IMF Completes Fourth Reviews for Cameroon, Approves US$73.6M Disbursement

• The IMF Executive Board completed the Fourth Reviews under the Extended Credit Facility (ECF) and the Extended Fund Facility (EFF) arrangements. This allows for an immediate disbursement of about US$73.6 million.
• Cameroon's economic recovery has continued in an uncertain domestic and global environment, with growth estimated at 3.8 percent in 2022 and expected to reach 4 percent in 2023, supported mainly by non-oil production.
• Sustained reforms will be needed to create additional fiscal space for productive investment and social spending, while maintaining debt sustainability and boosting Cameroon's growth and resilience.

Washington, DC: The Executive Board of the International Monetary Fund (IMF) completed today the Fourth Reviews of Cameroon's Fund-supported program. The three-year blended arrangements under theExtended Credit Facility(ECF) and theExtended Fund Facility(EFF) approved on July, 29, 2021 seek to support the country's economic and financial reform program (seepress release). The completion of the reviews allows for the immediate disbursement of SDR 55.2 million (about US$73.6 million) bringing total disbursements under the arrangements to SDR 372.6 million (around US$493.6 million).

Cameroon is showing resilience in an uncertain domestic and global environment. Growth is estimated at 3.8 percent in 2022, supported by non-oil production. Headline inflation is estimated at 7.3 percent at end-2022 year-on-year. The overall fiscal deficit improved from 3 percent of GDP in 2021 to around 1.1 percent of GDP in 2022 reflecting higher oil and non-oil revenues. The non-oil primary deficit remained unchanged at around 3.9 percent of GDP in 2022 owing to an increase in expenditure on fuel subsidies.

The medium-term outlook remains positive, provided reforms continue and the external environment becomes more supportive. Real GDP growth is expected to reach 4 percent in 2023 and 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 is projected to partially offset declining oil output. Inflation is expected to return to below 3 percent in the medium term.

In completing the reviews, the Executive Board approved the waiver of nonobservance of the performance criterion on the non-accumulation of new external payments arrears on grounds that the breach was temporary and minor.

At the conclusion of the Executive Board's discussion, Mr. Kenji Okamura, Deputy Managing Director and Acting Chair, made the following statement:

"Cameroon's recovery has continued in a challenging domestic and external environment.The ECF and EFF arrangements have supported the authorities' efforts to sustain macroeconomic stability, promote growth, and progress on longstanding reforms. The country's medium-term outlook remains favorable, despite increasing challenges. Resolute reform implementation will help manage current shocks, while boosting growth and resilience.

"Cameroon's performance under the program is mixed. The quantitative performance criterion on the accumulation of external arrears experienced further minor and temporary breaches in early 2023, and three of five indicative targets under the program have been repeatedly missed . While structural reforms continue to be slow, the authorities have made welcome progress in some key areas, including governance and revenue administration. Continued implementation of corrective measures to address missed targets and accelerate reforms will be crucial.

"The authorities are committed to maintaining a fiscal consolidation path consistent with program objectives. Additional room for productive investment and social spending can be created through efforts to increase domestic non-oil revenue mobilization, enhance investment efficiency, improve public financial management, and gradually phase out fuel subsidies, while mitigating the impact on the vulnerable. The authorities are also committed to limiting non-concessional financing and preventing accumulation of external and domestic arrears. Improving cash management and limiting spending through exceptional procedures will be important in this regard.

"To unlock Cameroon's abundant growth potential, structural reforms need to be accelerated. Steps to boost private sector-led growth, including the launch of the financial inclusion strategy, as well as recent steps to strengthen governance, especially the launch of a broad diagnostic of economic governance and plans to strengthen the Supreme Court's Audit Bench, are welcome.

"However, further measures are needed to improve the business climate, including by strengthening financial sector stability and inclusion. These should be accompanied by actions to strengthen governance and transparency, as well as the anti-corruption framework, including addressing the AML/CFT framework deficiencies identified by the Financial Action Task Force (FATF). "