IMF Enters into Service-Level Agreement with Cameroon for the First Review of the Resilience and Sustainability Facility Arrangement and the Sixth Reviews of the Program Supported by the Extended Credit Facility and the Extended Credit Facility
June 3, 2024IMF staff and Cameroonian authorities reached a staff-level agreement to conclude the sixth reviews of the program supported by the Extended Credit Facility (ECF) and the Extended Credit Facility (EMDC) and the first review of the agreement under the Resilience and Sustainability Facility (RSF).
Cameroon’s economic recovery continued in 2023 with overall growth estimated at 3.3%, which is expected to increase to 3.9% in 2024. Inflation slowed to 5.9% at the end of 2023, and is expected to decline further. to 5.5% by the end of 2024.The implementation of the program is generally in line with expectations. Efforts should be continued to accelerate public finance management reform, promote structural transformation, and advance adaptation and mitigation measures to climate change.
Washington. A team from the International Monetary Fund (IMF), led by Ms. Cemile Sancak, IMF Head of Mission for Cameroon, visited Yaoundé from April 25 to May 8 and held virtual meetings from May 9 to 31, 2024 to examine progress in terms of reforms and the authorities’ priorities in economic policies, within the framework of the sixth reviews of the four-year program supported by the agreements under the Extended Credit Facility (ECF) and the Expanded Mechanism (MEDC), and the first review of the Resilience and Sustainability Facility (RSF). Arrangements under the ECF and MEDC were approved by the IMF Executive Board in July 2021 for a total amount of SDR 483 million ($689.5 million) (see Press Release 21/237 ). A 12-month extension of these agreements was adopted in December 2023 to allow more time for the implementation of policies and reforms. Access was also increased by 110.4 million SDR ($147.6 million, see Press Release 23/469). The board approved an 18-month FRD arrangement worth SDR 138 million ($183.4 million, see Press Release 24/30). Following the talks, Ms. Sancak made the following statement:
“The Cameroonian authorities and IMF staff have concluded a staff-level agreement for the sixth reviews of the ECF-MEDC supported program, and for the first review of the arrangement under the FRD. This agreement is subject to approval by the IMF’s executive board, which is expected to examine it at the end of June. Completion of the reviews would enable the disbursement of 55.2 million SDRs ($73 million) for the program supported by the ECF and MEDC, and 34.5 million SDRs ($45.6 million) under of the FRD.
“According to initial information, the recovery of the Cameroonian economy after the crisis linked to the COVID-19 pandemic continued last year, and its overall growth was 3.3%. This growth, lower than the rate of 3.6% recorded in 2022 and the previous forecast of economic growth of 4% in 2023, is attributable to a combination of external and internal factors, including disruptions in the supply chain and the energy, as well as a contraction in the country’s oil production. Inflation decreased from 7.3% at the end of 2022 to 5.9% at the end of 2023.
“The evolution of public finances was generally in line with the objectives of the program. The non-oil primary deficit improved to 2.6% of GDP in 2023 (compared to 3.9% in 2022). Budgetary rebalancing benefited from the good performance of non-oil revenues and the efforts made by the public authorities to reduce costly fuel subsidies. However, the management of public finances continues to present some weaknesses with a substantial level of extra-budgetary expenditure in 2023. This has resulted in overruns on current expenditure, and in the narrow non-observance of the objective of non-oil primary deficit set under the program. The overrun on current expenditure has also limited resources intended for priority investments in favor of growth. It is therefore necessary to redouble efforts to improve budget integrity and execution. The authorities will present an amending budget for 2024 in order, among other things, to limit certain expenditures carried out through cash advances and will adopt a plan to clear domestic arrears. There was a slight exceeding of the ceiling for the accumulation of new external payment arrears.
“The outlook remains positive, subject to continued reforms and a favorable external context. Economic growth is expected to reach around 4% in 2024. Inflation will gradually decline, taking into account the waning effects of the second increase in pump prices in early 2024, and will be 5.5% by end of the year. As part of the preparation of the amending finance law for 2024, the authorities have expressed their determination to maintain macroeconomic stability and reduce the non-oil primary budget deficit to 2% of GDP in 2024.
“The authorities’ structural reform program is progressing satisfactorily. However, efforts must be intensified to achieve the ambitious objectives of the 2020-30 national development strategy (SND30), and in particular to provide budgetary room for maneuver for investments in infrastructure, while preserving debt sustainability. Reforms to support a deep structural transformation of the economy must also be accelerated, in particular to improve the business climate for the private sector. The mission encourages the measures taken by the authorities to improve the performance and financial management of public enterprises, the completion of technical studies concerning the restructuring of SONARA and the strengthening of the anti-corruption framework.
“The authorities are aware of the need to increase Cameroon’s resilience to climate change. As part of the FRD, the authorities have increased initiatives to improve the entire climate action system. The first reform measures are well underway and include the adoption of a decree establishing the institutional framework for coordinating climate action, and the publication of a procedures manual for the selection of projects, which includes criteria relating to climate change. A series of important reforms are underway, including the national climate action plan, the national disaster risk financing strategy, the management of climate-related public investments, and the governance and sustainability of the forest sector.
“The IMF staff team met with the Prime Minister, Joseph Dion Ngute, the Minister of State; Secretary General of the Presidency, Ferdinand Ngoh Ngoh, the Minister of Finance, Louis Paul Motaze, the national director of the BEAC, Emmanuel Nkoa Ayissi, and other senior officials. She also met representatives of development partners, the diplomatic community, the private sector and civil society.
“The IMF team would like to thank the Cameroonian authorities for their excellent cooperation. »
IMF Communications Department
