Current growth level ‘insufficient’ to attain 2035 vision - IMF

The International Monetary Fund (IMF) has remarked that Cameroon’s increased public investment spending has accelerated growth, but remarked that the Biya administration needs to implement higher quality policies and improve governance to promote the development “because the current level of growth, in itself, is not sufficient to accelerate poverty reduction and achieve upper-middle-income country status by 2035.”

The observation is contained in a recent report published by the Fund after a team visited Cameroon. The report notes that a broad array of reforms to the business environment needs to be initiated, because its credibility will take time to establish. It believes the private sector needs to take over as the main engine of growth by the time the public investment program is scaled back.

The various reform areas cited by the Doing Business indicators point to a direct link between improvements in revenue policy, public financial management and private sector activity; they include “trading across borders” and “paying taxes”.

“A combination of reforms are meant to enhance the cost-effectiveness of public expenditure and the need to foster private sector response has become critical. Regional security risks add an element of urgency to reforms to make the economy more resilient and to rekindle regional integration,” the report stated.

Risks to the 2014 budget need to be addressed without delay to avoid further accumulation of domestic arrears that undermine fiscal sustainability, the Fund cautioned, adding that non-oil revenue performance will remain tepid unless unwarranted exemptions are removed, the tax base is broadened, and tax administration is made more effective.

According to IMF, substantial risks undermine Cameroon’s development prospects: Regional insecurity has deteriorated markedly over the past year, fuel subsidies and a weak revenue effort continue to undermine a more pro-poor and pro-growth budget, and limited progress in improving the business environment stymies the coming of the formal private sector.