The International Monetary Fund (IMF) announced on July 25 that its Board of Directors has validated the second review of agreements with Cameroon, under the Extended Credit Facility (ECF) and the Extended Credit Mechanism (MEDC). And this, within the framework of the three-year agreements approved on July 29, 2021, put in place to support the country’s economic and financial reform program, amounting to 262.2 million special drawing rights (SDR), approximately 346, $1 million.
At the end of the IMF’s second review, Cameroon will benefit from disbursements of 72.9 million dollars from the institution. In the In retail, 18.4 million Special Drawing Rights (SDRs; approximately $24.3 million) under the ECF and 36.8 million SDRs (approximately $48.6 million) under the MEDC will be disbursed , despite the overall results of the funding program being deemed “mixed”. An assessment similar to the conclusions of the first review in February which, despite “generally satisfactory” macroeconomic performance, highlighted progress deemed “slow” in terms of structural reforms.
3.8% growth in 2022
“Cameroon’s results under the program remain on target and structural reforms are progressing, although delays are observed in some key areas,” Kenji Okamura, Managing Director, said after the board meeting. Deputy and Acting President of the Fund. The latter stresses the need for “effective implementation” of reforms strengthening transparency, governance and the anti-corruption framework in order to continue to obtain funding. “The recovery has been subject to heightened uncertainty given inflationary pressures, low immunization rates and tighter financial conditions. he adds.
Why the IMF was slow to grant new support to Cameroon
Published on February 23, the day before the start of the Russian invasion of Ukraine, the IMF’s first review forecast a sharp increase in the country’s growth (+3.1% in 2021), testifying great resilience of the Cameroonian economy supported by a strong recovery in the primary and tertiary sectors. A performance achieved after a year 2020 marked by Covid-19, growth at the time was only 0.5%. Similarly, growth projections were promising: 4.5% in 2022 and 4.8% from 2023. But the war in Ukraine and its fallout – high global inflation on food and fuel, hardening of financial conditions – turned everything upside down.
Although the IMF ensures that the growth outlook remains positive, it is still marked by “great uncertainties”. Thus, in 2022, real GDP growth should amount to 3.8%, or -0.7 points compared to the first program reviews. Inflation, for its part, is expected to increase to 4.6% in 2022 but should remain below 3% in the medium term. Despite this pressure on prices, the institution nevertheless specifies that Cameroon could take advantage of “new possibilities relating to oil and gas”, with projections estimated at +2.9% on oil revenues in 2022, as well as the completion of large hydroelectric plants. The authorities’ “solid” record on the implementation of macroeconomic programs also weighed in the board’s decision to approve the release of this news envelope.