By Yussuf Issa, Wednesday, June 28, 2017
Cameroon Journal, Yaoundé -The International Monetary Fund, IMF, has approved a three-year $666.2 million (nearly 390 billion FCFA) Extended Credit Facility, ECF, with Cameroon to support the country’s economic and financial reform programme.
IMF announced the loan approval Monday June 26, stating that the ECF-supported program will help Cameroon restore external and fiscal sustainability and lay the foundations for sustainable, private sector-led growth.
It would be recalled that Cameroon, has in the past, benefitted from similar IMF loans to help fix the country’s dwindling economic fortunes.
Following the Executive Board discussion on Cameroon, Mitsuhiro Furusawa, Deputy Managing Director and Acting Chair, said in a statement that, “Cameroon has been hit hard by the twin oil price and security shocks which have affected the CEMAC region since 2014 and led to a sharp drop in the pooled international reserves.”
“Having initially shown resilience owing to its greater diversification, the Cameroonian economy is now facing decelerating growth, declining fiscal and external buffers, and rapidly-rising public debt. The authorities’ Fund-supported program appropriately aims at addressing Cameroon’s large balance of payments need and restoring fiscal and external sustainability, while also contributing to the collective effort to rebuild regional reserves. The Cameroonian authorities’ leadership has been instrumental in spearheading the coordinated regional response to maintain the integrity of the CEMAC’s monetary arrangement.” He added.
“Addressing the rising fiscal and external imbalances requires a sustained and balanced fiscal consolidation based on expanding the non-oil revenue base, prioritizing public investment projects with demonstrated growth dividends, and rationalizing recurrent expenditure, while protecting social spending. The authorities’ fiscal program is supported by comprehensive structural reforms in revenue mobilization and public financial management to further boost non-oil revenue collection, improve spending efficiency, and contain fiscal risks” the IMF official said further.
The authorities in Cameroon, he disclosed, are committed to enhancing the country’s competitiveness and medium-term growth potential, in line with their strategy to reach emerging economy status by 2035.
The completion of large energy and public transport infrastructure projects, he said, will help boost private sector investment, job creation and further diversification, supported by complementary reforms to maintain financial stability, expand access to financial services and improve the business environment.
“The success of Cameroon’s program will also depend on the implementation of supportive policies and reforms by the regional institutions” he stated.
Cameroon’s reform strategy, a statement from the IMF said, is embedded in the coordinated regional approach outlined at the Yaounde heads of state summit in December 2016, during which Cameroonian authorities spearheaded a coordinated response to maintain regional external stability as well as the integrity of the monetary arrangement.
In that context, Cameroon’s ECF-supported program, they said, aims to restore the country’s fiscal and external sustainability and unlock job-rich, private sector-driven growth.
The program rests on three main pillars including frontloaded fiscal consolidation to strengthen fiscal and external buffers, while protecting social spending and social safety nets, structural fiscal reforms to expand the non-oil revenue base, improve the efficiency of public investment and the quality of budgetary system, and mitigate fiscal risks from contingent liabilities and reforms to accelerate private sector-led economic diversification and boost the resilience of the financial sector.
The fiscal objectives of the program, the IMF said, will be achieved through a better prioritization of public investment, focusing on infrastructure projects essential to further economic diversification, and a rationalization of the government’s spending on goods and services, while supporting an expansion of essential social expenditure and safety nets.