Low oil production minimised Cameroon’s economic growth in 2017, says IMF

Corinne DelechatCorinne Deléchat is the division chief in IMF’s African department. (Image source: International Monetary Fund/Flickr)Overall economic growth in Cameroon decelerated to 3.2 per cent in 2017, due to a steep decline in oil production despite the gradual rebound in international prices, said IMF’s Corinne Deléchat after concluding visit to Yaoundé from 27 April to 14 May 2018

IMF’s team, led by Corinne Deléchat, visited Yaoundé to conduct discussions on the IMF’s Article IV consultation and the second review of the programme supported by the extended credit facility (ECF) that was approved in June 2017.

“The tense security environment in parts of the country further contributed to the slowdown in economic activity. Inflation remained muted below one per cent per annum. Fiscal consolidation was implemented at a slower pace than envisaged under the programme despite revenue mobilisation exceeding the programme target, owing to a substantial acceleration of spending at the end of the year. As a result, the 2017 overall fiscal deficit was substantially higher than targeted under the programme. However, good progress continued to be made on structural reforms.”

Deléchat said, “The IMF team reached staff-level agreement with the authorities on economic and financial policies that could support approval of the second review of their three-year programme under the ECF. The IMF Executive Board could consider the second review in June-July 2018. The completion of the second review would enable a third disbursement of US$78.8mn.”

“The macroeconomic outlook for 2018 remains positive. Growth is expected to pick up and reach up to four per cent, buoyed by new gas production, construction activities for the 2019 African Cup of Nations and improved energy supply,” Deléchat noted.

“The revised budget projects a slightly higher deficit at 2.6 per cent of GDP compared to the 2.3 per cent of GDP initial objective under the programme. In addition, the authorities are putting in place needed measures to strengthen expenditure controls and ensure transparent and efficient implementation of the budget, including by strictly limiting exceptional spending procedures and accelerating implementation of national laws transposing key CEMAC Directives on public financial management.”

“Reducing fiscal risks is of paramount importance. This requires adequately managing the link between the financial and the public sectors and addressing contingent liabilities from state-owned enterprises.”

“Protecting the poor and vulnerable is essential and the update of the national social protection strategy, which expands safety nets with support from international development partners, is welcome.”

IMF’s team stressed the importance of expanding the tax base to reach Cameroon’s tax potential and reduce reliance on debt resources to fulfil the government’s ambitious infrastructure development plans.

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