Yaounde, Cameroon - The IMF has warned that Cameroonian financial stability can only be achieved through enhanced surveillance on and close monitoring of its financial institutions, according to an IMF mission which ended a working visit to Yaounde Thursday. Led by Mauro Mecagni, the mission visited Cameroon from 16 to 31 March, for consultations under the IMF Article IV for the year 2011. The IMF consults annually with each member government. Through these contacts, known as “Article IV Consultations,” the IMF attempts to assess each country’s economic health and to forestall future financial problems. The fund also operates the IMF Institute, a department that provides training in macroeconomic analysis and policy formulation for officials of member countries. During the visit, IMF officials met with the Cameroonian ministers of finance, economy, planning and regional planning, the Prime Minister, other top government officials and parliamentarians involved in budgeting.
The mission also met with the governor and the national director of the Bank of Central African States (BEAC), the private sector, the diplomatic community, representatives of unions and civil society organizations as well as development partners.
Discussions focused on recent economic and financial developments, the 2011 budget and its financing, the economic outlook for 2011 and over the medium term.
'The economic recovery in Cameroon is being consolidated on a broader basis in most areas, after the impact of the global financial crisis of 2008-09,' said Mecagni.
He said the economic growth rate was estimated at 3.2 per cent in 2010 against two per cent in 2009, thanks to the prompt support authorities provided to areas that were in distress and a stronger external demand for Cameroonian export products.
'Inflation has been contained because of the abundance of national crops, the reduction of taxation on imports of various foods and subsidizing petroleum products prices,' he added.
According to him, in 2010, the authorities made a significant effort to address the constraints resulting from weaknesses in public financial management in previous years.
'Cash management has helped to clear past domestic arrears, thus contributing to preserving financial stability. In addition, for the first time, the government issued bonds in local currency on the domestic market to finance priority infrastructure projects and has attracted local and foreign investors,' said Mecagni.
'However, the mobilization of non-oil revenue was below target, the financial performance of public investment has remained low and new outstanding balances to be paid on government commitments have been accumulated,' he said.
On the structural side, he stressed that the government had continued efforts to implement the tax and customs reforms and improve governance and transparency, while dialogue with the private sector had been strengthened through the Cameroon Business Forum.
'The viability of the 2011 budget depends on an increased mobilization of domestic financing, it could face pressure resulting from the accumulated balances payable in 2010, the budgetary costs of the measures recently adopted to manage commodity prices, the increase in civil service staff and subsidies required to support the policy of maintaining retail prices of petroleum products unchanged despite the rising cost of imported inputs,' he said.
According to the IMF mission, the financing of the budget will also depend on the success of the second bond debt from the state.
The mission recommended the incorporation of these risks in a revised budget framework, taking into account the need for careful implementation of the expenditures programme and the cash flow plan, a realistic level of funding that can be mobilized and the need to establish and implement a contingency plan if the proposed funding did not materialize.
The mission stressed the need to preserve financial stability through enhanced supervision of the financial institutions and close monitoring to ensure compliance regarding prudent management of funds.
To achieve this, the IMF said the Cameroonian government must work closely with the regional oversight agency to help build capacity and develop a coordinated strategy to fight against all potential vulnerabilities.
It also emphasized the need to clarify as quickly as possible the processing rules of sovereign bonds issued by states in the portfolio of banks.
The mission reiterated that the main challenge against the government in the medium term was to achieve a more inclusive and rapid level of economic growth in order to reduce unemployment and poverty.
It called on Yaounde to accelerate public investment programmes to address the issue of infrastructure deficits in areas of energy, water supply and transportation.
The mission urged the government to continue to improve governance, the business climate and the protection of creditors' rights.
It stressed the importance of seeking appropriate resources to finance public investment projects in order to preserve fiscal and debt sustainability and maintain macroeconomic stability.
The next mission of the IMF under Article IV for 2011 with Cameroon is scheduled for June.
Source: http://www.afriquejet.com
The mission also met with the governor and the national director of the Bank of Central African States (BEAC), the private sector, the diplomatic community, representatives of unions and civil society organizations as well as development partners.
Discussions focused on recent economic and financial developments, the 2011 budget and its financing, the economic outlook for 2011 and over the medium term.
'The economic recovery in Cameroon is being consolidated on a broader basis in most areas, after the impact of the global financial crisis of 2008-09,' said Mecagni.
He said the economic growth rate was estimated at 3.2 per cent in 2010 against two per cent in 2009, thanks to the prompt support authorities provided to areas that were in distress and a stronger external demand for Cameroonian export products.
'Inflation has been contained because of the abundance of national crops, the reduction of taxation on imports of various foods and subsidizing petroleum products prices,' he added.
According to him, in 2010, the authorities made a significant effort to address the constraints resulting from weaknesses in public financial management in previous years.
'Cash management has helped to clear past domestic arrears, thus contributing to preserving financial stability. In addition, for the first time, the government issued bonds in local currency on the domestic market to finance priority infrastructure projects and has attracted local and foreign investors,' said Mecagni.
'However, the mobilization of non-oil revenue was below target, the financial performance of public investment has remained low and new outstanding balances to be paid on government commitments have been accumulated,' he said.
On the structural side, he stressed that the government had continued efforts to implement the tax and customs reforms and improve governance and transparency, while dialogue with the private sector had been strengthened through the Cameroon Business Forum.
'The viability of the 2011 budget depends on an increased mobilization of domestic financing, it could face pressure resulting from the accumulated balances payable in 2010, the budgetary costs of the measures recently adopted to manage commodity prices, the increase in civil service staff and subsidies required to support the policy of maintaining retail prices of petroleum products unchanged despite the rising cost of imported inputs,' he said.
According to the IMF mission, the financing of the budget will also depend on the success of the second bond debt from the state.
The mission recommended the incorporation of these risks in a revised budget framework, taking into account the need for careful implementation of the expenditures programme and the cash flow plan, a realistic level of funding that can be mobilized and the need to establish and implement a contingency plan if the proposed funding did not materialize.
The mission stressed the need to preserve financial stability through enhanced supervision of the financial institutions and close monitoring to ensure compliance regarding prudent management of funds.
To achieve this, the IMF said the Cameroonian government must work closely with the regional oversight agency to help build capacity and develop a coordinated strategy to fight against all potential vulnerabilities.
It also emphasized the need to clarify as quickly as possible the processing rules of sovereign bonds issued by states in the portfolio of banks.
The mission reiterated that the main challenge against the government in the medium term was to achieve a more inclusive and rapid level of economic growth in order to reduce unemployment and poverty.
It called on Yaounde to accelerate public investment programmes to address the issue of infrastructure deficits in areas of energy, water supply and transportation.
The mission urged the government to continue to improve governance, the business climate and the protection of creditors' rights.
It stressed the importance of seeking appropriate resources to finance public investment projects in order to preserve fiscal and debt sustainability and maintain macroeconomic stability.
The next mission of the IMF under Article IV for 2011 with Cameroon is scheduled for June.
Source: http://www.afriquejet.com
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