Front Matter Page
IMF Country Report No. 18/9
CAMEROON
FIRST REVIEW UNDER THE EXTENDED CREDIT FACILITY ARRANGEMENT, REQUESTS FOR WAIVER OF NONOBSERVANCE OF A PERFORMANCE CRITERION AND MODIFICATION OF PERFORMANCE CRITERIA—PRESS RELEASE, STAFF REPORT, SUPPLEMENTARY INFORMATION, AND STATEMENT BY THE EXECUTIVE DIRECTOR FOR CAMEROON
January 2018
In the context of the First Review Under the Extended Credit Facility Arrangement Requests for Waiver of Nonobservance of a Performance Criterion and Modification of Performance Criteria, the following documents have been released and are included in this package:
A Press Release including a statement by the Chair of the Executive Board.
The Staff Report prepared by a staff team of the IMF for the Executive Board’s consideration on December 20, 2017, following discussions that ended on November 3, 2017, with the officials of Cameroon on economic developments and policies underpinning the IMF arrangement under the Extended Credit Facility. Based on information available at the time of these discussions, the staff report was completed on December 13, 2017.
A Staff Supplement updating information on recent developments.
A letter of Intent
A Statement by the Executive Director for Cameroon.
The documents listed below have been or will be separately released.
Letter of Intent sent to the IMF by the authorities of Cameroon*
Memorandum of Economic and Financial Policies by the authorities of Cameroon*
Technical Memorandum of Understanding*
*Also included in Staff Report
© 2017 International Monetary Fund
The IMF’s transparency policy allows for the deletion of market-sensitive information and premature disclosure of the authorities’ policy intentions in published staff reports and other documents.
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Front Matter Page
CAMEROON
FIRST REVIEW UNDER THE EXTENDED CREDIT FACILITY ARRANGEMENT, REQUESTS FOR WAIVER OF NONOBSERVANCE OF A PERFORMANCE CRITERION AND MODIFICATION OF PERFORMANCE CRITERIA
December 13, 2017
Key Issues
Context. Cameroon’s performance under the three-year ECF-supported program approved in June has been satisfactory, with the fiscal and external adjustments contributing to the rebuilding of buffers. Growth in 2017–18 is expected to be somewhat weaker than anticipated in the program, declining to 3.7 percent in 2017 owing to lower oil production and tepid demand, with a recovery to 4.2 percent in 2018. The medium-term outlook remains positive, boosted by the coming on stream of large energy and transport infrastructure projects.
Risks. Program risks stem from further fluctuations in oil prices (with an upside if recent trends are sustained), a deterioration of the security situation, reform fatigue ahead of the Fall 2018 elections and spending and borrowing pressures related to Cameroon’s organization of the 2019 African soccer cup.
Program status. All end-June 2017 quantitative targets were met with some margin. However, the ceiling on contracting of new non-concessional external debt (continuous performance criterion) was not observed by a significant margin as the authorities advanced to November 2017 the entry into force of a loan agreement initially included in the 2018 borrowing plan. As a corrective measure, the 2018 budget ceiling on new non-concessional borrowing was lowered by the same amount. All structural benchmarks through end-November except two were completed.
Key policy recommendations.
Stay the course on fiscal consolidation, including by identifying contingency measures to meet end-2017 and 2018 fiscal targets.
Step up efforts to enhance public financial management to reduce irregular budget transactions, strengthen treasury management and reduce fiscal risks.
Limit new non-concessional borrowing while striving to clear the backlog of undisbursed loans, including by reexamining the financing of under-performing projects.
Ensure an efficient resolution of ailing banks which minimizes fiscal costs.
Deepen business environment reforms to foster private sector development.
Staff views. Staff supports the authorities’ request for completion of the first review of the program supported by the ECF arrangement in view of all but one performance criterion being met. Staff also support the authorities’ request for increasing the program adjustor for government financing related to budget support disbursements for end-December 2017 (which modifies two performance criteria) and for a waiver of non-observance of the performance criterion on the ceiling on contracting or guaranteeing of new non-concessional external debt. Upon completion of the review, a disbursement of SDR 82.8 million (30 percent of quota) will be made available, for a cumulative amount of SDR 207 million or 75 percent of quota disbursed under the ECF for 2017.
Approved By
David Owen and Bob Traa
Discussions took place in Yaoundé during October 24– November 3, 2017. The staff team comprised Ms. Deléchat (head), Ms. Chen and MacDonald, Messrs. Barry and Kalonji (AFR), Messrs. Dupont (MCM), Kpodar (SPR), and Sow (FAD). The team was supported by Mr. Tchakoté (local economist). Mr. N’Sonde (OED) participated in the discussions. Staff of the African Development Bank and the World Bank attended some of the policy meetings.
Contents
Glossary
RECENT DEVELOPMENTS
POLICY DISCUSSIONS
A. Regional Context
B. Outlook and Risks
C. Fiscal Policy: Staying the Course on Consolidation
D. Structural Fiscal Reforms: Expanding the Non-Oil Revenue Base and Improving Public Financial Management
E. Debt Policy: Maintaining Sustainability and Containing Risks
F. Financial Sector Policy: Accelerating Reforms and Expanding Access
G. Structural Reforms: Promoting Diversification and Inclusive Growth
PROGRAM MODALITIES
STAFF APPRAISAL
BOXES
1. Rebasing of National Accounts
2. CEMAC PFM Directives
FIGURES
1. Real Sector Developments, 1999–2017
2. Fiscal Sector Developments, 2013–17
3. Monetary Developments, 2014–17
4. External Sector Developments, 2011–17
5. Financial Sector Developments, 2014–17
TABLES
1. Selected Economic and Financial Indicators, 2014–22
2a. Central Government Operations, 2014–22 (CFAF billions)
2b. Central Government Operations, 2014–22 (percent of GDP)
3. Monetary Survey, 2016–22
4. Balance of Payments, 2014–22
5. Risk Assessment Matrix
6. External Financing Requirements, 2014–22
7. Gross Fiscal Financing Needs, 2016–22
8. Proposed Schedule of Disbursements Under the ECF Arrangement, 2017–20
9. Capacity to Repay the Fund, 2016–31
ANNEXES
I. Impact of the BEAC Monetary Policy and Liquidity Management Reforms
II. 2018 Finance Law—Key Measures
III. Correspondent Accounts and the Need for Cash Adjustment
IV. State-Owned Enterprises and Public-Private Partnerships
V. Interim Growth and Employment Strategy Paper 2018–20
APPENDIX
I. Letter of Intent
Attachment I. Memorandum of Economic and Financial Policies, 2017–19
Attachment II. Technical Memorandum of Understanding
Glossary
| BEAC |
Regional Central Bank (Banque des États de l’Afrique Centrale) |
| CEMAC |
Central African Economic and Monetary Community (Communauté Économique et Monétaire de l’Afrique Centrale) |
| CFA |
Central African Financial Cooperation (Coopération financière en Afrique Centrale) |
| CNDP |
National Public Debt Committee (Comité National de la Dette Publique) |
| COBAC |
Regional Supervisory Body (Commission Bancaire de l’Afrique Centrale) |
| CPIA |
Country Policy and Institutional Assessment |
| CSPH |
Hydrocarbon Price Stabilization Fund (Caisse de Stabilisation des Prix des Hydrocarbures) |
| DGD |
Directorate General of Customs (Direction Générale des Douanes) |
| DGI |
Directorate General of Taxes (Direction Générale des Impôts) |
| DSA |
Debt Sustainability Analysis |
| EPA |
European Partnership Agreement |
| FSAP |
Financial Sector Assessment Program |
| GESP |
Growth and Employment Strategy Paper |
| GFSM 2001 |
Government Financial Statistics Manual of 2001 |
| HIPC |
Heavily Indebted Poor Countries |
| MFI |
Micro-Finance Institution |
| MTBF |
Medium Term Budgetary Framework |
| MTEF |
Medium Term Expenditure Framework |
| NOPD |
Non-Oil Primary Deficit |
| NPL |
Nonperforming Loan |
| PEFA |
Public Expenditure and Financial Accountability |
| PFM |
Public Financial Management |
| PIMA |
Public Investment Management Assessment |
| PPP |
Public-Private Partnerships |
| REER |
Real Effective Exchange Rate |
| SME |
Small and Medium-Size Enterprise |
| SOE |
State-Owned Enterprise |
| SNH |
National Hydrocarbons Company (Société Nationale des Hydrocarbures) |
| SONARA |
National Oil Refinery (Société Nationale de Raffinage) |
| SSA |
Sub-Saharan Africa(n) |
| VAT |
Value-Added Tax |
| WEO |
World Economic Outlook |
| WAEMU |
West African Economic and Monetary Union |
Front Matter Page
CAMEROON
FIRST REVIEW UNDER THE EXTENDED CREDIT FACILITY ARRANGEMENT, REQUESTS FOR WAIVER OF NONOBSERVANCE OF A PERFORMANCE CRITERION AND MODIFICATION OF PERFORMANCE CRITERIA—SUPPLEMENTARY INFORMATION, AND SUPPLEMENTARY LETTER OF INTENT
December 15, 2017
Approved By
David Owen (AFR) and Bob Traa (SPR)
Prepared by The African Department in consultation with the Legal Department and the Strategy and Policy Review Department.
Front Matter Page
Press Release No. 17/512
FOR IMMEDIATE RELEASE
December 20, 2017
International Monetary Fund
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Telephone 202–623–7100
Fax 202–623–6772
