5, November 2017
IMF team reached a staff level agreement with the authorities on policies that could support approval of the first review. Growth is decelerating, mostly due to weaker oil production.
The team and authorities agreed on the need to implement without delays measures to strengthen the financial sector, enhance the business environment to boost private sector investment and economic diversification, and achieve a more inclusive growth.
An International Monetary Fund (IMF) team, led by Ms. Corinne Deléchat, visited Yaoundé from October 24 to November 3, 2017 to conduct discussions for the first review of the program supported by an Extended Credit Facility (ECF) that was approved in June this year.
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 first review of their three-year program under the ECF. The IMF Executive Board is expected to consider the first review mid-December 2017. The completion of the first review would enable a second disbursement of SDR 82.8 million (about US$116.3 million).
“The country’s economic program has remained on track, despite a challenging backdrop. All quantitative performance criteria under the program for end-June 2017 have been met. In addition, all structural benchmarks through end-October have been implemented except for two, which have been modified. The authorities have also implemented measures to improve revenue mobilization, increase transparency of budget execution, enhance cash management and maintain financial sector stability.
“Growth is decelerating, mostly due to weaker oil production. Growth for 2016 has been revised downward slightly from an earlier estimate of 4.7 percent to 4.5 percent. For 2017, growth is projected at 3.7 percent, while inflation is expected to remain low, falling to 0.5 percent. The fiscal deficit should decrease as projected from 6.2 to 3.1 percent of GDP in 2017 despite a shortfall in oil revenue, which will be mostly offset by a reduction in current spending.
“The draft 2018 budget envisages a further reduction of the budget deficit to 2.3 percent of GDP, in line with the objectives of the ECF-supported program. To reach this target, the authorities will implement a set of measures to strengthen revenue mobilization by continuing to widen the tax base while continuing to rationalize and enhance the quality of public spending. In particular, the authorities intend to strictly prioritize public investment, focusing on current priority infrastructure and related projects, and projects with a high socio-economic impact.
“The team highlighted the importance of containing new borrowing, particularly on non-concessional terms, to preserve debt sustainability. The large stock of contracted but yet undisbursed debt is a symptom of remaining weaknesses in project preparation and implementation, amid an ambitious public investment program. The team encouraged the authorities to promptly implement the measures they have identified to reduce this backlog and ensure higher project execution rates going forward.
“The IMF team welcomed the reform momentum in public financial management and discussed key reforms that have been highlighted by the recent Public Expenditure and Financial Accountability (PEFA) analysis. In particular, the recent progress with the transposition of the six Directives on public finances harmonization in the Central African Economic and Monetary Community (CEMAC), the imposition of limits on the use of exceptional budget procedures and the preparation of a strategy to enhance the coverage of the single treasury account should help enhance the credibility and transparency of the budget. Furthermore, the team and the authorities agreed on the necessity to implement without delays measures to strengthen the financial sector, enhance the business environment to boost private sector investment and economic diversification, and achieve a more inclusive growth.
“The team met with Prime Minister Philémon Yang, Minister Secretary General at the Presidency Ferdinand Ngoh Ngoh, Minister of Finance Alamine Ousmane Mey, Minister of Economy, Planning, and Regional Development Louis Paul Motaze, BEAC National Director Jean-Marie Mani, and other senior officials and representatives of the diplomatic community, development partners and private sector.
“The team wishes to thank the Cameroonian authorities for their hospitality, cooperation, and the constructive dialogue.”