Cameroon-IMF: Historic, multidimensional cooperation

Since Cameroon joined the International Monetary Fund on July 10, 1963, cooperation with the financial institution has grown deeper and deeper almost reaching a point of no return. This relationship is particularly marked by a series of economic reform programmes, notably those that took off after the mid 1980s when the country experienced an economic decline.

These programmes aptly supported by both the IMF and the World Bank included cuts in public expenditure, structural adjustment, privatisation of some State owned corporations and companies and rescheduling of external debt. Prior to the mid 1980 malaise, Cameroon as a nation was developing relatively rapidly, notably from 1978 thanks to its oil wealth, agricultural diversity and well developed agro-industries.

All that was happening to the country’s economy was very much the concern of the IMF considering that Cameroon is one of its members. The glimmer of hope came up in the mid-1990s where growth was sustained at four to five per cent in a climate of relatively low inflation, as a result of the prudent monetary policies of the regional central bank. From 2003 the Cameroon economy grew more slowly, growth averaging 3.3 per cent.

This continued until 2007. The most significant period of cooperation and open expression of mutual concern between Cameroon and the IMF was in 1988 when reforms undertaken at the national level to redress the growing economic crises could not yield palpable results. And so in October of that year, Cameroon agreed to an IMF aid package worth 150 million dollars and accepted a structural adjustment programme (SAP) loan from the World Bank.

Cooperation between the country and IMF reached fever height when Cameroon was admitted in the Heavily Indebted Poor Countries (HIPC) Initiative. In October 2000, the Board of Executive Directors of IDA and the IMF agreed that Cameroon had met the requirements for reaching the decision point under the enhanced Heavily Indebted Poor Countries (HIPC) Initiative.

The amount of debt relief committed at the decision point was 1,260 million dollars in net present value (NPV) terms, calculated to bring the NPV of debt to the equivalent of 150 percent of exports on the basis of end-June 1999 data. At the same time, the Boards of IDA and IMF agreed to provide Cameroon with interim debt relief until Cameroon reached the floating completion point. Executive Directors determined that the completion point would be reached when Cameroon complies with the triggers as outlined in the decision point document.

These included: preparation of a full PRSP and satisfactory implementation for at least one year; maintenance of a stable macroeconomic environment; satisfactory use of the budgetary savings from the interim debt service relief; conclusion and satisfactory implementation of structural reforms supported by the Third Structural Adjustment Credit (SACIII); and satisfactory implementation of governance and anticorruption measures.

After observing that Cameroon had made considerable progress in the implementation of these conditions, the IMF declared Cameroon eligible for Completion point of the HIPC initiative in 2006. This qualified the country for a debt-relief of 1.3 billion dollars. Since then Cameroon and the IMF have been operating within the wavelength of regaining economic growth. The recent joint mission of the IMF/World Bank mission to Cameroon tells of the importance of monitoring the execution of IMF-driven policies as streamlined in the short- and medium-term economic outlook.

At the end of the evaluation visit, the mission voiced among others its concerns regarding the level of public debt, which is growing rapidly and which has been contracted on increasingly onerous terms at the same time recommending the adoption of a debt policy that is more oriented toward borrowing on more concessional terms.