Cameroon: IMF Staff Ends Mission to Cameroon On the 4th Review Under ECF

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End-of-Mission press releases include statements of IMF staff teams that convey preliminary findings after a visit to a country. The views expressed in this statement are those of the IMF staff and do not necessarily represent the views of the IMF's Executive Board. Based on the preliminary findings of this mission, staff will prepare a report that, subject to management approval, will be presented to the IMF's Executive Board for discussion and decision.

An International Monetary Fund (IMF) team, led by Ms. Corinne Deléchat, visited Yaoundé during April 23-May 3, 2019 to conduct discussions on the fourth review of the program supported by the Extended Credit Facility (ECF)[1] that was approved in June 2017.

At the conclusion of this visit, Ms. Deléchat issued the following statement:

"The IMF team reached staff-level agreement with the authorities on economic and financial policies that could support approval of the fourth review of their three-year program under the ECF. The IMF Executive Board could consider the fourth review in late June 2019. The completion of the fourth review would enable a fifth disbursement of SDR 55.2 million (about US$ 76.5 million).

"Overall economic growth is estimated to have reached 4 percent in 2018, from 3.5 percent in 2017, mostly owing to a lower contraction in the oil and gas sector than anticipated. Non-oil activity is estimated to have remained robust at 4.4 percent in 2018, driven by projects related to the African Cup of Nations (CAN), strong external demand for forestry products and expanding financial services. Inflation remains low but is trending up from 0.8 percent in 2017 to 2.3 percent in March 2019 (y/y) mainly owing to higher food prices and with strong regional variations. Budget execution in 2018 was broadly as envisaged under the program, but with stronger-than-envisaged revenue mobilization and higher expenditures, notably on public investment. In spite of ample financing, government net deposits at the BEAC declined by 0.5 percent of GDP as the authorities made large payments during the last quarter on unexecuted payment orders of previous years. Structural reforms are moving ahead, albeit with slower progress on already-delayed structural benchmarks in the financial sector.

"The authorities are reprofiling the 2019 budget to take into account higher projected revenue and fully incorporate spending needs related to the forthcoming elections and fuel subsidies, while keeping the overall deficit anchored at 2 percent of GDP. The revised budget also allows for accelerated implementation of ongoing foreign-financed investment projects based on a well-prioritized disbursement plan. In turn, higher external financing will allow the rebuilding of fiscal buffers and payment of the expenditure float accumulated at end-2018. The authorities continue to strengthen transparency and controls in budget implementation. Resort to exceptional spending procedures will decline and a decree establishing a budget calendar including a reduction of the complementary period to one month will be adopted. The laws transposing the four remaining CEMAC Directives on public financial management are being finalized."

"The medium-term outlook remains positive, with growth expected to gradually increase to 4.2 percent in 2019 owing to higher projected oil production. Finalization of the projects related to the 2021 CAN and coming on stream of large energy and transport infrastructure projects should boost medium-term growth to about 5-5 ½ percent of GDP. Fiscal consolidation over 2019-21, together with enhanced foreign exchange repatriation will support a continued rebuilding of BEAC reserves. Structural reforms to increase investment efficiency, reduce contingent liabilities of public enterprises and support private sector development will support the growth outlook going forward.

"The team met with Prime Minister Joseph Dion Ngute, Minister of State Secretary General at the Presidency Ferdinand Ngoh Ngoh, Minister of Finance Louis Paul Motaze, Minister of Economy, Planning, and Regional Development Alamine Ousmane Mey, BEAC Governor Mahamat Abbas Tolli, BEAC National Director Jean-Marie Mani, and other senior officials. The mission also met representatives of the diplomatic and donor communities."

"The team wishes to thank the Cameroonian authorities for their hospitality, cooperation, and the constructive dialogue."

[1] The ECF is a lending arrangement that provides sustained program engagement over the medium to long-term in case of protracted balance of payments problems. The arrangement for Cameroon in an amount equivalent to SDR 483 million (about US$ 666.2 million) was approved on June 26, 2017.

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