Abstract
This paper discusses key findings of the Fifth Review Under the Poverty Reduction and Growth Facility (PRGF) for Cameroon. Non-oil economic activity accelerated somewhat in 2007, and inflation declined. However, rising food and fuel prices starting in late 2007, amidst discussions of possible changes to the constitution, led to violent social unrest in February 2008. Program implementation was satisfactory in the second half of 2007. Most quantitative targets, notably on the non-oil primary fiscal deficit, for end-December 2007, were also met.
This statement provides an update on economic developments since the staff report was issued. These developments do not alter the thrust of the staff appraisal.
➢ Inflation continued to increase in the first quarter of 2008, climbing to 5.4 percent (year-on-year) compared with 2.3 percent a year ago. The food price index rose by 10 percent.
➢ Based on preliminary data, the nonoil primary deficit (program definition) in the first quarter of 2008 was lower by about 0.5 percent of nonoil GDP primarily reflecting lower-than-expected current and capital spending. A minor shortfall in nonoil revenues was due mainly to lower-than-projected indirect and nontax revenues. Oil revenues fell short of expectations, attributed by the authorities to delays in revenue transfers from the national oil company.
➢ In line with the March 2008 package of measures, the minimum wage was increased by 20 percent on June 24, 2008.
➢ As part of the privatization program, the national airline, CAMAIR, ceased operations at end-May. The liquidator will maintain a small number of essential personnel to implement the privatization process.