Another fuel price hike imminent: IMF officials on gov’t’s throat to stop fuel subsidy.

This, is if government bows to mounting pressure from the International Monetary Fund, IMF, to cut subsidy on fuel, due to fluctuation in prices of petroleum products on the international market.

The development is already making citizens jittery as it will unarguably have a strong bearing on the living conditions of Cameroonians. 

Discussions to this effect came to the fore during talks between State authorities and members of a visiting IMF delegation to Cameroon. 

The IMF delegation is in the country for a review mission, which ends October 16, 2024, barely nine months to the end of the Economic and Financial Programme between government and the Bretton Woods Institution. 

The IMF Head of Mission, Cémile Sancak, and his delegation, will during their stay in the country, have group and sector consultations with State authorities, especially those of the Ministry of Finance, MINFI, and the Ministry of the Economy, Planning and Regional Development, MINEPAT. 

The mission is part of the 7th review of programmes supported by the Extended Credit Facility, ECF, and the Extended Fund Facility, EFF, as well as the second review of the programme supported by the Resilience and Sustainability Facility, RSF. 

Enter IMF Head of mission 

Speaking to reporters after meetings with MINFI and MINEPAT officials, IMF Head of Mission, Cémile Sancak, said: “We are almost at the end of the program. Progress has been made in several areas. But there are also reforms still to come. At the start of the program, there were objectives established with the authorities, and now we are eight or even nine months from the end…we are going to evaluate the remaining reforms to achieve the programme’s overall objectives”. 

Harping on reforms after a meeting with MINEPAT officials, the IMF official hinted on the issue of fuel subsidies, which government has been resisting. She said this is one of the remaining reforms that need to be implemented. 

“Concerning prices at the pump, the authorities have begun to reduce the subsidy. There have been two price increases at the pump, and the one that remains is much smaller,” Sancak said. 

The IMF Head of Mission to Cameroon went further to state that: “The total cessation of subsidies is imperative to enable other sectors to be financed”.

Drop fuel subsidy, channel funds to other sectors 

Sancak went further to state that the huge chunk of resources allocated for fuel subsidies could be channeled into other growth-enhancing sectors. 

“We defined the elimination of the subsidy because this subsidy can be used for health and education, which contribute to the country's growth,” she stated.

Further explaining the correlation between subsidy and growth, the IMF official said “subsidy is used for people who don't need it. These resources can be used for important sectors for inclusive growth”. 

According to the IMF, the pending reform on fuel subsidy could mean that another increase is possible in 2025, which also marks the end of Cameroon's Economic and Financial Program with the IMF (2021-2024), which was extended to 2025 on November 17, 2023.

“This is a good time to assess where the country stands in the program. How far we have come and how far we still have to go,” Sancak added. 

There are a total of eight structural reforms to undergo review by IMF delegation and state officials. Two of the reform measures is to facilitate resilience and sustainability. 

Revisiting efforts by gov’t to cut subsidy 

Two years ago, as part of its IMF programme, government had undertaken to reduce subsidies on petroleum products. The aim then, officials said, was to find a margin to finance productive investment and social spending. 

Subsidies, which had been asphyxiating the State treasury, was estimated at over 1,000 billion FCFA by 2022. It was reduced to 640 billion FCFA in 2023. 

President Paul Biya had in his end-of-year address to the nation on December 31, 2023, hinted that Cameroonians would have to pay higher to get fuel, due to fluctuation in prices of petroleum products on the international market. 

His hint was made official when government announced an increase in fuel prices on Friday February 2, 2024. 

This was through a communique issued by the Secretary General at the Prime Minister’s Office, Prof Fouda Seraphin Magloire. 

The increase, reached after consultations between the government and social partners, came barely a year after another price hike was witnessed in 2022. 

Government said the aim was to address increasing budgetary constraints on the State and to avoid tensions faced in the supply chain of petroleum products to the national market. Authorities had also said, it was to enable the government to carry out earmarked development projects for the benefit of all citizens. 

What the last fuel price increase meant 

The increased pump price of premium fuel, popularly called Super, to 840 FCFA per litre, up from 730 FCFA. This showed an increase of 110 FCFA, representing a 15% increase.

The new pump price of gas oil was fixed at 828 FCFA per litre, up from 720 FCFA per litre. This represented a spike of 108 FCFA per litre in the price of gas oil, representing 15% increase. 

The prices of kerosene and cooking gas remained unchanged at 350 FCFA per litre and 6,500 FCFA per 12.5 kilogramme bottle, respectively. 

This article was first published in The Guardian Post issue No:3254 of Wednesday October 09, 2024