IMF Executive Board Concludes 2013 Article IV Consultation with Cameroon

Public Information Notice (PIN) No. 13/74 July 1, 2013

Public Information Notices (PINs) form part of the IMF's efforts to promote transparency of the IMF's views and analysis of economic developments and policies. With the consent of the country (or countries) concerned, PINs are issued after Executive Board discussions of Article IV consultations with member countries, of its surveillance of developments at the regional level, of post-program monitoring, and of ex post assessments of member countries with longer-term program engagements. PINs are also issued after Executive Board discussions of general policy matters, unless otherwise decided by the Executive Board in a particular case. On June 26, 2013, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Cameroon.1 Background The economic recovery strengthened in 2012, with growth reaching 4.4 percent (compared to 4.2 percent in 2011), reflecting an increase in the value of oil exports. Average inflation moderated to 2.4 percent (from 2.9 percent in 2011), helped by stable food prices. The current account deficit (including grants) widened from 2.9 percent of gross domestic product (GDP) in 2011 to 3.7 percent of GDP in 2012 following a decrease in net income owing to higher profit repatriation by local subsidiaries of international companies. Although Cameroon has had robust growth in the past few years, there has been little growth in per capita income, despite a relatively diversified and well-endowed economy. The fiscal situation eased in 2012. Non-oil revenue was higher than expected, mostly because of a stronger yield of the corporate income tax. Oil revenue increased slightly, as the dip in international oil prices was compensated by higher production. On the expenditure side, budget execution was close in nominal terms to that of the year before, and thus represented a contraction of expenditure in terms of GDP. As a result, the overall deficit (including grants) on a cash basis narrowed from 3.6 percent of GDP in 2011 to 2.0 percent of GDP in 2012. The banking system has stabilized, but remains a cause for concern. Two of the five commercial banks in financial distress appear to be in the process of re-establishing their financial soundness; but the other three show few signs of progress. Moreover, commercial banks remain exposed to excessive concentration in bank credit, payment difficulties of the national oil refinery, and weaknesses in the framework for dealing with troubled banks. Cameroons debt burden remains low, thanks in part to debt relief under the Heavily Indebted Poor Countries (HIPC) and Multilateral Debt Relief (MDR) Initiatives. However, external financing in 2012 increasingly relied on nonconcessional borrowing. On current trends, the updated debt analysis points to a deterioration of debt sustainability indicators

Cameroon: Selected Economic and Financial Indicators, 201114 2011 Act. 2012 Est. 2013 Proj. 2014 Proj.

(Annual percentage change, unless otherwise indicated) National income and prices GDP at constant prices Oil GDP at constant prices Non-oil GDP at constant prices GDP deflator Consumer prices (average) External trade Export volume Of which: non-oil sector Import volume Terms of trade ("-" is a deterioration) Money and credit Net domestic assets1 Net credit to the public sector1 Credit to the private sector Broad money (M2) 18.0 6.0 28.3 10.6 4.6 4.3 2.6 1.4 6.2 1.5 8.5 5.3 7.8 1.4 10.9 7.3 -4.4 -3.5 15.6 10.8 0.1 -1.5 1.0 1.4 8.9 7.4 7.8 -2.0 7.7 6.6 9.0 -0.4 4.1 -7.3 4.6 3.7 2.9 4.4 3.5 4.5 2.3 2.4 4.8 15.2 4.4 2.0 2.5 5.0 7.4 4.9 2.2 2.5

(Percent of GDP, unless otherwise indicated) Central government operations Total revenue (excluding grants) 18.2 18.4 19.4 19.4

Non-oil revenue (percent of non-oil GDP) Total expenditure Overall fiscal balance (cash basis) Excluding grants Including grants Non-oil primary balance (percent of non-oil GDP) External sector Current account balance (including grants) Imputed reserves (percent of broad money) Public debt Total External

14.1

14.3

15.5

15.5

21.6

20

23.5

23.9

-4.1 -3.6 -8.6

-2.5 -2 -6.7

-6.2 -5.8 -9.2

-4.6 -4.3 -9.5

-2.9

-3.7

-3.7

-3.7

52.9

53.7

50.0

46.2

13.4 7.3

15.9 9.0

19.2 9.7

22.5 11.1

Sources: Cameroonian authorities; and IMF staff estimates and projections.

1

Percent of broad money at the beginning of the period.

Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country's economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board. At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country's authorities. An explanation of any qualifiers used in summing up can be found here: http://www.imf.org/external/np/sec/misc/qualifiers.htm.