(Business in Cameroon) - The Cameroon government announced an increase in fuel pump prices from February 1st. In an official statement, Magloire Séraphin Fouda, Secretary General of the Prime Minister's Office, said the decision was taken “on the very high instructions of the Head of State and after constructive discussions with social partners”.
A liter of premium fuel will now cost CFA730 at the gas stations, up CFA100 (+15%) from the previous CFA630. A liter of diesel will now cost CFA720, up CFA145 (+25.2) from the previous CFA575. The price of a liter of petrol sold to industrialists by the Société Camerounaise des Dépôts Pétroliers (SCDP) increases from CFA410.19 to CFA560.19, up CFA150 (36.5%). On the other hand, the price of kerosene, which is mainly consumed by the poor, remains stable at CFA350 per liter, as does that of domestic gas (CFA6,500 for a 12.5 kg cylinder). To "guarantee the purchasing power of consumers" despite these measures, which are aimed at "preserving fiscal balances in the face of soaring oil prices on the international market", the wages of public employees are being raised by 5.2%. The minimum wage in the country is also expected to rise from just over CFA38,000 to CFA41,875.
The accompanying measures decided by the government to face the current challenges are less significant than those taken in 2014 when fuel pump prices were last increased. Indeed, at that time, in addition to the 5% revaluation of the minimum wage and salaries, the government had cut some taxes by 50%. These include the final withholding tax, paid mainly by small traders and informal sector operators; the parking tax and the axle tax, paid respectively by operators in the public transport sector and truckers.
The absence of such measures this time could lead to an increase in urban and intercity transport fares in the country, and the acceleration of inflation, already projected at 6% by the IMF, double the 3% threshold tolerated in the CEMAC zone. Overall, because of the unbearable pressures posed by the gloomy international market marked by the rise in the prices of crude oil, finished petroleum products, and sea freight, Cameroon now has to increase fuel pump prices; for the first time in eight years.
Cameroonian authorities “recognized the need to reduce fuel subsidies to create fiscal space for productive investment and social spending and are committed to accelerating structural reforms,” the IMF said in a recent statement, pending the conclusion of the third review of the three-year economic and financial program for Cameroon. After the validation of this review by the Board of Directors, Cameroon expects the IMF to approve, by March 2023, the disbursement of CFA45 billion in budget support.
Written by Brice R. Mbodiam
Translated from French by Firmine AIZAN