Fighting corruption, strengthening governance: IMF on gov’t’s throat to implement Article 66 on assets declaration.

IMF’s call is contained in a Country Report No. 24/237, made public recently. It analyses details on diverse areas of the country’s economy.

The release follows Cameroon’s alignment within the sixth Extended Credit Facility, ECF, and the Extended Fund Facility, EFF, deals with the IMF.

The exercise, which a team from the IMF visited Cameroon recently for, also touches on the Resilience and Sustainability Facility, RSF, arrangement.

Based on reports presented, the IMF board, among other recommendations, reiterated the need to tighten the bolts and strengthen the legal framework in fighting corruption to meet international benchmarks.

To note that both reviews ended with the allocation of at least 71 billion FCFA to Cameroon, for specific governance and climate change adaptation roadmaps.

What Article 66 says

Law No. 96-6 of 18 January 1996, to amend the constitution of June 2, 1972, in its part XII on Special Provisions, specifically Article 66, holds that: “The President of the Republic, the Prime Minister, Members of Government and persons ranking as such, the President and Members of the Bureau of the National Assembly, the President and Members of the Bureau of the Senate, Members of Parliament, Senators, all holders of an elective office, Secretaries-General of Ministries and persons ranking as such, Directors of the Central Administration, General Managers of public and semi-public enterprises, Judicial and Legal Officers, administrative personnel in charge of the tax base, collection and handling of public funds, all managers of public votes and property, shall declare their assets and property at the beginning and at the end of their tenure of office. The other categories of persons to whom the provisions of the article shall apply and the conditions of implementation thereof shall be determined by law”. 

Twenty-eight years on, the article has never been respected.

Corruption persists

In its detailed report, the IMF acknowledged shifts in several areas but indicated that: “Nevertheless, significant challenges remain, particularly on the anti-corruption legal and institutional framework”. 

It cited a diagnostic report on Cameroon, which shows the need for “immediate and short-term measures to address risks, such as gaps in existing legal frameworks, as well as structural reforms that require more time and resources, but are essential to strengthening governance and initiating lasting change”.

Besides indicating the commitment from authorities to improve the situation, the IMF quipped that for Cameroon’s fight against corruption to hit expected heights, the “implementation of the asset declaration law must be respected”.

It was blunt that “while some structural reforms have been introduced in the programme, based on the governance diagnostic report, more efforts are needed to meaningfully address corruption vulnerabilities, including the criminalisation of acts of corruption and asset declarations”.

The global financial body specified that without “structural improvements in transparency and accountability, there will be no meaningful progress in addressing pervasive corruption”.

It stated that government has taken the commitment to also address shortcomings in the management of State-Owned Enterprises, SOEs, “over the next few months, including publication on the website of the Ministry of Finance, of a list of the 25 largest SOEs that have published audited annual financial statements on the website of the Ministry of Finance”.

Criminalise all acts of corruption

The same report, apparently based on the recommendation of its staff who visited Cameroon recently, equally specified the need “for a comprehensive action plan to further strengthen economic governance, including addressing immediate core risks and to reinforce Public Financial Management, PFM, public procurement and expenditure auditing processes and to amend the Penal Code to criminalise all acts of corruption”. 

The IMF insisted that "this is to tie with the United Nations' Convention against Corruption, UNCAC, including illicit enrichment”.

"Work with int'l bodies to tackle corruption"

Besides calling for reforms to fight corruption, the IMF urged the powers that be “to formulate a concrete action plan to follow the governance diagnostic report published in 2023”. 

“It is also of paramount importance to continue to work with international bodies responsible for anti-corruption and financial integrity and to accelerate the implementation of actions aimed at strengthening the economy,” IMF said.

It also talked about the need to strengthen the Anti-Money Laundering and Combatting the Financing of Terrorism, AML/CFT, regime. 

Additionally, the IMF expressed concern over Cameroon’s suspension from the Extractive Industries Transparency Initiative, EITI. It linked the situation to the exclusion of the civil society and attempts to deprive it of its right of expression on key issues. 

“Cameroon remains at high risk of debt distress”

With a declining debt-to-Gross Domestic Product, GDP, ratio, the IMF warned of the risk of debt distress. It observed that Cameroon’s exports are low, unstable, plus a weak domestic revenue mobilisation base.

The IMF said the risk is worst relating to external debts, adding that Cameroon’s debt-carrying capacity is also in the negative. 

In the short team, the debt-to-revenue ratio, the IMF underscored, could stop breaching the threshold.

Citing an unstable global economic environment, geological tensions, and the tightening of credit conditions, the body raised concerns.

Despite equally admitting prospects in the mining sector that could come from the export of bauxite and iron ore, domestically, the IMF pictures risks for Cameroon.

“SONARA’s debt restructuring and contingent liabilities related to State-Owned Enterprises, SOEs, and Public Private Partnership, PPP projects, could further impact public debt sustainability,” the IMF noted in its report.

The IMF equally indicated that “avoiding treasury advances and strengthening budget discipline will enhance public debt management”.

It cited plans by government to borrow externally to settle domestic debts carried forward since 2020, to reduce domestic pressure but surmised that the situation of external debts could worsen.

Strengthen debt Recovery Corporation

Still within the context of stepping up public finance management, the IMF called for the strengthening of the Cameroon Debt Recovery Corporation.

It observed that the body had suffered from structural losses that cost it to operate at a loss in 2022, but said it needs “a sound governance framework, operational and budgetary independence, and strong transparency and accountability rules”.

Terms of reference for CDEC, authorisation from COBAC

The IMF, in its report, also asked authorities to “define the terms of reference of the Deposit and Consignment Fund, CDEC, and submit to the Fund for review”.

It also restated that, “CDEC should receive full supervisory recognition from COBAC as a financial institution, without benefiting from specific exemptions due to state ownership”.

IMF insisted in its report that the terms of reference should be “embedded in the implementing texts of the law regulating the activities of CDEC to be adopted by the authorities”.

Urgent reforms in electricity sector

Another area where IMF said there is need for urgent reforms is the electricity sector. The organisation stated that “there is an urgent need to advance reforms and resolve the liquidity crisis in the electricity sector”.

This, it said, is to address, “weaknesses in operational performance, payment discipline by public agencies, and the enforcement of sector regulations, have undermined the financial viability of the electricity sector”.

It proposes electricity tariff increase and the installation of electricity metres in public corporations that are noted for always failing to pay electricity bills.

IMF expressed optimism that the Natchtigal Hydro Power Plant realisation could reduce the pressure in the electricity sector. It, however, said “developing the sector requires substantial investments that could yield significant budget savings over the medium term”.

Cameroon, it indicated, has a 2024-28 electricity sector development programme that need at least US Dollar 945 million (571.471 billion FCFA), which is about 1.8 percent of the country’s Gross Domestic Product, GDP. 

The plan, the IMF added, will benefit support from international partners, specifying that the World Bank is ready to invest US dollars 300 million (approximately over 181 billion FCFA) in the sector within the programmed timeframe. 

IMF details that the money will be to “support a transmission line construction, with the first disbursement of US$60 million (over 36.2 billion FCFA expected in 2024”. 

Lauds resilience but pushes for more reforms 

The IMF, in the report, quoted its Deputy Managing Director, Kenji Okamura, as stating at the end of a meeting that preceded the release of the report that Cameroon is showing resilience in a difficult context but must peruse reforms.

“Cameroon’s economic growth continues despite the challenging domestic and external environment. Moreover, while the balance of risks remains tilted to the downside, the country’s medium-term outlook is favourable,” IMF quoted Okamura as having remarked. 

“Although performance under the Fund-supported program has been mixed, the ECF-EFF arrangements are supporting the authorities’ efforts to maintain macroeconomic stability and implement priority reforms to promote inclusive growth,” it added.

Okamura, IMF indicated in the same report, also said, “to preserve macroeconomic stability, it is important to maintain a fiscal path in line with programme objectives,” detailing that, “this implies strengthening domestic non-oil revenue mobilisation and public financial management”.

He equally called for the limiting of spending done through exceptional procedures essential to achieve budget discipline and integrity, reiterating that “Cameroon’s financial soundness indicators have generally improved, but vulnerabilities remain”. 

The Deputy IMF boss equally urged authorities to, “improve the business environment and support private sector-led inclusive growth…”.

This story was first published in The Guardian Post issue N0:3178 of Wednesday July 24, 2024