(Business in Cameroon) - The International Monetary Fund recently published an analysis of the impact of rising fuel prices on the Cameroonian market. According to the document, the Cameroonian government will have to spend CFA712 billion to maintain pump prices in the country this year. This is more than double the amount initially planned for the year (CFA350 billion).
The situation suggests an increase in pump prices, which the IMF forecasts at 21% over the period. However, the actual increase could go beyond the IMF prediction since a 21% increase would mean a subsidy of CFA476 billion but the government is only providing CFA350 billion. Sources in the Ministry of Finance revealed that "the price increase will not be uniform for all petroleum products," with kerosene being used more by the poorest.
The government said it has taken steps to reduce subsidies based on a well-thought-out targeting plan. Thus, part of the fuel subsidy for car owners who do not use public transport will be reduced and the cost of road tax stickers will be increased. The cost has been increased from 35% to 100%, depending on the engine horsepower. However, unless the government has other measures to improve targeting, this should be largely insufficient. Because, all the measures to increase registration fees and stamp duties are expected to bring in only CFA15 billion in 2023, according to budget revenue forecasts. And yet, to increase prices by only 21%, the country would have to reduce the subsidy by CFA126 billion through targeting measures according to its forecasts.
Brice R. Mbodiam