IMF Board Approves US$73M Loan for Cameroon

• The IMF Executive Board completed the Third Reviews of the Extended Credit Facility (ECF) and the Extended Fund Facility (EFF) arrangements, enabling Cameroon to draw the equivalent of US$73 million in disbursements from the IMF.
• The economic recovery is underway amid increased challenges in an uncertain global environment, with growth estimated at 3.4 percent in 2022, supported by higher oil prices and non-oil production.
• Sustained reform implementation will be needed to create additional fiscal space for productive investment and social spending and to move toward inclusive and resilient growth.

Washington, DC: The Executive Board of the International Monetary Fund (IMF) concluded today the Third Reviews of the three-year arrangements under the Extended Credit Facility(ECF) and theExtended Fund Facility(EFF) with Cameroon, which were approved on July 29, 2021 for SDR 483 million (about US$689.5 million, or 175 percent of quota). This will allow disbursement of SDR 55.2 million (about US$73 million), bringing total disbursements under the arrangements to SDR 317.4 million (around US$420 million).

Cameroon's recovery is underway amid increased challenges in an uncertain global environment. Growth is estimated at 3.4 percent in 2022, supported by higher oil prices and non-oil production. Headline inflation is estimated at 6 percent at end-2022. The overall fiscal deficit improved from 3 percent of GDP in 2021 to around 1.8 percent in 2022 reflecting higher oil revenues, while the non-oil primary deficit deteriorated from 3.9 percent of GDP in 2021 to 4.5 percent in 2022 mainly due to increased fuel subsidies. Real GDP growth is projected at 4.3 percent in 2023 and should average 4.5 percent in the medium term.

In completing the reviews, the Executive Board approved waivers of nonobservance for two performance criteria: (i) The floor on the non-oil primary balance at end-December 2022 was missed due to higher oil prices and currency depreciation leading to higher spending on the fuel subsidy; and (ii) The continuous zero ceiling on the accumulation of new external payments arrears was missed following delayed debt service payments due to end-year cash management issues, which have already been cleared. These waivers of nonobservance were approved due to the corrective actions taken by the authorities, and the temporary nature of the non-observance, respectively. In addition, the Executive Board approved a waiver of applicability for three end-December 2022 performance criteria, for which data are not yet available, and there is no evidence that they were not observed.

At the conclusion of the Executive Board's discussion, Ms. Antoinette Sayeh, Deputy Managing Director and Acting Chair, made the following statement:

"Cameroon's economy proved resilient to the COVID-19 pandemic, and the recovery has continued. However, the country is now faced with increased challenges in an uncertain global environment, underscoring the need for resolute reform implementation. The Fund-supported arrangements have enabled the authorities in sustaining macroeconomic stability and growth in a challenging context. Structural reforms need to be accelerated to strengthen medium-term external and fiscal sustainability and move Cameroon toward inclusive and resilient growth through a diversified economy. The country's medium-term outlook remains favorable.

"Cameroon's performance under the program is mixed. Two of the six quantitative performance criteria at end-December 2022 and three of the five indicative targets at end-June and end-September 2022 were missed. While important steps have been taken to advance long delayed structural reforms, progress is lagging in some key areas. The authorities have resolved to implement corrective measures to address missed targets and accelerate reforms more broadly.

"The authorities are committed to sustaining their fiscal consolidation to help achieve macroeconomic stability, while building the foundations for inclusive and resilient growth. They have taken the decision to reduce fuel subsidies accompanied by measures to mitigate the social impact. Mobilizing additional domestic non-oil revenue, improving public financial management, and further efforts to reduce fuel subsidies will make additional room for productive investment and social spending. Mitigation measures to protect the vulnerable will be critical. Resolving and preventing external and domestic arrears and seeking concessional financing are also important.

"To unlock Cameroon's abundant growth potential, effective and resolute implementation of structural reforms in the National Development Strategy is essential. In this regard, further steps are needed to enhance investment efficiency, strengthen financial inclusion, and improve the business climate. This should be accompanied by strengthening transparency, governance, and the anti-corruption framework, as well as ensuring financial sector stability."

Table 1. Cameroon: Selected Economic and Financial Indicators, 2021-27