Cameroon: Staff Report for the 2007 Article IV Consultation, Third Review Under the Three-Year Arrangement Under the Poverty Reduction and Growth Facility, Request for Waiver of Performance Criterion, and Request for Modification of Performance Criterion—Informational Annex

This 2007 Article IV Consultation highlights that a number of factors have constrained Cameroon’s growth potential relative to the group of lower-middle-income economies, including lower investment rate, shallower financial depth, less open trade; weaker infrastructure and human capital base; and weaker business environment. Growth picked up somewhat in 2006, following a rebound in construction activities, oil output, and forestry production. The outlook for 2007 and the medium term is encouraging. Economic activity is expected to pick up further in 2007, reflecting stronger performance in the forestry, construction and tertiary sectors.


This 2007 Article IV Consultation highlights that a number of factors have constrained Cameroon’s growth potential relative to the group of lower-middle-income economies, including lower investment rate, shallower financial depth, less open trade; weaker infrastructure and human capital base; and weaker business environment. Growth picked up somewhat in 2006, following a rebound in construction activities, oil output, and forestry production. The outlook for 2007 and the medium term is encouraging. Economic activity is expected to pick up further in 2007, reflecting stronger performance in the forestry, construction and tertiary sectors.

Cameroon: Relations with the Fund

(As of April 30, 2007)

I. Membership Status: Joined 07/10/1963; Article VIII

II. General Resources Account:

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III. SDR Department:

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IV. Outstanding Purchases and Loans:

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V. Latest Financial Arrangements:

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VI. Projected Payments to Fund (SDR million; based on existing use of resources and present holdings of SDRs)

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VII. Implementation of HIPC Initiative:

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Assistance committed under the original framework is expressed in net present value (NPV) terms at the completion point, and assistance committed under the enhanced framework is expressed in NPV terms at the decision point. Hence these two amounts can not be added.

Under the enhanced framework, an additional disbursement is made at the completion point corresponding to interest income earned on the amount committed at the decision point but not disbursed during the interim period.

VIII. Implementation of MDRI Assistance:

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The MDRI provides 100 percent debt relief to eligible member countries that qualified for the assistance. Grant assistance from the MDRI Trust and HIPC resources provide debt relief to cover the full stock of debt owed to the Fund as of end-2004 that remains outstanding at the time the member qualifies for such debt relief.

IX. Safeguards Assessments:

The Bank of the Central African States (BEAC) is the regional central bank of Central African States, of which Cameroon is a member. A safeguard assessment of the BEAC completed on August 30, 2004 found that BEAC has implemented a number of measures to strengthen its safeguards framework since the 2001 safeguards assessment, but further progress needs to be made in key areas. A summary of the recommendations of the safeguards assesssment was reported in Country Report No. 06/231.

X. Exchange Arrangements:

Cameroon participates in a currency union with five other members of the CEMAC and has no separate legal tender. Cameroon’s currency, the CFA franc, is pegged to the euro at the fixed rate of CFAF 655.957 per euro. Local currency equivalent: CFAF 735.24 = SDR 1, as of May 3, 2007. Effective January 1, 2007, the exchange arrangement of the CEMAC countries has been reclassified to the category of conventional pegged arrangement from the category of exchange arrangement with no separate legal tender. The new classification is based on the behavior of the common currency, whereas the previous classification was based on the lack of a separate legal tender. The new classification thus reflects only a definitional change, and is not based on a judgment that there has been a substantive change in the exchange regime or other policies of the currency union or its members.

Cameroon maintains an exchange system free of restrictions on the making of payments and transfers for current international transactions, except for restrictions maintained for security reasons that have been notified to the Fund pursuant to Executive Board decision 144–152/51.

XI. Article IV Consultation:

The last Article IV consultation with Cameroon was concluded by the Executive Board on April 22, 2005.

XII. FSAP Participation and ROSCs:

The Financial System Stability Assessment (FSSA) report of May 24, 2000 is based on the findings of the joint IMF-World Bank mission that visited Cameroon during February 29–March 14, 2000. The findings of the Financial Sector Assessment Program (FSAP) mission were presented to the authorities on March 13–14, 2000 in the context of the 2000 Article IV consultation.

The Report on the Observance of Standards and Codes (ROSC) on fiscal transparency and transparency of monetary and financial policies was issued on June 16, 2000.

The data module of the ROSC was issued on August 24, 2001 (CR/01/150).

XIII. Technical Assistance:

Since September 2005: presence of an FAD resident expert for fiscal administration (shared with other countries in the region).

October 2006: FAD mission on poverty and social impact assessment of the current petroleum price mechanism.

October 2006: FAD mission (jointly with World Bank) to assess preparation of the new organic budget law, and review expenditure classification system.

March 2006: STA mission on balance of payments statistics compilation.

July 2005: FAD mission on tax policy.

May 2005: FAD mission on tax and customs administration.

December 2004: STA mission on the compilation of national accounts and follow-up by FAD expert on public expenditure management.

October 2003: STA mission on the compilation of national accounts.

September 2003: FAD mission on non-oil revenue mobilization and follow-up by FAD expert on public expenditure management.

June 2003: FAD mission on public expenditure management.

March 2003: FAD mission on public expenditure management.

November 2002: FAD mission on public expenditure management.

May 2002: FAD mission on public expenditure management.

April 2002: FAD mission follow-up on the personal income tax system.

March 2002: FAD mission on the implementation of the action plan for government revenue and expenditure.

October–November 2001: FAD mission on tax and customs administration.

September 2001: FAD missions on the audit of the treasury and poverty tracking.

June 2000: FAD mission on the modernization of customs.

April 2000: STA mission on General Data Dissemination System (GDDS/ROSC).

November 1999: FAD mission on modernization of the tax department.

June–July 1999: FAD technical assistance mission on customs.

May–June 1999: FAD follow-up mission on value-added tax (VAT) and tax administration.

January–March 1999: Placement of an FAD advisor for the introduction of the VAT.

November 1998: Placement of an FAD resident advisor on public expenditure management.

October–November 1998: STA mission on metadata project.

September 1998: Placement of FAD advisor for the VAT.

July 1998: FAD mission on preparation of a VAT.

February 1998: FAD technical assistance mission on review of public expenditure management.

November 1997: FAD technical assistance mission on preparation for the introduction of the VAT.

January–February 1997: AFR/PDR mission, in collaboration with experts from the World Bank and the French government, on external debt statistics.

May 1996: AFR mission, in collaboration with a team from the French Treasury and the Banque de France, on the system of fiscal reporting and monitoring.

February 1996: FAD mission on direct taxation and agricultural sector taxation.

May–June 1995: STA mission on balance of payments statistics.

XIV. Resident Representatives:

The post of IMF Resident Representative has been maintained in Yaoundé continuously since 1989. The current Resident Representative, Ms. Kabedi-Mbuyi, has been in her post since July 2005.

Cameroon: Relations with the World Bank

(As of January 8, 2007)

Government’s Strategy Supported by the World Bank

27. The government’s strategy for economic growth and poverty reduction, as described in the poverty reduction strategy paper (PRSP) communicated to the World Bank and the IMF in April 2003, is articulated along seven pillars, as detailed in IDA/SecM2003-0434. The Government has begun revising the PRSP, with an expected completion date of early 2008.

World Bank Lending and Strategy

28. A joint IDA-IFC Interim Strategy Note (ISN) was presented to the Board on December 7, 2006. The strategy, which covers fiscal year (FY) 07–08, maintains the broad objectives of the previous Country Assistance Strategy but with enhanced emphasis on governance including combating corruption, managing for results, and strengthening partnerships, and alignment and harmonization of external assistance in line with the Paris Declaration for aid effectiveness. World Bank’s support to the Government’s strategy is integrated around six proposed outcomes:

29. Strengthening PRSP implementation: Planned activities include policy dialogue and technical assistance to support revision of the PRSP, with a focus on sharpened priorities and an explicit results framework, including monitoring and evaluation mechanisms, as well as Economic and Sector Work (ESW) to sharpen the PRSP gender focus.

30. Strengthening governance, including anticorruption and public finance management: Activities include planned financing of an operation to increase transparency and accountability as well as planned programmatic support to strengthen public financial management as part of a multi-donor platform; ongoing policy dialogue and technical assistance to support implementation of the Extractives Industries Transparency Initiative (EITI); and support to anticorruption efforts. Corruption assessments will be conducted in key sectors as part of a coordinated support effort by international partners initiated by the Bank and linked to OECD-DAC efforts to develop a common anticorruption policy.

31. Fostering private sector development: Activities include enhanced IFC support to small enterprises; stepped-up IFC/Bank policy dialogue and technical assistance to strengthen Cameroon’s weak business climate, including through a jointly appointed senior IFC/Bank staff based in Cameroon; and support to tighter regional integration, through ongoing and planned financing of a regional payment systems operation and an operation to strengthen regional financial institutions.

32. Supporting infrastructure and urban development: Activities include ongoing financing of the Douala infrastructure, the railway concession, and the regional air transport safety and security operations; planned financing of an urban and water, an energy sector, and a regional transport and trade facilitation operation; as well as ongoing policy dialogue on energy and a planned multi-partner transport sector ESW.

33. Supporting the forestry and environment sectors and strengthening rural and agricultural development: Activities include ongoing financing of the multi-partner-supported forestry and environment program, the community development program, and an operation to strengthen petroleum environment management capacity; an ongoing ESW on forestry reform; and a planned rural investment climate assessment with a gender focus as key input to the preparation of a Sector-wide approach (SWAp) in the agriculture sector.

34. Promoting human development: Activities include financing of an ongoing operation to increase capacity in the education sector, an ongoing and a planned follow-up multi-sectoral HIV/AIDS operation, and planned support of a SWAp in the health sector (FY08). Within the health SWAp, the Bank expects to provide financial support for capacity building, systems development, and delivery of basic health services: (i) strengthen the normative functions of the Ministry of Health; (ii) reinforce the capacity of provinces to manage, allocate, and plan resources, and to supervise, and monitor districts; and (iii) fund a basic package of services included in a consolidated health district plan which reflects sector priorities based on the updated Health Sector Strategy. The Bank is also undertaking a series of analytical work on the issues of governance, fiscal space and uses of debt relief in the health sector

35. As of January 8, 2007, the IDA portfolio (including GEF co-financing) comprises nine active projects with a total commitment of US$216.1 million, of which US$131.5 million are not disbursed yet. These projects cover a broad range of sectors, including infrastructure, education, transport, environment, forestry, HIV/AIDS, local development, and public-private partnerships.

Table 1:

World Bank Portfolio in Cameroon

(at January 8, 2006, in US$ million)

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36. In addition to its lending activities, the World Bank has been supporting the government with analysis and a policy dialogue in such areas as :

  • Monitoring and assisting on the PRSP implementation (i) by providing assistance and formulating sector strategies, sector and global medium-term expenditure frameworks to align the national budget to the PRSP development objectives; (ii) carrying out an Investment Climate Assessment (ICA) in FY06 to sharpen PRSP policies for economic growth and diversification, and poverty reduction.

  • Strengthening the dialogue and action on the governance agenda with an active role in (i) the Multidonor Platform on Public Finance that is working with the Government on improving public financial management, and (ii) working closely with other partners to support the government’s efforts to combat corruption. To support these activities a Public Expenditure Management and Financial Accountability Review (PEMFAR) and a Country Procurement Assessment Review have been undertaken.

IMF–World Bank Collaboration in Specific Areas

37. The IMF and World Bank staffs collaborate on (i) the HIPC Initiative and the PRSP process and specifically worked jointly on the documents for the HIPC completion point and the JSAN of the PRSP progress report, which were presented to the Boards in April 2006; (ii) analyses and reforms in public financial management; and (iii) other governance reforms, including the customs systems. Table 2 briefly describes each area and the specific policy advice support provided by the two institutions.

Table 2:

Cameroon: Bank/Fund Collaboration

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38. The Fund takes the lead on policy advice and reforms related to (i) macroeconomic policy and short- and medium-term financial programming; (ii) tax policy and administration; (iii) information and financial management systems for government revenue; (iv) budget accounting; (v) treasury procedures; and (vi) expenditure classification and tracking. Bank staffs participate in the meetings of Fund missions with the authorities in these areas.

39. The World Bank takes the lead on (i) institutional and human capacity building for public sector management; (ii) budget planning and programming including formulation of sectoral strategies and medium-term expenditure frameworks; (iii) analysis of poverty and sources of growth to support the PRSP process, (iv) advice on sector development particularly the social sectors, infrastructure, agriculture, and forestry; and (iv) the design, implementation and monitoring of the structural reform program including the privatization of public enterprises.

40. Both the Bank and Fund have responsibility for policy advice on (i) budgetary procedures, government expenditure management systems, and expenditure execution, including tracking of poverty-reducing expenditures; (ii) the functioning of internal and external budget control institutions; (iii) customs reform; (iv) trade policy; (v) financial system reform; and (vi) governance. The two institutions also jointly support and monitor the HIPC Initiative and PRSP process. Finally, the Bank and the Fund have jointly conducted a FSAP for the CEMAC region, and are presently conducting a joint FSAP for Cameroon.

Questions may be addressed to Abdoulaye Seck (Tel. 237-220-3815) or Katrina Sharkey (Tel. 473-6288).

Cameroon: Statistical Issues

Data provision to the Fund remains adequate for surveillance purposes, but there is scope for improvement in quality, coverage, and timeliness in most macroeconomic datasets. In recent years, the authorities have taken the initiative to improve the macroeconomic database, particularly the national accounts and balance of payments statistics

Cameroon has participated in the General Data Dissemination System (GDDS) since December 2000. Metadata and descriptions of current statistical practices and plans for improvement are available on the IMF’s Dissemination Standards Bulletin Board (DSBB). GDDS participants are encouraged to review and certify the accuracy of their metadata at least once a year; Cameroon’s metadata were last updated and certified in November 2001.

The National Institute of Statistics (INS), an autonomous institution under the aegis of the Ministry of Planning, Programming, and Regional Development, is the most important macroeconomic data production agency. Unfortunately, lack of clarity concerning the role and coordinating function of the INS has hampered the implementation of statistical standards and classifications across government departments and agencies. In this regard, it is encouraging that under the leadership of the Minister of Economy and Finance, the authorities have formed a coordinating committee to take up publication of the tables of the Statistical Appendix (accompanying the Article IV staff report) in the future.

National accounts statistics

In recent years, the INS has compiled a revised and updated set of national accounts estimates based on the 1993 System of National Accounts (1993 SNA).

STA missions visited Cameroon in October 2003 and December 2004 to assist the authorities with work on the national accounts. Both missions found the general methodology, analytical tools, and adjustments to be generally appropriate and in accordance with the 1993 SNA methodology. However, the STA expert and the recent article IV mission have identified certain weaknesses in the national accounting for oil GDP.

STA review of source data resulted in recommendations in the areas of coverage and timeliness. In particular, the framework for the collection and production of business enterprise statistics was found to be weak, creating difficulties for gauging the structure of the economy and current industrial activity. Particularly serious difficulties affect data on the following key sectors: agriculture, manufacturing, retail and wholesale trade, local government, and services. Stemming from the above-mentioned difficulties, the production index should be overhauled and integrated with the corresponding components of the annual national accounts. Other areas for concern include a limited selection of price indices for deflation of national accounts concepts and the lack of information on employment. In light of these shortcomings, technical assistance will remain essential in the coming years.

Consumer prices

The authorities intend to revise the monthly consumer price index (CPI) by extending the underlying survey to rural areas. Currently, the CPI is compiled on the basis of surveys carried out in the five principal cities: Yaoundé, Douala, Bafoussam, Bamenda and Garoua. In addition, the authorities intend to contribute to the production of a regional CPI in the CEMAC area. The consumption basket for the regional index will be larger than that of the national CPI with coverage for the two largest cities: Yaoundé and Douala.

Socio-demographic indicators

Recently, progress has been made in the production of socio-demographic statistics. The most recent household survey (ECAM II) carried out in 2001 provided comprehensive data used to update Cameroon’s poverty profile. Work is ongoing with World Bank assistance to update the household survey. The authorities have begun an update of two main social indicators, the education map (carte scolaire) and the healthcare map (carte sanitaire), previously prepared in 2000 and 2001, respectively.

Public finance statistics

Considerable progress has been made in the transparency and reporting of public finance statistics of the central government, including the preparation of consistent monthly budget execution tables on a payment order and cash basis and a table of expenditure by economic function to track spending for priority sectors. Quarterly reports on the overall budget execution, and the investment budget execution have been produced on a continuous basis. Despite this progress, data on the public finances are still in need of improvements in quality, coverage, and timeliness. Weaknesses in the fiscal data include: (i) incomplete compilation of budget implementation data on a commitment and, to some extent, on a cash basis; (ii) a lack of information on the financial information of local governments; (iii) poor monitoring of cross-liabilities in the public sector and of public enterprise debt; and (iv) lack of information on the financial information of public enterprises more generally.

Key reforms have been introduced in 2003-04 to address some of these shortcomings, but have not yet been drawn upon fully. The introduction of a new accounting system should permit the identification of expenditures by function (i.e., not only by spending ministries), and to evaluate the “float” (i.e., spending committed but not yet paid). The integrated financial management system (SIGEFI) should substantially improve the accuracy and timeliness of fiscal data both on a commitment and on a cash basis.

In January 2005, the authorities began to prepare, based on the SIGEFI, preliminary fiscal accounts 3 weeks after the end of the reported month (for 2004 final data were prepared with a 2 month delay). They plan to elaborate comprehensive fiscal accounts on a commitment basis and will strive to monitor the float. Moreover, the ongoing audit of government domestic debt, which will cover cross-liabilities in the public sector and public enterprise external debt, is expected to strengthen debt data. Efforts to enhance transparency of financial operations in the oil sector should also improve overall fiscal reporting. Also, efforts are underway to collect data on the operations of the largest 20 public enterprises.

Cameroon does not report data for publication in the IMF Government Finance Statistics Yearbook or the government finance statistics section in International Financial Statistics.

Monetary and financial statistics

Monetary statistics are reported to the Fund by the Banque des États de l’Afrique Centrale (BEAC) on a monthly basis, with delays of up to two months. Although the institutional coverage is comprehensive, the quality of the data may be affected by large cross-border movements of currency among member countries in the CEMAC. About 72 percent of the currency circulating in Cameroon is issued nationally, with the rest originating for the most part from Chad (12 percent) and Gabon (6 percent). About 93 percent of the currency issued in Cameroon remains within the national territory, while most of the remaining currency issued circulate in Chad (4 percent).

The mission that visited BEAC headquarters in May 2001 provided technical assistance for addressing the main shortcomings pertaining to coverage, methodology, compilation procedures, and timeliness of monetary statistics. The mission discussed an action plan for the implementation of the Monetary and Financial Statistics Manual (MFSM) and for the introduction of an area-wide page in IFS for CEMAC, publication of which started with the January 2003 issue of IFS.

A regional workshop on monetary and financial statistics was organized by the BEAC in Libreville (Gabon) in May 2002 to support the implementation of the MFSM in CEMAC countries. Priorities for Cameroon include the need to adapt the bridge table linking bank data with the monetary statistics to the new format for monthly reporting by the banks. Other outstanding issues concern the accrual recording of interest, the treatment of nonperforming loans, and proper sectorization of public entities. Also, a comprehensive financial survey is still to be compiled. Actions remain to be taken by the BEAC to implement the MFSM methodology in producing its member countries’ monetary statistics.

Balance of payments statistics

Data reporting for publication in the Fund’s Balance of Payments Statistic publications has encountered delays. On the basis of STA technical assistance in March 2006, annual balance of payments statistics for 1995–2003 were reported to STA in late 2006 and the authorities are now expected to begin producing higher quality data within a reasonable time period.

Cameroon: Table of Common Indicators Required for Surveillance

(at May 8, 2007)

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Includes reserve assets pledged or otherwise encumbered as well as net derivative positions.

Both market-based and officially determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.

Foreign, domestic bank, and domestic nonbank financing.

The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.

Including currency and maturity composition.

Goods only, data on trade in services are not available.

Daily (D), Weekly (W), Monthly (M), Quarterly (Q), Annually (A), Irregular (I); Not Available (NA).

Cameroon: 2007 Article IV Consultation, Third Review Under the Three-Year Arrangement Under the Poverty Reduction and Growth Facility, Request for Waiver of Performance Criterion, Request for Modification of Performance Criterion, and Financing Assurances Review: Staff Report; Staff Supplement and Statement; Public Information Notice and Press Release on the Executive Board Discussion; and Statement by the Executive Director for Cameroon
Author: International Monetary Fund