Lukong Pius Nyuylime
29 April 2008
Expectations are really high on the performance of the economy in 2008. According to the Economic and Financial Report for 2007, growth rate will take a big leap from 2.9 per cent in 2007 to 4.1 per cent in 2008.
The new dispensation will be highly activity-driven with the primary and secondary sectors recording exceptional performances. In 2007, consumption remained the main component of domestic demand, representing 81.7 per cent of the Gross Domestic Product (GDP). It is expected to grow at the rate of 3.5 per cent driven by public consumption which should rise by 6.2 per cent and should account for 9.8 per cent of the GDP.
Things ought to accelerate as from Last Friday, April, 25 when the new Presidential measure of March increasing salaries of civil servants, contract workers, State employees, workers recruited on the basis of a decision and servicemen fully went operational. As beneficiaries of the Presidential gesture went home with their package, one question remains. Of what importance is an increase in the people's pay packet? The natural answer is, enforcing their purchasing power of the people. Next question; why must purchasing power be reinforced?
Economists will give a more encompassing response; to spur consumption.
Without getting into the complexities of how sustainable the measure will go, it is important to underscore the disturbing context within which the operation is taking place. "Whereas we are stepping up salaries, we at the same time observe that we might not be able to eat rice", the Minister of Finance, Essimi Menye told journalist in Yaounde on Wednesday, April 23
while announcing the payment of the salary. That is the paradox, but this is not a calamity considering that not all the products are concerned with the crisis.
The new salary situation will entail extra spending of about CFA seven billion. To raise this money, Essimi Menye said, revenue sources such as taxes and customs duties must be well exploited but without necessarily instituting new levies. In addition, expenditure will have to be tightened. That is as far as mobilising the resources is concerned. Satisfying demand which depend on consumption is the main goal of the increase. Despite the relatively high inflation rate of 5.1 per cent in 2006, household expenditure increased by 3.7 per cent. On the whole household expenditure remains mostly geared toward food products and household goods which represented 45.6 per cent and 18.5 per cent respectively of total expenditure in 2006. In 2007, the same expenditure rose to 6.2 per cent. The share of the public consumption in GDP is estimated at about 9.8 per cent in 2008 up from 9.6 per cent in 2007.
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