businessincameroon.com

The Cameroonian government has just set up negotiations with the international institutions of Bretton Woods, towards a potential agreement which would result in a three-year economic program for the country.

In conformance with Article IV of the Fund for the year 2010, a joint mission of IMF / World Bank / BAD consultants stayed in Cameroon from March 18th to April 1st to start negotiations with Cameroonian authorities in order to sign the new three-year agreement. If the current negotiations are to be successful, this new agreement will be the fourth of its kind between Cameroon and the Bretton Woods' institutions and will cover the three-year period between 2010-2012

The preliminary talks for a new program supported by the FEC, were prompted by the last agreement supported by the FRPC which came into effect in December 2008. However, in February 2009 the Cameroonian government, through the Minister of Finance Mr. Essimi Menyé, announced a "change of direction" in relations between Cameroon and the IMF. At that time, the Cameroonian authorities clearly expressed their will to give up the IMF's guidance, because contrary to the last two decades when the economic policy of the country was almost defined by the international financial institutions of Bretton Woods, they would rather play the role of advisers. In this respect, instead of a three-year program, as was usually the case, a normal cycle of one year was suggested.

Change of direction
Less than a year after this announcement which had been generally welcomed by economic and financial analysts, the Cameroonian government seems to have revised its position, expressing a certain dependency towards the IMF and the World Bank. This is despite the structural policies of adjustment made compulsory for Cameroon by these institutions. The last two decades have affected the economic fabric of the country, leading Cameroon from the status of a country with intermediate income (PRI) to that of a heavily indebted poor Country (PPTE).

The difficulty faced by the Cameroonian authorities to be released from this predicament was all the more visible last year when Cameroon was forced to subscribe to a 70 billion CFA francs loan to face the exogenous shocks emanating from the international financial crisis.

However, according to the experts, this debt was not compulsory. This is because of internal mechanisms under a management system of stockholders' equity, that would have seen Cameroon avoid the weight of debt to its sponsors.

This position seems to be justified despite the country's important debt reductions, reaching more than 1000 billion CFA francs. In 2006, the outstanding discounted bills of the national debt of Cameroon exceeded more than 1500 billion CFA francs. "This change of direction from the government pinpoints its difficulties to adopt an autonomous and reliable economic policy likely to booster the development of the country ", experts assert.

Contradictions
Nevertheless, the Bretton Woods' institutions, in a common position outlined in the last IMF's report at the end of 2009, gave full points to the state economy, stating in particular that: "the analysis of viability of debt of the low-income countries (AVD) made collectively by the IMF and the World Bank shows that the risk of excessive debt of Cameroon remains low. Every ratio of foreign debt remains deeply below the thresholds connected to the implemented policies and those registered in the reference scenario and in the tests of resistance. The indicators of the national debt also remain at comfortable levels. The intensification of practices of debt management, the improvement of mobilization of non-oil profits and the extension of the base of exports remain expedient in consideration of the predictable decline of long-term oil profits. "
According to the government, this agreement currently under discussion with sponsors emphasizes the development of the energy sector, the construction of the harbor and road facilities and the intensification of the agricultural industry. It is also in line with the Cameroonian authorities' decision to turn their nation into an emerging country within 25 years. However, economic analysts are worried by the option taken by the government regarding the negotiations that must result in a new three-year program. Still, the government considers it still a possibility to contract a loan equivalent to 30 % of the country's GDP, that is about 3000 billion CFA francs.