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Cameroon Gains Access to IMF Funds to Boost Economic Growth

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Cameroon Gains Access to IMF Funds to Boost Economic Growth
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The International Monetary Fund (IMF) and Cameroonian authorities have reached a staff-level agreement on the seventh reviews of the Extended Credit Facility (ECF) and Extended Fund Facility (EFF), as well as on the second review of the Resilience and Sustainability Facility (RSF).

In July 2021, the IMF Executive Board approved the ECF/EFF arrangements for a total of SDR 483 million (US$689.5 million). To facilitate further policy implementation and reforms, a 12-month extension was approved in December 2023, along with an additional SDR 110.4 million (US$147.6 million).

Furthermore, the IMF Executive Board approved an 18-month RSF in January 2024 for SDR 138 million (US$183.4 million). Although economic recovery is underway, growth remains tepid. In 2023, Cameroon’s economy expanded by 2 percent, with forecasts suggesting an increase to 3.9 percent in 2024. Meanwhile, the average inflation rate over the past 12 months fell to 4.6 percent in November 2024 from 7.5 percent in the previous year.

IMF staff described the program’s performance as broadly satisfactory despite some delays in reforms. The authorities have been urged to finalize key measures related to governance in the extractive industry, improve the business climate, reform state-owned enterprises (SOEs), and enhance public financial management.

At the end of the discussions, Ms. Cemile Sancak, Mission Chief, remarked, “The IMF and Cameroonian authorities have reached a staff-level agreement on the seventh review of the ECF/EFF arrangements and the second review of the RSF arrangement. Subject to final approval by the IMF Executive Board, these reviews will facilitate disbursements of SDR 55.2 million (US$73.0 million) under the ECF/EFF and SDR 34.5 million (US$45.6 million) under the RSF.”

She noted that while Cameroon’s recovery continues, the growth rate remains subdued. “In 2023, the economy grew by 3.2 percent, and we expect an increase to 3.9 percent in 2024. Inflation has moderated further, with a 12-month average of 4.6 percent in November 2024 compared to 7.5 percent last year,” Ms. Sancak added.

Looking ahead, the fiscal outlook for 2024 appears positive. The target for the non-oil primary deficit is maintained at 2 percent of GDP, an improvement from 2.5 percent last year and 3.9 percent in 2022. During the first half of 2024, non-oil revenues grew by 5 percent, bolstered by robust performance in corporate and indirect taxes, while lower-than-expected expenditures were attributed to delays in investment projects—a recurring challenge that could hinder growth prospects.

Prospects remain broadly favorable, contingent on the continued implementation of reforms and favorable external conditions. The growth forecast for 2024 stands at around 4 percent, with a gradual increase to approximately 4.5 percent over the medium term. Inflation is anticipated to decline further to 4.4 percent by the end of 2024 and eventually reach the CEMAC convergence threshold of 3 percent by 2026.

The recently adopted 2025 budget, approved by Parliament in December, aligns with the objectives of Cameroon’s IMF-supported program and aims to anchor fiscal policy ahead of the Presidential elections later in 2025. A major priority remains the creation of fiscal space for both productive and social investments, alongside the advancement of anticorruption reforms.

Despite these positive developments, there have been delays in executing parts of the structural reform agenda. To meet the ambitious goals outlined in the national development strategy (SND30), the authorities have been encouraged to complete essential reforms, particularly in governance of the extractive industry, the business climate, SOE reform, and public financial management. Specifically, progress is needed on the long-pending SONARA restructuring plan and the revision of the 2013 law to streamline investment incentives.

Under the RSF, Cameroon is also intensifying its efforts to improve the climate policy framework. Ongoing work includes establishing guidelines to evaluate investment projects with climate change considerations, enhancing disaster preparedness by revising the Civil Protection law, and updating the mandate of the National Risk Observatory. Additionally, the IMF and other development partners are providing technical assistance to develop a national climate plan, a strategy for disaster risk financing, and to strengthen the governance and sustainability of the forestry sector.

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