The International Monetary Fund (IMF) has approved a three-year financing arrangement worth nearly $700 million with Cameroon, despite calls to halt the disbursement over misuse of funds.
The aid is to help the central African country recover from effects of the Covid-19 pandemic and pursue reforms.
The IMF said Thursday that its executive board had approved $689.5 million under the Extended Credit Facility (ECF) and the Extended Fund Facility (EFF), with an immediate disbursement of about US$ 177.2 million as budget support.
“Cameroon faces significant development challenges heightened by the pandemic. An upsurge in Covid-19 cases since January has raised concerns about growth prospects and the external and fiscal positions,” IMF said in a statement on its website.
The new loan was approved despite calls by groups for it to be deferred until Cameroon offers clarity on how a recent disbursement of $326 million (FCFA 180 billion) from Bretton Woods,, for use in fighting Covid-19, was spent.
An audit by the Supreme Court of Cameroon revealed massive corruption and mismanagement of $326 million (FCFA 180 billion) in IMF funds to fight against the pandemic in the period up to December 30.
The preliminary investigation by the audit bench of the court indicted several government officials of corruption, wasteful spending, improper accounting, irregular procurements and allowances, conflict of interest and embezzlement of the cash.
Since then, activists have been calling on Bretton Woods to halt the new loan.
In a letter to IMF Managing Director Kristalina Georgieva, while the new deal was being negotiated in June, some 21 female Cameroonian activists and opposition members demanded that the IMF stop the new disbursement until the government shows proof of transparent management of funds.
The activists’ call was echoed by Human Rights Watch (HRW), which said IMF should ensure the new loan is used to meet its human rights obligations, not lost to corruption.
“When badly-needed aid is being squandered or stolen, it would be irresponsible for the IMF to approve another loan without safeguards to ensure the money goes where it is intended,” Sarah Saadoun, a senior business and human rights researcher at HRW said earlier.
Announcing the disbursement, the IMF noted that a “steadfast commitment to strengthen transparency and good governance, and reduce corruption risks, will be crucial.”