On November 17, 2023, the International Monetary Fund (IMF) announced it has reached a staff-level agreement with Cameroon to extend the existing three-year economic and financial program (July 2021 – July 2024) for 12 months until July 2025. This program, initiated in July 2021, aims to support Cameroon’s economic and financial reforms over the specified period. The reasons for this extension have not been unveiled by the IMF, but approval by the institution’s Board is awaited.
A reliable source reported that “Cameroon has chosen to remain under the IMF program to continue benefiting from budgetary support.” The end of this program would have led to a reduction in budgetary support. This was a cause for concern, particularly for the Minister of Finance, who stated in February that “Cameroon is not destined to be indefinitely under a program [with the IMF], so we should remember that management involves foresight. It is therefore up to all of us to find replacement resources for this budget support so that Cameroon can continue moving forward and continue to finance its development”. He was speaking at the inauguration of the new heads of the national sinking fund CAA and the Deposits and Consignments Fund (CDC).
However, this issue is partly resolved with the extension of the IMF program. This new agreement with the IMF would result in additional financing of 110.4 million Special Drawing Rights (SDRs), approximately $145.4 million, or over CFA87 billion (at the current value of the dollar), the institution said in a press release after the fifth review mission from October 19 to November 1, 2023. The extension is expected to pave the way for budgetary support from other donors.
A disbursement is expected in December
The authorities and the IMF have reached an agreement on economic and financial measures that could facilitate the approval of the fifth review of the program. The completion of this review by the IMF’s board of directors in December would lead to a disbursement of 55.2 million SDRs, approximately $72.7 million, or over FCFA43 billion. This would bring the total disbursements under the agreements to 427.8 million SDRs, approximately $566.3 million, or nearly CFA340 billion.
According to the IMF, Cameroon has made progress in recent months in preserving its economic stability in line with program objectives. “Fiscal performance in 2023 is broadly in line with the program… The Cameroonian economy has remained resilient in the face of a difficult external environment… Implementation of structural reforms is progressing,” says the IMF.
In this context, real GDP growth is expected to accelerate to 4.3% in 2024, following a 4% increase in 2023, according to the IMF. Meanwhile, headline 12-month inflation is expected to ease from 7.2% in 2023 to 5.9% in 2024. Additionally, the overall deficit should decrease from 1.1% in 2022 to 0.7% in 2023, while the primary deficit excluding oil should drop from 3.9% to 2.5% over the same period. The public debt-to-GDP ratio is expected to decrease from 45% at the end of 2022 to less than 42% at the end of 2023.
The Cameroonian government is expected to continue efforts to strengthen its public finances and enhance resilience. “The authorities are therefore committed to reducing the non-oil primary deficit further in 2024 to below 2 percent of GDP and the stock of public debt to 40 percent of GDP. The authorities have committed to incorporating adequate financing in the 2024 budget to cover substantial unpaid obligations from the execution of the 2023 budget and carried over to 2024,” IMF says.