Definition of government activities

3. General government is defined consistently with the Government Finance Statistics Manual 2001 (GFSM 2001) principles and is partly covered in the budget process. 1.1.1

The non-financial public sector components are listed in Box 1. In addition to the units covered in the budget, the central government includes a large number of units with their own budget. For the most part, they are public administrative establishments (EPAs ³). EPAs are public entities endowed with financial autonomy and receiving from the government or from a decentralized local government appropriations to finance their implementation of a mission of general interest or of public service. In practice, their financing and operating methods vary.

The operations of some are fully covered in the budget on both the revenue and the expenditure sides, and their role is to carry out specific actions for which expenditure has been budgeted; this is the case, for example, of the Road Fund ⁴. Others are funded primarily or solely by transfers from the government budget, financed by earmarked taxes or from general revenue (this is the case, for example, of the universities and the National Statistics Institute). Yet others have their own substantial revenue, not included in the government budget. This applies, for instance, to the Hydrocarbon Price Stabilization Fund (CSPH), which is financed by surpluses from the oil price equalization system, and to the Special Fund for Intercommunal Equipment and Intervention (FEICOM), which is funded by several earmarked taxes not covered in the budget.

Government relationships with public nonfinancial corporations

4. Relationships between government and the public nonfinancial corporations are clear to some extent. 1.1.3, 1.1.4

The 1999 law establishing the general charter of public entities and enterprises in the public and parapublic sector distinguishes between EPAs (paragraph 3), public-owned corporations (SCPs), and semi-public corporations (SEMs). The SCPs are private corporations, created to pursue industrial or commercial activities in the public interest, which are wholly owned by the state or other state-owned entities. The SCPs are entities established under private law, created to pursue industrial or commercial activities in the public interest, that are wholly owned by the state or other state-owned entities. The SEMs are entities established under private law, endowed with financial autonomy and capital. Their shares are held partly by the state, local governments or public-owned corporations and partly by private corporations or individuals. However, the status of certain units is unclear. That is the case, for instance, of a number of EPAs (e.g., the Cameroon Red Cross which is classified as an EPA while it is an entity established under private law, which receives government subsidies) and structures (e.g., the national forestry development support agency) that are listed among both the EPAs and the SCPs. The arrangements regulating the profit transfers from public enterprises to the budget are relatively clear. Decisions in this regard are taken by the boards of directors of the enterprises, on which the government is represented proportionately to the level of its shareholding.

5. The quasi-fiscal activities (QFAs) of public nonfinancial corporations are limited.⁵ The 28 SCPs are in general autonomously managed, but their activities are affected by certain government decisions such as the requirement to include social categories and therefore crosssubsidies in their pricing policy. Whereas the 40 SEMs generally follow commercial principles, there are a few exceptions. This is the case, in particular, of the Cameroon Real Property Company (SIC), which manages housing units at subsidized prices but does not receive compensation from the government. On the other hand, the national refinery (SONARA) is subsidized when wholesale fuel prices, which are controlled by the government, are not high enough for the company to meet its costs.⁶

Relationships between the government and the central bank and public financial corporations

6. Cameroon, as a member of a monetary union, has an independent central bank that plays no budgetary role. 1.1.4

The BEAC is the central bank of the six member countries of the Central African Economic and Monetary Community (CAEMC), including Cameroon. It is responsible for implementing the common monetary policy, and especially for preserving the stability of the CFA franc. It does not conduct quasi-fiscal operations, and its financial relationships with the government are clearly defined. It can grant statutory advances to the government, in amounts not exceeding 20 percent of the fiscal revenue collected the previous year.⁷ Cameroon has used these advances in the past, but they have all been paid back and currently, the outstanding amount is zero. Interest rates on deposits and advances are set by the regional Monetary Policy Committee.

7. Public financial corporations do not engage in QFAs. 1.1.4

Government holdings in the financial sector are limited to three commercial banks (Banque Internationale pour le Crédit, 10 percent of the capital; Société Générale de Banques au Cameroun, 25.6 percent; and Société Commerciale de Banques au Cameroun, 35 percent). The market share of these three banks in terms of deposits and credits is about 40 percent. The state remains the owner of other financial corporations, including Crédit Foncier and CAMPOST, which are undergoing restructuring. According to the authorities, none of these banks resort to subsidized or directed lending.

Government relations with the private sector

8. Government holdings in corporations are extensive and their public disclosure is limited. 1.1.5

The extent of government holdings in the commercial sector is significant (Box 1). An annex to the budget law contains a list of all SEMs and indicates for each the shares held by the government and the parapublic sector in their capital; the dissemination of this annex (as of all annexes to the budget law) is limited. The Holdings Division of the Ministry of Finance (MINFI) is responsible for managing the government portfolio. The economic operations of public and parapublic enterprises are monitored by the Technical Commission for the Restructuring of Enterprises.

9. The laws and regulations governing government regulation of the nonfinancial private sector are clear but complex because of their large number. 1.1.5

The arrangements regarding the creation and functioning of private enterprises are presented in the Commercial Code, the Investment Code, the sectoral codes, the law on accounting, and the laws and regulations on the structures supporting enterprises and on taxation. In addition, Cameroon is a signatory to the regional treaty of the Organization for the Harmonization of Business Law in Africa (OHADA) for the regional harmonization of business regulations. Rules are transparent in the codes, but their implementation varies.

Fiscal management relationships among the branches of government

10. The fiscal powers of the executive, legislative, and judicial branches are clearly defined in law. 1.1.2

The 1996 Constitution describes the relationships between the executive and legislative branches. The government is accountable to the National Assembly; Parliament passes laws and controls the action of the government. It passes the government budget and laws on taxes and fees. Parliament can also call the government to account through written and oral questions and establish commissions of inquiry on given subjects. However, whereas government members are often asked questions during debates on draft budget laws, commissions of inquiry have rarely been formed. The judiciary is independent of the executive and legislative branches. The Supreme Court is the highest jurisdiction and includes an Audit Office in charge of the control and assessment of public accounts, and of the preparation of an annual report on the government accounts.

The legal and administrative framework for fiscal management

11. The legal framework for the management of public finances is clear and defined by laws and regulations, some of which are being amended to ensure their consistency with the Constitution and with the law on the government financial system. 1.2.1

The 2007 law on the government financial system establishes the conditions for preparing, presenting, executing, and monitoring execution of the budget law. It describes the structure and content of the budget law; it defines the content and the process of presenting the budget review law in Parliament; it explains the principle of separation between the payment authorizing officer managing revenue or expenditure and the accountant; and it defines the three categories of payment authorizing officers: principal, the ministers; secondary, the heads of devolved government units; and delegated, those appointed by principal or secondary payment authorizing officers. The law also describes the types of accounting to be maintained by the government and the types of controls—parliamentary, administrative, and jurisdictional—to be established over the public accounts. In addition, at the beginning of each fiscal year a Minister of Finance circular specifies the procedures to be followed and gives detailed instructions to payment authorizing officers and accountants for execution and control of the government budget. A Decree of June 25, 1997, which establishes general regulations on public accounting, is being amended as several of its provisions are now inconsistent with the 2007 law.

12. The legislative basis for tax revenue collection is clear. 1.2.2

All taxes and fees are described in the General Tax Code and in the Customs Code (but not all exemptions—see paragraph 13). In addition, simplified manuals and information prospectuses exist. The structure of the tax legislation framework is relatively stable and functions under a self-assessment system. Although the codes are generally precise, in some cases they leave room for a measure of administrative discretion. For instance, the Director-General of Taxes or the Minister of Finance may authorize a total or partial reduction of penalties. In addition, the granting of certain tax incentives is at the discretion of the authorities (paragraph 13). The nature of the financial obligations of the oil companies to the government is defined in the Oil Code, but the exact terms of those obligations are set on a case-by-case base in the context of oil contracts (c.f. paragraphs 10-14 of Annex 1).

13. Tax exemptions are extensive, and tax expenditure is not reported. 1.2.1/3.1.3

Tax exemptions and incentives are set forth in the Tax Code, the Customs Code, the Investment Code, sectoral codes, the law establishing the tax, financial, and accounting system applicable to partnership contracts, and international agreements. Some are granted automatically, such as the tax regime in the securities sector, which applies to all enterprises bringing new shareholders to the Douala securities exchange. Others require government approval, sometimes with a certain margin of interpretation when checking whether the relevant legal conditions are met, as, for instance, in the case of the regime for “structuring” projects, for which one of the eligibility criteria is “being a pillar of economic and social development,” or in the case of the customs exemptions for charitable works to assist vulnerable persons, granted by the Minister of Finance. Although the notion of tax expenditure is not officially established, the General Customs Directorate (DGD) and, less systematically, the General Tax Directorate (DGI) prepare internal quantitative assessments.⁸ In the case of exemptions related to public projects financed by donors and lenders, tax expenditure is identified in the annexes (unpublished) to the budget, as taxes are paid through counterpart funds.

Tax administration

14. The legal and regulatory tax framework is clearly defined. 1.2.2

DGI administrative procedures are defined in the Book of Tax Procedures. The administration is organized on a functional basis (legislation, disputes, audits, and collection) and by type of taxpayers, with specialized units respectively covering large enterprises, medium-sized enterprises, professional firms, real estate firms, and small taxpayers.⁹ There is as yet no code of conduct for tax officers, but they are required to maintain professional secrecy and other good practices specified in the Book of Tax Procedures. In addition, there are procedures manuals for some taxes, for the taxation of large enterprises, and for all the tax functions (management, control, collection, disputes) and production structures (Large Taxpayers Department, Center for Medium Enterprises Taxes, District Tax Centers). To pave the way for effective audits and collection, officers are entitled to request reports from third parties specified in the Book. The provisions for customs are similar. Also, there is a joint tax/customs unit that undertakes audit missions in the field. Taxpayers use single identification numbers for all taxes and all tax units. Reforms are under way to improve the protection of those identification numbers.

15. Taxpayers’ rights are well defined, and appeals against decisions on tax and nontax obligations are considered in a timely way. 1.2.2/4.2.6

For the risk of tax contestation to be kept to a minimum, taxpayers are entitled to request early administrative decisions (advance tax rulings), whereby they would be informed within 30 days of the tax consequences of any transaction or other act. In cases of contestation, taxpayers may appeal in the context of a three-phased process, first to a regional directorate, then to the Director-General of Taxes, and next to the Minister of Finance. In all these procedures, taxpayers are entitled to be represented by a third party in their relationships with the tax administration. The taxpayer also has the right to appeal to an independent court of law, but, according to the PEFA report, this right is limited in practice, because the appeal can only be done at the administrative chamber of the Supreme Court which is located in Yaoundé. For customs, the provisions are similar, except that there is no mechanism for obtaining advance administrative decisions. However, the implementation of the new government financial system will allow significant progress in this area.

Public consultation

16. Public opinion is infrequently sought concerning proposed laws, regulatory changes, and broader policy changes. 1.2.3

The public is informed of the budget law, which is published in the official gazette and, up to 2007, on the MINFI website. The annexes to the budget law are not confidential but are not systematically distributed or published. Civil society is, however, invited to share its opinions on the Poverty Reduction Strategy Paper (PRSP), which determines the core policies of the medium-term economic program.

Contractual arrangements and legal framework for liability and asset management

17. Contractual arrangements between the government and private entities are relatively clear, including the legal and regulatory framework for public-private partnerships. 1.2.4

Model oil contracts exist, but the details of signed contracts are not publicized. Public-private partnership projects are still virtually nonexistent, but a legal framework has been established in preparation for their possible development (Box 2). In this context, the Ministry of Finance is called upon to play an important preparatory role in the identification of eligible projects, but a much less important role from the issuance of invitations to bid onward.

18. There is no legislative framework for debt management. 1.2.5

The Minister of Finance is responsible for the stock of public debt. For example, the communes have to obtain the authorization of the MINFI (and the Ministry of Territorial Administration and Decentralization) before they can take out a loan. The caps on central government debt are set within the framework of the budget law. Debt management by the CAA is limited to making long-term projections that cover only confirmed commitments and take no account of possible liabilities. The government has also prepared a debt strategy, but this has not yet been approved.

19. The legal framework for privatization is clear, but the conduct of the privatization processes suffers, in some cases, from insufficient communication to the public. 1.2.5/4.2.4

Under the supervision of an interministerial committee, co-chaired by the Minister of Finance and the Minister of Economy, Planning, and Regional Development, the technical preparation of files on the enterprises to be privatized is entrusted to the Technical Privatization and Liquidation Commission (CTPL), whose tasks are clearly defined.¹⁰ The CTPL, which is placed under the direction of the Minister of Finance, works on the basis of a privatization program established by the government. The public is informed of the various phases of the process (from the invitations to bid to the final award) through the media. However, in cases of unsuccessful negotiations, the public is insufficiently informed about the reasons for the negotiation failure. The time taken to finalize privatization operations is a bit long owing to the time necessary for: (i) preparing preliminary studies; (ii) the authorities to validate strategic decisions; and (iii) obtaining the go-ahead from the development partners at key stages of the process. Privatization receipts are presented in the government budget in the form of both forecasts and actual performances.

The budget preparation process: clarity and consistency of process and presentation

20. The budget calendar followed in practice is not formally articulated. 2.1.1

According to the 2007 law on the government financial system, the draft budget law must be submitted to Parliament at least 15 days before the beginning of the budget session of November, and Parliament has 20 days, starting from the opening of the budget session, to debate the draft budget law. There is no other formally articulated provision on the budget timetable. The budget circular, which is signed by the President of the Republic, is published late and is of formal rather than practical value.¹¹ Very early in the year, in about April or May, the General Budget Directorate (DGB) holds a seminar on preparing the budget law for the coming fiscal year and explains the principal phases of the process, with budget conferences in about July, but this process is not formally established. The draft budget law is normally approved on time, before the start of the pertinent fiscal year.

The medium-term framework and policy basis for the budget

21. Multiyear budget forecasts and underlying macroeconomic assumptions are presented summarily in the budget law, but they are disconnected from the annual budgetary process. 2.1.2

The Forecasting Directorate (formerly the Economic Affairs Directorate, DAE) of the MINFI prepares a multiyear macroeconomic framework for the PRSP, based on financial programming that includes endogenous growth, a tax module, and a debt module. A second PRSP is being prepared for the period 2010–20, and medium-term expenditure frameworks (MTEFs) are prepared for the main social sectors, such as education, health, infrastructure, and rural development. Projections by economic sector and fiscal aggregates are prepared for the period up to 2020. The economic outlook and the budget framework with the macroeconomic assumptions are included in the economic report attached to the draft budget law placed before Parliament. Regarding investment, a record of projects is prepared, with investment projects listed for each of the country’s ten regions. However, only payment appropriations for the year are included; the implications for future years are not discussed, and the multiyear investment program is not shown.

22. Fiscal objectives for the year are described in the report on the economic and social outlook attached to the budget law. The future consequences of the measures adopted during the current fiscal year are not explained. 2.1.2/2.1.3

The draft budget law is accompanied by a report analyzing the nation’s economic, social, and financial position and outlook, for the attention of Parliament. The reasons for new tax and customs measures and economic incentives are presented; however, their implications are discussed only with respect to the fiscal year in question and not beyond it.

Fiscal sustainability analysis

23. An assessment of fiscal sustainability is not included in the budget documentation. 2.1.4

There is no sensitivity analysis of the economic assumptions or of fiscal policy options. In addition, there is no analysis of the important issue of dwindling oil revenues due to the depletion of oil reserves.

Coordination of budgetary and extrabudgetary activities

24. Mechanisms for the coordination and management of budgetary and extrabudgetary activities are generally well defined but are insufficiently monitored. 2.1.5

The budget law places caps on appropriations and covers all transfers. However, some appropriations, particularly the additional centime paid to the FEICOM and to local governments, do not go through either the budget or the treasury. Similarly, the equalization tax collected on behalf of the CSPH is paid directly to the CSPH. This contributes to the underestimation of total government revenue (see below). Neither forecasts nor actual data on extrabudgetary activities carried out by the EPAs are consolidated, and the overall government fiscal policy is therefore not known. Whereas the related payments are made through special accounts rather than through the general treasury, expenditure financed by grants and external loans is included in the budget.

Budget execution accounting and reporting

25. Accounting and internal control procedures are not entirely effective, and the accounting system does not provide a basis for preparing reliable data on arrears. The lack of published information on expenditures for which a payment order has been issued but which have not been paid yet makes any assessment of the fiscal situation difficult. 2.2.1

Revenue is recorded mainly at the collections stage, and expenditure at the commitment, payment authorization, and payment stage for the centralized services.¹² Most receipts occur through spontaneous deposits, not giving rise to the issuance of receipt vouchers, nor accounting entries; only revenue for which receipt vouchers have been issued triggers accounting entries before actual collection. As a result, knowing the full amount of accounts receivable is only possible for receipts for which a voucher has been issued. On the expenditure side, the process is computerized, and expenditure following the normal procedure will be recorded at the commitment stage by the payment authorizing officers (ordonnateur), with the issuance of a certificate of confirmation of availability of funds, then at the treasury at the payment authorization and payment stages. Consequently, the treasury is aware of expenditure for which a payment has been authorized but not paid. By contrast, expenditure following exceptional procedures are not monitored systematically and completely throughout the accounting process, and problems arise concerning its settlement. Accordingly, comprehensive knowledge about government arrears is not easily accessible and requires constant work of recording and comparing budget and treasury data.¹³ Internal controls are multiple and redundant, being effected thrice, by the ordonnateurs, the financial comptrollers and the accountants, and they do not seem to be effective at all levels, as noted by the Audit Office and the CONSUPE (see below). As the public expenditure system produces delays leading to very low implementation rates for certain investment projects, the authorities have sometimes resorted to accelerated procedures such as those established for the Road Fund expenditure. The fact that this expenditure is recorded in the budgetary accounts at the time of a transfer of the payment credit to the treasury rather than at the time of the expenditure itself implies that budget expenditure reported by the treasury does not always correspond to expenditure actually executed.

The amount of the expenditures for which a payment order has been issued but which have not been paid (the “restes à payer”), is not included in the published tables even though the amounts are important and known by the treasury. Moreover, the estimated amounts only cover the centralized services. As a result, the reported data on the cash balances reflect only partially the fiscal situation when the amounts of the “restes à payer” fluctuate substantially.

The important accumulation of “restes à payer” during the last few months of the year, if it was to translate into an increase in payment arrears, could have negative effects on budget execution and for the financial situation of government suppliers, which, in turn, could be transmitted to that of other companies and banks, which could see their nonperforming assets increase significantly. The accumulation of “restes à payer” reflects weaknesses in government cash management and may encourage the use of exceptional expenditure procedures. Also, the government suppliers could see their financial situation deteriorate even further, notably if the banks, faced with delays in the reimbursement of the loans they granted, strengthen the conditions for granting loans or/and request the payment of late fees.

In this context, it is very important to clearly define the concept of arrear, including the period after which a “reste à payer” is considered to be an arrear, and to put in place monitoring mechanisms. In line with the provisions of the CAEMC directive related to government financial operations (adopted by the member states in June 2008),¹⁴ this period should be set at 90 days.

26. The accounting system is capable of producing in-year reports on the budget outturn only for the central government, but such reports are not submitted to Parliament. 2.2.1/2.2.2

The government’s chart of accounts is harmonized with the budget classification, and the treasury accounts (balance du trésor) are produced on a monthly basis, with a 20-day gap. The treasury accounts cover operations to implement the budget law and cash operations. Based on these accounts, a table covering the government financial operations (TOFE) is prepared each month by the DAE, but only on a cash basis. There is no detailed report on implementation of the budget law; the DAE prepares only very brief quarterly summaries. The DAE also prepares a monthly economic bulletin on the economic sectors for the attention of the government and the development partners, but it is not published. According to the 2007 law, Parliament should receive a midterm budget execution report by September 30 of the ongoing year. However, Parliament receives only the economic report that is submitted with the draft budget law at year-end. Parliament does not engage in any midyear review.

27. Budget expenditure is occasionally executed without the observance of normal procedures. For various reasons (urgency, confidentiality, or cash management), the authorities sometimes ignore the normal expenditure procedures. For instance, there are cases when the National Hydrocarbons Company (SNH) makes payments on behalf of the government. Whereas the SNH subtracts those payments from the oil revenue that it transfers each month to the government, according to the authorities, that expenditure is adjusted from a budgetary standpoint, as the budget records the gross amount of the oil resources as well as the outlay (initially as expenditure for adjustment and later in the budget categories deemed to correspond to the outlay in question). This is not, therefore, a case of extrabudgetary expenditure, but rather of expenditure executed without observance of the expenditure process. As that expenditure does not go through the treasury, the latter does not know of its execution until the SNH informs it in the context of their monthly meetings on oil revenue. Budgetary adjustments may also be problematic, as it is impossible to be sure that expenditure is recorded in the budget appropriation corresponding to its nature and to the recipient ministries.

28. The law holds that revisions to revenue and expenditure during the fiscal year should be the subject of supplementary budgets. 2.2.3

Budgets are not systematically revised, and only one supplementary budget has been prepared in the past few years, for fiscal year 2008 (in September 2008), to take account of oil price changes, additional revenue measures, and wage hikes. That supplementary law was placed before Parliament and approved by ordinance of the President of the Republic. Changes by comparison with the budget law are recorded in the budget review law.

29. The final accounts are prepared with a substantial lag. 2.2.4

The final treasury accounts for December of fiscal year N are generally produced approximately in June of fiscal year N+1. The complementary accounting period, legally two months, is not respected, and there are delays in centralizing the statements from accountants in the regions. Revenue and expenditure accounts (comptes de gestion) should, in theory, be prepared by the principal accounting officers and sent to the Audit Office three months after the end of the fiscal year; but those accounts are not prepared by all the accountants, and even when they are compiled, their quality is mixed. Government accountants do not strictly observe the financial provisions of the 2007 law.

30. The budget review law is not consistent with legal provisions. 2.2.4

Draft budget review laws (loi de règlement) should close off budget execution and record any changes in actual execution compared with the budget forecasts. They should normally be submitted to the Audit Office with the administrative accounts from payment authorizing officers and the revenue and expenditure accounts from accountants, by September 30, at the latest, of the year following the fiscal year to which they relate. The Audit Office is then required to examine draft budget review laws and submit them to Parliament with its opinion. However, to date no draft budget review law has been submitted for examination by the Audit Office. The DGB has assumed the habit of preparing and submitting directly to Parliament a simplified draft budget review law for fiscal year N-2, consisting merely of tables on the execution of government budget revenue and expenditure, which is submitted to Parliament with the draft budget law for fiscal year N (this explains why the 2009 budget law contains the 2007 budget review law). These draft budget review laws are not based on the government annual financial statements (“compte de gestion de l’administration des finances”) and are accompanied by the administrative accounts from payment authorizing officers, which considerably diminishes their value.

Commitment to timely publication of fiscal data

31. The bulk of fiscal information is available to the public, but the authorities have not formally undertaken to provide the information by announcing a publication timetable. 3.3.1/3.3.2

The budget review law which should present the budget execution details is published with a lag of two years. More aggregated data are published every quarter in the media, with varying lags; information on execution of the 2008 budget was published on April 29, 2009. It is not always easy to interpret these data, as the breakdown of expenditure can change. In addition, neither the presentation used in budget review laws nor that used in budget laws allows for easy analysis of the government’s financial operations (paragraph 44). The government is not bound by a publication timetable.

Coverage and quality of budget documents

32. The budget documents cover central government activities and provide partial data on general government; defense expenditure is fully integrated in the budget. 3.1.1/3.1.4

The budget documents accompanying the budget law cover the activities of the central government and transfers to the local governments and to the EPAs. The principal components of the central government covered in the budget law are the ministries and the autonomous constitutional bodies; the list of special treasury accounts is not included in a transparent way; a list of EPAs is included in an annex, but the reported budgetary transfers to them date back several years. The budgets of the EPAs are neither consolidated nor included individually in the budget law. Moreover, important information is missing from the budget law, i.e., the table of budgeted staff by ministry and other government entity, tax expenditure, and contingent liabilities. Defense expenditure is clearly indicated in chapter 13 of the budget law, with a level of detail comparable to that in other chapters of the budget.

33. Budgetary information is available in an adequate level of detail. 3.1.1/3.1.4

The budget report contains a detailed table of tax and non-tax projections. The treatment of VAT is not in accordance with international practice, as it is reported on a gross basis (i.e., without subtracting VAT credit refunds, which are treated as expenditure). The presentation of oil revenue in the budget documents varies, and none of the definitions used covers all government oil revenue.¹⁵ The expenditure is broken down by chapter. It includes foreignfinanced expenditure.

34. The budget documentation does not provide the fiscal position of subnational governments but presents the financial statements of public corporations. 3.1.6

The budget contains neither individual nor consolidated data on the fiscal positions of local governments. An unpublished annex to the budget contains a list of the financial positions of public corporations but does not provide a consolidated public sector position. Information on communal debt is not systematically published.¹⁶

Past and forecast fiscal data in the budget

35. Annexes to the draft budget law contain very little information on the previous budget years and none on the years beyond the ongoing year. 3.1.2

An annex to the 2009 budget law contains a document entitled “Fiscal Revenue Forecasts,” which provides aggregated figures for fiscal revenue and expenditure, for the year compared with the forecasts and performances for the four previous fiscal years (2005–08). However, the revenue and expenditure details are compared only with the forecasts for the previous year; no information is included on subsequent years’ revenue and expenditure is included.

Treatment of fiscal risks

36. Fiscal risks are not analyzed in the budget context. 3.1.3

Neither the budget nor any other report contains risk analysis. The budget does not address the sensitivity of the macroeconomic assumptions nor contingent liabilities. However, the budget projections of hydrocarbon prices include a precautionary margin to minimize the disruptive impact that an unexpected decline in oil prices may have on budget execution (Appendix 1, paragraph 26).

37. QFAs are not substantial, and their estimated cost is not included in the budget documentation. 3.1.3

QFAs are limited (paragraph 5), and their cost is neither systematically estimated nor presented. Subsidies to the SONARA are included in the budget but are explicitly listed only in the annexes, which are not published.

Publication of data on debt, other liabilities, and financial assets

38. Partial information is published on gross public debt. 3.1.5

The budget law specifies the planned new borrowings as well as payments in principal and interest. In an annex entitled “Public Debt,” which is not published, details are provided on debt service as well as on the original amounts of financing agreements. The stock of debt is mentioned in another annex, the “Report on the Nation’s Economic, Social, and Financial Position and Outlook.” The CAA publishes annual data.

39. Information on nondebt liabilities is not published. 3.1.5

Apart from debt, the main government liabilities are: civil servants’ pensions, which are financed within the budget framework; debt and leasing contracts guarantees for a number of public enterprises; contingent liabilities related to difficulties in some important financial sector institutions; and arrears, especially to public and parapublic enterprises. Other obligations may well arise in the future in the context of public-private partnership contracts, made possible by the 2007 Decree. For the time being, no information is published on such obligations.

40. Information on government financial assets is not published. 3.1.5

The annexes to the budget, which are not published, contain a list of all public enterprises and government equity holdings (paragraph 8), stipulating their original capital, their turnover, and their outturn. Their market value, however, is not estimated. The value of their assets is not estimated either (Annex 1, paragraph 37).

Long-term public finance analysis

41. The authorities occasionally conduct and publish long-term public finance analyses. These analyses are prepared in the context of the PRSP. 3.1.7

Guide to the budget

42. There is no guide to the budget; after the budget law has been enacted, only a summary of it is published in the official gazette. 3.2.1

The budget documents containing details on administrative appropriations by ministry and other recipient administrative structure are not available to the public and are not widely disseminated. Only the record of investment projects by region is published.

Budget classification

43. The budget classifications are broadly consistent with international standards. 3.2.2

The budget classification has been made consistent with the public chart of accounts, and the classification of the treasury accounts has been harmonized with that of the budget. There is an administrative classification corresponding to the organic structure of the government and other independent constitutional bodies, an economic classification, and a functional classification. These could be further refined, for example with respect to economic spending related to restructuring and rehabilitation, which is not detailed enough. At the same time, there is no program classification. Current appropriations are broken down by chapter (each corresponding to a ministry or constitutional body), section (corresponding to the functional use of the expenditure), article (corresponding to the recipient administrative unit), and paragraph (corresponding to the economic type of the expenditure). Investment appropriations are broken down, for each project, by article and by paragraph and made available by article in each ministry. There is also a separate document presenting the annual investment budget as a list of projects broken down by ministry and by source of financing. This report is widely disseminated, as it is published by the media at the beginning of the fiscal year. Fiscal revenue is broken down by type.

Overall balance of the central government

44. Only the overall balance is shown in the budget documents. 3.2.3

The budget documents make no reference to primary or nonoil balances. A primary nonoil balance is presented in the TOFE, notably to monitor the financial program supported by the IMF. The budget documents do not report the general government balance, and there is no consolidated balance for the local governments. In any case, the operations of the local governments must be balanced, except in the rare cases where they have resorted to borrowing.¹⁷

Program budgeting and reporting

45. The objectives and expected results of government activities are described in general terms. 3.2.4

The results of government policies are presented only in general terms in the economic report presenting the draft budget law and in the PRSP and the sectoral MTEFs. The indicators of program performance or outcome assessment have not been developed, and this should be done before moving to program budgeting.

Integrity of budget and accounting processes

46. Budget forecasts appear optimistic, but the variance between budgeted and actual cash-basis outturns of the main fiscal aggregates is disclosed to the public. 4.1.1

There is a tendency to overestimate nonoil revenue slightly (by about 5 percent in 2008), especially because of the regular overestimation of nontax revenue. Oil revenue, by contrast, is systematically higher than forecast, owing to a margin of prudence concerning crude oil prices. On the expenditure side, the rate of investment expenditure execution has been rising for several years but is still low. One of the annexes to the budget law contains tables showing the gaps between the budgetary forecasts and actual performances over the past four years. A table on budget execution is published on a quarterly basis in the media but shows expenditure on a cash basis, thus giving an inaccurate picture of budget execution in the ongoing fiscal year.¹⁸ Information on budget execution on a payment order basis is published with a gap of two years, in the budget review law.

47. Statements on accounting policy are not included in the budget documentation or the final accounts. 4.1.2

There is no reference in the budget documents to the accounting basis used; this is defined in the 2007 government budget law. General government accounting follows the accounting framework established for all the CAEMC member states. Information on budget execution on the revenue side is recorded on a cash basis. Information on expenditure is presented on commitment, payment order, and payment bases, but only for centralized services. The Ministry of Finance continues to face the difficulty of registering in real time the commitments and payment orders of the central government’s decentralized services. Accrual-basis accounting is gradually being put into use but is still incomplete. The final accounts are closed off with a delay of several months. Moreover, because administrative accounts and final treasury accounts are not produced, there can be no reconciliation with the contents of the budget review law.

Reconciliation practices

48. The process of reconciling budget execution data has been generally improved, but there is some partial fragmentation of cash management. 4.1.3

Bodies have been set up to monitor cash management and reconciliations with the central bank and the CAA: a national debt committee, a payment validation committee, and a cash flow plan assessment committee. The latter meets on a weekly basis, and reconciliations between the treasury and the BEAC are continuous; this has led to a reduction in the costs of government cash flow management. However, consolidated cash management is not fully observed, as several government bodies, or the EPAs, still maintain accounts outside the treasury and the BEAC, in commercial banks, despite the recent instructions from the Minister of Finance to the treasury to counter this development. This applies, for example, to the CAA, as regards debt operations and the execution of externally-financed capital expenditure, and to the Road Fund. The treasury is currently seeking to make transfers to the EPAs on a monthly instead of annual basis.

Internal oversight

49. Civil servants are subject to a well-defined code of conduct; however, penalties are rarely imposed. 4.2.1

Ethical behavior of public servants is governed by the general rules and regulations of the civil service and the bylaws of the special units, which provide for appropriate enforcement measures, including penalties. A standing civil service disciplinary board exists (Decree of 2000) as well as a budgetary and financial disciplinary board (Decree of 2008). There is an anti-corruption national commission, and an anti-corruption steering committee was set up in 2005; members of the latter include representatives of civil society. A law of 2006 created the obligation for government officials at the level of director and above to declare their fortune; however, the regulations establishing the terms under which this law is to be implemented are still under preparation. These bodies do not seem to be functioning effectively, and it is rare for penalties to be imposed for embezzlement.

50. Civil service recruitment procedures are clear. 4.2.2

Entry into the civil service is through open competitive examination (concours), based on merit, in accordance with the terms of the 1994 general rules and regulations of the civil service and the Decree of 2000 establishing the general system of administrative competitive examinations. There are also specific bylaws governing a number of bodies such as those of the judiciary, national security, and the penitentiary administration. The 1992 Labor Code sets the terms of contractual recruitment. The upgrading and promotion of civil servants are meritbased, founded on annual assessments and formal examinations at certain intervals (Decree of March 20, 2001). Wage scales are relatively narrow. Organic frameworks for ministries are not fully adopted, and the administrative management of personnel files is centralized only in the case of about 128,000 civil servants out of a total of some 172,000; the files of defense, police, penitentiary, higher education, and judiciary personnel are managed by the respective administrations concerned and by the payroll unit. The latest physical census of civil servants dates back to 2005. The reorganization and updating of personnel files have not yet been completed. There are errors and instances of fraud in the civil service, and preparations are under way to institute electronic filing of information. Regularizations of payments for upgrades and promotions seem to take more time than can be expected, and substantial arrears have accumulated in this area.

51. Procurement rules meet international standards but are not, in practice, strictly followed. 4.2.3

A public procurement regulation agency (ARMP) was established in 2001 (Decree of February 23, 2001), in the form of an EPA placed under the tutelage of the Office of the President of the Republic. Regional field offices of the ARMP are being created in the country’s 10 regions. The agency’s mission is to regulate, monitor, and assess the public procurement system. A Public Procurement Code was published in 2004 (Decree of September 24, 2004) and is applicable to all services valued at CFAF 5 million and above. The code tends to make the contracting authority accountable and to strengthen ex ante controls by independent observers, in cases of public contracts valued at CFAF 30 million and over, and by four specialized commissions by economic sector, in cases of contracts valued at CFAF 100 million to CFAF 1 billion. In addition, ex post controls are performed by audit firms on all public contracts valued at over CFAF 500 million and on a randomly-selected sample of 25 percent of contracts valued at between CFAF 30 million and CFAF 500 million. Despite the solid framework for procurement, the number of over-the-counter contracts have increased significantly, notably in 2007 (Box 4). The ARMP collects information and documents directly from those involved, files them, and is working toward the establishment of an electronic public procurement database. Several guides and procedures manuals exist and are widely disseminated; a website is in operation; a weekly procurement record is published with a summary version on the website, and an annual report on the efficiency and reliability of the public procurement’s contracting, execution, and control processes is sent to the President of the Republic.

52. Internal audits take place at several levels, but their effectiveness is somewhat limited. 4.2.5

Internal verifications and audits are conducted by several administrative bodies throughout the public expenditure process. For instance, audits at the time of expenditure commitment are performed by the DGB and financial comptrollers, and by public accountants on the effectiveness of the provision of services prior to payment. The Budget Operations Control Directorate oversees budget execution in all spending ministries; the ARMP supervises public contracts; and there are staff supervision units in most ministries, undertaking internal controls at the departmental levels. However, the multiplicity of internal controls is no guarantee of their efficiency, and both the CONSUPE and the Audit Office have regularly highlighted several errors and cases of embezzlement (see below).

Clarity of internal control and independence of tax administration

53. The tax administration does not have effective internal monitoring and control mechanisms. 4.2.6

There has been no internal audit of the DGI since its creation in 2005. The DGI has a National Inspection of Services which is currently being reorganized and modernized in line with the publication of a new organizational chart of the MINFI. The DGD has also not been the subject of regular internal audits, even though some have been performed occasionally. External audits of the various DGD activities are regularly undertaken by the CONSUPE regarding the “budget execution” component, and by the General Inspection of Financial and Budgetary Affairs of MINFI regarding the “tax operations” component. Moreover, external and independent audits are sometimes conducted for specific taxes (forestry and road). To safeguard the rights of taxpayers, dispute mechanisms have been set up and, in the case of the DGI, together with the possibility of obtaining a prior opinion on the tax consequences of any action (advance tax ruling, paragraph 15).

54. The tax administration does not have legal protection from political interference. 4.2.6

The DGI and the DGD are central administrations of the Ministry of Finance, and their senior officials are subject to the civil service codes, with no particular immunities.

Public and independent oversight

55. The judicial control of the Audit Office is independent of the executive, and, in principle, its mandate covers all public sector activities. 4.3.1

The 1996 Constitution states that judicial authority is exercised by the Supreme Court, which is independent of the executive and legislative branches. The Supreme Court includes three offices, one of which is the Audit Office, created by law in 2003, and established in January 2006. The Audit Office controls and assesses the accounts maintained by public accountants of the central government, the EPAs, the local governments, and enterprises in the public and parapublic sectors. As a result, it must receive the accounts of all these bodies three months after the closure of the fiscal year (for the central government, EPAs, and local governments) and three months after approval by the competent body (for public and parapublic enterprises). The Audit Office is required to produce annual reports on its activities, showing the general results of its work and any observations it deems it necessary to formulate in the interests of reforming and improving the management of public accounts. These reports are submitted to the attention of the President of the Republic and the President of the National Assembly and published in the official gazette. The Audit Office has produced reports for 2006 and 2007. The latter highlighted serious common and recurrent discrepancies, concerning mainly the fragmentation of orders so as to avoid observing the public procurement procedures, abuses and discrepancies in personnel travels, public funds maintenance, and the unreliability of public accounting. The Audit Office has also recorded the lack of a general account for the administration of finances and of reliable accounts for several EPAs and decentralized local governments.

Box 4.

Public Procurement Processed by the Public Procurement Regulation Agency (ARMP), 2004–08

The ARMP is monitoring public procurement effectively. Its monitoring reveals that over-the-counter contracts have increased substantially since 2007, reaching over 13 percent of all contracts and one-third of all appropriations, but have shown a relative decline in 2008.

^1/Contracts awarded, order letters (for public contracts involving amounts of at least CFAF 5 million and up to CFAF 30 million), and amendments.

Source: ARMP Annual Report.

			2004	2005	2006	2007	2008
Total public contracts 1/
	Number		3,638	4,096	3,743	4,164	4,657
	Appropriation (in billions of CFA francs)		339.7	305.0	313.9	551.2	467
	Of which:
	Contracts by competitive bidding
		Number	3,316	3,744	3,382	3,514	4,293
		Appropriation (in billions of CFA francs)	302.4	235.9	248.6	355.4	386
		As a percentage of the total	93.3	94.0	93.4	86.3	93.6
	Over-the-counter contracts
		Number	156	236	238	556	292
		Appropriation (in billions of CFA francs)	32	61.2	57.1	181.5	72
		As a percentage of the total	4.3	5.8	6.4	13.4	6.3
Claims received			…	64	32	141	133
	Of which, claims justified		…	19	8	87	68

^1/Contracts awarded, order letters (for public contracts involving amounts of at least CFAF 5 million and up to CFAF 30 million), and amendments.

Source: ARMP Annual Report.

View Table

			2004	2005	2006	2007	2008
Total public contracts 1/
	Number		3,638	4,096	3,743	4,164	4,657
	Appropriation (in billions of CFA francs)		339.7	305.0	313.9	551.2	467
	Of which:
	Contracts by competitive bidding
		Number	3,316	3,744	3,382	3,514	4,293
		Appropriation (in billions of CFA francs)	302.4	235.9	248.6	355.4	386
		As a percentage of the total	93.3	94.0	93.4	86.3	93.6
	Over-the-counter contracts
		Number	156	236	238	556	292
		Appropriation (in billions of CFA francs)	32	61.2	57.1	181.5	72
		As a percentage of the total	4.3	5.8	6.4	13.4	6.3
Claims received			…	64	32	141	133
	Of which, claims justified		…	19	8	87	68

^1/Contracts awarded, order letters (for public contracts involving amounts of at least CFAF 5 million and up to CFAF 30 million), and amendments.

Source: ARMP Annual Report.

56. In practice, the functioning of the Audit Office is hampered by a shortfall in staff and its inability to enforce the rules. 4.3.1

The Audit Office does not have adequate human and material resources to perform its tasks; it has only 25 magistrates, of whom only 19 conduct audits while the other six perform administrative tasks. There are no assistants to assist magistrates in their verifications, which, in practice, makes the Office’s tasks extremely difficult. In addition, up to date, the Audit Office has received only one-third of the accounts that it should have received for control and assessment, with the first accounts starting only in 2004. This is mostly due to the local governments, which represent more than half of the accounts, and whose level of production remains below 10 percent. Moreover, the accounts that it has received are incomplete, miss the supporting documents, and of inadequate quality; this is especially true concerning the accounts of the local governments and those of the EPAs. To date, the Audit Office has not received any draft budget review law.

57. An audit is also performed by the CONSUPE, which is not, however, independent from the executive branch. 4.3.1

The CONSUPE is the highest institution for public finance internal control in Cameroon; this supervision and audit institution is attached to the Office of the President of the Republic and headed by a minister delegate (ministre délégué). The CONSUPE was reorganized by a Decree of 2005. It is responsible for conducting administrative audits on ensuring regularity and management performance of the government and its public and parapublic bodies involved in public finance management. It comprises 71 auditors, support and administrative staff and acquires additional resources for widening the scope and the quality of its interventions. Its program of activities is proposed by the minister delegate and approved by the President, and its investigations give rise to the preparation of reports that, once finalized, are submitted for the consideration of the Head of State, who decides on follow-up action. The minister delegate also chairs the budgetary disciplinary board for the imposition of penalties on payment authorizing officers and managers of public funds. An annual report on asset and personnel management is prepared at the end of each fiscal year and published. In 2006 the CONSUPE carried out 20 audit missions in a number of ministerial departments, decentralized local governments, public sector enterprises, EPAs, and public projects and programs. The 2006 report reports on the discrepancies noted, especially the most flagrant ones, regarding the conclusion and execution of public procurement contracts and poor management at the EPA level, which indicate that the internal audit and ex ante supervision bodies are inefficient. The CONSUPE carries out actions complementary to those performed by the Audit Office but does not assess the accounts. Its effectiveness depends upon the follow-up given to its audit reports by the President of the Republic. The reports have consequences if they are submitted to justice and to the Budgetary and Financial Discipline Board.

58. Audit reports are not submitted to Parliament and are not published. 4.3.2

The audit reports of the CONSUPE are submitted to the Head of State, who decides on possible follow-up. They are neither submitted to Parliament nor published. Also, whereas the Audit Office is required to give its opinion on the draft budget review law before its submission to Parliament, the Audit Office has not formally received any budget review law for examination.

59. The National Statistics Institute has partial independence. 4.3.3/4.3.4

The National Institute of Statistics is an EPA, whose director-general and managing board members are appointed by presidential decree. It is placed under the technical tutelage of the ministry responsible for statistics. The institute uses and validates the fiscal data received from the Ministry of Finance but does not verify their quality. Cameroon has subscribed to the General Data Dissemination System (GDDS) since 1998 and intends to transition to the Special Data Dissemination Standard (SDDS) but has not yet set a date for doing so.