- Cameroon still is experiencing solid growth and a low inflation rate. This is however "at risk" due to growing budget deficits and deteriorating control over government spending, according to a fresh review. Next year's Cameroonian budget, "dictated by the IMF," is to improve the situation.
A team of the International Monetary Fund (IMF) has just ended a two-week visit in Yaoundé, assessing recent economic developments in Cameroon. After a time of macroeconomic stability and balanced government budgets, "Cameroon's fiscal position deteriorated significantly in 2003-04," the IMF found.
Cameroon has experienced growth rates substantially larger than its population growth rate during the last years. While the IMF has yet to publish its projections of this year's real GDP growth, American government sources earlier this month set it at 4.6 percent. Last year's real GDP growth in Cameroon is estimated at 4.3 percent.
There was still "continued solid growth of Cameroon's economy amid low inflation," the IMF report confirmed. The lack of control of government spending however was now "putting at risk the macroeconomic stability that has been achieved in recent years." Grave slips had been observed by the IMF.
- In particular, budget execution and the financial position of public enterprises weakened, which has led to the accumulation of domestic arrears, the Fund said in a statement issued in Yaoundé today. "In the discussion [with the government], the team stressed the importance of strengthening budgetary and financial management performance in the public sector in the immediate period ahead," it added.
Furthermore, progress in structural and financial sector reforms had been mixed during this period, the review disclosed. Cameroonian authorities had pledged to reform and privatise public enterprises as part of the structural reform programme prescribed by the IMF.
Good intentions to reverse these slips however existed, the IMF team had noted. The government's proposed 2005 budget "is a first and important step to improve the use of public resources, foster economic activity, and increase the well-being of the population," the statement said.
While the IMF welcomed the proposed 2005 budget, it was strongly criticised by the opposition when tabled in parliament. The budget included a surprising tax hike that was not paralleled by increased salaries. According to the opposition, new taxes were not necessary if corruption among government officials had been rooted out.
Further, the budget proposal had been presented late, something newly appointed Finance Minister Polycarpe Abah Abah explained by "dictations" from the IMF. The Cameroonian Finance Minister reportedly told parliamentarians that the 2005 budget had been prepared by government and IMF officials together, to the great surprise of his listeners.
The IMF statement did not comment on transparency and corruption, an issue that most probably was discussed in the Fund's meetings with Prime Minister Ephraim Inoni and Finance Minister Abah Abah. Cameroon has repeatedly been listed as one of the world's most corrupt countries and the management of public enterprises and government budget is often questioned.
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