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Cameroon extends its ECF programme with the IMF by 3 months for a strong post-covid recovery

Cameroon extends its ECF programme with the IMF by 3 months for a strong post-covid recovery
  • Comments   -   Tuesday, 05 May 2020 09:19

(Business in Cameroon) - On May 4, 2020, the Executive Board of the International Monetary Fund (IMF) finally approved a 10-year interest-free loan of XAF135.56 billion for Cameroon. This loan was approved after two successive postponements (22 and 28 April 2020) of the review of the country’s case and it paves the way for Cameroon's access to the debt moratorium offered by G20 countries.

In addition to that support, the Bretton Woods institution “also approved the [Cameroonian] authorities’ request for an extension of the ECF arrangement, due to expire on June 25, 2020, to September 30, 2020, with a rephasing of access."

Given the sudden and pressing nature of the shocks, accommodative fiscal and monetary policies are warranted to mitigate the human and economic impact of the outbreak. However, the authorities remain committed to their reform agenda under the ECF arrangement. They plan to undertake adjustments to return to the fiscal consolidation path once the crisis abates to safeguard debt sustainability and ensure a strong recovery,” explained Mitsuhiro Furusawa, Deputy Managing Director and Acting Chair of the IMF.

On January 22, 2020, Cameroon received an additional envelope of XAF44 billion ($76.1 million) after the 5th review of Cameroon's three-year economic and financial programme (2017-2020) with the IMF, which is accompanied by the Extended Credit Facility (ECF). This new disbursement brought the amount already released to Cameroon under this programme to $590 million (about XAF344 billion).

Over XAF44 billion in play

According to the initial schedule, Cameroon should benefit from a final disbursement of over XAF44 billion from the IMF by the end of May 2020. This financing is however subjected to the positive conclusion of the 6th and final review of this three-year adjustment programme.

Considering the current economic situation, it is not sure the country will meet the initial objectives set by the programme. Hence the importance of that postponement and the rephasing of objectives.

By way of illustration, the programme required Cameroon to reduce its budget deficit to less than 2% in 2020. However, though the country has set a target of 2% in its 2020 finance bill, with the Covid-19 crisis, Cameroon expects its budget balance to deteriorate further.

Approved on June 26, 2017, the three-year programme with the IMF will enable Cameroon to benefit from overall budget support of $666.1 million (nearly XAF400 billion). The programme aims to support the country's efforts to restore external and fiscal sustainability and lay the foundations for more sustainable, inclusive, and private sector-led growth.

According to Cameroon's Finance Minister, Louis Paul Motaze, after its expiration in September 2020 (instead of June), this programme will be replaced by a new instrument that will focus on the fight against poverty in the country.  

Brice R. Mbodiam

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