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In the news: Cameroon records solid growth, but needs better fiscal performance, investment climate

Author(s):
International Monetary Fund. External Relations Dept.
Published Date:
May 2005
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Aided by continued political stability, Cameroon’s economy grew at a solid pace in 2004, the IMF said in its annual economic review. But although average per capita income rose, it remained below the levels of the early 1990s. The IMF Executive Board welcomed the country’s sound growth, low inflation, narrowing external current account deficit, and the progress made in reforming the health and education sectors. The regional currency union has helped Cameroon maintain macroeconomic stability with low inflation, but serious challenges remain.

Cameroon’s fiscal position deteriorated in 2003-04. If this continues, it could undermine macroeconomic stability, growth, and poverty reduction. In 2005, the authorities intend to strengthen fiscal performance and financial management through an ambitious program that seeks to mobilize nonoil revenue and contain nonpriority spending while increasing investment spending. The Board stressed the need to improve fiscal reporting and strengthen debt management, including by developing and implementing a realistic debt-servicing plan. Further, the authorities should clarify the external debt position of public enterprises to allow for a comprehensive debt sustainability assessment.

Limited progress has been made in removing long-standing impediments to private sector growth, including inadequate investment in infrastructure and human capital, poor service delivery from troubled state enterprises, and an investment climate clouded by weak governance. The Board said infrastructure investments and a stronger legal system will be key to improving the business climate and restoring investor confidence, adding that efforts to improve governance and fight corruption need to be redoubled.

The authorities intend to build a track record of policy implementation through a 2005 program monitored by the IMF. The Board said this would help maintain a stable macroeconomic environment and pave the way for a medium-term reform program that could get financial support from the IMF. A 2000 Poverty Reduction and Growth Facility arrangement with the IMF was derailed in 2004.

2000120012200220032004
CameroonEstimates
(percent change)
GDP at constant prices5.34.34.24.54.3
Consumer prices2.84.52.80.60.3
(percent of GDP)
Current account balance
(including grants)-4.1-6.4-7.0-2.4-1.6
External debt (net present value)n.a.n.a.54.842.543.4
Data: IMF Public Information Notice, April 2005.

Data for fiscal year July 2000-June 2001.

Data for fiscal year July 2001-June 2002.

Data: IMF Public Information Notice, April 2005.

Data for fiscal year July 2000-June 2001.

Data for fiscal year July 2001-June 2002.

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