When IMF imposes review of Cameroon's 2023 Finance Law!.



12/05/2023

The International Monetary Fund, IMF, has generally been criticised for its neoliberal policy which favours macroeconomic strategies like raising tax rates, reducing welfare services and privatising public utilities like water, electricity, education, or health; and cutting wages and subsidies to offset low corporate taxation and economic inflation rates. 

While these measures may well facilitate growth in developed economies, in states with emerging markets, several economists and research findings note that the "policies generally benefit those who are already wealthy, while the economically vulnerable pay the price". 

One of the reports published by the Boston University Global Development Policy Center concluded that in 79 countries from 2002-2018, the IMF’s austerity measures were “significantly associated with the highest earners receiving more at the expense of the bottom 80 percent”.

The critics also argue that IMF loans enable member countries to pursue reckless domestic economic policies knowing that, if needed, the IMF will bail them out. 

This safety net, critics charge, delays needed reforms and creates long-term dependency. Opponents also argue that the IMF rescues international bankers who have made bad loans, thereby encouraging them to approve ever riskier international investments.

IMF conditionalities have also been widely debated. Critics contend that IMF policy prescriptions provide uniform remedies that are not adequately tailored to each country’s unique circumstances. 

The austere loan conditions reduce economic growth, deepen and prolong financial crises, creating severe hardships for the poorest people in borrowing countries and strengthening local opposition to the IMF.

Over time, the IMF has been subject to a range of criticisms, generally focused on the conditions of its loans. 

The IMF has also been criticised for its lack of accountability and willingness to lend to countries with bad human rights records.

Jeffrey Sachs, the Head of the Harvard Institute for International Development has noted that: “…It defies logic to believe the small group of 1,000 economists on 19th Street in Washington should dictate the economic conditions of life to 75 developing countries with around 1.4 billion people”.

Governments which have had a governance problem and public corporations that rely on subvention to survive have for years turned to the IMF for survival.

Yaounde is currently engaged in a three-year economic and financial program (2022-2024) with the IMF. 

It prescribes a renewed emphasis on the non-oil revenue mobilisation effort and continuation of a prudent expenditure stance. 

According to the IMF, it also includes "reversing the deterioration of the financial operations of public companies and the utilities. The key objective is strengthening fiscal transparency".

The Head of the IMF mission to Cameroon, Cemile Sancak, on Monday, announced in Yaounde that Cameroon is preparing to rectify its 2023 current budget in line with the fourth review of the three-year economic and financial programme. 

Amending the Finance Law was being awaited since the beginning of the current year. Government, at the behest of the IMF, removed fuel subsidies that hiked prices at the pump from February 1, 2023.

The subsidies inflated last year's budget by more than 700 billion FCFA. Given the development, President Biya was forced to issue an ordinance to add the amount to the budget. 

The 5.2% salary increase for civil servants was also not in the budget parliamentarians voted last November. There are reports that President Biya would issue another ordinance later this month or in June to revise the 2023 Finance Law as he did last year.

But would such presidential tinkering with the Finance Law have been necessary, if the IMF was not dictating the country's economic policy?

A beggar, the dictum goes, has no choice as IMF apologists say countries are not forced to get their loans. The fact that the IMF gives direction for the management of an economy is also said to be a confidence booster for investors.

According to the IMF, for Cameroon to succeed in the management of its economy and budget, it needs to move forward with the "implementation of structural reforms. Close and sustained monitoring, and enhanced coordination within the government, will be critical to the successful implementation of the programme". 

But has that been the case with pervasive corruption without the implementation of Article 66 of the constitution stipulating for declaration of assets by top state officials

The International Monetary Fund, IMF, has generally been criticised for its neoliberal policy which favours macroeconomic strategies like raising tax rates, reducing welfare services and privatising public utilities like water, electricity, education, or health; and cutting wages and subsidies to offset low corporate taxation and economic inflation rates. 

While these measures may well facilitate growth in developed economies, in states with emerging markets, several economists and research findings note that the "policies generally benefit those who are already wealthy, while the economically vulnerable pay the price". 

One of the reports published by the Boston University Global Development Policy Center concluded that in 79 countries from 2002-2018, the IMF’s austerity measures were “significantly associated with the highest earners receiving more at the expense of the bottom 80 percent”.

The critics also argue that IMF loans enable member countries to pursue reckless domestic economic policies knowing that, if needed, the IMF will bail them out. 

This safety net, critics charge, delays needed reforms and creates long-term dependency. Opponents also argue that the IMF rescues international bankers who have made bad loans, thereby encouraging them to approve ever riskier international investments.

IMF conditionalities have also been widely debated. Critics contend that IMF policy prescriptions provide uniform remedies that are not adequately tailored to each country’s unique circumstances. 

The austere loan conditions reduce economic growth, deepen and prolong financial crises, creating severe hardships for the poorest people in borrowing countries and strengthening local opposition to the IMF.

Over time, the IMF has been subject to a range of criticisms, generally focused on the conditions of its loans. 

The IMF has also been criticised for its lack of accountability and willingness to lend to countries with bad human rights records.

Jeffrey Sachs, the Head of the Harvard Institute for International Development has noted that: “…It defies logic to believe the small group of 1,000 economists on 19th Street in Washington should dictate the economic conditions of life to 75 developing countries with around 1.4 billion people”.

Governments which have had a governance problem and public corporations that rely on subvention to survive have for years turned to the IMF for survival.

Yaounde is currently engaged in a three-year economic and financial program (2022-2024) with the IMF. 

It prescribes a renewed emphasis on the non-oil revenue mobilisation effort and continuation of a prudent expenditure stance. 

According to the IMF, it also includes "reversing the deterioration of the financial operations of public companies and the utilities. The key objective is strengthening fiscal transparency".

The Head of the IMF mission to Cameroon, Cemile Sancak, on Monday, announced in Yaounde that Cameroon is preparing to rectify its 2023 current budget in line with the fourth review of the three-year economic and financial programme. 

Amending the Finance Law was being awaited since the beginning of the current year. Government, at the behest of the IMF, removed fuel subsidies that hiked prices at the pump from February 1, 2023.

The subsidies inflated last year's budget by more than 700 billion FCFA. Given the development, President Biya was forced to issue an ordinance to add the amount to the budget. 

The 5.2% salary increase for civil servants was also not in the budget parliamentarians voted last November. There are reports that President Biya would issue another ordinance later this month or in June to revise the 2023 Finance Law as he did last year.

But would such presidential tinkering with the Finance Law have been necessary, if the IMF was not dictating the country's economic policy?

A beggar, the dictum goes, has no choice as IMF apologists say countries are not forced to get their loans. The fact that the IMF gives direction for the management of an economy is also said to be a confidence booster for investors.

According to the IMF, for Cameroon to succeed in the management of its economy and budget, it needs to move forward with the "implementation of structural reforms. Close and sustained monitoring, and enhanced coordination within the government, will be critical to the successful implementation of the programme". 

But has that been the case with pervasive corruption without the implementation of Article 66 of the constitution stipulating for declaration of assets by top state officials

 

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