November 13, 2018

• The IMF team has reached staff-level agreement with the authorities on policies that could support Executive Board’s approval of the third review.
• The authorities are taking strong measures to meet end-December 2018 program quantitative targets by enhancing revenue mobilization, re-prioritizing domestically financed investment and controlling current spending.
• The mission agreed with the authorities on a fiscal framework for 2019 consistent with program objectives as well as on a set of measures to contain public debt, strengthen public financial management, and address key obstacles to growth.

An International Monetary Fund (IMF) team, led by Ms. Corinne Deléchat, visited Yaoundé during November 5-13, 2018 to conduct discussions on the third review of the program supported by the Extended Credit Facility (ECF) that was approved in June 2017 .

At the end 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 third review of their three-year program under the ECF. The IMF Executive Board could consider the third review in mid-December 2018.

“Overall economic growth is projected to reach 3.8 percent in 2018, from 3.5 percent in 2017. This slight recovery in economic growth is mainly driven by construction activity related to public infrastructure projects and the 2019 Africa Cup of Nations (CAN). Medium-term prospects remain positive, with growth expected to improve gradually to 4.4 percent in 2019. However, the outlook entails significant risks from heightened global uncertainty, insufficient adjustment at the regional level, and continued insecurity in the anglophone regions.

“Budget execution at end-September 2018 was broadly as envisaged under the program despite slightly lower-than-projected non-oil revenue mobilization and good progress continued to be made on structural reforms.

“The authorities identified revenue and spending measures to ensure that the end-2018 overall fiscal deficit target can be met. They committed to enhance non-oil revenue collection, re-prioritize domestically financed public investment to offset the higher-than-expected disbursements on foreign financed investment, and tighten control of current spending while protecting social sectors.

“The mission highlighted the importance of presenting to the National Assembly a draft budget law for 2019 that is in line with the objectives of the ECF-supported program and includes strong measures to boost non-oil revenue mobilization through an expansion of the tax base, tightens current expenditures, prioritizes capital spending, and limits exceptional budget procedures.

“The mission took note of the government’s efforts to preserve public debt sustainability, including by limiting non-concessional borrowing. The team welcomed the authorities’ commitment to adopt, in the coming days, a plan to validate and reduce balances on non-performing contracted-but-undisbursed loans. Ongoing efforts to strengthen monitoring of state-owned enterprises’ liabilities would help contain contingent liabilities. The mission however highlighted the risks posed by administered utility prices on the financial viability of key public enterprises and encouraged the authorities to liberalize these prices.

“Structural reforms should continue to strengthen public financial management and address key obstacles to boosting the private sector’s contribution to growth. This will require to effectively implement the new tax measures included in the 2019 draft budget law, accelerating the implementation of the reform agenda on expenditure management and taking actions to improve the business climate, governance, and financial inclusion.

“The mission welcomed the authorities’ commitment to implementing policies consistent with the stability of the region’s monetary arrangement, which requires in particular a recovery of BEAC’s foreign reserves. The authorities indicated that, to this end, they will support regional institutions’ efforts to strengthen compliance with foreign exchange regulations, notably regarding repatriation of export earnings including oil export proceeds.

“The team met with Prime Minister Philemon Yang, State Minister of Justice Laurent Esso, Minister 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 Benoit 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.”