Statement at the Conclusion of an IMF Mission to Cameroon

Press Release No. 11/106

March 31, 2011

An International Monetary Fund (IMF) mission led by Mr. Mauro Mecagni visited
Cameroon during March 16–31, 2011 in order to conduct the 2011 Article IV
Consultation. The mission worked closely with the Minister of Finance and the Minister
of Economy, Planning, and Regional Development. It met with Prime Minister Philemon
Yang, State Minister, Secretary General at the Presidency, Laurent Esso, other several
ministers, members of the Committee of Finance and Budget and that of Economic
Affairs of the National Assembly, the Governor and the National Director of the BEAC,
senior officials, the business and diplomatic communities, representatives of labor
unions and civil society organizations, and development partners. The discussions
focused on recent economic and financial developments, the 2011 budget and its
financing, the outlook for 2011 and the medium term prospects. At the end of the
mission, Mr. Mecagni issued the following statement:

“The Cameroonian economy is consolidating a broad-based recovery following the

impact of the global financial crisis in 2008-09. Economic growth is estimated at 3.2
percent in 2010, up from 2 percent in 2009, owing to the authorities’ earlier support for
sectors in distress and stronger external demand for Cameroon’s export products.
Inflation has remained contained to date, because of robust local harvests, lower import
tariffs on several food items, and government subsidies on fuel products.

“In 2010, the authorities made a significant effort to deal with the legacy of weak public
finance management in previous years. Treasury management addressed the clearing
of past domestic arrears, thereby contributing to preserve financial stability. In addition,
for the first time the government issued domestic currency bonds in the local market, to
finance priority infrastructural projects, and was successful in attracting both domestic
and foreign investors’ interest. However, non-oil revenue mobilization was behind
targets, public investment execution remained low, and new unsettled government
obligations were accumulated. On the structural front, efforts to implement fiscal and
customs reforms and improve governance and transparency have continued, and the
dialogue with the private sector was enhanced through the Cameroon Business Forum”.

“With regard to the 2011 budget, its viability depends on mobilizing significant domestic
financing. The budget could come under pressure from (i) the carryover of unsettled
payment obligations accumulated in 2010; (ii) the fiscal costs of recently adopted
measures to administer basic good prices and expand the civil service; and (iii) the
subsidies required to support the policy to keep retail fuel prices unchanged despite the
increasing cost of imported inputs. The financing of the budget will also depend on the
success of the planned second issuance of government bonds. The mission
recommended incorporating these risks in a revised budget framework, taking into
account the need for prudent expenditure execution and treasury plans; the financing
that can realistically be mobilized; and the need for a contingent plan in case financing
does not materialize.

“The mission emphasized the importance of preserving financial stability through

strengthened supervision of financial institutions and close monitoring of compliance
with prudential regulations. In this context, it encouraged the authorities to work with the
regional supervisor to help reinforce its capacity, and to define a coordinated strategy to
address any emerging vulnerabilities, while minimizing costs for public finances. It also
highlighted the need to clarify as quickly as possible the regulatory treatment of
sovereign bonds in bank portfolios.

“The mission concurred with the authorities that the key medium-term challenge is to
achieve faster and more inclusive economic growth, in order to reduce unemployment
and poverty. In this regard, there is widespread agreement, in the private sector and in
the government, that the Cameroonian economy has much higher growth potential, that
is currently not being translated into concrete business and employment opportunities.
The mission encouraged the authorities to (i) step up the implementation of their Growth
and Employment Strategy; (ii) accelerate public investment programs to address
infrastructural gaps in energy, water supply and transportation that currently constrain
economic development and poverty reduction prospects; (iii) continue to improve
governance, the business climate, and creditor rights, thereby contributing to further
deepen the role of the financial sector. The mission underscored the importance of
continuing to seek appropriate resources to finance public investment projects in a way
that would help preserve fiscal and debt sustainability and maintain economic stability”.

“It is expected that the IMF’s Executive Board will discuss the 2011 Article IV
Consultation with Cameroon in June 2011. The mission wishes to thank the authorities
for their hospitality, the constructive discussions, and the excellent cooperation during
the mission.”

IMF EXTERNAL RELATIONS DEPARTMENT

Public Affairs Media Relations

Phone: 202-623-7300 Phone: 202-623-7100

Fax: 202-623-6278 Fax: 202-623-6772