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CAMEROON

CONTEXT
Background

1. Cameroon has remained resilient in the face of successive shocks. The post-pandemic
recovery, which was also supported by higher oil prices and non-oil production in 2021, continued
into 2022, despite an increasingly challenging environment with Russia’s war in Ukraine, inflationary
pressures, supply chain disruptions, and tight global financial conditions.

2. As CEMAC’s largest economy, Cameroon continues to play a leadership role in the


region. Cameroon accounted for about 60 percent of net foreign assets, 40 percent of the region’s
GDP, and around 55 percent of the total population in 2022 (Text Figure 1). The country also
contributes significantly to the region’s rebuilding of fiscal and external buffers.

Text Figure 1. Cameroon: Share of Economic Activity in CEMAC, 2018-22


(Percent)

Sources: Country authorities and IMF staff estimates.

3. While Cameroon’s SDG indicators compare well with the SSA averages, it faces
significant fragilities and development challenges. More than a quarter of the population lives
below the national poverty line, and more than 1 million people were displaced within the country
with an estimated 6.2 million people in need of humanitarian assistance in 2020 (source: UN). In
addition, Cameroon is faced with low human capital development, an unfavorable business
environment hampered by unprofitable SOEs, and low levels of financial inclusion. Drivers of fragility

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include institutional complexity and governance weaknesses, internal divisions, social exclusion,
insurgency, conflicts along borders, and a rising frequency of climate-related natural disasters.
Political risks are increasing, with potential regional spillovers.

4. Far-reaching reforms will be needed to raise growth and create jobs, while protecting
vulnerable populations. Cameroon’s National Development Strategy (SND-30) lays out the
authorities’ policies to address Cameroon’s economic challenges during 2020–30. The strategy
envisages increasing the annual growth rate to 8.1 percent on average by 2030, which is ambitious
without substantial acceleration in structural reforms. It identifies important priorities, broadly
consistent with program objectives, but implementation remains a challenge, including how to
achieve structural transformation. Staff cautioned that import substitution strategy—a key pillar to
SND-30—leads to inefficiencies and limits competition.

5. Cameroon also faces socio-political tensions in resource-rich regions. The conflict in the
two anglophone regions, sporadic Boko Haram attacks in the far North, and insecurity on the
eastern border with the Central African Republic (CAR) continue and could reverse improvements in
poverty reduction and development outcomes and jeopardize reform implementation. According to
the United Nations High Commissioner for Refugees (UNHCR), Cameroon hosts about two million
persons of concern, including one million internally displaced persons (IDP), 460,000 refugees and
asylum-seekers, and 466,000 IDP returnees.

RECENT ECONOMIC DEVELOPMENTS, OUTLOOK,


RISKS, AND PROGRAM PERFORMANCE
A. Recent Economic Developments

6. Cameroon’s growth recovery continued in 2023, despite strong external headwinds.


Real GDP growth reached 3.6 percent in 2022 on the back of buoyant agroindustry and service
sectors and is expected to reach 4 percent in 2023.

7. Inflation remains high and is projected to reach 7.2 percent on average in 2023 but is
decelerating. Inflation in Cameroon is mostly driven by rising food prices and inflation expectations
coupled with positive demand shocks and negative supply shocks (Annex II).

8. The current account deficit is projected to narrow in 2023 driven by rising gas
production and an improved primary income balance. The current account deficit improved to
3.4 percent in 2022 with strong export growth supported by rising natural gas and oil prices due to
Russia’s war in Ukraine. Stronger worker remittances have also helped. The current account deficit is
projected to narrow to 3.0 percent of GDP in 2023, driven by rising gas production and an improved
primary income balance which partly offset the impact of lower oil prices.

9. Cameroon’s external position in 2022 was assessed as modestly weaker than


warranted by fundamentals and desirable policies (Annex III). Cameroon’s real effective

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exchange rate (REER) depreciated by 3.1 percent following the euro’s depreciation against the US
dollar, while domestic inflation edged up. The real exchange rate was assessed to be overvalued by
14.5 percent.

10. Cameroon’s fiscal outcomes remained broadly in line with program objectives. While
higher oil prices and a weaker CFA franc led to more spending on the fuel subsidy, stronger revenue
mobilization and the fuel subsidy carry-over to 2023 helped contain the non-oil primary deficit at
3.9 percent of GDP in 2022 and resulted in a stronger overall deficit relative to the revised budget
law. Lower oil prices and a pump price adjustment in early 2023, as well as stronger-than-projected
non-oil revenue performance, improved the fiscal balance by mid-2023 and should help reduce the
non-oil primary deficit to 2.5 percent of GDP in 2023.

11. The development of the financial sector is hindered by fragilities in the banking
system. While the capital adequacy ratio is improving and liquidity ratios are stable at 16.3 and 29.8
percent, respectively, in mid-2023, NPL ratios rose to 15.4 percent of total loans by mid-2023, from
13 percent at end-2022. Moreover, banks' exposure to the Cameroonian government increased
reaching 35.3 percent of total assets in 2022, up from 23 percent in 2019, while being zero-risk
weighted by most banks. 1 This has likely crowded out credit to the private sector and continues to
present risks to financial stability.

12. Food insecurity has intensified, with climate-related shocks, security issues, and forced
displacements. Over three million people were estimated to be severely food-insecure between
January and May 2023, a five percent increase compared to the same period in 2022. The authorities
are working with the World Food Program (WFP) and other partners to respond to the immediate
food and nutrition needs of crisis-affected populations, mainly in the unsecure regions, including
through actions to improve the long-term resilience of communities.

13. The 2022 safeguards assessment found that BEAC maintained strong governance
arrangements. Since then, the BEAC senior executive management team, the Government, has
gone through significant turnover. A safeguards monitoring mission is planned before end-2023 to
evaluate continuity in the governance arrangements at the BEAC. In addition, an external quality
assessment of internal audit was finalized, and staff will follow up on the resulting recommendations
and implementation of the remaining 2022 safeguards recommendations.

B. Outlook and Risks

14. Medium-term macroeconomic conditions are expected to improve gradually. The


medium-term outlook remains positive, provided reforms continue and the external environment
becomes more supportive, with real GDP growth expected to average 4.4 percent in the medium
term. This improvement is driven by the agroindustry, forestry, and services sectors, as well as LNG
production, which should partially offset declining oil output. It is also predicated on the successful

1
COBAC allows for a zero-risk weight on government bonds backed by an escrow account at the BEAC. However, the
recent downgrade by a rating agency forces banks following IFRS standards to provision Cameroonian bonds.

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contribution of the deep-sea port of Kribi, which began operations in October 2020 and should
support trade and natural gas sectors. The Memve’ele hydroelectric plant is also expected to help
stabilize provision of power to industries. Inflation is expected to remain above the CEMAC
convergence criterion in the near term but return to below 3 percent by end 2027. Assuming the
global economy strengthens, and oil prices remain high, Cameroon’s non-oil growth rate should
exceed 4 percent starting from 2023 and the public debt-to-GDP ratio should remain below
45 percent.

15. The balance of risks is nevertheless tilted to the downside:


• Escalating global geopolitical tensions could have cascading effects on Cameroon. Fluctuations
in prices of Cameroon's key exports (i.e., oil and agricultural exports), directly affect the trade
balance while domestic prices bear pressures from imported inflation. Increasing oil prices may
raise fuel subsidies and undermine fiscal objectives.

• Global growth prospects could deteriorate further and more abruptly. While the US economy is
expected to be strong, Europe could experience a more intense and protracted fallout from
Russia’s war in Ukraine, and China could see a sharper-than-expected slowdown with
consequences for Cameroon’s trade and investment.

• Social tensions could intensify in the run-up to the 2025 presidential elections. Violence has
increased in the extreme-North region. The crisis in the North-West and South-West regions is
intensifying with increased outbreaks of violence.

• Further deterioration in regional stability could have spillovers in Cameroon. There are also risks
of intra-region cross-country contagion in the banking sector as cross-country holdings of
government securities issued by other CEMAC countries are high.

• More frequent climate disasters would have wide ranging impacts on infrastructure, agriculture,
and food security. With Cameroon already facing risks of food insecurity, a strong El Niño
presents a significant downside risk to food supplies, inflation, displacement of persons, and
social stability.

• Risks are mitigated as Cameroon has a strong record of implementing macroeconomic


programs, close engagement with donors, and a comprehensive CD program.

Authorities' Views

16. The authorities agreed with the staff’s assessment of the outlook and risks. They expect
stronger longer-term growth thanks to the acceleration of structural reforms and completion of
several large infrastructure projects. They view higher inflation driven by imported prices as a major
near-term risk with potential social impact.

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C. Program Performance

17. The program remains broadly on track following corrective actions to respect
quantitative targets and progress in reform implementation:

• Quantitative performance by June-2023 was broadly on track (Table 9 and MEFP Table 1).
Five out of six QPCs were met. The continuous QPC on non-accumulation of external arrears was
not met following delayed debt service payments to the European Investment Bank (EIB) in
August and September 2023 due to technical errors. A waiver of non-observance is requested
due to the minor and temporary nature of the non-observance (i.e., one and five-day delays
totaling 0.003 percent of GDP). All arrears have been cleared. Three ITs were breached: the
ceilings on the net accumulation of domestic payment arrears, spending through exceptional
procedures, and direct interventions of the National Hydrocarbons Company (SNH), owing to
growing security challenges in the Northwest, Southwest, and Far North regions, increased cash
needs for compensation of fuel importers due to higher-than-projected global oil prices, and
weaknesses in cash management. The government is committed to improve the monitoring of
expenditures related to direct interventions by SNH. To improve cash management and limit
accumulation of domestic arrears, an IT on limiting Treasury advances without budget allocation
(MEFP, Table 1) and SB9 (MEFP, Table 2) on including the stock of domestic arrears into the next
year’s budget were introduced in the fourth review. In addition, a new SB to improve
management of correspondents’ accounts has been introduced to support the authorities’
efforts to strengthen cash management (SB15).

• Preliminary data for end-September 2023 suggest that six out of ten ITs were met (Table
9, and MEFP Table 1). The four breached ITs are the program ceilings on the net accumulation
of domestic arrears, on SNH direct interventions, on Treasury advances without a budget
allocation (new IT introduced in the fourth review), and the share of spending through
exceptional procedures. A continuous QPC on PV of contracting and guaranteeing of new
external borrowing was met.

• Progress on structural reforms is ongoing (Table 10, and MEFP Table 2). Of the nine
structural benchmarks (SBs) for the fifth review, three were met on schedule, two were
implemented with delay, one is expected to be implemented by the Board date (prior action),
and three will be rescheduled/reformulated. Three SBs were met on schedule: (i) formulation of
an action plan to eliminate CIT holidays and promote healthy competition in the private sector
(SB7, October 2023); (ii) introduction of a new PPP framework due end-June 2023; and (iii)
increasing the number of VAT taxpayers by end-October 2023. The latter two were met ahead of
schedule during the fourth review. Two SBs were implemented with delay, namely SB1 on
government payment arrears audits, and SB8 on the modalities for monitoring project
management units’ performance, Publication of the governance diagnostic report (SB5) is
delayed but expected before the Board date (prior action). Three SBs due end-September are
delayed and need to be rephased. The authorities have established an inventory of public
enterprises’ debts to the government and to each other and expect to finalize a plan for clearing
them (SB2) by April 2024. Also delayed are the publication of the implementing texts of the

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Mining Code (SB3) and the development of a detailed restructuring plan for SONARA (SB6). SB6
has been reformulated to focus on a feasibility study (SB16).

POLICY DISCUSSIONS
18. The mission discussed policies to ensure long-term sustainable growth and address macro-
critical climate challenges as part of Article IV policy discussions (Sections A and B) and program
implementation (Sections C to G).

A. Ensuring Long-Term Sustainable Growth

Enhancing Growth Potential

19. Cameroon’s development strategy (SND-30) envisages a profound structural


transformation of the economy and builds around its industrialization strategy. The
government intends to achieve structural transformation through import substitution and export
promotion supported by the implementation of major investment projects and institutional reforms.
Staff cautioned that import substitution is prone to inefficiencies, limiting innovation and
competition, leading to lower quality products and higher costs for domestic consumers. The
authorities emphasized that a successful strategy would require substantial resources, improving
investment efficiency, support for sectors with high potential, and strengthening manufacturing
capacities. In promoting exports, the country would exploit its comparative advantages, such as the
large agricultural base, natural resources, and human capital.

20. The mission recommended that horizontal policies are the most effective ways to
foster structural transformation and export diversification (Selected Issues Papers). These
polices are also a necessary condition for the success of any industrial policy. It is advised that the
authorities concentrate efforts on those areas in priority because Cameroon’s performance in
horizontal areas has significant gaps. Key horizontal policies include investments in human capital
and infrastructure, strengthening institutions, including governance, and enhancing product and
labor markets by removing regulations that hinder competition among firms, allow more market
flexibility and encourage more formalization of existing firms. The authorities need to continue
strengthening their dialogue with the private sector, a key engine of growth, and civil society.

Authorities’ Views
21. The authorities agreed with the staff on the priorities to spur medium and long-run
growth but reiterated their views on import substitution. They agreed on the importance of
investments in human capital and infrastructure and enhanced governance. However, on the
effectiveness of import substitution measures, the authorities are aware of the potential issues in
implementation but view that scaling up domestic production by import substitution is a necessary
step for enhancing the prospect of exports, supported by improvement in infrastructure.

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B. Addressing Macro-Critical Climate Challenges

22. Without strong adaptation measures, climate change is expected to lead to output
losses, and exacerbate poverty, inequality, food insecurity and conflicts in Cameroon. Climate-
related losses in output will impede export capacity and may increase imports either to cope with
food, sanitation, and health needs during crises or to invest in rebuilding after crises. This will
increase balance of payments needs and require fiscal space. Social and economic impact would
affect human capital accumulation, jeopardize development, and hinder inclusive growth.

23. The mission stressed the need to mainstream climate commitments into the country’s
legal and regulatory framework and its budget cycle. Cameroon has signed all key international
agreements related to climate change and identifies it as a key challenge for economic growth and
development in key strategic documents (SND-30 and Vision 35). However, climate considerations
are yet to be effectively integrated into the country’s legal and regulatory framework, and PFM,
including fiscal planning and public investment management. The government also faces capacity
constraints, lacks an effective coordination mechanism, and has yet to operationalize its institutional
and governance frameworks to respond to climate challenges.

24. Cameroon needs to step up both adaptation and mitigation efforts. Cameroon puts
emphasis on enhancing adaptation efforts in agriculture and infrastructure. Priority areas outlined in
the Nationally Determined Contributions (NDC) include promoting climate-smart agriculture,
building resilient energy and transport infrastructure, diversifying energy supply, reducing disaster
risks, and improving population awareness and capacity. Under the NDC, Cameroon committed to
reduce greenhouse gas emissions by 35 percent by 2035 relative to 2010, including an
unconditional target of 12 percent. Phasing out the fuel subsidy will support the authorities’
mitigation efforts.

25. Mobilizing climate finance is an important challenge. In the near term, the main source
of climate-related financing will likely remain donor financing. Going forward, Cameroon needs to
develop its capital markets to harvest the potential private funding for climate investments and
engage the private sector in supporting its climate agenda.

Authorities’ Views
26. The authorities recognize the need to strengthen resilience to climate change. They
noted that it is already having an impact on the economy and livelihoods and may further
exacerbate social and economic challenges and fragility. They noted that Cameroon is a signatory to
all key international agreements on climate change, and climate change is recognized as an
important development challenge under the SND-30 and other strategic documents. The
government aims to strengthen institutional capacity to implement its policies to address climate
change and integrate its climate commitments into an appropriate legal and regulatory framework.

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C. Building Fiscal Resilience

Fiscal Consolidation

27. Fiscal performance remained strong up to June 2023 and the fiscal outcome for 2023
is expected to be consistent with program objectives. Both oil and non-oil revenue registered a
solid growth of about 13 and 20 percent year-on-year during this period, respectively. The strong
non-oil revenue was driven by revenue administration efforts and the economic recovery, which
supported company profits and capital income tax performance. Capex execution was relatively slow
and, together with strong revenue performance, explains overperformance in NOPB relative to the
program target by June. The authorities remain committed to achieving the program fiscal
objectives by end-2023.

28. The authorities intend to continue their consolidation efforts in line with the program
in 2024. The 2024 budget law envisages a further
Text Table 1. Cameroon: Fiscal
reduction in NOPB from a projected deficit of 2.5
Performance and Projections
percent in 2023 to 1.9 percent of GDP in 2024, (Percent of GDP)
supported by both continued efforts to strengthen
non-oil revenue mobilization and spending 2022 2023 2024

rationalization through a fuel subsidy reduction. Est. 4th Rev. June Proj. 4th Rev. Proj.
Total revenue and grants 15.9 15.9 8.0 16.0 15.5 15.9
The potential gains from these measures are Oil revenue 3.5 2.9 1.5 2.9 2.1 2.5
Non-oil revenue 12.1 12.7 6.4 12.7 13.1 13.1
estimated at around 0.4 p.p. of GDP for each Grants 0.4 0.3 0.0 0.3 0.3 0.3

measure. Total expenditure 17.1 16.7 7.7 16.6 16.1 16.3


Current expenditure 12.4 11.5 6.1 11.8 10.4 10.9
Transfers and subsidies 4.2 3.5 1.9 3.5 2.4 2.6
Authorities’ Views Interest payments 0.8 1.1 0.5 1.1 1.1 1.0
Capital expenditure 4.6 5.0 1.6 4.6 5.4 5.3

29. The authorities agree with the need to Overall balance -1.1 -0.8 0.3 -0.7 -0.6 -0.4

continue fiscal consolidation to support Non-oil primary balance -3.9 -2.5 -0.7 -2.5 -1.7 -1.9

Source: Country authorities and IMF staff calculations.


sustainability of public finances and remain on a
stable public debt path. They, however, emphasize the need to promote economic growth and
structural transformation, which requires substantial public investment. They agree with the need to
strengthen non-oil revenue mobilization, rationalize public spending, and improve public
investment efficiency.

Strengthening Non-oil Revenue Mobilization

30. The authorities remain committed to strengthening domestic non-oil revenue


mobilization. The 2024 budget envisages tax and customs policy and administration measures to
this effect (Text Table 2). These actions include both policy measures and efforts to further improve
revenue administration through stronger control and digitalization, including phasing out of tax
exemptions for businesses on interest from government securities, full taxation of benefits in kind,
reduction of VAT exemptions on carbonated drinks and introduction of electronic invoice tracking.
The authorities also plan non-tax revenue measures to contribute to domestic revenue mobilization.
Overall, these measures are estimated to bring about CFAF 113 billion in budget revenue (0.4
percent of GDP).

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Text Table 2. Cameroon: Non-oil Revenue Measures Planned in 2024


(Billion CFAF)

Tax policy measures


Measures related to PIT and CIT 11
Rationalization of tax expenditures (VAT and excise taxes) 19
Specific taxes 2
Property taxes and stamp duties 9
Customs duties 11
Tax administration measures
Electronic invoice tracking 15
Securing customs revenue on imported phones, tablets and digital terminals 15
Other 11

Non-tax revenue 22
TOTAL 113
percent of GDP 0.4

Source: Country authorities, staff calculations

31. Over the medium term, the authorities plan to enhance revenue mobilization by
reducing the number of tax exemptions and recovering tax arrears. The authorities have
prepared a plan to gradually eliminate CIT holidays, audit, and revise the 2013 law on investment
incentives to rationalize tax exemptions for companies (SB4 and SB7). Work is also ongoing to
improve tax arrears recovery of the payment arrears from 2000–19. Their audit (SB1, MEFP ¶31)
shows around CFAF 215 billion in tax arrears, that the authorities aim to recover over three to seven
years—around CFAF 30.8 billion annually. Moreover, the authorities will continue efforts to reform
personal income taxation and to rationalize VAT exemptions, in line with their three-year plan and
the 2022 tax policy diagnostic recommendations.

32. The government plans to improve personal income tax statistics. To better assess the
impact of the revisions to the personal income taxation, the government intends to set up a
database of wages and salaries, which comprises the entire public sector and a representative
sample of private sector employees (new SB11, November 2024), MEFP ¶21.

33. The government is considering additional measures to collect tax arrears in 2024. As a
first step, the government commits to preparing a detailed action plan, consisting of the first 100
unpaid tax and customs debts, including those of public enterprises, to manage and recover at least
15 percent of the outstanding recoverable tax arrears (outstanding as at end-June 2023) and
implement 50 percent of the measures included in the action plan (new SB12, April 2024, MEFP
¶22). This measure will improve the collection of tax and customs revenues, the clearance of
outstanding statements and strengthen the governance of revenue administrations, while improving
the transparency of budget management and public enterprises.

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Authorities’ Views
34. The authorities recognize the need to revise tax incentives and exemptions. This will
help improve non-oil revenue mobilization and better tailor the taxation system to industrial
development needs as part of their overall vision.

Advancing Fuel Subsidy Reform

35. The authorities are committed to reduce the fuel subsidy. Total spending on the fuel
subsidy in 2022 is estimated at around CFAF 900 billion, or 3.2 percent of GDP, of which CFAF 330
billion (1.1 percent of GDP) was carried over to 2023. While the pump price increase of about 21
percent in February 2023 helped reduce the subsidy, higher than projected global oil prices in 2023
and remaining bills from 2022 explain a carryover of about CFAF 170 billion (0.5 percent of GDP) of
the fuel subsidy to the 2024 budget. Increased spending on the fuel subsidy has created liquidity
pressures and crowded out other spending. Fuel subsidies continue to have significant fiscal
consequences and do not always benefit the most vulnerable.

36. The government increased fuel prices at the pump in February 2023 and remains
committed to reducing the fuel subsidy in 2024 and phasing it out by 2025 consistent with
the program objectives. Gradual reduction in the fuel subsidy would imply an increase of at least
15 percent in pump prices in early 2024. This increase would reduce the cost of subsidies by about
CFAF 140 billion, or 0.4 percent of GDP in 2024, given current assumptions. To achieve the program
objectives, the authorities commit to submitting to Parliament the 2024 budget law consistent with
the fifth review macroeconomic framework (prior action).

37. Fuel price increases should be accompanied by measures to mitigate the social and
economic impact. The authorities plan to maintain the increase in social spending introduced in
2023 and consider additional measures in the amount of around CFAF 68 billion, or 0.2 percent of
GDP, including increase in public salaries and territorial transfers. Over the medium term, the
authorities plan to gradually increase social spending, to improve social indicators.

Authorities’ Views
38. The authorities agreed with the need to reduce the fuel subsidy and to limit the
practice of carrying over the subsidies across years. They remain committed to gradually
eliminating the subsidy over the medium term and are considering options for an automatic fuel
price adjustment mechanism. For mitigation measures, they are working on strengthening social
safety nets—with World Bank support—and improving access to basic public services such as
education and health.

Improving Public Financial Management (PFM)

39. The authorities are making progress on key PFM reforms:

• Cash management. Spending through exceptional procedures, including Treasury advances


without a budget allocation and cash management weaknesses, led to accumulation of domestic

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payment obligations and delays in external payments in 2022-23. The authorities are pursuing
reforms aimed at improving the sincerity and execution of the budget. They plan to limit the
common budget chapters (chapitres communs) to 3-5 percent starting from 2025 (SB17 and
SB18, MEFP ¶45). They will also further improve management of the correspondents’ accounts.
To that end, the Minister of Finance will issue an instruction, following an audit, on
implementing a strategy to strengthen the management of correspondent accounts, with
provisions on the closure of illegal accounts, the clearance of existing arrears, and relevant cash
management rules consistent with the requirements of the annual budget law (SB15, MEFP
¶27).

• Domestic payment arrears. The government completed the audit of its payment arrears over
2000–19 and adopted a plan to settle them over three to seven years. Key sources of these
arrears were salary payments (CFAF 303 billion), tax arrears (CFAF 216 billion) and commercial
debt (CFAF 122 billion CFAF) (SB1, MEFP ¶31).

• Government’s cross debt. The government has established an inventory of cross debts
between public enterprises and the state at end-2020 and is finalizing a plan for clearing them.
However, the plan will not be finalized until April. Staff proposes rephasing the deadline to end-
April 2024. (SB2, MEFP ¶34).

• Mining code. The draft decrees for the application of the Code have been completed, but their
adoption has been delayed due to the need to integrate the role of the National Mining
Corporation (SONAMINES), created in 2020. The authorities plan to submit the draft code to
parliament in March 2024, and to publish it by end-June 2024 (SB3, MEFP ¶35).

• National Refining Company (SONARA). The restructuring has been delayed pending
completion of a study on the technical, economic, and financial feasibility of the options for the
new refinery (SB6, reformulated, MEFP ¶33).

• Public procurement. The online procurement system (COLEPS) is operational, but the number
of procurement contracts registered remains limited. To strengthen reform efforts in public
procurement, this SB is proposed to be revised. Under the new formulation, the authorities have
committed to increase to at least 80 percent the number and total value of contracts awarded
through COLEPS in certain key ministries (i.e., infrastructure, education, health, posts, and
telecommunications) between January and May 2024 (SB 10, MEFP ¶30). The authorities are
also working on strengthening the quality of procurement plans to ensure consistency between
commitment and Treasury plans (SB14, MEFP ¶30).

40. Public investment management. The authorities are committed to strengthen PIM and to
fully implement the system of commitment authorization (CA) and payment appropriations (PA) to
better manage and monitor multi-year capital projects. To this end, 2025 budget law will include an
annex on CAs and PAs in line with the Medium-Term Budgetary Framework (MTBF) and consistent
with the timetable for the implementation of investment projects (SB13, MEFP ¶29).

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Authorities’ Views

41. The authorities expressed their commitment to strengthening PFM process and
managing fiscal risks. They highlighted the progress made on SONARA restructuring, emphasizing
that their action plan should be sufficient to meet the SB. They agreed on the need to advance PFM
reforms to underpin cash management, reduce domestic payment arrears, improve efficiency of
public spending, including on public investment, and strengthen management of SOEs.

D. Maintaining Debt Sustainability and Reducing Debt Vulnerabilities

42. Cameroon remains at high risk of debt distress, but its debt is sustainable over the
medium term. Public debt stock declined to 45.3 percent of GDP at end-2022, compared to 46.8
percent of GDP at end-2021 (Text Table 3). The external debt stock was estimated at 30.8 percent of
GDP and domestic debt at 14.5 percent of GDP in 2022. The risk of external debt distress is high, as
two out of four indicators breach the thresholds under the baseline scenario. In addition, the present
value (PV) of public debt-to-GDP ratio is above the benchmark, indicating a high risk of overall debt
distress. Both external and public debt indicators are most vulnerable to commodity shocks. While
the debt stock is expected to decline further in 2023 with continued growth, tight fiscal policy and
CFA franc appreciation, contingent liabilities associated with state-owned enterprises and public-
private partnerships are expected to increase.

43. The debt carrying capacity continues to be weak as suggested by the latest Composite
Index (CI) score, and the bond spread is above the benchmark value. External debt service
indicators remain above the threshold but on a downward trend. The debt service-to-revenue ratio
is expected to stop breaching the threshold in the medium term. Risks are tilted to the downside,
which include geopolitical tensions, a longer-than-expected tight global financial conditions, delays
in implementing SONARA’s debt restructuring and rehabilitation plan, and a realization of
contingent liabilities. The authorities intend to push forward their reform agenda steadily to ensure
debt sustainability and reduce associated risks.

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Text Table 3. Cameroon: Decomposition of Public Debt and Debt Service by Creditor, 2022-24
Debt Stock Debt Service
2022 2022 2023 2024 2022 2023 2024

$US, Percent of Percent of


$US, millions Percent of GDP
millions total debt GDP

Total 1/ 19234 100.0 43.0 1923 2758 2297 4.3 5.6 4.3
External 13161 68.4 29.4 1195 1523 1476 2.7 3.1 2.8
Multilateral creditors 6041 31.4 13.5 132 342 371 0.3 0.7 0.7
IMF 1273 6.6 2.8
World Bank 2256 11.7 5.0
AfDB 1624 8.4 3.6
Other Multilaterals 888 4.6 2.0
o/w IsDB 636 3.3 1.4
o/w IFAD 97 0.5 0.2
Bilateral creditors 5496 28.6 12.3 722 835 833 1.6 1.7 1.6
Paris Club 1628 8.5 3.6 257 255 261 0.6 0.5 0.5
o/w France 1391 7.2 3.1
o/w Japan 82 0.4 0.2
Non-Paris Club 3725 19.4 8.3 449 580 572 1.0 1.2 1.1
o/w China 3603 18.7 8.1
o/w Turkey 122 0.6 0.3
Eurobonds 875 4.5 2.0 55 109 105 0.1 0.2 0.2
Commercial lenders 749 3.9 1.7 285 237 166 0.6 0.5 0.3
o/w Bank of China 177 0.9 0.4
o/w Intesa San Paolo SPA 101 0.5 0.2
Domestic 6072 31.6 13.6 728 1235 821 1.6 2.5 1.5
T-Bills (BTA) 373 1.9 0.8 11 394 0 0.0 0.8 0.0
Bonds 2133 11.1 4.8 348 318 342 0.8 0.6 0.6
Structured debt 1259 6.5 2.8 359 479 435 0.8 1.0 0.8
Non-structured debt 90 0.5 0.2 11 25 25 0.0 0.1 0.0
BEAC advances 1125 5.8 2.5 0 19 19 0.0 0.0 0.0
Floats and arrears 1093 5.7 2.4
Memo items: 0 0.0
Contingent liabilities 1035 2.3
o/w: Public guarantees (external) 21 0.0
o/w: Other contingent liabilities 1014 2.3
o/w external 584 1.3
o/w domestic 430 1.0
Nominal GDP (CFAF, billions) 27702.5 27702 29704 32063
Exchange rate, end of period (CFAF/US$) 619 … …
Exchange rate, period average (CFAF/US$) 622 … …

Source: Country Authorities & IMF Staff estimates.


1/ Excludes public guarantees and other contingent liabilities, which are noted under memo items.

44. The authorities are committed to limiting non-concessional borrowing and


implementing proactive debt management. The program ceiling on the PV of newly contracted
or guaranteed external public debt and ceiling for disbursement of non-concessional external debt
have served as a binding constraint on debt management, helping to slow debt accumulation and
improve Cameroon’s debt profile. In 2023 and 2024, the overall debt ceiling remained unchanged
compared to 2022, with an adjustor to accommodate concessional infrastructure and social projects
financed by the World Bank. To improve the liquidity and debt profile, a debt management

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operation to borrow longer-term external debt to clear domestic unpaid government obligations is
planned before end-2023. 2

Text Table 4. Cameroon: 2022 Summary Table on External Borrowing Program


PPG external debt Volume of new debt Volume of new debt PV of new debt
contracted or guaranteed 1/ (USD million) (CFAF billion) 2/ (CFAF billion) 2/ 3/

Sources of Debt Financing 1374 746 513


Concessional debt, of which 911 495 281
Multilateral debt 911 495 281
Bilateral debt 0 0 0
Non-concessional debt, of which 462 251 232
Semi-concessional debt 439 239 219
Commercial terms 23 13 13
Uses of Debt Financing 1374 746 513
Infrastructure 1197 650 417
Budget financing 177 96 96
Other 0 0 0
Source: Country Authorities & IMF Staff estimates.
1/ Excludes ordinary credit for imports, debt relief obtained in the form of rescheduling or refinancing, and budget support loans
from the WB.
2/ Calculated using exchange rate of 543.201 CFAF/USD
3/ The PV is calculated using the terms of individual loans and applying the 5 percent program discount rate. The PV of loans with a
negative grant element is assumed to be equal to the nominal value of the loan. An adjustor for WB projects, which is the difference
between the total PV of newly signed WB projects identified in 2023 and the PV of WB projects in 2022, will apply to the PV ceiling
of new debt once new WB projects in 2023 reaches the PV level of the previous year.

45. The authorities are reducing contracted but undisbursed loans (SENDs). The publication
of a decree specifying the modalities for monitoring the performance of project management units
was implemented with a delay (SB8, August 2023, MEFP ¶8). The debt management agency had a
stock-taking assessment of existing loan and grant agreements related to 180 projects, in
preparation for consulting with development partners on cancelling non-performing SENDs and
negotiating reallocation of unused external credit lines to other projects where applicable. Going
forward, timely disbursement according to the schedule is a prerequisite to contain SENDs, amidst
the need to sign more new projects to address urgent infrastructure gaps.

Authorities’ Views
46. The authorities agree on the importance of addressing various pockets of debt
vulnerabilities. They noted that the risk of debt distress has heightened amidst unfavorable
external developments and slow progress in domestic structural reforms. The authorities remain
committed to improving Cameroon’s debt risk assessment, which depends on continued active debt

2
The authorities aim to carry out a debt management operation totaling CFAF 200 billion to help reduce unpaid
domestic obligations, through a euro-denominated loan from an external development partner. The operation would
improve the public debt profile and is aligned with the authorities’ 2023-25 debt strategy to further increase average
maturity of the public debt. The assumption of financing term has remained unchanged since the 4th review.

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management, exports, and budgetary revenue performance, as well as the country’s CI score, which
reflects the country’s debt carrying capacity. The authorities highlighted the need to intensify efforts
to address SOE issues and reduce fiscal risks. The authorities remain committed to making progress
on SONARA’s restructuring plan.

E. Strengthening Financial Sector Resilience and Financial Inclusion

47. Financial sector resilience needs strengthening. The mission emphasized the need for
banks to: (i) implement COBAC’s recommendations on provisioning and capitalization;
(ii) strengthen their credit risk assessment frameworks; (iii) diversify away from the sovereign (both
Cameroonian and other CEMAC governments); (iv) follow a strategy to reduce the high share of
NPLs (15.4 percent in total gross loans in 2023Q2); and (v) ensure that data are submitted to BEAC.
In addition, it is essential that the government completes the Commercial Bank of Cameroon (CBC)
privatization in 2024 as planned and finishes the resolution of the distressed banks in a timely
manner.

48. Progress is ongoing in restructuring the distressed Cameroonian banks. The asset
shortfall of one of the banks has been filled, while another one, in which the government will take a
majority stake, still misses a significant amount. The filling of the asset shortfall of the latter bank
remains unclear as the authorities have mentioned a loan to be made to the government by the
insolvent bank, due to the regulatory forbearance. Staff emphasized that self-funding of the capital
of banks is inconsistent with good practices as it is not recognized by international regulatory
standards (Basel capital framework). Staff position is that the asset shortfall is filled with funds that
meet prudential requirements by the end of the Fund program. Discussions are ongoing with
COBAC to ensure that the recapitalization complies with international regulatory standards. While
COBAC has approved the recapitalization plans in July 2023, a substantial part of the capital is yet to
be transferred by both the government and private shareholders (end-2024).

49. The Société de Recouvrement des Créances (SRC), a public credit recovery agency, is
facing difficulties. The SRC experienced around CFAF 1 billion in losses in 2022, with a claim
portfolio of about CFAF 800 billion. The mission advocated an audit of losses to better understand
the reasons for the failure to recover credit. It is also important to strengthen the SRC’s operations
to ensure a robust governance framework, operational and budgetary independence, and strong
transparency and accountability rules, prior to any extension of SRC’s activities. The mission
reiterated the need for the government to commit to a sunset clause for banking assets recovery
activities.

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Box 1. Financial Inclusion in Cameroon: A Regional Perspective


Figure 1. Number of Commercial Bank Branches and ATMs Figure 2. Number of Mobile Money Agents and Debit Cards
(per 100,000 adults) (per 100,000 adults)

Figure 3. Number of Household Sector Depositors Figure 4. Number of Household Sector Borrowers
(per 1,000 adults) (per 1,000 adults)

Financial inclusion can be of different dimensions: traditional inclusion with, for instance, the number bank branches or ATMs,
and digital inclusion with, for example, the number of mobile money agents or debit cards, per a given population. Cameroon
scores low in terms of traditional financial inclusion, compared to its regional peers (Figure 1). It has an average of 2.2
commercial bank branches and 5 ATMs per 100,000 adults, whereas the CEMAC average is 3.8 bank branches and 7.5 ATMs
per 100,000 adults. The average for Sub-Saharan African countries (SSA) is even higher, with an average of 6.6 bank branches
and 14.8 ATMs. However, Cameroon appears to score better in terms of digital financial inclusion (Figure 2). It has an average
of 1,321 mobile money agents per 100,000 adults, which is largely over the CEMAC average of 565. Mobile money agents have
a major role in providing access to banking for populations in SSA, usually compensating for the low presence of bank
branches outside of major cities.

While financial inclusion can be analyzed through the prism of access to financial services, such as the number of bank branches,
ATMs, or mobile money agents, it can also be considered though the filter of usage of financial services. For instance, the
percentage of adults who have a deposit account at a commercial bank or who borrow from a bank reflects this usage.
Cameroon scores low in terms of household sector depositors with commercial banks compared to its neighbors (Figure 3): only
about 112 adults per 1,000 have a deposit account, whereas the corresponding number is 182 in Gabon, 282 in Equatorial
Guinea, and 437 in SSA. In addition, the number of adults borrowing from a bank in Cameroon is slightly above the CEMAC
average but considerably below the SSA average (Figure 4): 33 per 1,000 in Cameroon, 30 in the Republic of Congo, 35 in
Equatorial Guinea and 21 in CEMAC and 61 is SSA.

With 19 different banks present in Cameroon, this limited use of banking services could reflect a low financial literacy among the
population, a sparse geographical network of bank branches, or too high banking fees due to limited competition. Furthermore,
the large gender gap in access to deposit accounts and loans from commercial banks mirrors the substantial gender inequalities
in financial inclusion both in Cameroon and in the rest of SSA. Addressing these inequalities with specific measures targeting
financial inclusion for women would not only raise overall financial inclusion in Cameroon, but also unlock growth potential by
helping women develop businesses and participate in the formal economy.

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50. The operationalization of the Caisse des Dépôts et Consignations (CDEC) continues.
Charged with collecting and managing idle bank accounts and judiciary seizures, the state-owned
financial institution is still waiting for its regulatory texts to be signed by the government.
Meanwhile, discussions with the banking sector led to an agreement to limit the impact of the
transfers on banks’ liquidity positions. However, the CDEC has difficulties evaluating its claims and
getting cooperation from some of the banks. The government therefore needs to commit to ensure
that CDEC has the necessary financial and logistical resources to exercise its responsibilities in terms
of collection, management, and security of the various resources that will be transferred to it. In
addition, the CDEC should be regulated as any financial institution.

51. Supporting SMEs’ access to credit is the key to unlocking private sector led growth.
SME’s access to credit should be supported further. This requires improving the business climate
and reducing NPLs to increase banks’ lending confidence. To that end, the government should
support: (i) operationalization of the credit registries at BEAC and the creation of a scoring system of
companies; (ii) digitalization of the land registry and the creation of a real estate collateral registry,
(iii) training of judges in corporate law and the creation of commercial courts;
(iv) operationalization of the state-backed collateral fund for small companies to facilitate access to
credit (fond de garantie aux PME); and (v) internalization of the public sector crowding out effect in
the government’s bonds issuance strategy.

52. Cameroon is lagging in terms of financial inclusion (Box 1), but it has launched a
national Strategy for Financial Inclusion over 2023-27. The strategy, prepared with UNDP
support, is part of a broader CEMAC effort to promote financial inclusion and is expected to cost
CFAF 38 billion. It will focus on traditional and digital financial inclusion as well as reducing the
related gender gap.

Authorities’ Views

53. The authorities agree with the proposed measures to strengthen the financial sector
resilience. The authorities also share the same view on the need to ensure a strong governance of
the SRC, provide the necessary resources to the CDEC, promote SMEs’ access to credit, and increase
financial inclusion.

F. Strengthening Governance, Transparency and Anti-Corruption Efforts

54. The authorities are working to strengthen transparency, governance, and the fight
against corruption. A diagnostic of the country’s vulnerabilities in governance and corruption was
completed in collaboration with IMF staff (SB5, MEFP ¶44) and will be published by the Board date
(prior action). Based on the priority recommendations of the report, the government will prepare
and publish an action plan to further strengthen economic governance.

55. The government also intends to adopt a timetable for the transformation of common
chapters for the benefit of authorizing officers and managers in the relevant ministries, as
part of the reform of decentralized authorizations (SB17, MEFP ¶45). The inclusion of
appropriations for accidental and unforeseeable expenditures in allocations will be effective in the

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2025 budget law, and will not exceed 3-5 percent of the budget, and the budget will also specify the
modalities for the management of these allocations (SB18, MEFP ¶45).

56. The mission welcomed the progress in the authorities’ efforts to facilitate the timely
completion and publication of spending audits. The authorities have developed and published an
action plan to strengthen frameworks for preparing, publishing, and monitoring public expenditure
audits, including recommendations to strengthen relevant institutions, in particular the Supreme
Court's Audit Chamber (SB met in the fourth review).

Authorities’ Views

57. The authorities reiterated their commitment to continuing to work with international
bodies responsible for transparency and financial integrity. In particular, they intend to
accelerate implementation of actions aimed at strengthening the AML/CFT regime, particularly with
an eye towards supporting anti-corruption efforts. They have requested LEG TA to address the main
deficiencies in the country’s AML/CFT regime, with a view to being removed from the list of
jurisdictions under increased monitoring by the Financial Action Task Force (“grey list”).

58. The authorities also stressed the need for broader outreach on the issues to maintain
the reform momentum. They underscored that this would help maintain an open and constructive
dialogue in the country to prepare for successful implementation of recommendations.

G. Addressing Fragility and Regional Spillovers

59. Cameroon has been recently added to the IMF list of fragile and conflict affected
states (FCS). Sources of fragility include institutional and governance weaknesses, internal divisions,
social exclusion, insurgency and conflicts along borders, and a rising frequency of climate-related
natural disasters. Security risks are increasing, with potential regional spillovers from the region. In
the region, Cameroon has a high number of internally displaced persons (IDPs), driven mainly by
internal conflict and the impact of climate change, and natural disasters such as floods. The country
will continue to be affected by simultaneous and complex humanitarian, refugees, and internally
displaced people (IDP) crises and situations. These multiple dimensions of fragility present
challenges for sustaining inclusive growth and improving social indicators. A country engagement
strategy (CES) has been prepared in collaboration with international partners, to assess the drivers of
fragility, highlight factors of resilience, and inform the IMF staff’s ongoing and future engagement
with Cameroon. The authorities agreed with the overall proposal and stressed the need for close
coordination with other partners, especially in areas that go beyond the Fund’s mandate.

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PROGRAM MODALITIES, STATISTICAL ISSUES, AND


CAPACITY DEVELOPMENT
A. Program Modalities

60. Prior actions. The review includes two prior actions. The first is a submission to the
Parliament of the budget law consistent with the budget framework agreed in the fifth review. The
second is the publication of the governance diagnostic. Cameroon’s governance indicators highlight
the need for urgent action in this area. Governance vulnerabilities and corruption continue to weigh
down on Cameroon’s development prospects from a variety of perspectives (private sector
development, financial sector growth, public finance management, selection of investment projects).

61. Regional assurances. BEAC met its end-June 2023 NFA (Net Foreign Assets) target and
provided updated policy assurances in support of CEMAC countries’ Fund-supported programs. A
review of regional policies and policy assurances is scheduled to be discussed by the IMF Executive
Board in December 2023. Adequate policies and assurances are a condition for the conclusion of the
review. The regional assurances on regional NFA are critical for the success of Cameroon’s Fund-
supported program and to help bolster the region’s external sustainability.

62. Program performance reviews will continue semi-annually through six-monthly and
continuous QPCs, quarterly ITs, and SBs. Staff supports the authorities’ request to reset end-
March 2024 ITs and set new end-June and end-December 2024 QPCs, end-September 2024 ITs
reflecting the current macroeconomic framework, budget projections, and program commitments.
The missed SBs are proposed to be reset (Table 10) and new SBs are proposed to support revenue
mobilization, public financial management and good governance and transparency consistent with
program objectives.

63. The authorities request a waiver for nonobservance of a performance criterion. The
continuous zero ceiling on the accumulation of new external payments arrears was missed following
delayed debt service payments to the EIB in August and September 2023 due to technical errors. A
waiver of non-observance is requested due to the minor and temporary nature of the non-
observance, and these arrears have been cleared. The authorities emphasized that while there were
weaknesses in cash management, all efforts were made to respect external payment deadlines on
time. Given the capacity constraints and the minor and temporary technical delays, staff proposes to
add a 30-day period after the payment due date before considering the delayed payments as
external arrears for program assessment purposes. The authorities are receiving technical assistance
to improve debt monitoring capacity.

64. The authorities have requested a 12-month extension of the ECF/EFF arrangements
(through July 28, 2025). This would be accompanied by an augmentation of access of 40 percent
of quota over the extension, for balance of payments support (SDR 110.4 million). Staff proposes
that the increase in access be shared between resources from the General Resources Account (GRA)
(26.7 percent of quota; SDR 73.6 million) and the Poverty Reduction and Growth Trust (PRGT) (13.3

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percent of quota; SDR 36.8 million). The extension will allow for more time to implement the policies
and reforms foreseen under the program, given the additional external shocks faced since approval
of the ECF/EFF arrangements. In addition to reducing the space for implementing reforms the
shocks have created additional balance of payments needs. The tightening of global financial
conditions has raised borrowing costs and access to financing on international markets, the war in
Ukraine accelerated inflation and weighed down on growth domestically and in partner countries,
and the volatility of oil prices has raised the costs of subsidies and complicated budget
management.

65. Cameroon’s capacity to repay the IMF is adequate, but subject to significant risks
(Figure 3). Under the baseline, total Fund credit outstanding (based on existing and prospective
drawings) peaks at over 3 percent of GDP in 2023, while annual obligations to the Fund peak at
about 2.8 percent of revenues excluding grants in 2027, well above the reference group top quartile.
Risks to the program and the Fund are elevated and capacity to repay the Fund could be further
strained by the materialization of potential risks (e.g., global spillover risks, SOEs’ contingent
liabilities, especially from delays in implementing critical reforms such as SONARA’s restructuring,
and security risks). Accelerating the pace of reforms and staying on course on program targets will
be essential, as will timely budget support. Strong political support for the program’s objectives at
national and regional level are critical to mitigating these risks.

66. Financing assurances have been obtained. The program remains fully financed, with firm
commitments over the next 12 months and good prospects for its financing over the remainder of
the arrangement. Discussions with donors confirmed the importance of the Fund’s engagement in
their decision to contribute to budget support, quasi-budget support and project financing.

67. Risks to the program are manageable. Fuel subsidy reforms could lead to civil unrest if
not accompanied by appropriate social mitigation measures. Further delays in implementing
supportive infrastructure projects could exacerbate social and/or security tensions. Higher oil
revenue could test the authorities’ ability to implement reforms ahead of the elections. Higher
spillovers from the global environment could threaten external balances, while increased climate
related events could heighten food insecurity and social tensions. The authorities’ track record and
commitment to reforms envisaged under the program suggests that risks can be managed. Risks are
also mitigated by program conditionality, close engagement with key donors, and a comprehensive
capacity development program, tailored to pressing and longer-term needs.

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Text Table 5. Cameroon: External Financing


(In billion CFAF, unless otherwise indicated)
Total (CFAF, Total (SDR, Percent of Percent of
2023 2024 2025
billions) millions) Gap Quota1

Financing Gap 186 253 104 542 673 100 244

IMF Financing 136 89 44 269 334 50 121


ECF 45 30 15 89 111 16 40
EFF 91 59 30 180 223 33 81

Budget Support from other Donors 50 164 60 273 339 50 123


AfDB 23 18 0 41 51 8 18
World Bank 0 120 60 180 223 33 81
France 27 26 0 53 65 10 24
EU 0 0 0 0 0 0 0
Other 0 0 0 0 0 0 0

Exceptional Financing 0 0 0 0 0 0 0

Residual Gap 0 0 0 0 0 0 0

Source: IMF staff estimates and projections.


1/ Cameroon's current quota is SDR 276.0 million.

B. Statistical Issues

68. Data provision is broadly adequate, and the authorities have been working with
development partners to improve the quality, coverage, and timeliness of key macroeconomic
data. Significant developments since the last Article IV Consultation include the strengthening of
the quality and frequency of public debt and balance of payments data, and the shift of budget
execution reports to a commitment basis with a more comprehensive coverage. Important
weaknesses in fiscal data remain in the coverage of local government and public enterprises,
including cross-debts.

C. Capacity Development

69. The Capacity Development (CD) strategy for Cameroon is well-aligned with the
authorities’ economic reform strategy SND-30 objectives (Annex VI). Cameroon has an overall
good track record of implementing TA recommendations. A revised CD strategy was discussed with
the authorities, taking stock of emerging priorities and Cameroon’s status as an FCS.

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STAFF APPRAISAL
70. Cameroon has remained resilient, but uncertainties and risks have increased. Real GDP
growth is expected to accelerate to 4.3 percent in 2024, up from 4.0 percent in 2023, while headline
average inflation is expected to moderate from 7.2 percent in 2023 to 5.9 percent in 2024. The
current account deficit is projected to narrow to 3.0 percent in 2023, driven by rising gas production
and an improved primary income balance. However, Cameroon continues to face challenges,
including internal conflicts, tight global conditions, and high oil price volatility. Its external position
in 2022 was assessed to be modestly weaker than warranted by fundamentals and desirable policies.

71. The program remains broadly on track thanks to corrective actions and progress in
reform implementation. Five out of six quantitative performance criteria (QPCs) were met. The
continuous QPC on the non-accumulation of external payment arrears was breached due to minor
and temporary delays of two debt service payments. Of the nine structural benchmarks (SBs) for the
fifth review, three were met on schedule, two were implemented with delay, one expected to be
implemented by the Board date (prior action), and three will be rescheduled.

72. Advancing the implementation of horizontal policies is the most effective way to
foster structural transformation and export diversification. These polices are also a necessary
condition for the success of any industrial policy. Key horizontal policies, where Cameroon has
significant gaps, include investments in human capital and infrastructure, strengthening institutions,
including governance, and enhancing product and labor markets by removing regulations that
hinder competition among firms, allow more market flexibility and encourage more formalization of
existing firms. The authorities should also advance efforts to integrate climate considerations in
Cameroon’s institutional, regulatory, and budget frameworks to support progress toward the
national adaptation and mitigation objectives.

73. The authorities are committed to macroeconomic stability and implementing policies
consistent with the stability of the CEMAC region’s monetary arrangement. This includes
rebuilding of BEAC’s foreign exchange reserves and supporting the BEAC and the COBAC’s efforts to
strictly enforce the foreign exchange regulations. In line with program objectives, fiscal policy will be
geared towards consolidating and strengthening the public finances. This means reducing the non-
oil primary deficit to below 2 percent of GDP in 2024 and reducing the public debt stock to 40
percent of GDP. The authorities recognize that budget execution in 2024 will continue to face large
and unsustainable pressures unless steps are taken to moderate the costs of fuel subsidies.

74. Staying the course of fiscal consolidation would require further deep public financial
reforms. With continued gradual fiscal consolidation over the medium term, providing space for
expanding transfers to vulnerable will require a more concerted effort to mobilize domestic non-oil
revenues, including by widening the tax base, reducing the cost of fuel subsidies, and improving the
prioritization, and efficiency of public expenditures. It is also critical to strictly limit recourse to direct
interventions and exceptional spending procedures, improve cash management, and strengthen
fiscal transparency and budget credibility.

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75. Strengthening the broader public sector financial management is also essential. In this
regard, there is a critical need to strengthen the management of public enterprises, especially those
providing essential services and infrastructure for development.

76. Cameroon’s public debt is sustainable although the country remains at high risk of
debt distress. The authorities have demonstrated a strong commitment to reducing debt
vulnerabilities including by restructuring SONARA’s debt. Staff welcomes the authorities’
commitment to limiting non-concessional borrowing and the continued adherence to the fiscal
consolidation and structural reform efforts, a prudential borrowing policy.

77. Fragilities in the banking system have increased. NPL ratios are rising, and banks'
exposure to the Cameroonian government has increased to 35.3 percent of total assets in 2022, up
from 23 percent in 2019. This is crowding out credit to the private sector and presents risks for
financial stability. The increasing sovereign-bank nexus calls for measures to limit a further build-up
in concentration risk. The authorities should work with COBAC to ensure that banks reduce and
account adequately for sovereign risk.

78. The authorities’ efforts to promote transparency and good governance and reduce
corruption risks are welcome. The publication of the governance diagnostic will be an important
step forward (prior action). Staff also underlined the importance of continuing to work with
international bodies responsible for transparency and financial integrity and to accelerate
implementation of actions aimed at strengthening the AML/CFT regime, particularly with an eye
towards supporting anti-corruption efforts.

79. Based on Cameroon’s performance under the program, the implementation of the
end-June 2023 regional policy assurances and regional policy assurances established in the
December 2023 union-wide paper, staff supports the authorities’ request for the waiver of
nonobservance of the QPC on the non-accumulation of external payment arrears, the
program extension, access augmentation, and completion of the fifth review. Staff proposes
that the completion of the sixth review under the ECF-EFF arrangements be conditional on the
implementation of critical policy assurances on NFAs at the union level established in the December
2023 union-wide background paper.

80. The next Article IV Consultation is expected to take place within 24 months in
accordance with the Executive Board decision on consultation cycles for members with Fund
arrangements.

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Figure 1. Cameroon: Real Sector Developments, 2017–23


Growth started to recover in the second half of 2021, driven by a ... although exports and consumption continued to recover.
strong rebound in the tertiary sector, but slowed during the first
half of 2022...

Inflation, driven by food and energy prices, accelerated but is ... with some regional variations.
gradually declining...

Exports are recovering from pandemic lows... ... with imports following a similar pattern.

Sources: Country authorities, BEAC and IMF staff calculations.

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Figure 2. Cameroon: Fiscal Developments, 2017–23


Non-oil revenues have continued to strengthen ... ...and current spending has declined...

..following the reduction in the fuel subsidy driven by lower oil This has led to a projected reduction in both overall and
prices and a domestic fuel price increase in 2023. non-oil primary fiscal deficits…

.. and contributed to favorable public debt dynamics... but the stock of domestic payment arrears remains high.

Sources: Country authorities, BEAC and IMF staff calculations.

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Figure 3. Cameroon: Capacity to Repay Indicators Compared to UCT Arrangements for PRGT Countries
30

CAMEROON
INTERNATIONAL MONETARY FUND

Total Fund Credit Outstanding Total Fund Credit Outstanding Total Fund Credit Outstanding
(Percent of GDP) (Percent of gross international reserves) (Percent of PPG External Debt)
6 Interquartile Range 40 25

5 35
Median 20
30
4 Cameroon 25 15
3 20
15 10
2
10
1 5
5
0 0 0
T T+1 T+2 T+3 T+4 T+5 T+6 T+7 T+8 T+9 T+10 T T+1 T+2 T+3 T+4 T+5 T+6 T+7 T+8 T+9 T+10 T T+1 T+2 T+3 T+4 T+5 T+6 T+7 T+8 T+9 T+10

Total Debt Service to the Fund Total Debt Service to the Fund Total Debt Service to the Fund
(Percent of revenue excl. grants) (Percent of exports of goods and services) (Percent of PPG External Debt Service)
3 3 40

30
2 2
20
1 1
10

0 0 0
T T+1 T+2 T+3 T+4 T+5 T+6 T+7 T+8 T+9 T+10 T T+1 T+2 T+3 T+4 T+5 T+6 T+7 T+8 T+9 T+10 T T+1 T+2 T+3 T+4 T+5 T+6 T+7 T+8 T+9 T+10

35 Largest Peaks for Fund Credit Outstanding 35 Largest Peaks for Debt Service to the Fund
(Percent of GIR) (Percent of exports of goods and services)
120 Cameroon 25th Percentile of Peaks 75th Percentile of Peaks 8
100
6
80
60 4
40
2
20
0 0

MLI2019
AFG2011

HTI2010
AFG2020
LBR2012

MWI2012

MWI2018
MWI2010

GNB2015

LBR2019
BEN2010

TGO2017

TGO2020

SLE2010

SLE2018
SLE2017
COG2019

ETH2019
KEN2015

MDA2010

MDA2016
KEN2016
GMB2020

GMB2012
HTI2010

HND2020

STP2019

STP2012

CMR2021
TCD2017

CAF2012
CIV2011

LBR2012
SLE2013

MWI2018

CIV2016

ARM2010

LBR2019
TGO2020

SLE2010

MWI2010
BEN2017

SLE2017
TGO2017
SLE2018

MWI2012

GRD2014

GRD2010
MDG2016

ETH2019

GEO2012
KEN2016

MDA2010

GIN2012
GIN2017

RWA2016

BDI2012
GMB2012

MRT2010
CMR2021

BFA2013

STP2019

CAF2016

CAF2012
GRD2014

GRD2010
NER2012

GEO2012

RWA2016

BDI2012

Notes:
1) T = date of arrangement approval. PPG = public and publicly guaranteed.
2) Red lines/bars indicate the CtR indicator for the arrangement of interest.
3) The median, interquartile range, and comparator bars reflect all UCT arrangements (including blends) approved for PRGT countries between 2010 and 2020.
4) PRGT countries in the control group with multiple arrangements are entered as separate events in the database.
5) Gross international reserves refer to the gross imputed reserves for Cameroon.

©International Monetary Fund. Not for Redistribution


CAMEROON

Table 1. Cameroon: Selected Economic and Financial Indicators, 2022-28


(CFAF billion, unless otherwise indicated)

2022 2023 2024 2025 2026 2027 2028


Est. 4th Rev. Proj. 4th Rev. Proj. Proj. Proj. Proj. Proj.
(Annual percentage change, unless otherwise indicated)
National account and prices
GDP at constant prices 3.6 4.0 4.0 4.2 4.3 4.5 4.5 4.5 4.6
Oil GDP at constant prices 2.1 -1.8 0.5 -1.3 2.7 1.3 0.2 0.2 0.2
Non-Oil GDP at constant prices 3.6 4.1 4.1 4.3 4.3 4.5 4.6 4.6 4.7
GDP deflator 6.3 2.7 3.1 2.7 3.5 4.0 3.1 2.6 1.7
Nominal GDP (at market prices, CFAF billions) 27,702 29,457 29,704 31,521 32,063 34,822 37,515 40,216 42,770
Oil 1,155 872 957 797 976 939 900 866 837
Non-Oil 26,548 28,585 28,747 30,724 31,088 33,884 36,615 39,349 41,933
Consumer prices (average) 6.3 6.2 7.2 4.8 5.9 5.5 4.9 3.4 2.5
Consumer prices (eop) 7.3 5.9 6.2 3.7 5.5 5.2 3.6 2.0 2.0

Money and credit


Broad money (M2) 11.4 9.0 9.0 8.0 8.4 7.6 7.4 7.2 7.1
Net foreign assets 1/ 7.7 2.9 1.6 0.7 3.2 2.7 2.2 2.5 3.2
Net domestic assets 1/ 3.6 6.1 7.4 7.3 5.3 5.0 5.2 4.7 3.8
Domestic credit to the private sector 13.6 10.4 11.2 9.2 9.5 7.7 7.4 7.2 7.2

(Percent of GDP, unless otherwise indicated)


Savings and investments
Gross national savings 15.3 15.6 15.6 16.1 16.2 17.0 17.3 18.3 19.1
Gross domestic investment 18.7 18.5 18.6 19.2 19.0 19.4 20.1 20.9 21.8
Public investment 4.6 5.0 4.6 5.4 5.3 5.9 6.6 7.2 7.5
Private investment 14.1 13.5 13.9 13.7 13.7 13.6 13.5 13.8 14.4

Central government operations


Total revenue (including grants) 15.9 15.9 16.0 15.5 15.9 15.5 15.6 15.7 15.8
Oil revenue 3.5 2.9 2.9 2.1 2.5 2.0 1.9 1.8 1.7
Non-oil revenue 12.1 12.7 12.7 13.1 13.1 13.3 13.6 13.8 14.0
Non-oil revenue (percent of non-oil GDP) 12.6 13.1 13.1 13.4 13.5 13.7 13.9 14.1 14.3
Total expenditure 17.1 16.7 16.6 16.1 16.3 15.9 16.4 16.6 16.7
Overall fiscal balance (payment order basis)
Excluding grants -1.5 -1.1 -1.0 -1.0 -0.7 -0.6 -0.9 -1.0 -0.9
Including grants -1.1 -0.8 -0.7 -0.6 -0.4 -0.4 -0.8 -0.9 -0.9
Overall fiscal balance (cash basis)
Excluding grants -1.6 -2.4 -2.3 -1.8 -1.4 -1.1 -1.3 -1.0 -0.9
Including grants -1.2 -2.0 -1.9 -1.5 -1.1 -0.9 -1.2 -0.9 -0.9
Non-oil primary balance (payment order basis) -3.9 -2.5 -2.5 -1.7 -1.9 -1.3 -1.6 -1.6 -1.6
Non-oil primary balance (payment order basis, percent of non-oil GDP) -4.0 -2.6 -2.6 -1.7 -2.0 -1.4 -1.7 -1.7 -1.6

External sector
Trade balance -0.7 -1.4 -1.7 -1.6 -1.5 -1.3 -1.6 -1.7 -1.7
Oil exports 7.8 5.2 5.5 4.5 5.1 4.9 4.2 3.5 3.0
Non-oil exports 7.8 8.2 8.4 8.0 8.5 8.3 8.2 8.2 8.3
Imports 16.3 14.8 15.6 14.1 15.1 14.6 14.0 13.4 13.0
Current account balance
Excluding official grants -3.7 -3.3 -3.3 -3.1 -2.9 -2.7 -2.8 -2.7 -2.8
Including official grants -3.4 -2.9 -3.0 -3.0 -2.8 -2.5 -2.8 -2.7 -2.7
Terms of trade -10.6 -7.6 -2.2 -1.6 1.6 0.5 -4.4 -5.5 -4.5

Public debt
Stock of public debt 45.3 43.2 41.8 41.1 39.0 36.1 34.1 32.6 31.4
Of which: external debt 30.8 30.7 29.2 29.7 28.5 27.0 26.0 25.5 25.4

Sources: Country authorities; and IMF staff estimates and projections.


1/ Percent of broad money at the beginning of the period.

INTERNATIONAL MONETARY FUND 31

©International Monetary Fund. Not for Redistribution


CAMEROON

Table 2a. Cameroon: Central Government Operations, 2022-28


(CFAF billion, unless otherwise indicated)

2022 2023 2024 2025 2026 2027 2028


Est. 4th Rev. Proj. 4th Rev. Proj. Proj. Proj. Proj. Proj.

Total revenue and grants 4,417 4,696 4,743 4,878 5,106 5,409 5,843 6,315 6,741
Total revenue 4,313 4,595 4,644 4,782 5,009 5,328 5,799 6,275 6,720
Oil sector revenue 973.8 842 870 668 810 691 698 709 724
Non-oil sector revenue 3,339 3,754 3,774 4,114 4,200 4,636 5,100 5,566 5,996
Direct taxes 838 956 964 1,062 1,069 1,208 1,372 1,528 1,676
Special tax on petroleum products 150 170 173 178 181 189 198 207 216
Other taxes on goods and services 1,699 1,905 1,915 2,094 2,125 2,385 2,624 2,882 3,087
Taxes on international trade 420 453 453 487 509 520 547 576 623
Non-tax revenue 232 269 269 294 316 335 360 374 394
Total grants 104 101 99 96 97 81 45 40 21
Projects 49 35 35 37 38 41 45 40 21
Other 55 66 64 59 59 40 0 0 0

Total expenditure 4,725 4,923 4,937 5,082 5,227 5,546 6,135 6,668 7,123
Current expenditure 3,448 3,400 3,506 3,289 3,494 3,428 3,596 3,775 3,930
Wages and salaries 1,193 1,297 1,313 1,381 1,428 1,487 1,557 1,682 1,780
Goods and services 893 754 833 820 927 956 1,030 1,047 1,063
Subsidies and transfers 1,151 1,026 1,037 752 818 627 636 643 654
Interest 211 323 323 335 320 359 372 403 432
External 169 194 194 197 182 209 211 229 248
Domestic 42 129 129 138 138 150 162 173 184
Capital expenditure 1,279 1,470 1,379 1,713 1,690 2,037 2,489 2,893 3,194
Domestically financed investment 581 605 627 806 819 1,012 1,389 1,767 2,085
Foreign-financed investment 688 835 723 876 831 986 1,060 1,086 1,069
Rehabilitation and participation 10 30 29 30 40 40 40 40 40
Net lending -2 0 0 0 0 0 0 0 0
Local production stimulus fund 0 21 21 50 13 0 0 0 0
Decentralization addendum special account 0 31 31 31 30 0 0 0 0

Overall balance (payment order basis)


Excluding grants -412 -327 -294 -301 -218 -218 -336 -393 -404
Including grants -308 -226 -194 -204 -121 -137 -292 -353 -382

CEMAC reference fiscal balance -819 -497 -489 -174 -216 5 -245 -378 -466

Adjustment to cash basis -25 -374 -385 -255 -220 -170 -170 0 0
Unexecuted payment orders (-=reduction) 0 0 0 0 0 0 0 0 0
Floats and arrears (- = reduction) -25 -374 -385 -255 -220 -170 -170 0 0
o/w Arrears (- = reduction) -43 -200 -370 -115 -150 -100 -100 0 0
o/w Floats (- = reduction) 18 -159 0 -125 -50 -50 -50 0 0
o/w other arrears 1/ 0 -15 -15 -15 -20 -20 -20 0 0

Overall balance (cash basis)


Excluding grants -436 -702 -678 -556 -438 -388 -506 -393 -404
Including grants -332 -601 -579 -459 -341 -307 -462 -353 -382

Financing 332 335 393 325 89 203 462 353 382


External financing, net 310 296 291 184 264 287 398 432 583
Amortization -589 -704 -704 -660 -643 -657 -623 -654 -572
Drawings 898 1,000 995 843 907 945 1,021 1,086 1,155
Eurobond 0 0 0 0 0 0 0 0 0
Domestic financing, net 22 39 102 142 -176 -84 64 -79 -201
Banking system, net 73 302 302 180 61 71 69 122 148
Central Bank 102 110 110 -81 -64 -129 -149 -112 -99
SDR Allocation 70 80 80 0 0 0 0 0 0
Commercial Banks -28 192 192 261 125 200 218 235 247
Non-bank financing, net -51 -262 -200 -38 -236 -156 -5 -201 -349

Financing gap 0 265 186 134 253 104 0 0 0

IMF Financing 136 136 46 89 44 0 0 0


ECF 45 45 15 30 15 0 0 0
EFF 91 91 31 59 30 0 0 0

Budget Support (excl. IMF) 129 50 88 164 60 0 0 0


AfDB 41 23 0 18 0 0 0 0
WB 62 0 62 120 60 0 0 0
France 27 27 26 26 0 0 0 0
EU 0 0 0 0 0 0 0 0
Other 0 0 0 0 0 0 0 0

Exceptional Financing 0 0 0 0 0 0 0 0

Residual gap 0 0 0 0 0 0 0 0

Memorandum items:
Primary balance (payment order basis, incl. grants) -97 97 129 130 199 222 81 50 50
Primary balance (cash basis, incl. grants) -122 -278 -256 -125 -21 52 -89 50 50
Non-oil primary balance (payment order basis, incl. grants) -1,071 -745 -741 -537 -611 -470 -617 -659 -674
Non-oil primary balance (cash basis, incl. grants) -1,095 -1,119 -1,126 -792 -831 -640 -787 -659 -674

Sources: Country authorities; and IMF staff estimates and projections.


1/ Other arrears include the stock of unstructured debt held by CAA and the "floating" domestic debt at the Treasury, as defined in the TMU.

32 INTERNATIONAL MONETARY FUND

©International Monetary Fund. Not for Redistribution


CAMEROON

Table 2b. Cameroon: Central Government Operations, 2022-2028


(Percent of GDP)

2022 2023 2024 2025 2026 2027 2028


Est. 4th Rev. Proj. 4th Rev. Proj. Proj. Proj. Proj. Proj.

Total revenue and grants 15.9 15.9 16.0 15.5 15.9 15.5 15.6 15.7 15.8
Total revenue 15.6 15.6 15.6 15.2 15.6 15.3 15.5 15.6 15.7
Oil sector revenue 3.5 2.9 2.9 2.1 2.5 2.0 1.9 1.8 1.7
Non-oil sector revenue 12.1 12.7 12.7 13.1 13.1 13.3 13.6 13.8 14.0
Direct taxes 3.0 3.2 3.2 3.4 3.3 3.5 3.7 3.8 3.9
Special tax on petroleum products 0.5 0.6 0.6 0.6 0.6 0.5 0.5 0.5 0.5
Other taxes on goods and services 6.1 6.5 6.4 6.6 6.6 6.8 7.0 7.2 7.2
Taxes on international trade 1.5 1.5 1.5 1.5 1.6 1.5 1.5 1.4 1.5
Non-tax revenue 0.8 0.9 0.9 0.9 1.0 1.0 1.0 0.9 0.9
Total grants 0.4 0.3 0.3 0.3 0.3 0.2 0.1 0.1 0.0
Projects 0.2 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.0
Other 0.2 0.2 0.2 0.2 0.2 0.1 0.0 0.0 0.0

Total expenditure 17.1 16.7 16.6 16.1 16.3 15.9 16.4 16.6 16.7
Current expenditure 12.4 11.5 11.8 10.4 10.9 9.8 9.6 9.4 9.2
Wages and salaries 4.3 4.4 4.4 4.4 4.5 4.3 4.2 4.2 4.2
Goods and services 3.2 2.6 2.8 2.6 2.9 2.7 2.7 2.6 2.5
Subsidies and transfers 4.2 3.5 3.5 2.4 2.6 1.8 1.7 1.6 1.5
Interest 0.8 1.1 1.1 1.1 1.0 1.0 1.0 1.0 1.0
External 0.6 0.7 0.7 0.6 0.6 0.6 0.6 0.6 0.6
Domestic 0.2 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4
Capital expenditure 4.6 5.0 4.6 5.4 5.3 5.9 6.6 7.2 7.5
Domestically financed investment 2.1 2.1 2.1 2.6 2.6 2.9 3.7 4.4 4.9
Foreign-financed investment 2.5 2.8 2.4 2.8 2.6 2.8 2.8 2.7 2.5
Rehabilitation and participation 0.0 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1
Net lending 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Local production stimulus fund 0.0 0.1 0.1 0.2 0.0 0.0 0.0 0.0 0.0
Decentralization addendum special account 0.0 0.1 0.1 0.1 0.1 0.0 0.0 0.0 0.0

Overall balance (payment order basis)


Excluding grants -1.5 -1.1 -1.0 -1.0 -0.7 -0.6 -0.9 -1.0 -0.9
Including grants -1.1 -0.8 -0.7 -0.6 -0.4 -0.4 -0.8 -0.9 -0.9

CEMAC reference fiscal balance -3.0 -1.7 -1.6 -0.6 -0.7 0.0 -0.7 -0.9 -1.1

Adjustment to cash basis -0.1 -1.3 -1.3 -0.8 -0.7 -0.5 -0.5 0.0 0.0
Unexecuted payment orders (-=reduction) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Floats and arrears (- = reduction) -0.1 -1.3 -1.3 -0.8 -0.7 -0.5 -0.5 0.0 0.0
o/w Arrears (- = reduction) -0.2 -0.7 -1.2 -0.4 -0.5 -0.3 -0.3 0.0 0.0
o/w Floats (- = reduction) 0.1 -0.5 0.0 -0.4 -0.2 -0.1 -0.1 0.0 0.0
o/w other arrears 1/ 0.0 -0.1 -0.1 0.0 -0.1 -0.1 -0.1 0.0 0.0

Overall balance (cash basis)


Excluding grants -1.6 -2.4 -2.3 -1.8 -1.4 -1.1 -1.3 -1.0 -0.9
Including grants -1.2 -2.0 -1.9 -1.5 -1.1 -0.9 -1.2 -0.9 -0.9

Financing 1.2 1.1 1.3 1.0 0.3 0.6 1.2 0.9 0.9
External financing, net 1.1 1.0 1.0 0.6 0.8 0.8 1.1 1.1 1.4
Amortization -2.1 -2.4 -2.4 -2.1 -2.0 -1.9 -1.7 -1.6 -1.3
Drawings 3.2 3.4 3.4 2.7 2.8 2.7 2.7 2.7 2.7
Eurobond 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Domestic financing, net 0.1 0.1 0.3 0.4 -0.5 -0.2 0.2 -0.2 -0.5
Banking system, net 0.3 1.0 1.0 0.6 0.2 0.2 0.2 0.3 0.3
Central Bank 0.4 0.4 0.4 -0.3 -0.2 -0.4 -0.4 -0.3 -0.2
SDR Allocation 0.3 0.3 0.3 0.0 0.0 0.0 0.0 0.0 0.0
Commercial Banks -0.1 0.7 0.6 0.8 0.4 0.6 0.6 0.6 0.6
Non-bank financing, net -0.2 -0.9 -0.7 -0.1 -0.7 -0.4 0.0 -0.5 -0.8

Financing gap 0.0 0.9 0.6 0.4 0.8 0.3 0.0 0.0 0.0

IMF Financing 0.0 0.5 0.5 0.1 0.3 0.1 0.0 0.0 0.0

Budget Support (excl. IMF) 0.0 0.4 0.2 0.3 0.5 0.2 0.0 0.0 0.0

Exceptional Financing 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Residual gap 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Memorandum items:
Primary balance (payment order basis, incl. grants) -0.3 0.3 0.4 0.4 0.6 0.6 0.2 0.1 0.1
Primary balance (cash basis, incl. grants) -0.4 -0.9 -0.9 -0.4 -0.1 0.1 -0.2 0.1 0.1
Non-oil primary balance (payment order basis, incl. grants) -3.9 -2.5 -2.5 -1.7 -1.9 -1.3 -1.6 -1.6 -1.6
Non-oil primary balance (cash basis, incl. grants) -4.0 -3.8 -3.8 -2.5 -2.6 -1.8 -2.1 -1.6 -1.6

Sources: Country authorities; and IMF staff estimates and projections.


1/ Other arrears include the stock of unstructured debt held by CAA and the "floating" domestic debt at the Treasury, as defined in the TMU.

INTERNATIONAL MONETARY FUND 33

©International Monetary Fund. Not for Redistribution


CAMEROON

Table 3. Cameroon: Balance of Payments, 2022-28


(CFAF billion, unless otherwise indicated)

2022 2023 2024 2025 2026 2027 2028


Est. 4th Rev. Proj. 4th Rev. Proj. Proj. Proj. Proj. Proj.
(CFAF billion)

Current account balance -941 -863 -884 -958 -896 -866 -1,036 -1,084 -1,160
Trade balance -197 -424 -513 -491 -484 -470 -607 -666 -720
Exports, goods 4,322 3,944 4,135 3,940 4,371 4,600 4,641 4,709 4,860
Oil and oil products 2,163 1,536 1,645 1,415 1,648 1,702 1,569 1,409 1,289
Non-oil sector 2,159 2,408 2,490 2,525 2,724 2,898 3,072 3,300 3,571
Imports, goods -4,519 -4,367 -4,648 -4,431 -4,856 -5,070 -5,248 -5,375 -5,580
Services (net) -508 -391 -437 -381 -426 -425 -419 -406 -433
Exports, services 1,073 1,394 1,287 1,521 1,413 1,556 1,707 1,860 1,990
Imports, services -1,581 -1,785 -1,724 -1,902 -1,840 -1,981 -2,126 -2,266 -2,423
Income (net) -689 -439 -411 -425 -414 -459 -482 -518 -553
Of which: interest due on public debt -169 -194 -194 -197 -182 -209 -211 -229 -248
Transfers (net) 454 390 477 339 429 488 472 507 547
Inflows 727 579 757 540 731 815 824 884 940
Outflows -273 -189 -280 -201 -302 -327 -352 -377 -393
Capital and financial account balance 1,421 898 893 901 984 1,034 1,237 1,329 1,517
Capital account 135 35 35 37 38 41 45 40 21
Capital transfers 49 35 35 37 38 41 45 40 21
Financial account 1,287 863 857 864 946 993 1,193 1,289 1,496
Official capital 145 296 291 184 264 287 399 434 586
Borrowing 733 1,000 995 843 907 945 1,021 1,086 1,155
Of which: SDR Allocation 0 0 0 0 0 0 0 0 0
Amortization -589 -704 -704 -660 -643 -657 -623 -654 -572
Non-official capital (net) 755 587 586 655 657 751 839 900 939
of which: Foreign direct investment 560 565 554 631 622 713 799 858 896
Short-term private capital, net 387 -20 -20 25 25 -45 -45 -45 -30
Errors and omissions 68 0 0 0 0 0 0 0 0

Overall balance 548 35 9 -57 88 168 202 245 357

Financing -548 -35 -9 57 -88 -168 -202 -245 -357


Bank of Central African States -669 -266 -161 -25 -289 -195 -73 -96 -219
IMF Repayments 0 -34 -33 -53 -51 -78 -129 -149 -138
SDR Allocation 0 0 0 0 0 0 0 0 0
Financing gap 0 265 186 134 253 104 0 0 0
IMF Financing 0 136 136 46 89 44 0 0 0
Budget Support (excl. IMF) 0 129 50 88 164 60 0 0 0
Exceptional Financing 0 0 0 0 0 0 0 0 0
Residual gap 0 0 0 0 0 0 0 0 0
(Percent of GDP)
Trade balance -0.7 -1.4 -1.7 -1.6 -1.5 -1.3 -1.6 -1.7 -1.7
Oil exports 7.8 5.2 5.5 4.5 5.1 4.9 4.2 3.5 3.0
Non-oil exports 7.8 8.2 8.4 8.0 8.5 8.3 8.2 8.2 8.3
Imports 16.3 14.8 15.6 14.1 15.1 14.6 14.0 13.4 13.0
Current account balance
Including grants -3.4 -2.9 -3.0 -3.0 -2.8 -2.5 -2.8 -2.7 -2.7
Excluding grants -3.7 -3.3 -3.3 -3.1 -2.9 -2.7 -2.8 -2.7 -2.8
Overall balance 2.0 0.1 0.0 -0.2 0.3 0.5 0.5 0.6 0.8
Foreign direct investment 2.0 1.9 1.9 2.0 1.9 2.0 2.1 2.1 2.1
(Percentage change, unless otherwise indicated)

Export volume 7.5 6.5 5.8 4.8 4.6 5.8 6.7 8.3 8.5
Crude oil -0.4 -6.4 -6.4 -9.7 -9.7 -19.3 -17.6 -16.3 -17.8
Nonoil 9.2 8.9 8.2 7.2 7.0 9.3 9.1 10.2 10.1
Import volume -8.1 9.7 10.1 4.8 5.0 5.5 4.6 3.3 4.2
Terms of trade -10.6 -7.6 -2.2 -1.6 1.6 0.5 -4.4 -5.5 -4.5
Non-oil export price index -2.1 0.7 6.6 -2.2 2.3 -2.6 -2.9 -2.5 -1.7
Export price index 23.4 -14.8 -9.6 -4.7 1.1 -0.5 -5.4 -6.3 -4.9
Import price index 38.0 -7.8 -7.6 -3.2 -0.5 -1.1 -1.1 -0.9 -0.4
Oil price ($US dollars per barrel) 96.4 75.3 80.5 69.8 79.9 76.0 72.7 69.9 67.5

Sources: Cameroonian authorities; and IMF staff estimates and projections.

34 INTERNATIONAL MONETARY FUND

©International Monetary Fund. Not for Redistribution


CAMEROON

Table 4. Cameroon: Monetary Survey, 2022-28


(CFAF billion, unless otherwise indicated)
2022 2023 2024 2025 2026 2027 2028
Est. 4th Rev. Proj. 4th Rev. Proj. Proj. Proj. Proj. Proj.

Net foreign assets 3,193 3,432 3,327 3,494 3,609 3,867 4,098 4,373 4,761
Bank of Central African States (BEAC) 1,854 2,018 1,913 2,049 2,164 2,392 2,594 2,839 3,196
Of which : BEAC foreign assets 3,191 3,457 3,352 3,481 3,641 3,836 3,909 4,005 4,224
Of which: IMF credit -794 -896 -896 -889 -934 -901 -772 -623 -485
Commercial banks 1,339 1,414 1,414 1,444 1,444 1,474 1,504 1,534 1,564

Net domestic assets 4,964 5,461 5,566 6,109 6,034 6,512 7,050 7,574 8,033
Domestic credit 6,126 6,954 6,983 7,509 7,478 7,925 8,134 8,664 9,249
Net claims on the public sector 2,328 2,766 2,766 2,942 2,865 2,961 2,807 2,958 3,136
Net credit to the central government 2,267 2,705 2,705 2,930 2,854 2,970 3,036 3,158 3,306
Central Bank 978 914 914 621 688 354 -50 -416 -770
Claims 1,371 1,473 1,473 1,466 1,511 1,478 1,349 1,200 1,061
Credit under statutory ceiling 577 577 577 577 577 577 577 577 577
Counterpart of IMF credit 794 896 896 889 934 901 772 623 485
Deposits -393 -559 -560 -845 -823 -1,124 -1,399 -1,616 -1,832
Commercial Banks 1,289 1,791 1,791 2,310 2,166 2,616 3,084 3,568 4,065
Claims on the Treasury 1,341 1,791 1,791 2,310 2,166 2,616 3,084 3,568 4,065
Deposits -52 0 0 0 0 0 0 0 0
Deposits of other public entities -510 -510 -510 -560 -560 -580 -800 -800 -800
Credit to autonomous agencies 27 27 27 27 27 27 27 29 30
Credit to the economy 1/ 4,342 4,732 4,762 5,111 5,157 5,508 5,871 6,277 6,713
Credit to public enterprises 544 544 544 544 544 544 544 571 600
Credit to financial institutions 57 57 57 57 57 57 57 57 57
Credit to the private sector 3,742 4,131 4,161 4,510 4,556 4,907 5,270 5,649 6,056
Other items (net) -1,163 -1,493 -1,417 -1,400 -1,444 -1,412 -1,084 -1,090 -1,216
Broad money 8,157 8,893 8,893 9,603 9,643 10,379 11,148 11,947 12,794
Currency outside banks 1,614 1,761 1,761 1,903 1,911 2,058 2,212 2,372 2,541
Deposits 6,544 7,132 7,132 7,700 7,732 8,321 8,936 9,576 10,253
Memorandum items:
Net borrowing from the central bank excluding IMF 184 18 17 -269 -246 -547 -822 -1,039 -1,255
Contribution to the growth of broad money (percentage points)
Net foreign assets 7.7 2.9 1.6 0.7 3.2 2.7 2.2 2.5 3.2
Net domestic assets 3.6 6.1 7.4 7.3 5.3 5.0 5.2 4.7 3.8
Of which : net credit to the central government -0.4 5.4 5.4 2.5 1.7 1.2 0.6 1.1 1.2
Credit to the economy (annual percentage change) 15.1 9.0 9.7 8.0 8.3 6.8 6.6 6.9 6.9
Credit to the private sector
Annual percentage change 13.6 10.4 11.2 9.2 9.5 7.7 7.4 7.2 7.2
In percent of GDP 13.5 14.0 14.0 14.3 14.2 14.1 14.0 14.0 14.2
Broad money (annual percentage change) 11.4 9.0 9.0 8.0 8.4 7.6 7.4 7.2 7.1
Currency outside banks 4.7 9.1 9.1 8.1 8.5 7.7 7.5 7.2 7.1
Deposits 13.1 9.0 9.0 8.0 8.4 7.6 7.4 7.2 7.1
Velocity (GDP/average M2) 3.4 3.3 3.3 3.3 3.3 3.4 3.4 3.4 3.3

Sources: BEAC and IMF staff calculations.


1/ Credit to the economy includes credit to public enterprises, financial institutions and the private sector.

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Table 5. Cameroon: Capacity to Repay the Fund, 2022-2044


2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044

Fund obligations based on existing credit


(SDR millions)
Principal - 41.4 63.5 96.6 159.2 184.0 160.1 143.5 110.4 66.2 36.8 14.7 - - - - - - - - - - -
Charges and interest 2.0 15.2 30.1 30.1 29.7 28.4 26.5 24.3 22.2 20.0 18.3 17.4 17.3 17.3 17.3 17.3 17.3 17.3 17.3 17.3 17.3 17.3 17.3

Fund obligations based on existing and


prospective credit (SDR, millions)1
Principal - 41.4 63.5 96.6 159.2 184.0 169.3 170.5 147.8 105.5 76.1 54.0 24.5 4.9 - - - - - - - - -
Charges and interest 2.6 17.3 32.9 36.5 37.3 36.0 34.0 31.3 28.0 24.6 21.6 19.5 18.1 17.4 17.3 17.3 17.3 17.3 17.3 17.3 17.3 17.3 17.3

Total obligations based on existing and


prospective credit
SDR millions 2.6 58.7 96.3 133.1 196.4 220.0 203.3 201.8 175.8 130.1 97.7 73.5 42.6 22.3 17.3 17.3 17.3 17.3 17.3 17.3 17.3 17.3 17.3
CFAF billions 2.1 47.4 77.4 107.2 158.6 178.6 166.3 165.0 143.8 106.4 79.9 60.1 34.9 18.2 14.1 14.1 14.1 14.1 14.1 14.1 14.1 14.1 14.1
Percent of government revenue 0.0 1.0 1.5 2.0 2.7 2.8 2.5 2.3 1.9 1.3 0.9 0.6 0.3 0.2 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1
Percent of exports of goods and services 0.0 0.9 1.3 1.7 2.5 2.7 2.4 2.3 1.8 1.3 0.9 0.6 0.3 0.2 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1
Percent of debt service2 0.3 5.3 9.4 12.4 19.0 20.2 20.3 18.7 13.9 9.6 7.1 5.9 3.0 1.5 1.1 1.1 1.0 0.9 0.9 0.8 0.7 0.7 0.6
Percent of GDP 0.0 0.2 0.2 0.3 0.4 0.4 0.4 0.4 0.3 0.2 0.1 0.1 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Percent of quota 0.9 21.3 34.9 48.2 71.2 79.7 73.7 73.1 63.7 47.1 35.4 26.6 15.4 8.1 6.3 6.3 6.3 6.3 6.3 6.3 6.3 6.3 6.3
Percent of gross reserves 0.1 1.4 2.1 2.8 4.1 4.5 3.9 3.7 3.0 2.1 1.5 1.0 0.5 0.3 0.2 0.2 0.1 0.1 0.1 0.1 0.1 0.1 0.1

Outstanding IMF credit based on existing


and prospective drawings
SDR millions 966.0 1,090.2 1,137.1 1,095.7 936.6 752.6 583.3 412.8 265.0 159.5 83.4 29.4 4.9 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
CFAF billions 804.0 880.2 914.0 882.6 756.2 610.9 477.0 337.6 216.7 130.4 68.2 24.1 4.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Percent of government revenue 18.2 18.6 17.9 16.3 12.9 9.7 7.1 4.8 2.8 1.6 0.8 0.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Percent of exports of goods and services 14.9 16.2 15.8 14.3 11.9 9.3 7.0 4.6 2.8 1.6 0.8 0.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Percent of debt service2 106.2 98.0 110.8 101.9 90.7 69.1 58.2 38.2 21.0 11.8 6.0 2.4 0.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Percent of GDP 2.9 3.0 2.9 2.5 2.0 1.5 1.1 0.7 0.4 0.3 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Percent of quota 350.0 395.0 412.0 397.0 339.3 272.7 211.3 149.6 96.0 57.8 30.2 10.7 1.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Net use of Fund credit (SDR millions) 138.0 124.2 46.9 -41.4 -159.2 -184.0 -169.3 -170.5 -147.8 -105.5 -76.1 -54.0 -24.5 -4.9 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Disbursements 138.0 165.6 110.4 55.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Repayments and repurchases 0.0 41.4 63.5 96.6 159.2 184.0 169.3 170.5 147.8 105.5 76.1 54.0 24.5 4.9 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Memorandum items: (CFAF billions)


Nominal GDP 27,702 29,704 32,063 34,822 37,515 40,216 42,770 45,564 48,701 51,977 55,497 59,262 63,292 67,605 72,223 77,169 82,466 88,129 94,198 100,699 108,054 115,971 124,494
Exports of goods and services 5,395 5,422 5,785 6,156 6,348 6,569 6,850 7,321 7,838 8,331 8,864 9,436 10,051 10,713 11,425 12,191 13,017 13,904 14,861 15,891 17,039 18,282 19,628
Government revenue 4,417 4,743 5,106 5,409 5,843 6,315 6,741 7,077 7,612 8,165 8,783 9,506 10,287 11,081 11,965 12,940 14,017 15,232 16,569 18,069 19,804 21,766 23,987
Debt service2 757 898 825 866 834 884 819 883 1,034 1,104 1,131 1,024 1,152 1,208 1,260 1,339 1,419 1,536 1,656 1,788 1,931 2,051 2,189
CFAF per SDR (period average) 832.3 807.4 803.8 805.5 807.4 811.8 817.9 817.9 817.9 817.9 817.9 817.9 817.9 817.9 817.9 817.9 817.9 817.9 817.9 817.9 817.9 817.9 817.9

Source: IMF staff estimates and projections.


1/ On May 24, 2019, the IMF Executive Board approved a modified interest rate setting mechanism which effectively sets interest rates to
zero on ECF and SCF through June 2021 and possibly longer. The Board also decided to extend zero interest rate on ESF till end June
2021 while interest rate on RCF was set to zero in July 2015. Based on these decisions and current projections of SDR rate, the following
interest rates are assumed beyond June 2021: 0/0/0/0 percent per annum for the ECF, SCF, RCF and ESF, respectively. The Executive
Board will review the interest rates on concessional lending by end-June 2021 and every two years thereafter.
2/ Total debt service includes IMF repurchases and repayments.
Quota (in SDRs) 276,000,000

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Table 6. Cameroon: Financial Soundness Indicators, 2016-23Q2


(Percent)
2016 2017 2018 2019 2020 2021 2022 2023
Q1 Q2

Capital adequacy
Total bank regulatory capital to risk-weighted assets1 9.1 9.7 10.8 10.7 13.8 14.2 15.0 14.4 16.3
Total capital (net worth) to assets 4.3 4.5 5.0 5.1 6.5 6.5 6.7 6.4 7.0
Total assets (growth) 7.3 4.9 10.3 11.1 8.5 15.9 17.4 20.3 19.3

Asset quality
Non-performing loans (gross) to total loans (gross) 10.7 10.8 12.4 12.8 13.4 14.1 13.0 13.6 15.4
Non-performing loans less provisions to regulatory capital 17.7 9.1 11.8 11.1 11.7 11.6 13.8 17.7 29.6

Earnings and profitability


Return on equity2 1.3 17.0 14.2 16.0 6.4 28.8 17.8
Return on assets 0.8 2.0 1.8 2.1 0.9 3.9 2.3
Non interest expense to gross income 92.9 89.2 87.7 96.6 89.3 84.3 62.5

Liquidity
Liquid assets to total assets 23.2 24.2 26.4 25.9 30.1 30.3 31.4 33.2 29.8
Liquid assets to short-term liabilities 148.7 149.3 162.4 161.9 182.4 189.3 187.7 200.2 186.8

Credit
Gross loan (banks' book) - bn FCFA 3437 3513 3741 3819 4119 4566 4961 5093 5297
Gross loan - annualized growth rate 6.0 2.2 6.5 2.1 7.9 10.9 8.6 12.4 12.2

Other
Foreign-currency-denominated loans to total loans 0.7 2.8 1.0 0.8 0.5 0.1 0.1 0.1 0.1
Foreign-currency-denominated liabilities to total liabilities 0.2 0.1 0.1 0.1 0.1 2.1 5.8 9.4 7.7

Source: Banking Commission of Central Africa (COBAC).


1/ Calculated according to the Basel I guidance.
2/ Return in ROE is calculated based on annualized net profit before tax.

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Table 7. Cameroon: Proposed Schedule of Disbursements and Purchases Under ECF and EFF,
2021–25

Amount Amount
Availability (Millions of SDRs)
Conditions for Disbursement (Percent of Quota)1
Date
Total ECF EFF Total ECF EFF

7/29/2021 Executive Board approval of the ECF & EFF Arrangements. 45.0 15.0 30.0 124.2 41.4 82.8

Observance of the performance criteria for July 30, 2021 and completion of the first review under the
12/15/2021 30.0 10.0 20.0 82.8 27.6 55.2
arrangements
Observance of the performance criteria for December 31, 2021 and completion of the second review
6/15/2022 20.0 6.7 13.3 55.2 18.4 36.8
under the arrangements
Observance of the performance criteria for June 30, 2022 and completion of the third review under the
12/15/2022 20.0 6.7 13.3 55.2 18.4 36.8
arrangements
Observance of the performance criteria for December 31, 2022 and completion of the fourth review
6/15/2023 20.0 6.7 13.3 55.2 18.4 36.8
under the arrangements
Observance of the performance criteria for June 30, 2023 and completion of the fifth review under the
12/15/2023 20.0 6.7 13.3 55.2 18.4 36.8
arrangements

Observance of the performance criteria for December 31, 2023 and completion of the sixth review
6/15/2024 20.0 6.7 13.3 55.2 18.4 36.8
under the arrangements

Observance of the performance criteria for June 30, 2024 and completion of the seventh review under
12/15/2024 20.0 6.7 13.3 55.2 18.4 36.8
the arrangements2

Observance of the performance criteria for December 31, 2024 and completion of the eighth review
6/3/2025 20.0 6.7 13.3 55.2 18.4 36.8
under the arrangements2

Total 215.0 71.7 143.3 593.4 197.8 395.6

Source: IMF staff calculations.


1/ Cameroon's current quota is SDR 276.0 million.
2/ New proposed disbursements under the ECF-EFF program extension.

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Table 8. Cameroon: External Financing Needs and Sources


(CFAF, billions)

2023 2024 2025 2026 2027 2028

Total Financing Requirements 1782 1879 1796 1861 1983 2088


Current Account Deficit 884 896 866 1036 1084 1160
Amortization of PPG Debt 737 694 735 752 803 710
Gross Reserves Accumulation (+ = increase) 161 289 195 73 96 219

Financing Sources 1597 1627 1692 1861 1983 2088


Capital Account 35 38 41 45 40 21
Financial Account 1561 1589 1650 1816 1943 2067

Financing Gap 186 253 104 0 0 0

Additional/Exceptional Financing Sources 186 253 104 0 0 0


IMF Financing 136 89 44 0 0 0
ECF 45 30 15 0 0 0
EFF 91 59 30 0 0 0
Budget Support (excl. IMF) 50 164 60 0 0 0
AfDB 23 18 0 0 0 0
WB 0 120 60 0 0 0
France 27 26 0 0 0 0
EU 0 0 0 0 0 0
Other 0 0 0 0 0 0
Exceptional Financing 0 0 0 0 0 0

Residual gap 0 0 0 0 0 0

Source: Country Authorities and IMF Staff Estimates

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Table 9. Cameroon: Quantitative Performance Criteria (QPC) and Indicative Targets (IT) under the ECF
and EFF Arrangements
(In billions of CFAF, unless otherwise indicated)
End June-23 End-Sept 23 End-Dec 23 End-Mar 24 End-Jun 24 End-Sept 24 End-Dec 24

QPC Est. Performance IT Adjusted IT Est. Performance QPC IT (4th rev.) IT (new) QPC (new) IT (new) QPC (new)

A. Quantitative Performance Criteria 1/


Floor on the non-oil primary fiscal balance (payment order
-331 -233 Met -474 -302 Met -745 65 -30 -508 -480 -611
basis)
Ceiling on the net domestic financing of the central government
132 67 Met 147 192 141 Met 39 -8 12 224 112 -176
(excluding IMF financing) 2/
Ceiling on net borrowing of the central government from the
139 -32 Met 127 172 70 Met 111 0 0 0 0 0
central bank (excluding IMF financing) 2/
Ceiling on the disbursement of non-concessional external debt 346 118 Met 518 139 Met 691 188 185 370 554 739

B. Continuous Quantitative Performance Criteria


(starting from the program approval)
Ceiling on the accumulation of new external payments arrears 3/ 0 … Not met 0 … Not met 0 0 0 0 0 0
PV of contracting and guaranteeing of new external borrowing 4/ 512.9 97.7 Met … 203 Met 512.9 … … 512.9 … 512.9

C. Indicative Targets
Floor on non-oil revenue 1,729 1,906 Met 2,591 2,757 Met 3,754 1016 1038 1974 2958 4200
Ceiling on the net accumulation of domestic payment arrears -81 161 Not met -228 314 Not met -374 -64 -55 -110 -165 -220
Floor for poverty-reducing social spending 624 694 Met 993 1,011 Met 1325 355 265 539 959 1368
Ceiling on direct interventions of SNH 80 90 Not Met 110 134 Not met 145 40 40 80 110 145
Share of spending executed through exceptional procedures on
4 10.9 Not met 4 9 Not met 4 4 4 4 4 4
authorized (payment order) spending 5/
Ceiling on Treasury advances without a budget allocation 6/ 15 42 Not met 15 15 15 15 15 15

Memorandum items 7/:


1. Cumulative external budget support, excluding IMF (earliest
23 23 68 23 129 0 18 78 78 164
disbursement)
2. Balance of the special account for the unused statutory
50 50 50 1 1 1 1 1 1 1
advances

Sources: Country authorities and IMF staff calculations.

Note: The terms in this table are defined in the TMU.


In addition to QPCs enumerated in this table, the Standard Continuous Performance Criteria will also apply: (i) Not to impose new or intensify
existing restrictions on the making of payments and transfers for current international transactions; (ii) Not to introduce new or intensify existing
multiple currency practices; (iii) Not to conclude bilateral payments agreement that are inconsistent with the IMF’s Articles of Agreement (Article
III); and (iv) Not to impose new or intensify existing import restrictions for balance of payments reasons.

1/ Program indicators under A are performance criteria at end-June and end-December 2023, end-June and end-December 2024; indicative
targets otherwise.
2/ The ceiling on net domestic financing (excluding payment of arrears) of the budget and the ceiling on the net borrowing from the central bank
will be adjusted if the amount of disbursements of external budgetary assistance excluding IMF financing, falls short of or exceeds program
forecasts. If disbursements are less (higher) than the programmed amounts, the ceiling will be raised (reduced) pro tanto, up to a maximum of
CFAF 120 billion at the end of each quarter. The ceiling on borrowing from the Central Bank in 2023 includes the use of 2021 SDR allocation of 80
billion CFAF.
3/ The zero ceiling applies until the end of the arrangement.
4/ Cumulative ceiling calculated from January 1, 2022, and reset annually, and monitored on a continuous basis from completion of the first
review under the ECF/EFF arrangement. Excludes ordinary credit for imports, debt relief obtained in the form of rescheduling or refinancing, and
budget support loans from the World Bank.
5/ This refers to payments made by the Treasury without prior authorization (issuance of payment orders, such as cash advances and provisional
budget commitments), excluding debt service payments.
6/ This indicative target will come into effect from July 1, 2023, and limit Treasury advances without a budget allocation to CFAF 15 billion per
quarter.
7/ Updated based on the recent staff estimates.

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Table 10. Cameroon: Prior Action and Structural Benchmarks

Completio Revised
Prior Action Indicator Status Comments
n date1 Deadline
1

Public finance and debt


management
Submit to Parliament the 2024
Finance Act in line with the This prior action was met on
Met
macroeconomic and budgetary November 30, 2023.
framework of the 5th reviews.
Publish a diagnostic of
governance vulnerabilities,
particularly with regard to
corruption, including the
functions of the State most
relevant to economic activity,
namely: i) fiscal governance; (ii)
supervision of the financial sector;
(iii) market regulation; (iv) the rule
of law; and (v) anti-money
laundering and countering the
financing of terrorism (AML/CFT).

Revised
Completio
Structural Benchmark Deadline1 Indicator Status Comments
n date1

Complete the audits of Submission of the Audit Audits of the State’s arrears have
Not met,
government payment arrears and Report and Arrears been completed, and a plan has
1 Sept. 23 implemented
adopt an arrears settlement plan Clearance Plan to IMF been adopted to settle the
with delay
certified by these audits. Staff. arrears over 3-7 years.
Establish an inventory of the
respective debts between the
The inventories have been
public enterprises and the
drawn up, however, a plan for
Government and between the Inventory and clearance
the clearance of the respective
2 public enterprises themselves, as Apr 24 plan shared with IMF Not met
Sept. 23 debts between the government
at end-2020, and adopt a plan for Staff.
and public enterprises will not
the clearance of the respective
be completed until April 2024.
debts between the Government
and public enterprises.
Extractive Sector

The implementing texts of the


mining code have not been
finalized. The creation of the
national mining company,
SONAMINES, tasked with
defending the government's
Finalize and publish all
interests in the sector, required a
3 implementation texts of the 2016 Implementing texts
Not met review and the formulation of a
Mining Code (law n° 2016/017 of Sept. 23 June 24 published.
new code, which will be
December 14, 2016).
submitted to Parliament in
March 2024. Following its
adoption, the government will
publish the implementing texts
of the new mining code as soon
as possible.

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Table 10. Cameroon: Prior Action and Structural Benchmarks (continued)

Business Climate

The revision of Law No.


Revise Law No. 2013/004 of April
2013/004 of April 18, 2013 was
18, 2013, to rationalize incentives
4 delayed to allow an intermediate
and promote healthy competition Dec. 23 Nov. 24 Revised Act published
step (SB7), which has now been
between economic operators.
met.

Good Governance and Anti-


Corruption
Publish a diagnostic of
governance vulnerabilities,
particularly with regard to
corruption, including the The government has completed
functions of the State most a diagnostic of economic
relevant to economic activity, governance in collaboration with
5 Publication of the Not met
namely: i) fiscal governance; (ii) Sept. 23 Prior Action the IMF. The government has
report
supervision of the financial sector; authorized the publication of the
(iii) market regulation; (iv) the rule report by the Board date.
of law; and (v) anti-money
laundering and countering the
financing of terrorism (AML/CFT).
The development of a
restructuring plan for SONARA
has been completed and
validated by the IMC, but the in-
SONARA Restructuring Plan:
Elaborate and submit to depth technical-economic and
Elaborate a restructuring plan for
IMF staff the new financial feasibility study of
6 SONARA, including industrial and Sept. 23 Not met
restructuring plan for option 3 for a complex refinery
financial options under
SONARA. with a hydrocracking unit has
consideration.
not yet been finalized and
submitted to IMF staff.

Replaced by New SB16.


Business Climate. The preparation of an action
Formulate an action plan with plan with recommendations to
recommendations to eliminate eliminate the corporate tax
CIT holidays (including the break, was an intermediate step
Action plan submitted
7 minimum tax) to promote healthy Oct. 23 Met to the revision of Law No.
to IMF staff.
competition between economic 2013/004 of 2013 to streamline
operators, excluding companies incentives and promote healthy
operating in the agriculture, competition between economic
livestock, and fishery sectors. actors (SB4).
Project and Debt Management
Publication of a decree This SB was introduced to
specifying the improve project and debt
Implementation the decree of Not met,
procedures for management. The deadline was
8 October 2021 governing project Aug. 23 implemented
monitoring the revised to August 2023 in the
management units. with delay
performance of project fourth review. It was
management units implemented in November 2023.
Public finance and debt
management
Include in the budget law of year The purpose of this structural
N+1 a budgetary allocation for benchmark is to limit
Allocations in the 2024
9 the clearance of outstanding Dec. 23 outstanding amounts of more
initial budget law
unpaid obligations (RAPs) of more than 90 days at the end of the
than 90 days at the end of year N. fiscal year.

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Table 10. Cameroon: Prior Action and Structural Benchmarks (continued)

Public Investment Management


(PIM)
Increase to at least 80% the
number and total value of
COLEPS is currently operational,
contracts awarded through the Report on the number
but only a limited number of
COLEPS (Cameroon Online E- and value of online
procurement projects is
Procurement System) in some key procurement contracts
10 May 24 registered in the system. To
ministries (infrastructure, from January to May
strengthen reforms in this area,
education, health, posts and 2024 (as a percentage
a new formulation of this SB is
telecommunications) between of total) submitted to
proposed.
January and May 2024, in order to IMF staff
monitor the awarding of public
contracts at the level of central
services.
New Structural Benchmarks
Revenue mobilization
Create a dataset of wages and
This is a long-standing technical
salaries that is suitable for
assistance recommendation. This
simulating IRPP calculations and
Share the database with database plays a key role in
11 that comprises both the entire Nov. 24
IMF staff. assessing the impact of possible
public sector and a representative
IRPP reforms on income and
sample of private sector
equity.
employees.
Prepare a detailed action plan,
Tax arrears are a significant
including the first 100
problem in Cameroon as
outstanding tax and customs
established in the March 2022
debts, including state-owned
IMF technical assistance report.
enterprises, to manage and Submit to IMF staff a
This measure will improve tax
12 recover at least 15 percent of the April 24 detailed and sequenced
revenue collection and
outstanding recoverable tax action plan.
strengthen the governance of
arrears (outstanding as at end-
tax administration by improving
June 2023) and implement 50
the transparency of budget
percent of the measures included
management.
in the action plan.
Public Financial Management
Inclusion in the budget
There are significant weaknesses
of an annex on CAs and
in public investment
PAs that comply with
Take into account in the budget management practices,
the MTBF and are
the commitment authorizations including the management of
consistent with the
(CAs) and payment appropriations multi-year projects. Improving
13 Nov. 24 timetable for the
(PAs) that comply with the MTBF the efficiency of investments,
implementation of
and are consistent with the particularly in public
investment projects
timetable for the implementation infrastructure, will support the
(from the 2025 budget).
of investment projects. private sector and economic
Draft budget law to be
growth.
presented to IMF staff.
Prepare and publish an
Develop comprehensive and annual report for 2024,
realistic public procurement plans, assessing consistency This measure aims to strengthen
which should allow for the between commitment the management of public
14 development of commitment May 25 and cash plans and expenditures, in particular
plans consistent with monthly based on the work of regarding public procurement of
cash flow plans. the Treasury investment projects.
Committee (CTRB) and
its Secretariat.

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Table 10. Cameroon: Prior Action and Structural Benchmarks (concluded)


Minister of Finance to issue an
instruction, following an audit, to
strengthen the management of
correspondent accounts with
The measure aims to strengthen
provisions on the closure of illegal Submit the instruction
15 Dec. 24 cash management of
accounts, the clearance of existing to IMF staff.
correspondent accounts.
arrears, and relevant cash
management rules consistent with
the requirements of the annual
budget law.
This new SB replaces SB6, which
Implementation of the SONARA has not been met. The
Restructuring Plan. development of a restructuring
Carry out the in-depth technical- plan for SONARA has been
economic and financial feasibility completed and validated by the
Conduct and submit
study of option no.3 validated by IMC, but the in-depth technical-
16 June 2024 the study report to IMF
the President of the Republic economic and financial
staff.
related to a refinery complex with feasibility study of option 3 for a
a hydrocracking unit, complex refinery with a
accompanied by the plans and hydrocracking unit has not yet
design of the new refinery. been finalized and submitted to
IMF staff.
Governance
Adopt a timetable for the
transformation of the common
chapters for the benefit of the Validated timetable for
authorizing officers of the transforming common This SB aims to improve
17 ministries and the managers May 24 chapters into transparency in the use of
concerned in the context of the allocations is sent to "common chapters".
reform of the devolution of the IMF staff.
authorization.

The 2025 draft budget


law, presenting the
appropriations for
Include the appropriations for
accidental and
accidental and unforeseeable
unforeseeable
expenses in endowments in the
expenditures in This SB aims to improve
2025 draft budget law, which do
18 Nov. 24 endowments and transparency in the use of
not exceed 3-5 percent of the
specifying the "common chapters".
budget, and specify the
modalities for
modalities for managing the
managing the
endowment.
endowment, is
transmitted to the IMF
staff.
1/ Refers to end of the month.

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Annex I. Risk Assessment Matrix


(July 21, 2023) 1

Risks Likelihood Impact if Realized Recommended Policy Response

Intensification of regional conflict(s). Escalation • Higher inflation and increased • Create fiscal space through wage bill
of Russia’s war in Ukraine or other regional conflicts food insecurity would intensify. control, spending review, and revenue
and resulting economic sanctions disrupt trade • Supply chain disruptions would mobilization for new policies to
(e.g., energy, food, tourism, and/or critical supply continue to affect businesses. mitigate supply shocks in the
chain components), remittances, FDI and financial • Spending pressures (including economy.
High
flows, and payment systems, and lead to refugee on fuel subsidies) would • Prioritize and target public spending
flows. increase, with extension of tax towards the most vulnerable people.
exemptions, which jeopardize • Review and reprioritize tax exemptions
fiscal strategy for programs with higher economic and
social impact.
Commodity price volatility. A succession of • Worsening terms of trade in • Review export promotion incentives to
supply disruptions (e.g., due to conflicts, case of lower commodity prices, ensure that they encourage higher
uncertainty, and export restrictions) and demand improvement in case of higher growth and diversification of the
fluctuations causes recurrent commodity price prices for Cameroon’s main economy.
volatility, external and fiscal pressures in EMDEs, commodity exports (e.g., timber • Prioritize and target public spending
contagion effects, and social and economic High and cocoa) towards the most vulnerable people.
instability. • Unstable fiscal position, with
delays in fiscal adjustment and
reform efforts.
• Further social unrest.

• Slower growth due to weaker • Adjust fiscal policy to anchor


demand from trade partners, expectations of economic agents.
with worsening current account. • Prioritize and target public spending
Weaker demand could cool towards the most vulnerable people.
inflation. • Monitor macro-financial risks.

Persistently high inflation. Amid high economic • Impact on the vulnerable and • In the short term, the regional central
uncertainty and financial sector fragility, major food insecurity bank will need to remain vigilant,
central banks pause monetary policy tightening or • Increase in risk premia, adjusting the monetary stance as
pivot to loosen policy stance prematurely, de- heightened financial sector needed. In the medium-term,
Medium
anchoring inflation expectations, triggering a wage- instability risk. Cameroon needs to accelerate
price spiral and spillovers to financial markets. implementation of reforms to
strengthen the resilience of the
financial sector.

Sovereign debt distress. Domino effects of higher • Capital outflows. • Enhance banking supervision and
global interest rates, a growth slowdown in AEs, • Increase in borrowing costs. enforce prudential regulations.
and/or disorderly debt events in some EMDEs • Create fiscal space to absorb economic,
Medium
spillover to other highly indebted countries, financial, and other shocks.
resulting in capital outflows, an increase in risk • Advance SOE restructuring and PFM
premia, and loss of market access. reforms.

1
The Risk Assessment Matrix (RAM) shows events that could materially alter the baseline path. The relative likelihood is the staff’s subjective
assessment of the risks surrounding the baseline (“low” is meant to indicate a probability below 10 percent, “medium” a probability between
10 and 30 percent, and “high” a probability between 30 and 50 percent). The RAM reflects staff views on the source of risks and overall level
of concern as of the time of discussions with the authorities. Non-mutually exclusive risks may interact and materialize jointly. The
conjunctural shocks and scenarios highlight risks that may materialize over a shorter horizon (between 12 to 18 months) given the current
baseline. Structural risks are those that are likely to remain salient over a longer horizon.

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Social discontent. High inflation, real income loss, • Social unrest could delay fiscal • Review and reprioritize public spending
and spillovers from crises in other countries adjustment. towards programs with higher
(including migration) worsen inequality, trigger • Social discontent and spillovers economic and social impact.
social unrest, and give rise to financing pressures from regional crises (e.g., • Create fiscal space to tackle financial
and detrimental populist policies. This exacerbates displacements of populations) vulnerabilities.
imbalances, slows growth, and triggers market Medium [to could fuel existing internal • Mobilize additional grants and
repricing. High] tensions. concessional loans from financial and
• Rising unrest would further technical partners to cover prioritized
disrupt agricultural production needs.
and growth.
• Delays in investment projects
might be exacerbated.
Structural
Risks
Deepening geoeconomic fragmentation. Broader • • Accelerate labor and product market
and deeper conflict(s) and weakened international reforms to support diversification of
• Risk of reconfiguration of
cooperation result in a more rapid reconfiguration exports and extend trade relations.
relations with traditional
of trade and FDI, supply disruptions, protectionism, partners.
technological and payments systems fragmentation, High
• Further supply disruptions.
rising input costs, financial instability, a fracturing of
• High input costs, financial
international monetary and financial systems, and instability.
lower potential growth.
• Lower potential growth.
• Impact on public services that • Create contingent plans for
Medium
rely on digital infrastructure. cyberattacks.
More frequent extreme climate events. Extreme • Harm agricultural production, • Improve capacity for monitoring and
climate events driven by rising temperatures cause worsening the livelihood of assessing climate policies and
loss of human lives, severe damage to people in rural areas and strengthening early warning systems.
infrastructure, supply disruptions, lower growth, and exacerbating extreme poverty • Address infrastructure gaps and
financial instability. and inequalities. income/developmental disparities
More frequent climate disasters would have wide • Higher recovery spending, among regions, while instituting
ranging impacts on infrastructure, agriculture, and higher financing costs, and appropriate social safety nets.
food security. Over three million people were Medium lower revenues.
estimated to be severely food-insecure between • Supply disruptions and weaker
January and May 2023, a 5 percent increase confidence.
compared to the same period in 2022. With
Cameroon already facing food insecurity, a strong
El Niño presents a significant downside risk to food
supplies, inflation, displacement of persons, and
social stability.
Disorderly energy transition. Disorderly shift to • Energy supply disruptions • Energy sector reform.
net-zero emissions (e.g., owing to shortages in • Stranded assets
critical metals) and climate policy uncertainty cause Low
supply disruptions, stranded assets, market
volatility, and subdued investment and growth.
Regional stability. Political crises in the region, • Increased sovereign financing • Address bank vulnerability/advance
including the recent events in Gabon, may lead to, costs. bank restructuring.
disruption in regional trade integration, further • Intraregional banks’ exposure. • Advance reforms supporting public
destabilization of cross-border security, cause intra- Further deterioration in regional debt sustainability.
region contagion in the banking sector. stability could have spillovers in
Medium to
Cameroon. There are also risks
High
of intra-region cross-country
contagion in the banking sector
as cross-country holdings of
government securities issued by
other CEMAC countries.

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Annex II. Drivers of Inflation in Cameroon

This annex assesses the drivers of inflation in Cameroon and examines the contributions of supply and
demand shocks. The increase in inflation in the post-pandemic period is explained by a combination of
supply and demand shocks and the importance of food prices and inflation expectations. Supply shocks
have been positive since the start of the pandemic. Demand shocks which were negative in the pre-
pandemic and pandemic periods turned positive in the post-pandemic period amplifying the impact of
supply shocks. Post-pandemic, inflation expectations, food prices, and transport costs were the major
drivers of inflation, while the output gap had a negative contribution.

A) What are the drivers of inflation?

A Modified Phillips Curve Equation:

𝟒𝟒 𝟒𝟒 𝟒𝟒 𝟒𝟒
𝟏𝟏 𝟏𝟏 𝟏𝟏 𝟏𝟏
𝝅𝝅𝒕𝒕 = 𝝁𝝁 + 𝜶𝜶𝜶𝜶𝒆𝒆𝒕𝒕 + 𝜷𝜷 �(𝒚𝒚𝒕𝒕−𝒊𝒊 − 𝒚𝒚∗𝒕𝒕−𝒊𝒊 ) + 𝜸𝜸 � ∆𝑵𝑵𝑵𝑵𝑵𝑵𝑵𝑵𝒕𝒕−𝒊𝒊 + 𝜹𝜹 � 𝝅𝝅𝑬𝑬𝑬𝑬,𝒄𝒄𝒄𝒄𝒄𝒄𝒄𝒄
𝒕𝒕−𝒊𝒊 + 𝝑𝝑 � 𝝅𝝅𝑶𝑶𝑶𝑶𝑶𝑶 𝑭𝑭𝑭𝑭𝑭𝑭𝑭𝑭
𝒕𝒕−𝒊𝒊 + 𝜽𝜽𝜽𝜽𝒕𝒕−𝟏𝟏
𝟒𝟒 𝟒𝟒 𝟒𝟒 𝟒𝟒
𝒊𝒊=𝟏𝟏 𝒊𝒊=𝟏𝟏 𝒊𝒊=𝟏𝟏 𝒊𝒊=𝟏𝟏

Where 𝝅𝝅𝒕𝒕 is annualized quarter-over-quarter (QoQ) inflation, 𝝅𝝅𝒆𝒆𝒕𝒕 = 𝝅𝝅𝒕𝒕−𝟏𝟏 proxies inflation expectations, 𝒚𝒚𝒕𝒕 is
the log of real output, 𝒚𝒚∗𝒕𝒕 is the log of potential output, ∆𝑵𝑵𝑵𝑵𝑵𝑵𝑵𝑵𝒕𝒕 is the one-period change in the log of the
Nominal Effective Exchange Rate, 𝝅𝝅𝑬𝑬𝑬𝑬,𝒄𝒄𝒄𝒄𝒄𝒄𝒄𝒄
𝒕𝒕 is Euro Area core inflation, 𝝅𝝅𝑶𝑶𝑶𝑶𝑶𝑶
𝒕𝒕 is oil price inflation, and 𝝅𝝅𝒕𝒕
𝑭𝑭𝑭𝑭𝑭𝑭𝑭𝑭
is
food inflation. Potential output is estimated with a function of changes in capital stock, structural
employment, and total factor productivity using a Solow decomposition (source: Cameroon 2021 Article IV
Staff Report). To ease the interpretation, the contributions of the Nominal Effective Exchange Rate, Euro Area
core inflation, and oil price inflation are labelled as external factors. The contribution of the output gap is
labelled as internal factors. The regression is estimated via standard OLS on quarterly data. Several
robustness checks have been performed—not presented here.

𝑅𝑅2 𝜇𝜇 𝛼𝛼 𝛽𝛽 𝛾𝛾 𝛿𝛿 𝜗𝜗 𝜃𝜃

0.82 0.474∗∗ 0.444∗∗∗ 0.781∗∗∗ −0.424∗∗∗ 0.039∗∗ 0.008∗∗∗ 0.228∗∗∗

- (0.204) (0.159) (0.267) (0.102) (0.015) (0.003) (0.079)

Where 𝑅𝑅2 is the coefficient of determination and standard errors are in parentheses,
*** indicates a significance at 1% and ** a significance at 5%

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Source: IMF Staff Calculation.

The modified Phillips Curve provides a non-exhaustive though very informative view of the drivers of inflation in
Cameroon, as seen by the good fit of the regression (R2=0.82) and the high statistical significance of all
coefficients. The largest two drivers are inflation expectations and food inflation. Assuming expectations are
backward looking, an increase of one percent of inflation expectations raises current inflation by 0.44 percent.
This large pass-through may reflect de-anchored inflation expectations in Cameroon when inflation was well
above the 3 percent BEAC target during the period studied. For instance, post-pandemic inflation expectations
explain a large share of inflation, which reached 7.4 percent QoQ in annualized terms in 2022Q4. Food inflation
is also a major driver of consumer price growth in Cameroon. A one percent increase in food inflation (whether
driven by domestic or imported inflation), raises inflation by 0.23 percent, even more so since the end of the
COVID-19 pandemic. External factors (excluding food)—expressed as a sum of the exchange rate effect, Euro
Area core inflation, and oil price inflation—had a small contribution on inflation over the period 2002Q4-
2019Q4 but have recently grown in importance explaining a significant share of post-pandemic inflation. The
role of internal factors (excluding food)—expressed by output gap pressures—is also significant in recent years.
While the contribution was subdued pre-pandemic, it was negative and large post-pandemic. The role of other
potential omitted variables is thought to be included in the residuals, which appear relatively small in the recent
period.

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B) Is inflation driven by demand or supply shocks?

A bivariate Structural VAR with real GDP growth and inflation:

𝟒𝟒
𝒈𝒈𝒕𝒕 𝝁𝝁𝒈𝒈 𝒈𝒈𝒕𝒕−𝒊𝒊 𝜺𝜺𝑫𝑫𝑫𝑫𝑫𝑫𝑫𝑫𝑫𝑫𝑫𝑫
𝒕𝒕
𝑩𝑩 �𝝅𝝅 � = �𝝁𝝁 � + � 𝑨𝑨𝒊𝒊 �𝝅𝝅 � + � 𝑺𝑺𝑺𝑺𝑺𝑺𝑺𝑺𝑺𝑺𝑺𝑺 �
𝒕𝒕 𝝅𝝅 𝒕𝒕−𝒊𝒊 𝜺𝜺𝒕𝒕
𝒊𝒊=𝟏𝟏

Where 𝒈𝒈𝒕𝒕 is annualized QoQ real GDP growth, 𝝅𝝅𝒕𝒕 is annualized QoQ inflation, and 𝜺𝜺𝑫𝑫𝑫𝑫𝑫𝑫𝑫𝑫𝑫𝑫𝑫𝑫 and 𝜺𝜺𝒕𝒕 are
𝑺𝑺𝑺𝑺𝑺𝑺𝑺𝑺𝑺𝑺𝑺𝑺
𝒕𝒕

demand and supply shocks identified with sign restrictions. The SVAR is estimated using Bayesian methods.

Source: IMF Staff Calculation. Median historical decomposition from 10,000 draws in deviation from initial conditions.

A positive demand shock is defined as a shock that leads both to an increase in real GDP and inflation. A
positive supply shock is a shock that leads to an increase in real GDP coupled with a decrease in inflation.
Although the economy is hit by a multitude of different shocks, these shocks can always be interpreted as being
demand or supply induced. This parsimonious VAR therefore gives a simple view of the aggregate effect of the
shocks driving inflation in Cameroon. The role of demand and supply shocks has overall been relatively equal
over the period studied (2000Q1-2022Q4), with demand and supply shocks alternatively hitting inflation
positively and negatively. A focus on recent years is however informative. Between 2016 and 2019, inflation was
mostly driven down by negative demand shocks. This happened while output growth was decelerating, and
output gap turned negative, decreasing from +0.31 percent in 2015Q4 to -0.29 percent in 2017Q4. During the
Covid-19 pandemic (2020 to 2022), demand shocks continued to be negative as consumption froze, while
supply shocks pushed inflation up because of the supply chain disruptions. As the economy recovered from the
pandemic, both demand and supply shocks pushed inflation up with a supply of goods and services lagging the
new dynamic demand.

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Annex III. External Sector Assessment

Overall Assessment: The external position of Cameroon is assessed to be modestly weaker than warranted
by fundamentals and desirable policies in 2022. The current account balance improved in 2022 on the back of
higher oil and natural gas prices. As the country’s net liability position has increased, with high risk of external
debt distress driven by its debt service burden, fiscal consolidation and structural reform implementation
should be continued to move the current account balance to a level warranted by fundamentals and desirable
policies.

Foreign Assets and Liabilities: Position and Trajectory

Background. Cameroon’s net international investment position (NIIP) is estimated at -29.8 percent of GDP
as of end-2020, deteriorating from -28.2 percent of GDP in 2019.1 Gross foreign assets stood at 30.1
percent of GDP in 2020, of which nonfinancial private sector assets and reserve assets take the largest
shares. Gross foreign liabilities amount to 59.8 percent of GDP, of which public debt and foreign direct
investment (FDI) accounted for the largest shares. Between 2015-20, Cameroon’s net liability position
increased by 10.6 percent of GDP, which can be attributed to both accumulation of financial account flows
as well as valuation effects.
Assessment. Cameroon’s net liability position continued to increase, although the pace is expected to slow
down with the improved current account balance. Cameroon’s NIIP is assessed to be sustainable but large
share of debt liabilities raises risks to external sustainability (Cameroon is at high risk of external debt
distress: see Debt Sustainability Analysis). Further efforts to strengthen public debt management and limit
non-concessional borrowing remain critical to ensure external sustainability.

NIIP: Gross Assets: Debt Assets:


2020 (% GDP) Gross Liab.: 59.8 Debt Liab.: 48.4
-29.7 -30.1 20.4

Current Account

Background. Cameroon’s current account


balance improved in 2022 to -3.4 percent of GDP Figure 1. Cameroon: Current Account
on the back of higher oil and gas exports. Balance
Cameroon’s current account deficit is projected
to further narrow to around 3.0 percent of GDP
in 2023. In the medium term, the current account
balance is projected to stabilize around -3.0
percent of GDP thanks to the continued tight
fiscal balance and broader export base. However,
the outlook remains highly uncertain, subject to
risks, including more intensification of regional
conflicts and commodity price volatility. In the
longer term, the strength of Cameroon’s external
sector is predicated on the success of measures
envisaged under SND-30—to enhance domestic
production and diversify export products, and the African Continental Free Trade Area (AFCTA).
Assessment. Cameroon’s 2022 current account was assessed to be modestly weaker than warranted by
fundamentals and desirable policies. The EBA-Lite Current Account (CA) model suggests a CA norm of -2.7
percent of GDP against a cyclically adjusted CA of -4.6 percent of GDP (Table 1). This implies a CA gap of -
1.9 percent of GDP under current policies. Policy gap is assessed at 4.0 percent of GDP, driven by tighter

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fiscal policy (+1.9 percent), lower public health spending (+1.8 percent), change in reserves (+0.6 percent),
and slower credit growth (+0.3 percent) compared to peers.2 On the other hand, the EBA-Lite Real Effective
Exchange Rate (REER) model indicates a CA gap of 1.1 percent of GDP (corresponding to a REER gap of -
8.6 percent). Given Cameroon’s persistent CA deficit, staff considers the results from the REER approach
less reliable and estimates the CA gap based on the CA model. Accordingly, Cameroon’s external position
is assessed to be modestly weaker than warranted by fundamentals and desirable policy settings in 2022,
given the gap was within a range of -2 to -1 percent as per classification.

Table 1. Cameroon: Model Estimates for 2022 (in percent of GDP)


CA model 1/ REER model 1/
(in percent of GDP)
CA-Actual -3.4
Cyclical contributions (from model) (-) 0.6
COVID-19 adjustors (-) 0.0
Additional temporary/statistical factors (-) 0.0
Natural disasters and conflicts (-) 0.6
Adjusted CA -4.6

CA Norm (from model) 2/ -2.7


Adjustments to the norm (-) 0.0
Adjusted CA Norm -2.7

CA Gap -1.9 1.1


o/w Relative policy gap 4.0

Elasticity -0.1

REER Gap (in percent) 14.5 -8.6


1/ Based on the EBA-lite 3.0 methodology
2/ Cyclically adjusted, including multilateral consistency adjustments.

Real Exchange Rate

Background. Cameroon’s REER based on the


Figure 2. Cameroon: Real Effective
Consumer Price Index appreciated by 0.1 percent
Exchange Rates (2010=100)
in 2021 relative to the previous year, reflecting
the mild depreciation of the Euro vis-à-vis the
USD but offset by lower inflation domestically. In
2022, the was a 3.1 percent depreciation as Euro
depreciation against strong US dollar continued
and domestic inflation edged up. Over the longer
term, REER has been broadly stable since the
1994 devaluation, with year-to-year fluctuations
not exceeding 10 percent (Figure 2). Overall, the
price competitiveness gains achieved appear to
have been preserved over the last decades.
Assessment. The EBA-lite CA model estimates a
REER gap of 14.5 percent in 2020, whereas the REER Index model yields a REER gap of -8.6 percent.
Consistent with the assessment of the CA gap, staff assesses the REER to be overvalued by 14.5 percent
based on the CA model.

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Capital and Financial Accounts: Flows and Policy Measures

Background. In 2022, net medium-to-long term capital inflows decreased to 2.7 percent of GDP from 3.7
percent of GDP in the previous year. The stronger capital inflows in 2021 was mainly due to the SDR
allocation and a Eurobond. FDI inflows continued to be lower compared with the pre-crisis period, at
around 2.0 percent of GDP, compared to 2.6 percent of GDP in 2019.
Assessment. FDI inflows are projected to recover modestly in the medium term, reaching 2.2 percent of
GDP by 2027. However, risks come from various fronts. First, capital inflows could be entrenched at a low
level amidst concerns over Cameroon’s debt sustainability and fragility of the economic recovery. Second,
tight global monetary policy led by advanced economies’ central banks could last longer than the current
expectation, putting pressure on net portfolio inflows. That said, maintaining fiscal consolidation and
pushing forward the steady implementation of long-standing structural reforms to improve business
environment will help attract durable foreign capital inflows.

Reserves Level

Cameroon is a member of the Economic Community of Central African States (CEMAC), a regional currency
union, for which the foreign reserves reached 4.0 months of prospective imports in 2022, somewhat lower
than the five-month benchmark for a resource-rich monetary union.
1
The authorities are in the process of revising data for 2021 and preparing submission for 2022, which is
behind schedule.
2
The model estimates are based on the following desirable policy levels: (i) cyclically adjusted overall fiscal
balance at -1.9 percent of GDP; (ii) public health expenditure at 1.7 percent of GDP; (iii) change in reserves
at 1.7 percent of GDP, as being consistent with the CEMAC regional assessment; (iv) private credit level at
18.1 percent of GDP; (v) change in private credit at 2.3 percent of GDP; (vi) capital control index at 0.35;
(vii) real interest rate at 0.5 percent.

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Annex IV. Cameroon’s Capacity Development Strategy Note


Update (Summary)
This note presents the understanding reached between IMF staff and the Cameroonian authorities on
the capacity development strategy, expected objectives, and technical assistance in support of the
macroeconomic policy priorities for 2023-25.

Recent Technical Assistances and Perspectives

1. Capacity development (CD) activities in Cameroon—through technical assistance (TA)


from both Fund headquarters and the Central Africa Regional Technical Assistance Center
(AFRITAC Center)—continue to be frequent. They have focused on revenue administration, tax
policy, debt and expenditure management, governance, and compilation and dissemination of
statistics. These activities have highly contributed to improving the formulation and implementation
of policies and reforms, as reflected notably in the implementation of the current ECF-EFF program.

2. Capacity building will continue to focus on supporting the authorities’ economic


reform strategy for 2023-25, consolidating past achievements, while making progress in new
areas. The CEMAC Commission has defined a set of reforms which underpin Fund-supported
programs with CEMAC members and organized around five pillars to create the basis for a more
diversified, inclusive, and private sector-led growth and enhanced governance. Building on past TA
provided to Cameroon, the CD strategy supports the overall goal of improving government revenue
mobilization, raising the efficiency, effectiveness, and transparency of public expenditure,
strengthening debt management capacity and medium-term debt strategy (MTDS), and enhancing
statistics compilation and timely dissemination of macroeconomic statistics. In addition, going
forward, Cameroon is likely to need increased assistance in enhancing governance and anti-
corruption efforts and enhancing its financial inclusion, bolstering more integrated and robust
government and securities markets. strategies, as well as building resilience to climate change. On
the latter, it should be noted that AFRITAC plans to provide training on on-site banking supervision
methodology for assessing climate risk in the first half of 2024. This work on emerging priorities will
dovetail with assistance being provided by other institutions and bilateral donors.

Authorities’ Views

3. The authorities continue to highly value the IMF’s capacity building. They collaborate
effectively with the TA missions in various areas and appreciate the Fund’s responsiveness and
availability to deliver high quality TA upon request. They note that priorities have been closely
aligned with the program objectives. They are also of the view that missions are well sequenced and
complementary and that the collaboration between IMF HQ CD departments and AFRITAC Centre is
excellent.

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Table 1. Cameroon: Top Technical Assistance Priorities

Priorities Objectives
Tax policy and revenue 1. Formulate a developmental Medium-Term Revenue Strategy
administration (MTRS), including tax policy reforms and measures to improve
revenue mobilization, modernize tax and customs
administrations, and streamline exemptions.
2. Improve tax compliance by developing a business-friendly tax
and customs administration, enhancing tax auditing, continuing
to expand electronic processes, and combating fraud and
smuggling.
Public Financial 3. Raise the efficiency, effectiveness, and transparency of public
Management expenditure, and reduce fiscal risks from SOEs.
Financial and Fiscal Law 4. Reinforce the good governance, transparency, and anti-
Reform corruption frameworks to bring them in line with international
good practices, with an emphasis on addressing fraud and
corruption.
Debt Management 5. Strengthen debt management capacity and improve
consistency between borrowing decisions and the Medium-
Term Debt Strategy (MTDS).
Government Financial 6. Improve data compilation and reporting
Statistics
Climate Change 7. Implement adaptation and mitigation measures to increase
resilience to climate change.

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Annex V. Implementation of Past Article IV Fund Advice


The traction of Fund policy advice has continued since the previous Article IV Consultation in 2021, with progress in fiscal
consolidation and key structural reforms to boost non-oil revenue, enhance public financial management and improve the
business environment. Cameroon's complex socio-political environment has constrained progress in some key areas (e.g.
governance, reduction of tax expenditures, expansion of the property tax, elimination of fuel subsidies with more flexible
pump prices).

Fund Advice Status Comment


Fiscal Policy and Public Financial Management
Avoid a premature tightening of fiscal stance Ongoing, The COVID-19 pandemic was followed by a deterioration
and continue efforts to mitigate the impact of but adjusted in the external environment. Nevertheless, he authorities
the pandemic. Gradual fiscal consolidation over the due to have made good progress in line with program targets in
short term should provide space for COVID-related additional successive reviews. In 2023, the overall deficit is expected
spending and expansion of transfers to vulnerable. crises since to decline to 0.7 percent of GDP down from 1.1 percent in
Accelerate the fiscal consolidation path once the the 2022. The non-oil primary deficit is also expected to fall
crisis abates to strengthen debt sustainability and pandemic. from 3.9 percent to 2.5 percent over the same period.
ensure a strong and inclusive recovery in line with
Cameroon’s medium-term reform agenda.
Expand the tax base by (i) phasing out tax and Ongoing. The authorities have committed to streamline the least
customs exemptions; (ii) improved recovery (iii) effective tax exemptions and to intensify efforts to
reviewing the investment incentives law. recover tax arrears and duties and taxes arising from
cross-debt agreements. The authorities have undertaken
a diagnostic study to inform the government on short-
and-medium term fiscal policy measures, especially
revenue mobilization. They have prepared a plan to
gradually eliminate CIT holidays, and to audit and revise
the 2013 Law on investment incentives.
Strengthen tax collection by creating more Ongoing, The authorities have continued efforts to strengthen tax
decentralized tax offices and completing single with good collection, fight against fraud and tax evasion, and ensure
taxpayer identification by linking databases in the progress on the integrity of taxpayer files and IT systems. They have
tax and customs administrations. key actions. improved the exchange of information between the tax
and customs administrations and the interface between
the active taxpayer database and tax management.
However, regional centers remain highly dependent on
central fiscal transfers.
Reform fuel subsidy and pricing policies Ongoing The authorities increased fuel pump prices in February
2023. They are considering options to all automatic price
adjustments to reflect global market price fluctuations.

Complete the Treasury Single Account reform Ongoing The authorities have inventoried all the accounts to be
transferred to the TSA and intend to gradually transfer
the funds to the TSA once the BEAC platform is
available—a step that is not in the Cameroonian
authorities’ control.

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Improve cash management and budget The authorities are taking measures to tackle weaknesses,
execution. Strictly limiting recourse to direct such as the persistent underestimation of spending needs
interventions and exceptional spending and commitments, and excessive use of exceptional
procedures. procedures. To improve cash management, the
authorities will prepare credible monthly cash flow plans
consistent with both the commitment and public
procurement plans. They also envisage measures to
improve data processing, using streamlined processes for
urgent expenditures, with quarterly regularization of such
expenditures. Exceptional procedures need to be limited
to a few urgent spending items, defined by law, with clear
and transparent procedures for implementation and
reporting.
Address financial and fiscal risks associated with Ongoing In 2021 IMF TA provided an in-depth diagnostic of SOEs
SOEs. focusing on i) the institutional framework for governance
(i) Strengthen efforts to restructure SONARA without and supervision of public enterprises; ii) transparency in
delays based on a thorough cost-benefit analysis of the monitoring of their operations; iii) financial relations
all available options. (ii) Complete diagnostic studies with the government; and iv) controlling the budgetary
of three large public SOEs (iii) Clear government risks linked to their activities. The authorities have
cross-debts with SOEs and of government arrears completed diagnostic studies of three large SOEs—PAD,
(iv) Enhance SOEs’ monitoring and oversight, reform CAMTEL, and CAMWATER—and intend to implement key
policies to level the playing fields across sectors. recommendations from these studies. The government is
also continuing steps to place SONARA on a sound
financial footing. In September 2022, the government
approved a framework for restructuring SONARA, and the
terms of reference (TOR) for technical studies
and a business plan.
Debt Sustainability
Limit non-concessional borrowing Ongoing
Cameroon is subject to a program ceiling on the PV of
newly contracted or guaranteed external public debt, with
an adjustor for World Bank projects in 2023.
Restructure SONARA’s debt Ongoing The restructuring of bank debts [has been finalized] and
the authorities aim to conclude as soon as possible the
negotiations on the restructuring of the debt vis-à-vis
traders (suppliers of crude oil and finished oil products)
under the same conditions as those concluded with the
banks.
Financial Sector Policies
Strengthen the banking sector: (i) address the Ongoing. Progress is ongoing in restructuring the distressed
three problem banks and rising non-performing Cameroonian banks. The asset shortfall of one of the
loans (NPLs); (ii) enhance cooperation with the banks has been filled, while another one, in which the
regional supervisor COBAC; (iii) revise the business government will take a majority stake, still misses a
model of the public SME bank. significant amount. While COBAC approved the
recapitalization plans in July 2023, a substantial part of
the capital is yet to be transferred by both the
government and private shareholders (end-2024).
Enhance financial intermediation: (i) update the Ongoing The authorities have expanded the creditor database to
mobile banking legal framework; (ii) strengthen MFIs. The national movable security directory (RNSM) is
supervision of the microfinancial institutions (MFIs); operational. The New National Strategy for Financial
and (iii) implement the central information database Inclusion 2022-2025 has been launched.
for banks and large MFIs.

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Private Sector Development


Improve the business environment: (i) strengthen Ongoing, The government has intensified its efforts to strengthen
dialogue with the private sector and civil society; (ii) with good the consultation format between the public and the
reduce bureaucratic impediments particularly in progress in private sectors. Nevertheless, discussions with the private
paying tax and intra-CEMAC trading; (iii) protect simplification sector suggest the need for more frequent and earlier
property and investor rights, (v) enhance financial of tax consultations, especially on the budget.
inclusion. procedures.
Good governance and anti-corruption efforts

Publish COVID-19 related audit and continue Cameroon implemented its governance commitments
implementation of governance-related related to Rapid Credit Facility (RCF), notably on
commitments made under the RCF publication of audit reports on COVID-related
expenditures. The 2021 COVID-19 expenditure report was
published on March 30, 2023. In addition, the authorities
have developed and published an action plan to
strengthen frameworks for preparing, publishing, and
monitoring public expenditure audits, including
recommendations to strengthen relevant institutions, in
particular the Supreme Court's Audit Chamber.
Promote transparency and good governance and The authorities have launched, with LEG technical
reduce corruption risks assistance, and will publish a comprehensive diagnostic of
the country's vulnerabilities in governance and anti-
corruption.

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Annex VI. Country Engagement Strategy 1


Staff prepared this forward-looking engagement strategy for Cameroon in the context of the IMF’s
Strategy for Fragile and Conflict Affected States. Cameroon has longstanding and stable relations with
the Fund. After the 2017 Extended Credit Facility (ECF) arrangement ended in September 2020, amid
the COVID pandemic, Cameroon received two disbursements under Rapid Credit Facility (RCF)
totaling SDR 276 million, equivalent to about US$382 million or 100 percent of quota. This note aims
to guide Fund engagement with Cameroon over the medium term. Three-year arrangements under
the Extended Credit Facility (ECF) and the Extended Fund Facility (EFF) approved in July 2021 amount
to SDR (Special Drawing Rights) 483 million (about US$689.5 million, or 175 percent of quota). The
authorities have requested a 12-month extension and augmentation of the ECF/EFF arrangements
(through July 28, 2025) to allow more time to implement the policies and reforms foreseen under the
program, given the additional shocks faced since the approval of the ECF/EFF arrangements.

Background
1. Cameroon’s growth has continued in the face of successive shocks, but risks have
increased, highlighting the need to address economic, social and political fragilities. The
authorities’ swift response to the COVID-19 pandemic helped minimize the number of cases, allowing
for a recovery by mid-2021. The recovery, which was supported by higher oil prices and non-oil
production in 2021, continued into 2022, in an increasingly challenging environment with Russia’s war
in Ukraine, inflationary pressures, supply chain disruptions, and tight global financial conditions.
Cameroon has several interrelated sources of fragility. Economic drivers include a high debt-to export
ratio, low private investment, inefficient SOEs, slow growth in human development indicators
compared to peers, and insufficient public service delivery. Cameroon is also highly vulnerable to food
insecurity, and climate change. Political drivers of fragility include institutional and governance
vulnerabilities, internal conflicts, social exclusion, instability in neighboring countries, as well as
insurgency and conflicts along borders.

2. Internal conflicts have challenged Cameroon since independence in 1960. The country
is a fusion of territories formerly under French and British rule during the colonial era. French
Cameroon became the independent Republic of Cameroon in 1960. In 1961, two of the four
Anglophone provinces, the southern portion of British Cameroon, voted in a referendum to join the
Republic of Cameroon, while two provinces went to Nigeria. In the decades following decolonization
the country struggled to strike a balance between federal control and centralization.

3. The current institutional system has helped maintain a measure of stability, but
tensions are mounting. The system reflects efforts to preserve the delicate balance of sometimes
diverse interests and has managed to maintain peace over most of the territory for decades.
However, security risks have risen, with increased fatalities and displacements of people. A World
Bank report assessing the economic and social impacts of the conflict in Cameroon’s Anglophone

1
Prepared by the Cameroon team. This confidential document is a draft, please do not quote.

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regions as of 2019 demonstrated the immense human, physical, and developmental impact on
Cameroonians inside and outside the two regions. Cameroon is also faced with regional spillovers
from events in neighboring countries. This underlines the need to enhance the capacities of local
and national government systems to support those in immediate need, while working to eliminate
poverty, promote development objectives.

4. Cameroon plays a lead role in regional resilience and has strong potential to overcome
fragilities, but much of its rich potential remains untapped. Cameroon boasts abundant natural
resources, including oil, natural gas, minerals, fertile land, and rich ecological diversity within the
Congo Basin. Through its geographic location and seaports, it is a significant gateway bridging West
and Central African markets. As the largest economy in the Central African Economic and Monetary
Community (CEMAC), it contributes strongly to regional reserves. However, economic growth
remains modest, with limited export diversification, and most of the workforce is still employed in
low-productivity agriculture. Cameroon’s low growth, with rapidly expanding population, has slowed
progress in poverty reduction and human capital development.

5. Given the varied dimensions of Cameroon’s challenges, the approach to overcoming


fragilities will need to be multifaceted. It should encompass measures to address economic
fragilities (e.g., resource dependence, capacity to service debt, low growth, including measures to
improve the business environment), social fragilities (e.g., inequality, access to basic services, human
development indicators, access to justice, forced displacement) and political fragilities (e.g.,
governance, corruption, rule of law). A priority theme running through these efforts is the need to
continue building more inclusive political and economic institutions, which reflect Cameroon’s high
level of diversity and societal complexity, without compromising effective decision-making. Another
high priority is to strengthen transparency and checks and balances in the institutional framework to
decrease vulnerabilities to corruption.

6. These efforts will need to be supported by a large and sustained domestic and
multilateral effort. Fund engagement should focus on preserving the macroeconomic stability,
building on gains achieved under the ECF-EFF, while supporting further implementation of
governance and transparency reforms, and remaining mindful of capacity constraints and setbacks
risks. In the longer term, engagement must boost donor confidence necessary for implementing
policies to address developmental needs. Substantial additional resources and collaborative efforts
will be needed to ensure synergies with support delivered by other partners.

Sources and Consequences of Fragility

7. A key source of Cameroon’s fragility is socio-political tensions in its resource-rich


regions, alongside insurgencies, conflict in neighboring countries, and forced displacements.
Cameroon is experiencing conflict in the two anglophone regions, attacks in the far North, and
insecurity on the eastern border with the Central African Republic (CAR), regions which already
suffer from high poverty levels and rapid population growth. The country has a high number of
internally displaced persons (IDP), mainly driven by internal conflict and the impact of climate
change, and natural disasters, such as floods Cameroon: Humanitarian Dashboard (January to March
2023) - Cameroon | ReliefWeb. According to the UN Refugee Agency (UNHCR), in June 2021,

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Cameroon was hosting about two million persons of concern to UNHCR, including one million IDPs,
460,000 refugees and asylum-seekers, and 466,000 IDP returnees. Cameroon will continue to be
affected by simultaneous and complex humanitarian crises, refugees, and IDPs. As a result,
challenges relating to land access and use, and service delivery go beyond the conflict-affected
areas. Recent developments in the rest of the CEMAC region could exacerbate the pressure on
Cameroon’s stability and institutions.

8. Another key source of Cameroon’s fragility is the institutional framework, with its
highly centralized political and resource allocation system. The framework was built to maintain
peace, unity, and stability, in a fragmented sociocultural environment. Cameroon’s population is
diverse with northerners/southerners, Christians/Muslims, rural/urban populations, and poverty
increasing in rural areas and decreasing in urban areas. These differences can prevent coalitions of
change from forming and create deeper fractures.

9. Cameroon also faces economic fragilities manifested in below-potential growth and


slow progress towards its long-term development goals. Cameron is a lower middle-income
country richly endowed in natural resources, including oil and gas, mineral ores, and high value
timber species. Cameroon also produces a variety of agricultural goods, including coffee, cocoa,
cotton, maize, and cassava. Growth performance was supported by large infrastructure projects,
private investment, and rising public spending up to 2019. However, real GDP growth has averaged
around 4 percent in recent decades, falling short of the country’s economic potential and more than
a quarter of Cameroon’s population still live below the national poverty line and many lack access to
clean water and sanitation, education, and health (Figure 1). Food insecurity is high, especially in the
North West and South West regions, estimates indicate that over three million people were severely
food-insecure between January and May 2023, a five percent increase compared to the same period
in 2022. 2 Poverty reduction is also held back by gender inequalities.

2
West & Central Africa Food Security Data - Cadre Harmonisé (March 2023).

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Figure 1. Cameroon: Economic, Social and Political Indicators of Fragility

Actual GDP below potential Real GDP per capita still below its 1986 level

Actual vs. Potential GDP Growth GDP per capita (constant 2015 $US)
10000
8 Cameroon
8000 Lower middle income
6
Upper middle income
4 6000 Sub-Saharan Africa
2
4000
0
2000
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
Actual Growth 0
Potential GDP Growth

1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
2013
2016
2019
2022
Source: Macro Poverty Outlook
Note: Potential growth estimated as a function of changes in Source: World Bank
capital stock, structural employment, and TFP using a Solow
decomposition.

Government health expenditure stagnating Primary education graduation ratio below peers (2019)

Trends in Government Health Expenditure (GHE) Pe 120


50 100
Capita
80
60
40
20
0
0
2000 2002 2004 2006 2008 2010 2012 2014 2016 201
LIC SSA CMR AFW

A food crisis country hosting more than a million Ranked among the top 30-40 most corrupt countries.

IDPs in 2021…

10. Public spending in Cameroon remains centralized, with high security expenditure and
low social and investment spending compared to peers and non-transparent public financial
management (PFM) systems. The country faces large infrastructure gaps, and with a high risk of
external and overall debt distress, additional external financing is constrained. Limited resources are

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available for infrastructure investment or goods and services that strengthen human and physical
capital and security absorbs a large share of government expenditure. Currently, Cameroon’s overall
investment rate remains lower than that of regional peers. Investment spending averaged 18.6
percent of GDP in 2010–22, below the Sub-Saharan Africa (SSA) average of 21.6 percent, the CEMAC
average of 28.7 percent, and less than half the lower middle-income countries (LMICs) average of
40.2 percent. The distribution of resources to and among regions is higher in wealthier regions and
major cities. 3 The more underdeveloped Northern regions, which have the lowest socioeconomic
indicators, receives much less per capita funding than the national average (Figure 2).

11. Vulnerabilities have been identified in Cameroon’s governance and anti-corruption


framework. The CES will leverage the comprehensive discussion of Cameroon’s governance
weaknesses and corruption vulnerabilities, which is taking place in the context of a governance
diagnostic conducted in consultation with IMF staff and pursuant to the Fund’s 2018 enhanced
governance framework.

Figure 2. Cameroon: Distribution Of Budget Allocations Among Regions

12. The judicial system and the frameworks for conflict resolution and law enforcement
need clarification and strengthening. They are constrained by human and budgetary resources
and acknowledge both customary and civil law, despite inconsistencies between the two. This leads
to conflicts, especially on land tenure. In addition, overlapping legislation on land tenure, mining
and forest laws creates additional institutional confusion and a disincentive for private sector
investments.

Climate change poses an imminent threat to Cameroon’s economy. The country relies on
natural resource exports and most of the population is employed in agriculture. Climate change
could threaten exacerbate poverty, fragility, conflict, gender disparities, and regional inequalities
(CCDR, 2022). In recent years, floods and droughts have damaged infrastructure and harvests, and

3
The first regional elections were held in December 2020, starting the decentralization process provided for in the
1996 Constitution.

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led to significant population displacements. Climate change is expected to raise sea levels,
threatening coastal populations, and lead to even more erratic rainfall patterns. In the absence of
adaptation reforms, climate shocks could undermine GDP growth and further reduce fiscal space, in
a context of tightening financing conditions.

Box 1. Escaping From Fragility: Analytical Considerations


Analyst broadly agree that a “fragile state” is one that is significantly susceptible to crisis in one or more
of its sub-systems. It is particularly vulnerable to internal and external shocks and domestic and
international conflicts). In a fragile state, institutional arrangements embody and can preserve crisis
conditions, and they may embody extreme inequality or lack of access altogether to health or education.

In analyzing fragility, it is useful to consider the range of options of how systems respond to shocks
proposed by Nassim Taleb (2013). Based on that, a ‘fragile’
state is affected negatively by stressors, a ‘robust’ state
resists stressors), a ‘resilient’ state bounces back from
stressors and an ‘antifragile’ can benefit from stressors. The
idea is to shift the country from fragile to at least “robust”
or “resilient”.

Acemoglu and Robinson (2019) propose a simple


framework for the emergence of nonfragile, “strong”
states. The creation of an inclusive state is described as the
outcome of a power game between state elites and society
(Acemoglu and Robinson, 2017). The outcome can be Despotic Leviathan where the state ultimately wins
or Absent Leviathan, where the state is very weak or non-existent.

In the narrow corridor between excessive state power and all society power, there can be a balance of
power. In that space, state and society continually compete, both getting stronger in the process. Fragile
states are considered as being outside the corridor, so appropriate policies need to be designed to shift
the balance into the corridor. The wider the corridor, the easier the task.
Assuming the width of the corridor cannot be changed, what strategies help the country get into it? For
situations to the left of the corridor, the state dominates society, so less state dominance is needed. For
situations to the right of the corridor, the society dominates state, so a stronger state might be desirable,
provided the population cooperates.

Another useful conceptual framework is based on Nassim


Taleb’s (2012, 2013a, b) concept of fragility, which defines
fragility by the response to shocks. In Taleb (2013), systems are
fragile if they “break” under large stress, or if they have
accelerating sensitivity to harmful stressors or to time (stress
fragility). The system’s response to negative shocks is
represented by the concave red curve in the bottom left
quadrant) and can go all the way to an economic collapse in
response to shocks (revolutions, military coups or other
irregular power transitions). Using this concept of fragility, IMF staff (Mali staff report) have extended the
model to positive shocks to capture the view of fragility as the inability of an economy to take off over
time or to take advantage of positive shocks (such as terms of trade shocks or growth in the demand of
their trade partners). This is shown by the red line in the top right quadrant. This is structural fragility,
where a complex network of social, economic, and political interactions with weak nodes, such that it is
difficult to identify the weakest nodes.

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Strategy to Escape Fragility

13. Long-term sustainable development requires inclusive institutions that provide public
services and incentives for private investment. Engagement with Cameroon will therefore need
to balance efforts to improve state institutions, accountability and governance and improving
private sector incentives.

Reform Priorities and Fund Engagement

14. Political stability and security are essential for Cameroon’s economic and social
development, and the following key areas need increased focus:

• Decentralization. Over the longer-term, implementing a durable decentralized fiscal framework


will be critical for Cameroon’s political stability, security, and development goals. Progress in
accelerating fiscal decentralization could be achieved by enhancing revenue mobilization;
introducing a surcharge system for regional assemblies; implementing fiscal equalization to
mitigate regional disparities; improving the flow of funds to municipalities and regions;
establishing conditional capital and performance-oriented grants; enhancing intergovernmental
coordination; and strengthening accountability mechanisms.

• Security. Greater security supports growth by boosting business and consumer confidence,
facilitating production, and allowing government delivery of public services and infrastructure.
Stronger control over the territory also facilitates enforcement of taxation, regulations, and other
institutional reform efforts that help set the conditions for inclusive growth.

• Mobilizing support for reforms. Building state capacity and setting the conditions for greater
resilience and inclusive, job-rich growth will help Cameroon address the sources of fragility. The
state gains legitimacy and support from the population when it provides a stable environment
for economic activity and job creation, it increases the delivery of services (e.g., security, social
services, infrastructure) to reduce poverty and inequality, and is transparent and accountable. In
a fragile context it is important to remain nimble to take advantage of any windows of
opportunity or reassess the approach if new constraints emerge.

15. Sustainable growth will help progress toward economic and social goals, with a
positive feedback loop to address political fragilities. This means:

• Maintaining macroeconomic stability. Policy discussions emphasize preserving


macroeconomic and financial stability by maintaining a prudent fiscal stance, building fiscal
space for social and productive spending, and strengthening medium-term fiscal and debt
sustainability.

• Mobilizing domestic revenue and strengthening PFM. Key reforms include implementing
effective tax policies and containing exemptions, improving spending efficiency, cash
management, managing fiscal risks from SOEs, and public debt management.

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• Increasing social spending and infrastructure investment. Creating space for social and
infrastructure spending means mobilizing additional resources, including from development
partners. Cameroon also needs to improve spending public investment efficiency, and
transparency, with a greater emphasis on human capital development and productive
investment spending.

• Strengthening governance and transparency. Make progress on implementing the national


anti-corruption strategies and strengthening the AML/CFT framework and enforcement capacity.

• Promoting financial inclusion, while protecting financial stability.

• Improving the business environment. Attract private investment by providing well-designed


legal, institutional, and governance frameworks.

Program Engagement

16. Cameroon is currently supported by a three-year arrangement under the Extended


Credit Facility (ECF) and the Extended Fund Facility (EFF). The current arrangements were
approved in July 2021 for SDR 483 million (about US$689.5 million, or 175 percent of quota. They
followed the 2017 ECF, which ended in September 2020, and two disbursements under the Rapid
Credit Facility (RCF) totaling SDR 276 million, equivalent to about US$382 million or 100 percent of
Cameroon’s quota. Cameroon’s ECF/EFF-supported program has helped maintain macroeconomic
stability and support structural reform implementation.

17. The traction of longstanding Fund policy advice has been steady but slow in some key
areas. Reforms initiated in the context of the ECF-EFF program have supported improvements,
including enhancing revenue mobilization, and rationalizing expenditures, especially the fuel subsidy
bill. The authorities have initiated governance reforms including amending the procurement legal
framework and improving the framework for spending audits. Areas needing intensified attention
include boosting non-oil revenue, enhancing public financial management and improving the
business environment.

18. The ongoing engagement highlights the main constraints and provides lessons for
future engagement. Constraints include (i) difficulties in implementing change given the complex
politico administrative environment (ii) nonprioritized targeting of reforms, which affects ability to
maintain the reform momentum (iii) governance gaps and lack of transparency, leading to low
mobilization of public support for reforms. The scope of reforms should consider the political
absorptive capacity and institutional capacity constraints and incentivize both the government and
the private sector. This includes:

• Calibrating the pace of reform based on Cameroon’s capacity and available resources.

• Coordination with development partners. The engagement should consider coordinating actions
with all relevant development partners, including the UN, AfDB, World Bank, and the main
bilateral donors.

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• Ensuring closer synergies between program advice and capacity development (CD).

• Greater focus on institution building, governance, and transparency.

Capacity Development

19. The IMF supports Cameroon with CD activities delivered by both Fund headquarters
and the Central Africa Regional Technical Assistance Center (AFRITAC Center). In consultation
with the CD departments, the CES has considered ongoing efforts and possible new avenues.

• To date, CD activities in Cameroon have focused on revenue administration, tax policy,


debt and expenditure management, governance, and the compilation and dissemination
of statistics. These activities have highly contributed to improving the formulation and
implementation of policies and reforms, as reflected notably in the implementation of the
current ECF-EFF program. The CEMAC Commission has defined a set of reforms which underpin
Fund-supported programs with CEMAC members and organized around five pillars to create the
basis for a more diversified, inclusive, and a private sector-led growth and enhanced
governance. Building on past TA provided to Cameroon, the CD strategy supports the overall
goal of improving government revenue mobilization, raising the efficiency, effectiveness, and
transparency of public expenditure, strengthening debt management capacity and medium-
term debt strategy (MTDS), and enhancing statistics compilation and timely dissemination of
macroeconomic statistics.

• Going forward, capacity building will continue to support progress in new areas. Progress
is ongoing on emerging priorities (governance and anti-corruption efforts, financial inclusion
strategy, building resilience to climate change, reinforcing financial integrity (AML/CFT), and
gender budgeting. Further in-depth diagnostics could be needed in some areas. In addition,
going forward, Cameroon is likely to need increased assistance in bolstering more integrated
and robust government and securities markets. On climate change, it should be noted that
AFRITAC plans to provide training in on-site banking supervision methodology for assessing
climate risk in 2024. This work on emerging priorities will dovetail with assistance being
provided by other institutions and bilateral donors.

• Greater efforts are needed to expand dialogue with partners and to integrate fragility
analysis with policy advice and CD. This will help identify relevant CD assistance being
provided by partners and consider how IMF work might dovetail with such assistance and be
tailored to support policy advice.

20. Substantial additional resources and collaborative efforts will be needed to ensure
synergies with support delivered by other partners. The engagement should consider
coordinated actions with all relevant development partners, including the World Bank, the African
Development Bank, EU, UN, Islamic Development Bank, and bilateral donors. This will be especially
helpful to ensure appropriate attention to issues that are macro-critical but not within the Fund’s
mandate. Also critical will be efforts to catalyze financial support from other donors.

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21. The country team will leverage strong relationships and communication with
development partners across a variety of activities, with the Resident Representative playing a
key role. The IMF team maintains close engagement with the World Bank, and African Development
Bank (AfDB), which are involved in budget support and a variety of development projects. The IMF
team coordinates with these institutions closely on recent economic developments, the
macroeconomic outlook, and risks. In addition to collaborating on debt sustainability analysis, Fund
staff are in regular contact with World Bank staff to ensure consistency and complementarity in
capacity development support (particularly public financial management, SOEs management, and
social safety nets) and policy advice (including under financial arrangements provided by both
institutions).

22. The team will also continue to regularly discuss financing needs and financing options
with these and other partners. Some bilateral partners have been deeply involved in the
Anglophone peace process (Switzerland and Canada, UK) and provide broader political perspectives.

23. Private sector and civil society. To better understand Cameroon’s business climate, the
country team continues to engage the private sector and civil society organizations during missions.

24. There is scope for deepening strategic partnerships with the following to leverage
their expertise in identifying appropriate policies and addressing emerging risks:

• The Global Center on Adaptation (GCA) in catalyzing private climate finance for both
adaptation and mitigation.

• The European Union (EU) and the Agence France de Développement (AFD) in the context of
the Cameroon Green and Resilient Cameroon (CASEVE) program, which aims to prevent food
and climate crises that result from the overexploitation of territories and natural resources.

• The World Food Programme on food insecurity. With more frequent climate-related shocks,
security issues and forced displacements, the authorities are working with WFP and other
partners to respond to the immediate food and nutrition needs of crisis-affected populations,
mainly in the unsecure regions, including through actions to improve the long-term resilience of
communities.

• UNHCR, and the IOM, on economic issues related to migrants and internally displaced persons
(IDPs) and refugees and more broadly on the economic impact of humanitarian crises.

25. The Resident Representative office will continue to play a key role in coordination and
maintaining the momentum of policies and reforms, The office is currently active in helping the
authorities understanding and strengthening ownership of reform, enhancing inter-ministerial
coordination and raising awareness and support among the broader public of the program
objectives. The office also supports the team in informing stakeholders on Cameroon’s progress
under the program.

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Risks to Closer Fund Engagement

26. Risks to closer engagement with Cameroon include longstanding issues and new
developments. Fund engagement will continue to face capacity constraints and complex decision-
making processes. Complex institutional framework could delay reform implementation even when
reforms are well designed. Significant deficiencies in macroeconomic institutions delay
implementation. Added to that are risks related to recent developments, including the prolonged
security crisis in Europe, which could further hinder timely donor support and continue to affect
food and oil prices. There are also risks of further political instability in the region and heightened
spillovers from neighboring countries, and renewed resistance to reform in the runup to the
elections.

27. Distributional and social impact is critical for the success of reforms. For instance,
subsidy reform without mitigating measure to compensate vulnerable social groups, and those
losing from the reforms, especially those with the power to mobilize violence could jeopardize
reforms and undermine trust. This underscores the importance of designing an effective
communication plan to explain the longer run benefits of reforms (e.g., making space for public
investment, health, and education).

28. The risks are mitigated by the authorities’ strong ownership and careful tailoring of
the reform agenda to the country’s fragilities and capacity constraints. Cameroon has built a
strong track record of reform implementation. This was achieved by (i) strong ownership of the
reform agenda by the authorities, (ii) careful prioritization and sequencing of reforms that consider
institutional and capacity constraints, (iii) close integration between program design and CD
support, and (iv) close coordination with development partners and other CD providers to ensure
complementarities. Going forward, IMF engagement should continue to be guided by these
principles.

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Appendix I. Letter of Intent

Madam Kristalina Georgieva


Managing Director
International Monetary Fund
Washington, D.C. USA
December 6, 2023

Subject: Letter of Intent for the Extended Credit Facility and the Extended Fund Facility

Dear Madam Managing Director,

1. The Government of Cameroon is continuing to implement its 2021-24 Economic and


Financial Program supported by the International Monetary Fund’s Extended Credit Facility (ECF)
and Extended Fund Facility (EFF) in a difficult economic and security context, further exacerbated by
the Russia-Ukraine conflict and geopolitical tensions in the Middle East. To support the needs of its
population and contribute to meeting its balance of payments needs and to rebuilding regional
foreign exchange reserves, the government adopted an economic recovery program in line with the
regional economic and financial reform program (PREF-CEMAC) and the maintenance of regional
external stability.

2. Cameroon continues to face risks from the external environment, including tight global
financial conditions and increased oil price volatility. The outlook remains positive, despite
uncertainties about global developments.

3. The performance of the program as at end-June and end-September 2023 is broadly


satisfactory. Regarding the quantitative targets, five of the six quantitative performance criteria as at
end-June were met. The continuous criterion on the non-accumulation of external arrears was not
met. Three of the five indicative targets have not been met, namely: the ceiling on the net
accumulation of arrears of domestic payments, direct interventions by the National Hydrocarbons
Company, and the share of expenditure executed under exceptional procedures. We have proposed
corrective measures to address missed targets. Preliminary data for end-September 2023 suggest
that six out of ten ITs were met, and four ITs were breached. The breached ITs are the program
ceilings on the net accumulation of domestic arrears, on SNH direct interventions, on Treasury
advances without a budget allocation and the share of spending through exceptional procedures. A
continuous QPC on PV of contracting and guaranteeing of new external borrowing was met.

4. Progress is being made in implementing structural benchmarks. Three of the nine structural
benchmarks due for the fifth review were met by the deadline: (i) the structural benchmark for
increasing the number of taxable persons for VAT purposes from 13,500 at end-December 2022 to
14,850 as at end-October 2023 was implemented ahead of schedule; (ii) the structural benchmark
on Public-Private Partnerships (PPPs) (end-June 2023); (iii) the structural benchmark on an action
plan including recommendations to eliminate the corporate tax break (end-October 2023). Of the
remaining six benchmarks, two were completed late, one is expected to be implemented by the IMF

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Board date (prior action), and three will be deferred. The structural benchmarks met with a delay are:
the publication of the decree specifying the terms and conditions for monitoring the performance of
project management units, following the October 2021 decree governing project management units
(structural benchmark no. 8, August 2023); Audits of the government's payment arrears and the
related clearance plan (structural benchmark no. 1, September 2023).; The report on the diagnosis of
governance vulnerabilities will be published with a delay (structural benchmark no. 5, September
2023, prior action) to allow consultations with the relevant agencies. The deferred/reformulated
structural benchmarks are: An inventory of the debts owed by public enterprises to the government
and to each other at end-2020 has been drawn up, but a debt clearance plan between the
government and public enterprises has not yet been adopted (structural benchmark no. 2,
September 2023); The action plan for restructuring/rehabilitation of SONARA has been developed
but the feasibility study for the operationalization of the chosen option is underway. It covers the
technical, economic, and financial aspects. The report of this study will be submitted to IMF staff
(reformulated structural benchmark no. 16, June 2024). Similarly, the publication of the
implementing texts of the Mining Code (structural benchmark no. 3, September 2023) has been
delayed.

5. The government welcomed the SDR allocation made available to Cameroon by the IMF in
August 2021. To mitigate the socio-economic effects of the crisis, the government used CFAF 120
billion in 2021-22 and CFAF 80 billion in 2023—96 percent of the allocation.

6. In view of the pressures resulting from the external environment, and to allow sufficient time
to achieve the objectives of the program, we request a 12-month extension (until July 28, 2025) of
the ECF/EFF arrangements with an increase in access amounting to 40 percent of quota (SDR 110.4
million). We request that the increase in access be shared between resources from the General
Resources Account (GRA) (26.7 percent of quota; SDR 73.6 million) and the Poverty Reduction and
Growth Trust (PRGT) (13.3 percent of quota; SDR 36.8 million).

7. The attached Memorandum of Economic and Financial Policies (MEFP) supplements those of
July 2021, February 2022, July 2022, February 2023, and June 2023. It describes the economic and
financial situation in 2023, outlines the government’s economic and financial policies for 2024, and
defines the quantitative criteria, indicative targets, and structural benchmarks through end-2024.

8. Considering the achievements under the program and the commitments in the MEFP, the
government requests the conclusion of the fifth reviews of the ECF-EFF supported arrangements
and the disbursement and purchase of SDR 18.4 million and SDR 36.8 million, respectively. The
government also requests that the IMF Executive Board approve changes to the program targets for
end-March 2024 and new targets for June, September, and December 2024, which have been set in
line with the updated macroeconomic projections and adopted policies.

9. The government is convinced that the policies and measures presented in the MEFP are
adequate to achieve the program targets and is committed to accelerate its implementation of
reforms and to take any additional measures required. It will consult with the IMF on additional
measures or before revising measures in the MEFP in accordance with the IMF policy on such

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consultations. To facilitate program monitoring, the government will report the information required
to IMF staff by the prescribed deadlines in accordance with the attached Technical Memorandum of
Understanding (TMU).

10. Finally, the government agrees to the publication of this letter, the MEFP, the TMU, and the
IMF staff report on this program.

Very truly yours,

/s/

Joseph Dion Ngute


Prime Minister, Head of Government

Attachments:
1. Supplementary Memorandum of Economic and Financial Policies
2. Technical Memorandum of Understanding

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Attachment I. Supplementary Memorandum of Economic and


Financial Policies in 2023-24, December 2023

INTRODUCTION
1. The National Development Strategy for 2020–30 (SND-30) remains the framework for
our strategic priorities. The government is working to restore strong, sustained, and inclusive
economic growth, with a view to accelerating Cameroon's march towards economic and social
emergence. To achieve this, it is necessary to strengthen macroeconomic stability and engage in a
deep structural transformation of the economy through significant investments in the priority
sectors of the SND-30, while maintaining the sustainability of public finances and supporting the
country's resilience to climate change.

RECENT ECONOMIC DEVELOPMENTS


2. The economic recovery from the pandemic has continued despite a challenging
security situation and strong external pressures, including the tightening global financial
conditions and volatile oil prices. Growth is expected to increase from 3.6 percent in 2022 to 4.0
percent in 2023. However, despite the measures taken by the government, average inflation reached
6.3 percent at end-2022 and is expected to reach 7.2 percent by end-2023, driven mainly by food
prices.

3. The external balance continued to strengthen. The current account deficit narrowed to
3.4 percent of GDP in 2022, mainly due to higher oil and gas prices. Despite lower oil prices, higher
gas production and an improved primary income balance are expected to reduce the current
account deficit to 3.0 percent at end-2023.

4. Budgetary results remained broadly in line with the objectives of the program. The
non-oil primary deficit was contained to 3.9 percent of GDP in 2022 despite higher spending on fuel
subsidies, partly because part of the costs of these subsidies, about CFAF 480 billion, were deferred
to 2023 and 2024. Higher non-oil revenues and lower spending on fuel subsidies, partly due to the
retail price adjustment in February 2023, are expected to help reduce the non-oil primary deficit to
2.5 percent of GDP in 2023.

5. The public debt ratio as a percentage of GDP continues to fall. The acceleration of
growth and the tightening of fiscal policy, as well as the appreciation of the CFA franc, coupled with
the increase in oil prices, have helped to reduce public debt, which is expected to decline from 45.3
percent at end-2022 to a forecast of 41.8 percent of GDP at end-2023. External public debt is
expected to fall from 30.8 percent in 2022 to 29.4 percent of GDP in 2023. In contrast, contingent
liabilities associated with public enterprises and public-private partnerships are expected to increase
from 11.5 percent in 2022 to 14 percent of GDP in 2023.

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IMPLEMENTATION OF THE ECONOMIC AND FINANCIAL PROGRAM


6. Despite the challenging environment, the implementation of the program was in line
with our objectives. Five of the six quantitative performance criteria as at end-June 2023 have been
met. In view of its very high volume as at end-2022, the government plans to postpone the payment
of the balance of the fuel subsidy until 2024. Three of the five indicative targets were not met. These
include ceilings for the net accumulation of arrears of domestic payments, direct interventions by
SNH, and the share of expenditure carried out under exceptional procedures. Security concerns led
to a greater use of SNH direct interventions. The need to take charge of the fuel subsidy from the
2022 financial year has led to a failure to meet the targets on spending executed through
exceptional procedures and on the payment of domestic arrears. The government is committed to
improve the monitoring of expenditures related to direct interventions by SNH. We also undertake
to ensure the proper application of the provisions of the law on the government's financial regime,
which prohibits the use of cash advances, to reduce spending executed through exceptional
procedures to the strict minimum. To address this, we proposed corrective measures in July 2023,
including the requirement for all expenses to be covered by the budget before they are paid.

7. Preliminary data for end-September 2023 suggest that six out of ten indicative targets
(ITs) were met, and four ITs were breached. The breached ITs are the program ceilings on the net
accumulation of domestic arrears, on SNH direct interventions, on Treasury advances without a
budget allocation and the share of spending through exceptional procedures. A continuous QPC on
PV of contracting and guaranteeing of new external borrowing was met (Table 1).

8. Progress is being made in implementing most of the structural benchmarks. Three of


the nine structural benchmarks due for the fifth review were met by the deadline: (i) the structural
benchmark for increasing the number of taxable persons for VAT purposes from 13,500 as at end-
December 2022 to 14,850 as at end-October 2023 was implemented ahead of schedule; (ii) the
structural benchmark on Public-Private Partnerships (PPPs) (end-June 2023); (iii) the structural
benchmark on an action plan including recommendations to eliminate the corporate tax break (end-
October 2023). Of the remaining six benchmarks, two were completed late, one is expected to be
implemented by the IMF Board date (prior action), and three will be deferred/reformulated. The
structural benchmarks met with a delay are: the publication of the decree specifying the terms and
conditions for monitoring the performance of project management units, following the October
2021 decree governing project management units (structural benchmark no. 8, August 2023); Audits
of the government’s payment arrears and the related clearance plan (structural benchmark no. 1,
September 2023). The report on the diagnosis of governance vulnerabilities will be published with a
delay (structural benchmark no. 5, September 2023, prior action) to enable consultations with the
relevant agencies. The deferred/reformulated structural benchmarks are: An inventory of the debts
owed by public enterprises to the government and to each other at end-2020 has been drawn up,
but a debt clearance plan between the government and public enterprises has not yet been adopted
(structural benchmark no. 2, September 2023; rephased to April 2024); The action plan for
restructuring/rehabilitation of SONARA has been developed but the feasibility study for the
operationalization of the chosen option is underway. It covers the technical, economic and financial
aspects. The report of this study will be submitted to IMF staff (new Structural Benchmark, no. 16,

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June 2024). Similarly, the publication of the implementing texts of the Mining Code (Structural
Benchmark No. 3, September 2023; rephased to June 2024) has been delayed.

ECONOMIC AND FINANCIAL PROGRAM IN THE MEDIUM TERM


9. Overall economic policy remains geared towards implementing the SND-30 while
ensuring the sustainability of public finances. Fiscal policy will remain focused on fiscal
consolidation in line with the objectives under the IMF supported program and the CEMAC
convergence criteria, while providing adequate fiscal space to implement priority expenditures for
the SND-30. The policies presented below complement those previously presented in the July 2021,
February 2022, July 2022, February 2023, and June 2023 memoranda.

A. Macroeconomic Framework

10. The economic outlook remains positive, although enveloped in uncertainty. Despite the
decline in hydrocarbon production, real GDP growth is expected to accelerate from 4.0 percent in
2023 to 4.3 percent in 2024 and over the medium term thanks to the dynamism of the primary
(industrial agriculture, fisheries, and forestry) and tertiary sectors. Average inflation is projected to
decline from 7.2 percent in 2023 to around 5 percent by end-2025, and below 3% over the medium
term.

11. The current account deficit (including grants) is expected to continue to improve. High
hydrocarbon prices have temporarily boosted export revenues, reducing the deficit from 3.7 percent
of GDP in 2022 to 3.4 percent of GDP in 2023. In the medium term, programs to promote non-oil
exports, import substitution, and regional integration should contribute to a gradual reduction of
the current account deficit (including grants) and stabilize it below 3 percent of GDP.

12. Regarding medium-term fiscal policy, the government's objective is to reduce the overall
fiscal deficit (including grants) and the non-oil primary deficit to a sustainable level in the short and
medium term, so as to keep public debt on a sustainable path. To this end, the focus will be on the
mobilization of domestic non-oil revenues to increase them to around 13.3 percent of GDP in 2025,
compared to 12.1 percent in 2022. Particular attention will also be paid to the rationalization of
expenditure and in particular to the reduction of the fuel subsidies by 2025.

B. Long-Term Sustainable Growth

13. The SND-30, which emphasizes industrial policy envisages a profound structural
transformation of the economy to support growth. The government intends to achieve this
through the promotion of substitution of imports by national products, export promotion, and the
implementation of major investment projects. This strategy requires substantial resources,
prioritization of the most urgent and important areas, support for sectors with high potential in the
short and medium term and strengthening manufacturing capacities. In promoting foreign trade,
the country should take advantage of its comparative advantages, such as the large agricultural
base, natural resources, and youth, and make use of regional trade agreements.

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14. Public investment is key to boosting long-term growth and building resilience to
shocks. The government is aware of the need to strengthen the management of public investments.
The IMF's 2020 Public Investment Management Assessment (PIMA) highlighted areas for
improvement. Although investment needs remain high, public investment as a percentage of GDP
has declined over the past decade and remains low. Given the limited fiscal space and debt
vulnerabilities, public investment spending will benefit from better prioritization of projects and
improved project efficiency.

15. The government recognizes the need to strengthen Cameroon's resilience to climate
change. Climate change is already having an impact on the population and the national economy.
Cameroon is a signatory to all key international agreements on climate change and includes climate
change as an important development challenge under the SND-30 and other strategic documents.
Indeed, climate shocks have the potential to further undermine development and to accentuate
fragility. The government aims to strengthen institutional capacity to implement its policies to
address climate change and integrate its climate commitments into an appropriate legal and
regulatory framework. These efforts will help support adaptation and mitigation policies in line with
the 2021 Nationally Determined Contributions.

C. Fiscal Resilience
16. The Government aims to ensure that fiscal policy is consistent with the objectives
pursued in the implementation of the SND-30. The government will provide the necessary
budgetary resources to accelerate the achievement of the objectives of the SND-30 through the
operationalization of the Initial Impulse Plan (P2I). The government will ensure a significant increase
in local production and the industrial transformation of the economy and the revitalization of the
support system for import substitution and export promotion policies.

Fiscal Consolidation

17. Fiscal policy in 2024 remains focused on fiscal consolidation and strengthening the
resilience of public finances, in line with the objectives of the program. Fiscal policy needs to
create space for priority spending, including productive investment and social protection. To this
end, fiscal policy remains geared towards mobilizing domestic non-oil revenues, controlling
outstanding debts and reducing fuel subsidies. As in 2023, fiscal policy in 2024 is facing very high
spending on fuel subsidies, a significant part of which has been carried over from 2022 to 2023-24.
It also emphasizes the clearance of domestic payment arrears and the adequate funding provided
for in the 2024 budget law to settle these arrears, including the arrears of payments from fiscal years
prior to 2020 that have been audited. This action aims to respect the principles of annuality and
budgetary accuracy. The 2024 budget law aims to reduce the non-oil primary deficit from 2.5
percent in 2023 to 1.9 percent of GDP in 2024, while maintaining the overall deficit (on a
commitment basis) at 0.4 percent of GDP. We aim to achieve this by mobilizing domestic revenues
from 12.7 percent in 2023 to 13.1 percent of GDP in 2024, while reducing the current primary
expenditure from around 10.7 percent to 9.9 percent of GDP.

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Mobilizing Domestic Non-oil Revenues

18. The General Directorate of Taxes (DGI) and the General Directorate of Customs (DGD)
are continuing their efforts to strengthen revenue mobilization. The main objectives are to
broaden the tax base and improve the efficiency of revenue collection. The DGI is implementing its
three-year plan (2023-25) to modernize and align the tax system with international standards. As
part of this plan, and in view of the need to find the additional resources essential to the financing
of the SND-30, the DGI forecasts an increase in tax revenues of CFAF 62.5 billion in 2024, through
the implementation of tax administration policy measures that will further broaden the tax base and
strengthen control and the fight against fraud and tax evasion. The DGD is also implementing a
reform program focused on revenue mobilization and provides for an increase in customs revenues
of CFAF 30 billion. This objective will be achieved in particular through the effective implementation
of the new mechanism for the collection of customs duties and taxes on imported phones, the
readjustment of export taxation on certain high-potential products, improving the quality of the
handling of goods and exchanging information with the Central Bank, commercial banks, the
General Directorate of Taxes and the National Agency for Financial Investigation, with a view to
optimizing controls on import and export operations. In this respect, strengthening collaboration
between the DGI and the DGD through the FUSION platform remains a priority objective.

19. The government recognizes the need to review tax incentives and exemptions for the
private sector. This is important to mobilize non-oil tax revenues and better tailor incentives to the
achievement of the country's industrialization goals. This must be done as part of a consultation and
a comprehensive review of the industrial strategy. The government has prepared an action plan with
recommendations to eliminate the corporate tax break (structural benchmark no. 7, October
2023). This plan, which was an intermediate step, provides for the revision of Law No. 2013/004 of
2013 to streamline incentives and promote healthy competition between economic actors in
October 2024 (structural benchmark no. 4, December 2023, deferred to November 2024).

20. To further strengthen tax revenue mobilization and improve fiscal policy, the
government intends to undertake further measures in line with the recommendations of the
diagnostic carried out by IMF experts in 2022. Indeed, aware that VAT exemptions lead to tax
shortfalls and considering that their reduction could generate additional revenue, the Government
plans to gradually start rationalizing VAT exemptions. This measure, which will reinforced by
administrative measures (optimization of controls and tax administration), as well as those that will
be included in the 2025 budget law, will generate additional revenues of 0.05 percent of GDP. This
measure aims to increase non-oil tax revenues and is expected to support the objectives of the
program. However, this gradual abolition of tax and customs exemptions will be carried out taking
into account the import-substitution policy, to support the country's industrialization efforts and
take into account the socio- economic climate.

21. The government plans to improve personal income tax statistics. To better assess the
impact of the revisions to the personal income tax system, the government intends to set up a
database of wages and salaries that is suitable for simulating IRPP calculations and comprises both

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the entire public sector and a representative sample of private sector employees (new structural
benchmark no. 11, November 2024).

22. Regarding the tax and customs administrations, the government is considering
measures to collect tax arrears in 2024. As a first step, the government commits to preparing a
detailed action plan, consisting of the first 100 unpaid tax and customs debts, including those of
public enterprises, to manage and recover at least 15 percent of the outstanding recoverable tax
arrears (outstanding as at end-June 2023) and implement 50 percent of the measures included in
the action plan (new structural benchmark no. 12, April 2024). This measure will improve the
collection of tax and customs revenues, the clearance of outstanding statements and strengthen the
governance of revenue administrations, while improving the transparency of budget management
and public enterprises.

Fuel Subsidies

23. Fuel subsidies continue to have significant fiscal consequences and do not always
benefit the most vulnerable. In addition to the increase in fuel prices at the pump in February
2023, the government recognizes the need to gradually eliminate fuel subsidies by 2025 to create
space for other priority spending and support the objective of fiscal sustainability. To achieve this,
the government has considered options to allow automatic adjustments to fuel prices at the pump
to reflect price fluctuations in international markets and plan to implement a new mechanism. In the
meantime, the government is committed to reducing subsidies for petroleum products gradually,
which would imply an increase of around 15 percent in pump prices in early 2024. This increase
would reduce the budgetary cost of subsidies by about CFAF 140 billion, or 0.4 percent of GDP in
2024, given current assumptions. To achieve the program objectives, the authorities commit to
submit to Parliament the 2024 budget law consistent with the macroframework of the Fifth Review
(prior action).

24. Policies on fuel prices at the pump should be accompanied by measures to mitigate
the social and economic impact, including by strengthening social safety nets and improving
access to basic public services such as education and health. The government plans to maintain the
increase in social spending introduced in 2023. We plan to gradually increase social spending, to
improve social indicators.

Public Financial Management

25. The government is continuing its efforts to strengthen public financial management
(PFM). The government remain determined to improve the sincerity and execution of the budget,
ensure discipline in budget execution, improve the efficiency of expenditure related to investment
projects, and reduce domestic payment times in line with regulatory standards of less than 90 days.

26. The government has finalized two public financial management assessments and is
preparing a new program of measures in this area. With the support of the European Union, the
government has finalized the third review of Public Expenditure and Financial Accountability (PEFA),
after those of 2007 and 2017. The government has also finalized a Public Expenditure Review (PER)

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with the support of the World Bank. Both reviews will be published by end-December 2023. These
assessments will serve as a basis for the development of a new program (supported by a detailed
action plan) of structural measures to strengthen public financial management, which will be
finalized by June 2024 at the latest.

27. The Government is pursuing reforms aimed at improving the sincerity and execution
of the budget. The government will subject treasury correspondents to an annual disbursement
plan consistent with the budgetary policy underlying the budget law. To improve budget execution,
we have improved quarterly projections of public spending to limit the practice of Treasury
advances, release of funds and advance payments (régies d’avance). In addition, to further improve
liquidity management, the government will continue to cap Treasury advances without a budget
allocation. These advances are prohibited by law, and the government undertakes to limiting them
to CFAF 15 billion per quarter in cases of extreme urgency (indicative target, Table 1). In addition,
the Minister of Finance will issue an instruction, following an audit, on implementing a strategy to
strengthen the management of correspondent accounts, with provisions on the closure of illegal
accounts, the clearance of existing arrears, and relevant cash management rules consistent with the
requirements of the annual budget law (new structural benchmark no. 15, December 2024).

28. The government will continue to implement steps to improve the quality of public
spending. To better manage SNH's direct interventions and ensure transparency, the authorities
have set up a system for reconciling and evaluating said expenditure. Following the diagnosis of the
public service pension scheme, the authorities will carry out an actuarial study of the pension system
with a view to reducing quasi-fiscal risks by the end December 2024 and will use the
recommendations of this study to ensure the viability of the pension scheme.

29. The Government is implementing a program to enhance the effectiveness of the public
investment program, in line with the PIMA recommendations for project selection, planning
and execution. This is essential to support the private sector and economic growth. To improve
project management, the government has signed the texts governing project management units
(structural benchmark no. 8, August 2023). In addition, the government aims to improve the
selection and budgeting of investment projects. The government will endeavor to control the
management of commitment authorizations (CAs) / payment appropriations (PAs) to better manage
multi-annual investment projects. To this end, 2025 budget law will include an annex on CAs and
PAs in line with the Medium-Term Budgetary Framework (MTBF) and consistent with the timetable
for the implementation of investment projects (new structural benchmark no. 13, November
2024).

30. Improving public procurement practices will strengthen the efficiency of public
investment spending and public financial governance. The government commits to increasing to
at least 80 percent the number and total value of contracts awarded through COLEPS (Cameroon
Online E-Procurement System) in certain key ministries (infrastructure, education, health, posts, and
telecommunications) between January and May 2024, to monitor the awarding of public contracts at
the level of central services (structural benchmark no. 10, May 2024). In addition, the government
will ensure the operationalization of the public procurement tracking system.

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31. The government places a high priority on settling arrears and ensuring domestic
payments as soon as possible. The Government has completed the audits of the State's payment
arrears and adopted a plan for the clearance of arrears certified by these audits over three to seven
years (structural benchmark no. 1, September 2023). LF2024 includes an allocation of CFAF 50
billion to clear part of the arrears of previous years. To better manage outstanding unpaid
obligations (RAP), the government has included a budgetary allocation of CFAF 150 billion in the
LF2024 for the clearance of the stock of outstanding payments of more than 90 days at end-2023
(structural benchmark no. 9, December 2023). To avoid the accumulation of outstanding
payments, the government will prepare comprehensive and realistic public procurement plans,
which should allow for the development of commitment plans consistent with the monthly cash flow
plans (new structural benchmark no. 14, May 2025). The objective is to contain waiting times for
suppliers within 90 days of the date of settlement of the expenditure and to limit excessive
commitments at the end of the year. In addition, the DGTCFM will prepare and update an issuance
schedule to further improve cash management and keep RAPs within 90 days.

32. The authorities are committed to significantly reducing the wage debt and limiting
further accumulation of arrears to government employees. An allocation of 193 billion CFAF has
been included in the 2024 budget law to deal with the arrears of salary payments due to state
employees. The government also undertakes to include a substantial budgetary allocation of at least
144 billion CFAF in the 2025 budget law to clear the arrears of the wage debt. The implementation
of SIGIPES 2, the pay and career management software, from January 2024, will make it possible to
institute the automatic promotion procedure, which will lead to the non-accumulation of arrears in
future years' budgets. In the same vein, the digitalization and acceleration of the onboarding
procedure for new agents will substantially reduce the waiting time before their first pay. Finally, to
control the wage bill, the government has adopted a prudent recruitment policy based primarily on
replacements for retiring employees.

Public Enterprise Management

33. The government will continue to implement measures to ensure the


restructuring/rehabilitation of SONARA. In this regard, the government is in the process of
carrying out the in-depth technical-economic and financial feasibility study of option no.3 relating
to a complex refinery with a hydrocracking unit, accompanied by the plans and design of the new
refinery, as validated by the President of the Republic (structural benchmark no. 6 reformulated,
now new structural benchmark no. 16, June 2024). The implementation of this activity of the
restructuring plan has experienced some delays but will be completed by June 2024.

34. Settling cross-debts in the public sector has taken longer than expected (structural
benchmark no. 2, September 2023; rephased to April 2024). The government has drawn up an
inventory of cross-debts between public enterprises and the government as of end-2020 but a debt
clearance plan between the government and public enterprises has not yet been adopted. The
inventory of cross-debts of between public enterprises themselves, as at end-2020, is ongoing.

35. The implementing texts of the Mining Code have not been finalized on time (structural
benchmark no. 3, September 2023, deferred to June 2024). The creation of the national mining

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company, SONAMINES, tasked with defending the government’s interests in the sector, required
formulation of a new code. The government has submitted a draft law on the new Mining Code to
Parliament in November 2023. Following its adoption, the government will publish the
implementing texts of the new mining code as soon as possible.

D. Debt Sustainability and Vulnerabilities

36. The government is determined to improve public debt sustainability and reaffirms the
central role of the National Committee on Public Debt (CNDP). As the risk of debt distress
remains high, debt policy focuses on slowing new external borrowing, while favoring concessional
loans. Recourse to non-concessional borrowing will be limited to financing priority projects with
proven socioeconomic and financial cost-effectiveness and for which no concessional financing is
available. To improve the liquidity profile of the debt, a management operation is planned before
end-2023 to reduce the Government’s outstanding domestic obligations. In addition, ensuring debt
sustainability requires the authorities to step up their efforts to monitor the risks associated with
public enterprises and to make timely progress on restructuring, to reduce contingent liability risks.

37. The government is committed to reducing the stock of undisbursed committed


balances (SENDs), in consultation with its creditors. The government plans to reduce the stock
from CFAF 3,673 billion as at end-2022 to CFAF 3,548.1 billion as at end-2023 (estimated level at
CFAF 3,484.1 billion at end-September 2023, to be added with the loan agreements to be signed by
the end of 2023 for an amount of about CFAF 577 billion and the planned disbursements of CFAF
641 billion). The Government has made an inventory of loan and grant agreements for 180 projects.
It will consult with development partners to possibly reverse non-performing SENDs and, if
necessary, reallocate unused funding to other projects. The government is aware that timely
disbursement, in line with each project’s schedule, is a prerequisite for containing SENDs and the
associated budgetary and economic costs, in a context where the need to conclude new projects to
fill the infrastructure gap is becoming an emergency.

E. Financial Sector Resilience and Financial Inclusion

38. The government is committed to complying with regulations to preserve the stability
of the monetary union and its banking system. The government supports the regional efforts to
preserve the stability of the monetary arrangement, which requires rebuilding the BEAC’s foreign
reserves. It is committed to enforcing all aspects of the foreign exchange regulations under its
jurisdiction. Specifically, the government will require compliance with the regulation by public
enterprises, new concession contracts or revenue-sharing agreements with the extractive sector, and
with the new Petroleum Code. Additionally, the current events in international financial markets
highlight the need for continued reforms to strengthen the stability of the financial sector. The
government will focus on measures to strengthen the resilience of the banking sector, including
compliance with prudential standards and the implementation of COBAC recommendations.

39. Resolution of the distressed banks is continuing. In July 2023, COBAC authorized the
government, as well as the historical shareholders who had committed to do so, to take equity

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positions in the two banks in difficulty, as provided for in the restructuring plans. The government
had begun the process of recapitalizing the restructuring banks in advance, in accordance with the
commitments made. These recapitalizations are in line with the approved restructuring plans, in
which the historical shareholders have not been bailed out. All of them, pending fresh capital, the
prudential positions of the two banks remain fragile. In addition, one of the banks still has a
significant asset shortfall that the government has committed to filling. Therefore, the government
undertakes to provide a schedule for the disbursement of the remaining capital tranches latest end-
December 31, 2024, the deadline agreed to by COBAC. In addition, the authorities plan to make up
the shortfall in assets by signing a commitment to the bank in question. The mechanism will take the
form of compensation by means of non-payment of taxes by the bank over a period of five (5) years.
The taxes collected in this way will be deposited in an escrow account opened in the bank’s books.
In the event that the taxes collected are not sufficient to cover an instalment, the government
undertakes to cover the said instalment through the State budget. 1 At the same time, the
government will continue the privatization process of the CBC (Commercial Bank of Cameroon)
which will be completed in 2024, in accordance with the commitments made by the Groupement –
Conseil de l’Etat to this effect.

40. The government will continue to support access to credit for SMEs. Access to credit for
SMEs, while important for their growth, is too often difficult and needs to be further encouraged.
This requires an improvement in the business climate by reducing non-performing loans, to increase
the confidence of banking and micro-credit institutions in the SME sector. To this end, it is
important to continue promoting : i) the establishment of various credit registers, balance sheet
registers, and the creation of a rating system for companies and individuals associated with the
BEAC; ii) the digitization of the land registry to enable the creation of a register of real estate
securities; iii) the training of judges in commercial affairs and the creation of competent commercial
courts; iv) the establishment of a government guarantee fund for SMEs; v) the consideration of the
crowding-out effect linked to the issuance of public securities on the market in its issuance strategy.

41. The government will clarify the role of the Debt Collection Corporation (SRC). The
government will conduct an audit of the significant losses recorded in 2022 and ensure the
strengthening of its governance and the transparency of its operations, prior to any expansion of its
activities. The government will also ensure that the institution has adequate resources to carry out
its activities.

42. In particular, the government will ensure that the regulatory texts necessary for the
effective launch of a state depository corporation (Caisse des Dépôts et Consignations or
CDEC) are signed as soon as possible. Any delay in this direction is likely to extend the time limits
for the transfer of funds to the CDEC. The government will also take all necessary measures to
ensure that, on the one hand, the funds vested in the CDEC and held by other actors are effectively
transferred to these books during the first half of 2024 and, on the other hand, the deposits and
consignments provided for by the law of April 14, 2008, are made directly and exclusively with the

1
Nevertheless, self-financing of bank capital is not recognized as a practice in line with international standards (Basel
Committee Framework) and is incompatible with good practices. As a result, the funding should be covered by the
government budget or by issuing a coupon bond on the markets.

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CDEC from the first quarter of 2024. Regarding asset management, the state depository corporation
(CDEC) will enter into prior discussions with COSUMAF.

43. The government finalized its financial inclusion strategy in February 2023 with an
action plan for 2023-2027. The government is now working with development partners to
implement the plan and thereby increase the economy’s low banking penetration rate while
reducing underlying gender inequalities.

F. Governance, Transparency and Anti-Corruption

44. The government continues its efforts to strengthen governance, transparency, and
anti-corruption. A diagnosis of economic governance was developed in collaboration with the IMF
(missed structural benchmark no. 5, September 2023, prior action).

45. The government intends to continue reforms initiated on the breakdown of the
common chapters of the State budget, to reduce the weight of accidental and unforeseeable
expenditure to between 3 and 5 percent of the State budget by 2025. Consequently, the
government will adopt a timetable for the transformation of common chapters for the benefit of
authorizing officers and managers in the relevant ministries, as part of the reform of decentralized
authorizations (new structural benchmark no. 17, May 2024). The inclusion of appropriations for
accidental and unforeseeable expenditure in allocations will be effective in the 2025 budget law,
which will not exceed 3-5 percent of the budget and the budget will also specify the modalities for
the management of these allocations (new structural benchmark, no. 18, November 2024).

46. Cameroon is making progress towards validating compliance under the Extractive
Industries Transparency Initiative (EITI). The government published the 2020 EITI Reconciliation
Report in December 2022 and the 2021 EITI Reconciliation Report in September 2023. Despite some
challenges in implementing the 15 corrective actions prescribed by the EITI International Secretariat
Board during the last validation, the validation process under the 2019 EITI Standard was launched
in October 2023.

47. The government is committed to putting in place measures to strengthen the fight
against money laundering and terrorist financing (AML/CFT). Since the adoption of its Mutual
Evaluation Report (MER) in October 2021 (published in March 2022), Cameroon has made progress
on some of the recommended actions by increasing the resources of the Financial Intelligence Unit
and strengthening the capacities of investigative authorities and judicial bodies to effectively
conduct AML/CFT cases. In June 2023, the government committed to work with the Financial Action
Task Force (FATF) and the Action Group against Money Laundering in Central Africa (GABAC) to
implement an action plan to strengthen the effectiveness of its AML/CFT regime, following the
country’s addition to the grey list.

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PROGRAM MODALITIES
48. Considering external pressures and to allow sufficient time to achieve program
objectives, the government is requesting an extension of the current ECF/EFF arrangements
from the current 36 months to 48 months (i.e., until July 28, 2025). The government is also
requesting an increase in access amounting to 40 percent of Cameroon’s quota (SDR 110.4 million)
and a modification in the program’s conditionalities. The government also requests that the increase
in access to be split between GRA resources (26.7 percent of quota; SDR 73.6 million) and PRGT
resources (13.3 percent of quota; SDR 36.8 million).

49. The government is requesting a waiver for the breach of the continuous performance
criterion on non-accumulation of external arrears. The government is also requesting the
approval of modifications to the program targets for end-March 2024, and setting new end-June
and end-December 2024 QPCs, and end-September 2024 ITs reflecting the current macroeconomic
framework, budget projections, and program commitments.

50. The government will take all necessary measures to meet the targets and criteria
presented in Tables 1 and 2 of this memorandum. The program will be monitored at semiannual
reviews using the performance criteria, indicative targets, and structural benchmarks defined in
Tables 1 and 2 of this memorandum and in the attached Technical Memorandum of Understanding
(which also defines the requirements for data reporting to IMF staff). The sixth review based on end-
December 2023 targets, is expected to be completed from June 15, 2024. The seventh review based
on end-June 2024 targets is expected to be completed from December 15, 2024. The eighth review
based on end-December 2024 targets is expected to be completed from June 3, 2025.

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Table 1. Cameroon: Quantitative Performance Criteria (QPC) and Indicative Targets (IT)
under the ECF and EFF Arrangements
(In billions of CFAF, unless otherwise indicated)
End June-23 End-Sept 23 End-Dec 23 End-Mar 24 End-Jun 24 End-Sept 24 End-Dec 24

QPC Est. Performance IT Adjusted IT Est. Performance QPC IT (4th rev.) IT (new) QPC (new) IT (new) QPC (new)

A. Quantitative Performance Criteria 1/


Floor on the non-oil primary fiscal balance (payment order
-331 -233 Met -474 -302 Met -745 65 -30 -508 -480 -611
basis)
Ceiling on the net domestic financing of the central government
132 67 Met 147 192 141 Met 39 -8 12 224 112 -176
(excluding IMF financing) 2/
Ceiling on net borrowing of the central government from the
139 -32 Met 127 172 70 Met 111 0 0 0 0 0
central bank (excluding IMF financing) 2/
Ceiling on the disbursement of non-concessional external debt 346 118 Met 518 139 Met 691 188 185 370 554 739

B. Continuous Quantitative Performance Criteria


(starting from the program approval)
Ceiling on the accumulation of new external payments arrears 3/ 0 … Not met 0 … Not met 0 0 0 0 0 0
PV of contracting and guaranteeing of new external borrowing 4/ 512.9 97.7 Met … 203 Met 512.9 … … 512.9 … 512.9

C. Indicative Targets
Floor on non-oil revenue 1,729 1,906 Met 2,591 2,757 Met 3,754 1016 1038 1974 2958 4200
Ceiling on the net accumulation of domestic payment arrears -81 161 Not met -228 314 Not met -374 -64 -55 -110 -165 -220
Floor for poverty-reducing social spending 624 694 Met 993 1,011 Met 1325 355 265 539 959 1368
Ceiling on direct interventions of SNH 80 90 Not Met 110 134 Not met 145 40 40 80 110 145
Share of spending executed through exceptional procedures on
4 10.9 Not met 4 9 Not met 4 4 4 4 4 4
authorized (payment order) spending 5/
Ceiling on Treasury advances without a budget allocation 6/ 15 42 Not met 15 15 15 15 15 15

Memorandum items 7/:


1. Cumulative external budget support, excluding IMF (earliest
23 23 68 23 129 0 18 78 78 164
disbursement)
2. Balance of the special account for the unused statutory
50 50 50 1 1 1 1 1 1 1
advances

Sources: Country authorities and IMF staff projections.

Note: The terms in this table are defined in the TMU.


In addition to QPCs enumerated in this table, the Standard Continuous Performance Criteria will also apply: (i) Not to impose new or intensify existing
restrictions on the making of payments and transfers for current international transactions; (ii) Not to introduce new or intensify existing multiple
currency practices; (iii) Not to conclude bilateral payments agreement that are inconsistent with the IMF’s Articles of Agreement (Article III); and (iv)
Not to impose new or intensify existing import restrictions for balance of payments reasons.

1/ Program indicators under A are performance criteria at end-June and end-December 2023, end-June and end-December 2024; indicative targets
otherwise.
2/ The ceiling on net domestic financing (excluding payment of arrears) of the budget and the ceiling on the net borrowing from the central bank will
be adjusted if the amount of disbursements of external budgetary assistance excluding IMF financing, falls short of or exceeds program forecasts. If
disbursements are less (higher) than the programmed amounts, the ceiling will be raised (reduced) pro tanto, up to a maximum of CFAF 120 billion at
the end of each quarter. The ceiling on borrowing from the Central Bank in 2023 includes the use of 2021 SDR allocation of 80 billion CFAF.
3/ The zero ceiling applies until the end of the arrangement.
4/ Cumulative ceiling calculated from January 1, 2022, and reset annually, and monitored on a continuous basis from completion of the first review
under the ECF/EFF arrangement. Excludes ordinary credit for imports, debt relief obtained in the form of rescheduling or refinancing, and budget
support loans from the World Bank.
5/ This refers to payments made by the Treasury without prior authorization (issuance of payment orders, such as cash advances and provisional
budget commitments), excluding debt service payments.
6/ This indicative target will come into effect from July 1, 2023, and limit Treasury advances without a budget allocation to CFAF 15 billion per quarter.
7/ Updated based on the recent staff estimates.

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Table 2. Cameroon: Prior Action and Structural Benchmarks

Completion Revised
Prior Action Deadline1 Indicator Status Comments
date1

Public finance and debt


management

Submit to Parliament the 2024


Finance Act in line with the
This prior action was met on
macroeconomic and budgetary Met
November 30, 2023.
framework of the 5th reviews.

Publish a diagnostic of
governance vulnerabilities,
particularly with regard to
corruption, including the
functions of the State most
relevant to economic activity,
namely: i) fiscal governance; (ii)
supervision of the financial sector;
(iii) market regulation; (iv) the rule
of law; and (v) anti-money
laundering and countering the
financing of terrorism (AML/CFT).

Revised
Completion
Structural Benchmark Deadline1 Indicator Status Comments
date 1

Complete the audits of government Submission of the Audit Audits of the State’s arrears have
Not met,
payment arrears and adopt an Report and Arrears been completed, and a plan has
1 Sept. 23 implemented
arrears settlement plan certified by Clearance Plan to IMF been adopted to settle the arrears
these audits. Staff. with delay over 3-7 years.

Establish an inventory of the


respective debts between the public The inventories have been drawn
enterprises and the Government and up, however, a plan for the
Inventory and clearance
between the public enterprises clearance of the respective debts
2 plan shared with IMF Not met
themselves, as at end-2020, and Sept. 23 Apr 24 between the government and
Staff.
adopt a plan for the clearance of the public enterprises will not be
respective debts between the completed until April 2024.
Government and public enterprises.
Extractive Sector

The implementing texts of the


mining code have not been
finalized. The creation of the
national mining company,
SONAMINES, tasked with
Finalize and publish all defending the government's
3 implementation texts of the 2016 Implementing texts interests in the sector, required a
Not met
Mining Code (law n° 2016/017 of Sept. 23 June 24 published. review and the formulation of a
December 14, 2016). new code, which will be submitted
to Parliament in March 2024.
Following its adoption, the
government will publish the
implementing texts of the new
mining code as soon as possible.

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Table 2. Cameroon: Prior Action and Structural Benchmarks (continued)

Business Climate.

Revise Law No. 2013/004 of April 18, The revision of Law No. 2013/004
2013, to rationalize incentives and of April 18, 2013 was delayed to
4 Nov. 24
promote healthy competition Dec. 23 Revised Act published allow an intermediate step (SB7),
between economic operators. which has now been met.

Good Governance and Anti-


Corruption

Publish a diagnostic of governance


vulnerabilities, particularly with
regard to corruption, including the
The government has completed a
functions of the State most relevant
diagnostic of economic governance
to economic activity, namely: i) fiscal
in collaboration with the IMF. The
5 governance; (ii) supervision of the Not met
Sept. 23 Prior Action Publication of the report government has authorized the
financial sector; (iii) market
publication of the report by the
regulation; (iv) the rule of law; and
Board date.
(v) anti-money laundering and
countering the financing of terrorism
(AML/CFT).
The development of a restructuring
plan for SONARA has been
completed and validated by the
SONARA Restructuring Plan: IMC, but the in-depth technical-
Elaborate and submit to
Elaborate a restructuring plan for economic and financial feasibility
IMF staff the new
6 SONARA, including industrial and Sept. 23 Not met study of option 3 for a complex
restructuring plan for
financial options under refinery with a hydrocracking unit
SONARA.
consideration. has not yet been finalized and
submitted to IMF staff.

Replaced by New SB16.


Business Climate.
The preparation of an action plan
Formulate an action plan with
with recommendations to
recommendations to eliminate CIT
eliminate the corporate tax break,
holidays (including the minimum tax)
Action plan submitted to was an intermediate step to the
7 to promote healthy competition Oct. 23 Met
IMF staff. revision of Law No. 2013/004 of
between economic operators,
2013 to streamline incentives and
excluding companies operating in
promote healthy competition
the agriculture, livestock, and fishery
between economic actors (SB4).
sectors.

Project and Debt Management

Publication of a decree This SB was introduced to improve


Implementation the decree of specifying the procedures Not met, project and debt management. The
8 October 2021 governing project Aug. 23 for monitoring the implemented deadline was revised to August
management units. performance of project with delay 2023 in the fourth review. It was
management units implemented in November 2023.

Public finance and debt


management
Include in the budget law of year
The purpose of this structural
N+1 a budgetary allocation for the
Allocations in the 2024 benchmark is to limit outstanding
9 clearance of outstanding unpaid Dec. 23
initial budget law amounts of more than 90 days at
obligations (RAPs) of more than 90
the end of the fiscal year.
days at the end of year N.

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Table 2. Cameroon: Prior Action and Structural Benchmarks (continued)

Public Investment Management


(PIM)
Increase to at least 80% the number
and total value of contracts awarded
Report on the number COLEPS is currently operational,
through the COLEPS (Cameroon
and value of online but only a limited number of
Online E-Procurement System) in
procurement contracts procurement projects is registered
10 some key ministries (infrastructure, May 24
from January to May in the system. To strengthen
education, health, posts, and
2024 (as a percentage of reforms in this area, a new
telecommunications) between
total) submitted to IMF formulation of this SB is proposed.
January and May 2024, in order to
staff
monitor the awarding of public
contracts at the level of central
services.
New Structural Benchmarks
Revenue mobilization
Create a dataset of wages and
This is a long-standing technical
salaries that is suitable for simulating
assistance recommendation. This
IRPP calculations and that comprises
Share the database with database plays a key role in
11 both the entire public sector and a Nov. 24
IMF staff. assessing the impact of possible
representative sample of private
IRPP reforms on income and
sector employees.
equity.

Prepare a detailed action plan,


Tax arrears are a significant
including the first 100 outstanding
problem in Cameroon as
tax and customs debts, including
established in the March 2022 IMF
state-owned enterprises, to manage
Submit to IMF staff a technical assistance report. This
and recover at least 15 percent of
12 April 24 detailed and sequenced measure will improve tax revenue
the outstanding recoverable tax
action plan. collection and strengthen the
arrears (outstanding as at end-June
governance of tax administration
2023) and implement 50 percent of
by improving the transparency of
the measures included in the action
budget management.
plan.
Public Financial Management
Inclusion in the budget of
There are significant weaknesses in
an annex on CAs and PAs
public investment management
Take into account in the budget the that comply with the
practices, including the
commitment authorizations (CAs) MTBF and are consistent
management of multi-year
and payment appropriations (PAs) with the timetable for the
13 Nov. 24 projects. Improving the efficiency
that comply with the MTBF and are implementation of
of investments, particularly in
consistent with the timetable for the investment projects
public infrastructure, will support
implementation of investment (from the 2025 budget).
the private sector and economic
projects. Draft budget law to be
growth.
presented to IMF staff.
Prepare and publish an
Develop comprehensive and realistic annual report for 2024,
This measure aims to strengthen
public procurement plans, which assessing consistency
the management of public
should allow for the development of between commitment
14 May 25 expenditures, in particular
commitment plans consistent with and cash plans and based
regarding public procurement of
monthly cash flow plans. on the work of the
investment projects.
Treasury Committee
(CTRB) and its Secretariat.
Minister of Finance to issue an
instruction, following an audit, to
strengthen the management of
correspondent accounts with
The measure aims to strengthen
provisions on the closure of illegal Submit the instruction to
15 Dec. 24 cash management of
accounts, the clearance of existing IMF staff.
correspondent accounts.
arrears, and relevant cash
management rules consistent with
the requirements of the annual
budget law.

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Table 2. Cameroon: Prior Action and Structural Benchmarks (concluded)

This new SB replaces SB6, which


Implementation of the SONARA
has not been met. The
Restructuring Plan.
development of a restructuring
Carry out the in-depth technical-
plan for SONARA has been
economic and financial feasibility
completed and validated by the
study of option no.3 validated by the Conduct and submit the
16 June 2024 IMC, but the in-depth technical-
President of the Republic related to study report to IMF staff.
economic and financial feasibility
a refinery complex with a
study of option 3 for a complex
hydrocracking unit, accompanied by
refinery with a hydrocracking unit
the plans and design of the new
has not yet been finalized and
refinery.
submitted to IMF staff.
Governance
Adopt a timetable for the
transformation of the common
chapters for the benefit of the Validated timetable for
This SB aims to improve
authorizing officers of the ministries transforming common
17 May 24 transparency in the use of
and the managers concerned in the chapters into allocations
"common chapters".
context of the reform of the is sent to IMF staff.
devolution of the authorization.

The 2025 draft budget


law, presenting the
appropriations for
Include the appropriations for
accidental and
accidental and unforeseeable
unforeseeable
expenses in endowments in the 2025 This SB aims to improve
expenditures in
18 draft budget law, which do not Nov. 24 transparency in the use of
endowments and
exceed 3-5 percent of the budget, "common chapters".
specifying the modalities
and specify the modalities for
for managing the
managing the endowment.
endowment, is
transmitted to the IMF
staff.
1/ Refers to end of the month.

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Attachment II. Technical Memorandum of Understanding


Provisions of the Extended Credit Facility and the Extended Fund Facility, 2021–25

1. This Technical Memorandum of Understanding (TMU) defines the quantitative


performance criteria and indicative objectives that will be used to assess performance in the
framework of Cameroon’s program supported by arrangements under the Extended Credit Facility
(ECF) and the Extended Fund Facility (EFF) over the period 2021-25. The TMU also establishes the
framework and cutoff dates for reporting the data to enable IMF staff to assess program
implementation.

CONDITIONALITY

2. The quantitative performance criteria and indicative objectives from end-June 2023
until end-December 2024 are provided in Table 1 of the Memorandum of Economic and Financial
Policies (MEFP) attached to the Letter of Intent. The structural benchmarks defined in the program
are provided in detail in Table 2 of the MEFP.

DEFINITIONS

3. Government: Unless otherwise indicated, “government” is defined as the central


government of the Republic of Cameroon, which includes all implementing agencies, institutions,
and any organizations receiving special public funds, whose powers are included in the definition of
central government under the 2001 Government Finance Statistics Manual (GFSM 2001, paragraphs
2.48–50). This definition does not include local governments, the Central Bank, or any other public
entity, or entity belonging to the government that has autonomous legal status and whose
operations are not included in the table of government financial operations (TOFE).

4. A nonfinancial public enterprise is a commercial or industrial unit, fully or partially owned


by the central government or its bodies, that sells goods and services to the public on a large scale.
With effect from June 2017, all operations between the government and these public enterprises
should be treated on a gross basis in the TOFE with the proper treatment of revenue operations and
those related to expenditure.

REVENUE

5. Total government resources are comprised of tax and nontax fiscal revenue (as defined in
Chapter 5 of GFSM 2001) and grants. Revenue is recorded in the accounting system on a cash basis.
Proceeds from the sale of assets and revenue from privatizations (defined in paragraph 8) are not
considered government revenue.

6. Oil revenue is defined as the total transferable balance of the Société Nationale des
Hydrocarbures (the national hydrocarbons company—SNH), and income tax on oil companies and

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gas operators. The authorities will notify IMF staff of any changes in the tax systems that may occur
that would lead to changes in revenue flows. Oil revenue is recorded in the accounting system on a
cash basis.

7. Non-oil revenue includes all government's (tax and nontax) revenue, with the exception of
oil revenue as defined under paragraph 6. Value-added tax (VAT) is recorded net of VAT refunds.
Pipeline fees paid by the Cameroon Oil Transportation Company (COTCO) are recorded under
nontax revenue.

8. Privatization revenue includes all funds paid to the government in connection with the sale
or transfer of the management of a public enterprise (concession), agency, or facility to one or more
private enterprises (including enterprises fully controlled by one or more foreign governments, one
or more private entities, or one or more individuals). Privatization revenue also includes all funds
deriving from the sale of shares held by the government in private companies or public enterprises.
All privatization revenue must be recorded on a gross basis. Any costs that may be involved in sales
or concessions must be recorded separately under expenditure.

EXPENDITURE

9. Total government expenditure and net lending include all wage and salary expenditure
for civil servants, goods and services, transfers (including subsidies, grants, social security benefits,
and other outlays), interest payments, and capital expenditure, all of which are recorded in the
accounting system on payment order basis, unless otherwise indicated, and net lending (defined in
GFSM 2001). Total government expenditure also includes expenditure carried out without any prior
payment authorization and pending regularization.

10. Direct interventions by Société Nationale des Hydrocarbures (SNH) are included in
government expenditure. They include emergency payments made by the SNH on behalf of the
government, substantially to cover exceptional sovereignty and security outlays.

11. Social expenditure includes public expenditure recorded in the government budget in
connection with priority programs to accelerate attainment of the government's social development
objectives. This item includes: (i) for the education sector, total expenditure (current and capital) of
the Ministries (Basic Education, Secondary Education, and Employment and Vocational Training); (ii)
for the health sector, current and capital expenditure of the Ministry of Public Health, including
COVID-19 related expenditures; and (iii) for other social sectors, current and capital expenditure of
the Ministries of Labor and Social Security, Youth and Civic Education, Social Affairs, and Promotion
of Women and Family; (iv) administered price subsidies (fuel at the pump, electricity to households),
(v) gas subsidy, and (v) expenditures for the Social Safety Net Program.

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BALANCE AND FINANCING

12. Primary balance: Primary balance: The primary balance is defined as the difference between
total government revenue (defined in paragraph 5) and total government expenditure and net
lending (defined in paragraph 9) not including interest payments in connection with external and
domestic debt.

13. Debt: The definition of "debt" is set out in paragraph 8 (a) of the Guidelines on Public Debt
Limits in Fund-Supported Programs attached to the Executive Board Decision 16919– (20/103)
adopted on October 28, 2020, but also includes commitments contracted or guaranteed, for which
the values have not been received. For purposes of these Guidelines, "debt" is understood to mean
a current, i.e., not contingent, liability created under a contractual arrangement through the
provision of value, in the form of assets (including currency) or services, at some future point(s) in
time. These payments will discharge the debtor from the principal and/or interest liabilities
undertaken under the contract. In accordance with the foregoing definition of debt, any arrears,
penalties and judicially awarded damages arising from the failure to make payment under a
contractual obligation that constitutes debt are debt.

14. External debt, in the assessment of the relevant criteria, is defined as any borrowing or debt
service in a currency other than the CFA franc. This definition also applies to debt between countries
of the Central African Economic and Monetary Community (CEMAC) and debt from the
Development Bank of Central African States (BDEAC). The relevant performance criteria apply to
external debt of the government, public enterprises that receive transfers from the government, and
other public entities in which the government holds more than 50 percent of the capital stakes, or
any other private debt for which the government has provided a guarantee that should be
considered to constitute a contingent liability. Guaranteed debt refers to any explicit legal
obligation incumbent on the government to reimburse a debt in the event of payment default by
the debtor (whether the payments must be made in cash or in kind).

15. Concessional external debt: External debt is considered concessional if it comprises a grant
component of at least 35 percent. 1 The grant component is the difference between the face value of
the loan and its present value (PV) expressed as a percentage of the face value. The PV of debt at
the date on which it is contractually arranged is calculated by discounting the debt service payments
at the date on which the debt was arranged. 2 A discount rate of 5 percent is used for that purpose.

1
The link to the IMF website below refers to an instrument that can be used to calculate the grant component for a
broad range of financial arrangements: http://www.imf.org/external/np/pdr/conc/calculator.
2
The calculation of concessionality reflects all aspects of the loan agreement, including the maturity, grace period,
schedule of maturities, commitment fees, and management fees. Concessionality calculations for Islamic
Development Bank (IsDB) loans will reflect the existing agreement between the IsDB and the IMF.

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16. Domestic debt is defined as all government’s debts and obligations denominated in CFA
francs. This item includes unreimbursed balances, advances from the Bank of Central African States,
Treasury bills and bonds, structured debt, domestic payment arrears, and SONARA’s domestic debt.

17. Structured debt is defined as debt that has been subject to a formal agreement or
securitization. Under the program, structured bank debt is included in net bank credit and structured
non-bank debt is reflected in non-bank financing.

• Structured bank debt is defined as all claims of local banks on government, with the exception
of Treasury bills and bonds.

• Structured non-bank debt is defined as all government's balances payable in connection with
local non-bank institutions, individuals, or the CEMAC, that have been securitized or subject to a
formal reimbursement agreement according to a clearly defined schedule.

18. Net domestic financing of the government is defined as the sum of (i) net bank credit to
the government; and (ii) net non-bank financing.

• Net bank credit net to the government is equal to the change in the balance between the
government’s commitments and assets with the national banking system. These assets include:
(i) the Treasury’s cash resources on hand; (ii) Treasury deposits with the Central Bank, not
including the Heavily Indebted Poor Counties (HIPC) account and the Debt Reduction and
Development Contract (C2D) account; and (iii) the credit balance of the accounts of the Caisse
Autonome d'Amortissement (CAA) with commercial banks earmarked for reimbursement of the
government's debt obligations. The government's commitments include: (i) financing from the
Central Bank; net IMF financing (disbursements net of reimbursements), refinancing of
guaranteed bonds, and Treasury paper held by the Central Bank; and (ii) financing from
commercial banks, specifically loans and direct advances; and Treasury securities, bills, and
bonds held by local banks. Net bank credit to the government is calculated based on the data
provided by the Bank of Central African States (BEAC). This data should be subject to monthly
reconciliation between the Treasury and the BEAC.

• Net non-bank financing to the government includes the following: (i) the change in the
outstanding balance of government securities (Treasury bills and bonds) issued in CFA francs on
the regional financial market and not held by the local banking system; (ii) the change in the
outstanding balance of structured non-bank domestic debt (defined in paragraph 16); (iii)
privatization revenue (defined in paragraph 8); (iv) the change in the balance of correspondent
bank accounts (including Account 42) and consignment accounts; and (v) the change in the
balance of outstanding claims on government abandoned by the private sector. The
government’s net non-bank financing is calculated by the public treasury.

19. Domestic payment arrears are the sum of (i) payment arrears on expenditure; (iii) payment
arrears on structured domestic debt; and (iii) unstructured debt:

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• Payment of arrears on expenditure are defined as "balances payable" for which the payment
lag exceeds the regulatory period of 90 days. Balances payables reflect the government's
unpaid obligations. They are defined as expenditure items for which the normal expenditure
execution procedure (commitment, validation, and authorization) has been followed until they
were undertaken by the public treasury, but that are still pending payment. Balances payable
under 90 days represent payments in progress. The Treasury will monitor this information on a
monthly basis to identify expenditure arrears in the stock of balances payable.

• Payment arrears on structured domestic debt are defined as the difference between the
amount due under a domestic debt arrangement (defined in paragraph 11) or the
reimbursement of matured Treasury securities, bills, or bonds and the amount effectively paid
after the payment deadline indicated in the agreement or after the maturity date of the Treasury
securities, bills, or bonds.

• Unstructured debt is defined as:

i. Unstructured debt of the CAA, which includes all balances payable, and liabilities of the
government transferred to the CAA that have not been subject to a reimbursement or
securitization agreement. The stock of unstructured debt is estimated at CFAF 53.3 billion at
end-September 2023.
ii. Domestic "floating” debt, including all government’s commitments for which a service was
provided by a public or private service provider but that has not been subject to any budget
commitment. These obligations include invoices payable and not settled to public and private
enterprises but exclude tax debt deriving from debt offsetting operations with public enterprises
and the execution of externally financed public procurement agreements that have not been
covered by the budget as a result of insufficient budget appropriations. The Directorate General
of Budget will conduct a monthly assessment of these commitments in collaboration with the
public treasury.

20. External payment arrears in the program are defined as external debt obligations of the
government (principal and interest) not paid 30 days after the due date specified in the underlying
agreement, taking into account any applicable contractual grace periods. This performance criterion
excludes payment arrears on external financial obligations of the government that are subject to
rescheduling.

21. Treasury advances do not follow the normal expenditure chain and are defined as any
payments made by the Treasury in the absence of a commitment or payment order issued by the
relevant authorizing officer at the General Directorate of Budget (DGB) and regularized retroactively.

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QUANTITATIVE PROGRAM OBJECTIVES

22. The quantitative targets (QTs) provided in the list below are as specified in Table 1 of the
MEFP. Unless otherwise indicated, all quantitative targets will be assessed on a cumulative basis
from the beginning of the calendar year to which the quantitative targets apply. The quantitative
targets and details for their assessment are provided below:

A. Non-Oil Primary Balance

Performance Criteria

23. A floor for the non-oil primary balance (based on payment order) is defined as a
quantitative objective in Table 1 of the MEFP. The non-oil primary balance is defined as the
difference between the primary balance defined in paragraph 12 and oil revenue defined in
paragraph 6.

24. To ensure consistency among data from different sources used to prepare the table of
government financial operations (TOFE), and particularly between the data on fiscal
operations reported by the Treasury and data on financing reported by the BEAC, the CAA,
and the Treasury, the cumulative level of financing discrepancies in the TOFE (including errors and
omissions) for a given month should not exceed 5 percent of the cumulative expenditure for that
month, in absolute value. Should this limit be exceeded, a comprehensive reconciliation exercise for
all TOFE source data will be undertaken in consultation with IMF staff.

Cutoff Dates for Reporting Information

25. The detailed data on government financial operations indicating the primary balance, oil
revenue, and the level of miscellaneous expenditure not otherwise classified will be submitted on a
monthly basis within six weeks from the end of the month, with the exception of end-December
data. Cameroon’s Law No 2018/012 on the public finance, provides for a complementary period of
30 days after the end of the calendar year to complete all pending payments from the budget year.
Therefore, the end-year data on government financial operations will be submitted by March 15 of
the following year.

B. Net Domestic Financing of the Government Excluding Net IMF


Financing

Performance Criteria

26. A ceiling on net domestic financing of the government excluding net IMF financing is
defined as a quantitative objective in Table 1 of the MEFP. For program requirements, net domestic
financing of the government excluding net IMF financing will be net domestic financing of the
government defined in paragraph 16, not including net IMF financing.

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Adjustment

27. The ceiling on net bank financing of the government excluding net IMF financing will be
adjusted if (i) the disbursements in connection with external budget support net of external debt
service and the payment of external arrears, and (ii) the rescheduling of bilateral external debt
service is lower than the program forecasts, are below the programmed levels.

• At the end of each quarter, if disbursements of external budget support are below (above) the
programmed amounts, the relevant quarterly ceilings will be adjusted upward (downward)
commensurately, within the limit of CFAF 120 billion for each quarter of 2023 and 2024. This
ceiling may be reviewed depending on the rate of budget aid disbursements during the year.

• At the end of each quarter, if the rescheduling of bilateral external debt service is below (above)
the programmed amounts, the corresponding quarterly ceilings will be adjusted upward
(downward) pro-tanto.

Cutoff Dates for Reporting Information

28. The detailed data on net domestic financing of the government (bank and non-bank) and
the status of budget support disbursements, reimbursement of external debt service, and the status
of external arrears will be submitted on a monthly basis within six weeks after the end of the month.

C. Disbursement of Non-Concessional External Debt

Performance Criteria

29. A ceiling on disbursements of non-concessional external debt is defined as a


quantitative objective in Table 1 of the MEFP. This performance criterion is applicable to debt
contractually arranged to finance projects. This performance criterion is based on external debt as
defined in paragraph 14 and uses the concept of concessionality defined in paragraph 15 of this
Technical Memorandum. The non-concessional external debt ceiling would exempt debt contracted
or disbursed under the debt management operation for clearance of the domestic arrears. The debt
management operation exemption to the debt ceiling would (i) cover only the amount of new
borrowing related to the debt management operation, and (ii) would need to show either an
improvement in the key liquidity and/or solvency debt burden indicators without adversely affecting
the risk rating.

Cutoff Dates for Reporting Information

30. Detailed information on disbursements of external debt contracted by the government must
be reported within six weeks after the end of the month, indicating the date on which the loans were
signed and making the distinction between concessional and non-concessional loans.

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D. Net Claims of the Central Bank on the Central Government

Performance Criteria

31. A ceiling on net claims of the Central Bank on government is defined as a quantitative
objective in Table 1 of the MEFP. This criterion is defined as the difference between the Central
Bank’s claims on government, excluding IMF financing, in particular unpaid balances of consolidated
statutory advances, refinancing of guaranteed bonds, and Treasury securities held by the Central
Bank; and cash and total deposits of the Treasury with the Central Bank, including the balance of the
special account of unused statutory advances. The balance of this special account will be regularly
monitored to maintain the objectives defined in Table 1 of the MEFP.

32. The ceiling on net claims of Central Bank on government includes the agreed use of the
2021 SDR allocation.

33. The ceiling on net claims of the Central Bank on government will be adjusted if the
disbursements in connection with external budget support are below the programmed levels. At the
end of each quarter, if disbursements of external budget support are below (above) the
programmed amounts, the relevant quarterly ceilings will be adjusted upward (downward)
commensurately, within the limit of CFAF 120 billion for each quarter of 2023 and 2024. This ceiling
may be reviewed depending on the rate of budget aid disbursements during the year.

Cutoff Dates for Reporting Information

34. The BEAC must report the detailed information on all financing from the Central Bank to the
government and the statement on the balance of the special account of unused statutory advances
within six weeks after the end of the month.

E. Non-Accumulation of External Payment Arrears

Performance Criteria

35. A ceiling of zero on the accumulation of new external payment arrears is defined as a
continuous quantitative objective in Table 1 of the MEFP. This performance criterion applies to the
accumulation of external arrears as defined in paragraph 20 of this Memorandum. In connection
with the program, the government undertakes not to accumulate any external payment arrears on
its debt, with the exception of arrears subject to rescheduling. The government's non-accumulation
of arrears is a performance criterion to be observed on an ongoing basis. This performance criterion
will be measured on a cumulative basis on approval of the program.

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Cutoff Dates for Reporting Information

36. The data on balances, accumulation, and reimbursement of external arrears will be
reported within six weeks after the end of each month. This performance criterion will be
monitored continuously by the authorities and any new external arrears should be reported
immediately to the Fund.

F. PV of External Debt Contracted or Guaranteed by the Government and


Certain Other Public Entities

Performance Criteria

37. A performance criterion (ceiling) applies to the PV of new external debt contracted or
guaranteed by the government and certain other public entities. 3 The ceiling applies also to
debt contracted or guaranteed for which value has not yet been received, including private debt for
which official guarantees have been extended. This performance criterion is applicable to external
debt as defined in paragraph 14 of this Memorandum and to debt guaranteed by the government
that constitutes a contingent public liability as defined in paragraph 13 of this Memorandum.
Moreover, this criterion is applicable to external debt contracted or guaranteed by (i) public
enterprises defined in paragraph 4 that receive transfers from the government, (ii) municipalities,
and (iii) agencies of general government including professional, scientific, and technical
organizations. However, this performance criterion is not applicable to borrowing arranged in CFA
francs, Treasury bills and bonds issued in CFA francs on the CEMAC regional market, regular short-
term loans from suppliers, regular import credits, loans from the IMF, and budget support loans
from the World Bank or debt relief or rescheduling. New debt contracted or disbursed for debt
management operations resulting in an improvement in the overall debt profile (as specified in
paragraph 29) is exempt from this performance criterion. For the assessment of this performance
criterion, debt relief is defined as the restructuring of debt with the existing creditor that reduces the
net present value of the debt, and debt rescheduling is defined as the operations with the existing
creditor that spread the average weighted maturities of financial flows without increasing the net
present value.

38. The PV of debt at the time of its contracting is calculated by discounting the future
stream of payments of debt service due on this debt. 4 For debts with a grant element equal to or
below zero, the PV will be set equal to the nominal value of the debt. The discount rate used for this
purpose is the unified discount rate of 5 percent set forth in Executive Board Decision No. 15248-
(13/97). The PV of external debts in currencies other than the U.S. dollar will be calculated in U.S.
dollar terms at program exchange rates as specified in TMU Text Table 1. For any debt carrying a
variable interest rate in the form of a benchmark interest rate plus a fixed spread, the PV of the debt

3
Guidelines on Public Debt Limits in Fund-Supported Programs attached to the Executive Board Decision No. 16919-
(20/103), adopted October 28, 2020).
4
The calculation of concessionality takes into account all aspects of the debt agreement, including maturity, grace
period, payment schedule, upfront commissions, and management fees.

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would be calculated using a program reference rate plus the fixed spread (in basis points) specified
in the debt contract. The program reference rate for the six-month USD SOFR is 0.04 percent and
will remain fixed for the duration of the program. The spread of the six-month Euro EURIBOR over
six-month USD SOFR is -56 basis points. The spread of six-month JPY OIS over six-month USD SOFR
is -8 basis points. The spread of six-month GBP SONIA over six-month USD SOFR is 1 basis point.
For interest rates on currencies other than Euro, JPY, and GBP, the spread over six-month USD SOFR
is 15 basis points. 5 Where the variable rate is linked to a benchmark interest rate other than the six-
month USD SOFR, a spread reflecting the difference between the benchmark rate and the six-month
USD SOFR (rounded to the nearest 50 bps) will be added.

Table 1. Cameroon: Program Exchange Rates


CFA franc Currency units per
Currency
per currency unit US Dollar
US Dollar 617.546 1.00
Euro 655.957 0.9414
AfDB XUA 821.855 0.7514
STG Pound 745.254 0.8286
Japanese Yen 4.655 132.650
Chinese Yuan 88.398 6.986
Source: IMF Representative Exchange Rates, December 23, 2022; African Development Bank
January 2023 Exchange Rates; Staff calculation.

Adjustment

39. An adjustor upward (downward) by the amount by which budget support exceeds (falls
short of) the projected amounts. Any adjustment will be capped to 10 percent of the external debt
ceiling set in PV terms and must be consistent with maintaining debt sustainability.

40. The external debt ceiling set in PV terms ceiling would be adjusted upward by the full
amount in PV terms of any project financing dedicated to COVID-19 vaccine interventions that was
not anticipated at the time of setting of the performance criterion. In this connection, the authorities
will consult with IMF staff on any planned external concessional borrowing for this purpose and the
conditions on such borrowing before the loans are either contracted or guaranteed by the national
government.

41. An adjustor of up to 5 percent of the external debt ceiling set in PV terms applies to this
ceiling, in case deviations from the performance criterion on the PV of new external debt are
prompted by a change in the financing terms (interest, maturity, grace period, payment schedule,

5
The program reference rate and spreads are based on the “average projected rate” for the six-month USD SOFR
over the following 10 years from the April 2021 World Economic Outlook (WEO).

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upfront commissions, management fees) of a debt or debts. The adjustor cannot be applied when
deviations are prompted by an increase in the nominal amount of total debt contracted or
guaranteed.

42. If the PV of the amount of the World Bank loans signed in 2023 is greater than the PV of the
World Bank loans signed in 2022 (CFAF 179.4 billion), the ceiling will be adjusted upward pro-tanto,
and the amount of upward adjustment to the ceiling will be capped at a maximum of CFAF 182.5
billion (PV) in 2023, according to the identified projects.

Cutoff Dates for Reporting Information

43. The detailed information on all loans (conditions and creditors) contracted by the
government must be reported within six weeks after the end of the month. The same obligation is
applicable to guarantees issued by the government. This criterion is monitored continuously by the
authorities and any signing or guaranteeing of debt should be reported immediately to the Fund.

OTHER INDICATIVE QUANTITATIVE TARGETS

G. Non-Oil Revenue

44. A floor on non-oil revenue as defined in paragraph 7 is defined as an indicative objective in


Table 1 of the MEFP.

H. Accumulations of Domestic Payment Arrears

45. A ceiling on net accumulations of domestic payment arrears is defined as an indicative


objective in Table 1 of the MEFP. Domestic payment arrears covered by the Treasury are defined in
paragraph 19 and do not include unstructured floating debt not covered by the Treasury. As an
exception, at end-September 2023 and end-December 2023 this ceiling will include payments in
progress defined as balances payable under 90 days in paragraph 19.

I. Social Expenditure

46. A floor on social expenditure pursuant to paragraph 11 is defined as an indicative


objective in Table 1 of the MEFP. These expenditure items will be monitored regularly in connection
with program implementation.

Cutoff Dates for Reporting Information

47. The data on the government's financial position as presented in the table of government
financial operations, the detailed listing of revenue highlighting oil revenue, domestic payment
arrears, and the status of social expenditure execution must be reported within six weeks after the
end of the month with the exception of end-December data as indicated in paragraph 25.

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J. Share of Exceptional Expenditure in Total Authorized Expenditure Not


Including Debt

48. A ceiling on the share of exceptional expenditure in total authorized expenditure not
including debt is defined as an indicative objective in Table 1 of the MEFP. This criterion will be
calculated based on the ratio between exceptional expenditure (expenditure excluding debt service
paid without prior authorization, including cash advances and provisional commitments) and total
authorized expenditure, excluding debt service, that is domestically financed (including wages).
Exceptional expenditure will be monitored regularly as part of program implementation.

Cutoff Dates for Reporting of Information

49. Monthly accounting statements showing the amount of cash advances, provisional budget
commitments, and advance funds must be reported to IMF staff within three weeks after the end of
each month. Authorized expenditure presented in Table M1 of the table of government financial
operations will be used to compute this ratio.

K. Treasury Advances Without a Budget Allocation

50. A ceiling on Treasury advances without a budget allocation is defined as an indicative target
in Table 1 of the MEFP and will be tested on a quarterly basis. Treasury advances are defined in
paragraph 21.

Cutoff Dates for Reporting of Information

51. Monthly accounting statements showing the amount of Treasury advances must be reported
to IMF staff within six weeks after the end of each month.

DATA SUBMISSION REQUIREMENTS

52. The quantitative data on the government’s quantitative and indicative objectives will
be reported to IMF staff with the periodicity described in Table 1 below. Moreover, all data
revisions will be reported promptly to IMF staff. The authorities undertake to report to IMF staff any
information or data not specifically addressed in this TMU, but required for program
implementation, and to keep IMF staff abreast of the situation in terms of achieving the program
objectives.

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Table 1. Cameroon: Summary of Data Reporting Requirements

Frequen
Responsible cy
Information Reporting lag
institution of the
data

Government Finance

The summary situation of Treasury Operations


(La situation résumée des Operations du Trésor Ministry of
(SROT)), including statement of unpaid orders of Finance Monthly 6 weeks
more than 90 days or less than 90 days, as well (MINFI)/DGTC
as statement of the correspondent accounts.

The table of government financial operations


(TOFE) and customary annex tables; (data on
execution of investments financed with external
6 weeks, except for
grants and loans must be available in a timely
end-December for
manner so that the quantitative targets of the
MINFI/DP Monthly which data will be
program can be determined in a timely manner.
reported by March 15
If information on physical execution of externally
of the following year
financed projects is not available, information on
requests to draw funds from the donors will be
used).

Domestic budget financing (net bank credit to


the government, stock of Treasury bills and
bonds pending reimbursement, domestic debt MINFI/BEAC Monthly 6 weeks
reimbursement status, privatization revenue, and
abandoned claims).

Ministry of
Implementation status of social expenditure
Finance Monthly 6 weeks
defined in Paragraph 11.
(MINFI)/DGB

Domestic debt reimbursement status. MINFI/CAA Monthly 6 weeks

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Table 1. Cameroon: Summary of Data Reporting Requirements (continued)


4 weeks
The signing or
Statistics on external debt contracted and
guaranteeing of
guaranteed (detailed listing of external debt
external debt, and the
service matured/paid, list of new loans specifying
MINFI/CAA Monthly occurrence of
the financial conditions, loans guaranteed and
external payment
external arrears, and list of contracts in the
arrears must be
process of negotiation).
reported immediately
to the IMF.
Monthly structured bank and non-bank debt
MINFI/CAA Monthly 6 weeks
service forecast and actual payments
Monthly monitoring report on calls for funds and
CAA/MINEPAT Monthly 4 weeks
effective disbursements.
MINFI/Ministry
of Economy,
Data on the implementation of the public
Planning and
investment program, including a detailed listing Quarterly 6 weeks
Regional
of financing sources.
Development
(MINEPAT)/CAA
Monthly accounting statements showing the
amount of cash advances, advance funds, and
the balance of provisional budget commitments. MINFI Monthly 6 weeks
Monthly accounting statements showing the
amount of Treasury (cash) advances without a MINFI Monthly 6 weeks
budget allocation
First week of the
Publish the oil product price structure. MINFI/CSPH Monthly
current month
Prices, consumption, and taxation of oil
products, including: (i) the current price structure
for the month in question; (ii) the detailed
calculation of the price structure based on the
free on board price to obtain the retail price; (iii)
volumes purchased and distributed for
consumption by the oil distributor (SONARA and MINFI/CTR/CSP
Monthly 6 weeks
marketers), with the distinction between retail H
sales and sales to industries; and (iv) a
breakdown of tax revenue on petroleum
products—customs duty, excise tax on
petroleum products (TSPP), and value-added tax
(VAT)—and support for the refinery and the
situation of shortfalls and overpayments.

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Table 1. Cameroon: Summary of Data Reporting Requirements (continued)

Provide revenue forecasts for the Directorate


General of Taxes, Directorate General of
Customs, and Directorate General of Budget by DGI, DGD, DGB Monthly 6 weeks
type of tax on an annual basis and on a monthly
basis, and outturn as compared with forecasts.

VAT refund balance (refund requests, payments


MINFI/DGI Monthly 6 weeks
made, and VAT refund account status).

DGI/DGD joint quarterly collaboration reports


indicating, in particular, the results in terms of
DGI/DGD Quarterly 6 weeks
identification of fraud and collection of
additional revenue.

The situation of the SNH, including the volumes


exported, the prices, the exchange rates, the
costs of operations, the direct interventions, the MINFI
commitments towards the State, the balance Quarterly 6 weeks
transferable to the Treasury.

Include the total amount of oil revenue from the


national oil company SNH and direct
MINFI
interventions in the monthly table of Monthly 6 weeks
government financial operations (TOFE)

Accounting and budgetary extract indicating the


status of payment of State invoices to public
MINFI
service companies (ENEO, CAMWATER, CAMTEL, Quarterly 6 weeks
SONARA CAMPOST, SIC)

Publish quarterly budget execution report MINFI Quarterly 8 weeks

Fiscal Performance Indicators as indicated in


MINFI/DGI Quarterly 6 weeks
Table 2

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Table 1. Cameroon: Summary of Data Reporting Requirements (concluded)

Monetary Sector
Consolidated balance sheets of monetary
BEAC Monthly 6 weeks
institutions
Provisional data on the integrated monetary
BEAC Monthly 6 weeks
survey
Final data on the integrated monetary survey BEAC Monthly 10 weeks
Net government position. BEAC Monthly 6 weeks
The situation of the balance of the special
BEAC Monthly 6 weeks
account of undisbursed statutory advances
The key rate and the credit and debit interest
BEAC Monthly 6 weeks
rates
Balance of Payments

Preliminary annual balance of payments data. MINFI Annual 9 months

Foreign trade statistics. MINFI/INS Monthly 6 weeks


Any revision of the balance of payments data
On
(including services, private transfers, official BEAC/MINFI 2 weeks
revision
transfers, and capital transactions).
Real Sector
Provisional national accounts and any revision of
INS Annual 6 months
the national accounts.
Quarterly National Accounts. INS Quarterly 3 months
Disaggregated consumer price indices for the
INS Monthly 4 weeks
cities of Douala and Yaoundé
Consumer price indices disaggregated by city,
INS Monthly 6 weeks
product and at the national level.
Structural Reforms and Other Data
Any official report or study devoted to
Cameroon’s economy, from its date of MINEPAT 2 weeks
publication or finalization.
Any decision, decree, law, order, or circular
MINFI/MINEPA
having economic or financial implications, from 2 weeks
T
its publication date or effective date.
Report on the implementation of expenditure of Bi-
MINFI/DGB 3 months
the special allocations account (CAS) COVID-19 annually
CAS-COVID-19 expenditure audit report MINFI/DGB Annually 6 months
Data on SNH interventions MINFI/DGB Quarterly 6 weeks

104 INTERNATIONAL MONETARY FUND

©International Monetary Fund. Not for Redistribution


CAMEROON

Table 2. Cameroon: Fiscal Performance Indicators


Tax Number of active taxpayers Total number of tax payers
DGE – VAT
Directorate CIT
for Large Tax on industrial and
Enterprises commercial profits
Salary deductions
CIMES – VAT
Center for CIT
Taxes on
Tax on industrial and
Medium
commercial profits
Enterprises
Salary deductions

CDI – CIT
Divisional Tax on industrial and
Tax Center commercial profits
Salary deductions
Withholding tax

INTERNATIONAL MONETARY FUND 105

©International Monetary Fund. Not for Redistribution

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