The executive board of the International Monetary Fund (IMF) has approved the disbursement of $76.1 million to Cameroon despite noting that programme implementations in 2019 had mixed results and faced challenges.
Cameroon has been hit by the blob in global oil and commodity prices, which have affected the six-member Central African Economic and Monetary Community (Cemac) region, while Yaoundé’s coffers have also been depleted by a war against terrorism with the threats posed by the Boko Haram jihadist group along its northern borders with Nigeria and a separatist movement in its Anglophone region threatening to tear the country apart.
The lender said the disbursement, after a fifth review of economic reforms under a three-year agreement known as the Extended Credit Facility (ECF) between the government and the institution, will bring the total amount disbursed under the arrangement to nearly $590 million.
It said further that the board also approved the authorities’ request for a waiver of nonobservance of the continuous performance criteria on the non-accumulation of new external payments arrears, based on the actions by the Cameroonian government deemed to correct previous failures.
Introduced in June 2017, the ECF worth $666.1 million aims at supporting the Cameroon’s efforts to restore external and fiscal sustainability and to lay the foundations “for a more sustainable, inclusive and private sector-led growth.”
The disbursements are generally approved after mid-term evaluation meetings held after completion of article IV consultations. The article requires that IMF sends a team to the country under review to discuss with policy makers and gather economic and financial information. The report of the team forms the basis of discussions of the board. That was the aim of a visit by a mission from the institution to Yaoundé last October.
"Cameroon’s performance under the ECF-supported programme has been mixed. All end-June 2019 performance criteria have been met but four out of the five indicative targets for end-June were missed. Structural reforms are advancing but with delays,” an IMF statement quoted Mitsuhiro Furusawa, the deputy managing director and acting chair following the approval of the disbursement.
“Cameroon is at high risk of debt distress. To safeguard debt sustainability, it is important to strictly adhere to the disbursement plan for contracted-but-undisbursed loans and to limit non-concessional borrowing to macrocritical projects for which concessional financing is not available,” the statement further quoted Mr Mitsuhiro.
The IMF boss advised authorities to broaden the non-oil revenue base, reduce discretionary tax exemptions, combat tax fraud and evasion, and enhance tax and customs administration.