IMF renews confidence in gov’t, approves 44.5BFCFA loan.

The Bretton wood during the visit, gave government a pass mark, before approving some 44.5 billion FCFA as loan to encourage the effort.

The experts disclosed that Cameroon’s md-term outlook remains favourable, despite increasing challenges while economic recovery is continuing in spite of the hostile domestic and external environment.

Going down to the basics, the reviewers stated that on June 29, they scrutinized both the Extended Credit Facility, ECF and the Extended Fund Facility, EFF which allowed for an immediate disbursement of about 73.6 million United States Dollars, which is about 44.5 billion FCFA as loan.

The body added that Cameroon’s economic recovery had 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.

The said improvement, it said is further driven by the agroindustry, forestry, and services sectors, as well as increase in Liquified Natural Gas, LNG production, which is projected to partially offset declining oil output. 

Headline inflation, they say 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 group said 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, it added. Inflation is expected to return to below 3 percent in the medium term, they added.

The loan money is also meant to support government’s economic and financial reform programme with the disbursement broken down into SDR 55.2 million; or about US$73.6 million, bringing total IMF disbursements under the arrangements to SDR 372.6 million; which is around US$493.6 million, they further disclosed.

Thorny spots still exist

Despite the optimism they expressed, the IMF experts still gave a note of caution, insisting that the government still has to resolutely implement recommended reforms in order to be able to contain current shocks, while boosting growth and resilience.

The group stressed that, Cameroon’s performance under the programme 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 experts stated.

Though the government was credited with beingcommitted to maintaining a fiscal consolidation path consistent with IMF programme objectives, the experts said additional room for productive investment and social spending could be created through efforts to increase domestic non-oil revenue mobilisation, enhance investment efficiency, improve public financial management, and gradually phase out fuel subsidies, while mitigating the impact on the vulnerable. 

The IMF has called on the authorities to remain committed to limiting non-concessional financing and preventing accumulation of external and domestic arrears. 

The IMF has insisted that improving cash management and limiting spending through exceptional procedures will be important in this regard.

It added that 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. The group concluded that to actually unlock Cameroon’s abundant growth potential, structural reforms need to be accelerated.