logoBC
Yaoundé - 25 May 2020 -
Public management

Cameroon’s budget deficit expected to widen, tax burden expected to increase, under revised 2019 Finance Act

Cameroon’s budget deficit expected to widen, tax burden expected to increase, under revised 2019 Finance Act
  • Comments   -   Monday, 03 June 2019 19:35

(Business in Cameroon) - As announced earlier by Business in Cameroon, President Paul Biya issued a presidential order May 29, amending and supplementing certain provisions of the 2019 Finance Act.

The new Act provides for an increase by XAF361.5 billion in State Budget from XAF4,850.5 billion to XAF5,212 billion. Of the amount, XAF121.5 billion will come from domestic resources (including XAF56 billion in oil revenues and XAF24.5 billion in tax revenues) and XAF240 from loans (including XAF188 billion in external loans).

Since growth projections have not been revised upwards, the new 2019 budget is expected to slightly increase the tax burden and widen the budget deficit compared to previous budget forecasts. The challenge now is to be able to maintain deficit below 2% of GDP as foreseen by the ECF program with the IMF.

The adjusted 2019 Finance Act confirms that Cameroon is going into debt to repay its debt. Of an increase by XAF361.5 billion in budget, XAF240 billion are loans. Yet, XAF225.57 billion of the budget is expected to service the debt. This means the extra money borrowed will almost come out to pay off an existing debt.

Current spending forecasts drop XAF14.5 billion showing monies granted to certain ministries and other public institutions will be cut. But others will receive budget reallocations as well. Beneficiaries include the ministry of public works which receives additional XAF44.06 billion, the ministry of sports and civic education (XAF44.06 billion), and the ministry of water and energy (XAF23 billion).

Amount initially granted to the defense ministry is revised downwards, narrowed by XAF13 billion. But this does not necessarily mean that the total defense budget is cut. The joint expenditure forecasts (line 65) are up by more than XAF50 billion. This budget line has often been used to finance the war.

According to the International Monetary Fund (IMF), the budget adjustment intends to “take into account the increase in expected revenues” and “fully integrate the expenditure needs related to the upcoming elections and fuel subsidies, while maintaining the overall deficit at 2% of GDP.”

The revised budget also provides for the acceleration of the implementation of externally financed investment projects that are under way on the basis of a disbursement plan, according to an IMF statement that marks the fourth review of the three-year program Cameroon signed with the Bretton Woods Institution in June 2017.

Aboudi Ottou

medicis-sarl-to-invest-about-xaf6-bln-in-the-construction-of-a-haemodialysis-centre-in-cameroon
Medicis Sarl plans to invest XAF5.7 billion for the construction of a haemodialysis centre in Cameroon. To encourage and facilitate the realization of...
electronic-tolls-cameroon-finally-signs-a-construction-contract-with-razel-bec-egis-project-consortium
On 18 May 2020, the Cameroonian government finally signed a contract for the construction of the country's first 14 electronic toll booths with the...
no-microfinance-institution-operating-in-cameroon-published-their-tariff-conditions-in-h1-2019-as-the-regulation-requires-beac-study
The Bank of Central African States (Beac) recently published a study titled: “Publication des conditions tarifaires par les banques au Cameroun :...
cameroon-transit-fees-collected-on-chad-cameroon-pipeline-surged-by-24-32-to-xaf36-59-bln-in-2019-snh
In 2019, Cameroon generated XAF36.59 billion (+24.32%) of transit revenues on the Chad-Cameroon pipeline, according to figures recently published by the...

Mags frontpage


Business in Cameroon n87: May 2020

Roads, dams, fiber optics, markets... Cameroon’s big projects toward integration


«Central Africa is facing enormous challenges» - AfDB


Investir au Cameroun n97 Mai 2020

Routes, barrages, fibre optique, marchés… Les grands chantiers camerounais de l’intégration


« L’Afrique centrale est confrontée à d’énormes défis » (BAD)