IMF Executive Board Approves US$ 689.5 Million Arrangements Under Extended Credit Facility and Extended Fund Facility for Cameroon

Washington, DC: On July 29, the Executive Board of the International Monetary Fund (IMF) approved three-year arrangements under theExtended Credit Facility(ECF) and theExtended Fund Facility(EFF) for Cameroon for SDR 483 million (about US$ 689.5 million, or 175 percent of Cameroon's quota) to support the country's economic and financial reform program.

Approval of the ECF/EFF enables immediate disbursement of about US$ 177.2 million, usable for budget support. This follows Fund emergency support to Cameroon under the Rapid Credit Facility (RCF) totaling SDR 276 million, about US$ 382 million or 100 percent of Cameroon's quota (seeIMF Press Release No. 20/205andIMF Press Release No. 20/318).

Cameroon faces significant development challenges heightened by the pandemic. An upsurge in COVID-19 cases since January 2021, has raised concerns about growth prospects and the external and fiscal positions. Additionally, security risks in parts of the country persist. The pandemic could reverse improvements in poverty reduction and development outcomes and jeopardize the implementation of reforms.

While economic activity decelerated markedly in 2020, the slowdown was less than anticipated, reflecting strong performance in the agricultural and construction sectors. The current account deficit narrowed to 3.7 percent of GDP, owing to both lower imports and higher than expected non-oil exports. Inflation remained below 3.0 percent. In addition, the authorities' proactive management of the COVID-19 pandemic helped contain the fiscal deficit to 3.6 percent of GDP.

The near-term outlook remains highly uncertain and critically depends on the authorities implementing policy commitments under the program. A gradual recovery could increase GDP growth to 3.6 percent in 2021 and 4.6 percent in 2022. Total public and external debt to GDP are projected to gradually decline after 2021. Medium-term growth prospects remain positive, driven by the implementation of National Development Strategy for 2020-30 (SND30), large infrastructure projects, and a recovery in trading partner economies.

At the conclusion of the Executive Board's discussion, Mr. Mitsuhiro Furusawa, Deputy Managing Director and Acting Chair, stated:

"The COVID-19 pandemic has heightened Cameroon's development challenges and has raised concerns about its growth prospects and external and fiscal positions. In this context, financing under the ECF and EFF arrangements would support the authorities' efforts to achieve a rapid post-pandemic recovery, strengthen medium-term external and fiscal sustainability, and implement their structural reform agenda toward sustained, more inclusive, and diversified growth. Effective and resolute implementation of the authorities' reforms, particularly to further strengthen transparency, good governance, and the anti-corruption framework, are essential to help catalyze additional donor financing.

"The five pillars of the new program will seek to (i) mitigate the health, economic, and social consequences of the pandemic while ensuring domestic and external sustainability; (ii) reinforce good governance and strengthen transparency and the anti-corruption framework; (iii) accelerate structural fiscal reforms to modernize tax and customs administrations, mobilize revenue, improve public financial management, increase public investment efficiency, and reduce fiscal risks from state-owned enterprises; (iv) strengthen debt management and reduce debt vulnerabilities; and (v) implement structural reforms to accelerate economic diversification, boost financial sector resilience and inclusion, and promote gender equality and a greener economy.

"The authorities have appropriately adopted a revised budget, with a larger deficit to accommodate the impact of the pandemic. They have reiterated their firm commitment to gradually return to the fiscal consolidation path to safeguard debt sustainability once the pandemic abates. The success of Cameroon's program will also depend on the implementation of supportive policies and reforms by the CEMAC regional institutions."

Cameroon: Selected Economic and Financial Indicators, 2019–26

(CFAF billion, unless otherwise indicated)