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Tchiroma justifies Cameroon’s FCFA 400 billion loan from IMF

4 August 2017 No Comment

By Theodore M. Ndze
The Minister of Communication, Issa Tchiroma Bakary says the recent FCFA 400 billion procurement by the Cameroon government from the International Monetary Fund, IMF on June 26, 2017 will allow the country to draw up to 175% of its own reserves whose ceiling stand today at 275 million of Special Drawing Rights.
Speaking at a press conference on Cameroon’s Economic and Financial Programme with the IMF supported by the Extended Credit Facility (ECF) which is the main tool that the IMF has at its disposal to provide support in the mid-term to countries facing macroeconomic imbalances, Tchiroma said as a general rule, the Extended Credit Facility is the main tool that the IMF has at its disposal to provide support in the mid-term to countries facing macroeconomic imbalances. He said the agreement with the IMF for this Extended Credit Facility paves the way for additional bilateral funding.
He disclosed that FCFA 887 billion are expected in addition to the funding of the IMF, from technical and financial partners, according to the following distribution: FCFA 377 billion from the African Development Bank, FCFA 247 billion from the World Bank, FCFA 197 billion from France through the French Development Agency and FCFA 66 billion from the European Union.
The Minister further noted that for 2017 alone, FCFA 510 billion will be put at the disposal of Cameroon within the framework of the key reforms in some sectors considered critical to the economy.
The interest rate for the repayment of these funds is 0% with a deferred depreciation period of five and a half years and a maximum maturity period of ten years.
“It is worth indicating that the three-year Programme thus supported by the ECF and the attached additional financing scheme is based on our own growth strategy as determined by the GESP,” he stated adding that it also aims to achieve the social goals set by the Government.
He recalled that on the initiative of the President of the Republic of Cameroon, Paul BIYA, CEMAC Heads of State met on December 23, 2016 in an extraordinary summit expanded to the Director General of the IMF and the French Minister for the Economy and Finance, to discuss on the economic and monetary situation of the sub region. At end of their working session, the Heads of State then adopted 21 resolutions including Resolution No. 13, inviting CEMAC countries to engage in negotiations with the IMF to better structure their economic recovery efforts, against the backdrop of the shock which resulted from the drastic decline in oil prices on the world market.
As a matter of fact, the economic situation of CEMAC member countries had deteriorated significantly since 2014, bringing down the average growth rate of the sub-region from 2.1% in 2015 to less than 0.7% in 2016, with a public debt representing 44.6% of the Gross Domestic Product in 2016, as against 34.9% in 2015.
With regard to reserves, they had moved from 4 400 billion CFA Francs in 2015 to 1 900 billion CFA Francs, that is to say, from two to six months of imports in 2016.
As regards the current external balance, it remained negative until 2016, below 10.2%.
So, it was therefore necessary for Heads of State to devise solutions to address the crisis and create conditions for a sound and sustainable recovery for their respective economies, with the support of the IMF, by means of both national and regional efforts.
The Government’s spokesman said under the leadership of President Paul, Cameroon has contributed to leading a coordinated regional response to maintain the integrity of the monetary arrangement of the CEMAC, in other words, to preserve the economies of the community from an economic downturn that would have unprecedented consequences.
Within the CEMAC zone, the Cameroonian economy is particularly resilient, due to its greater diversification, the reliability of its industrial fabric and the dynamism of its domestic market.
However, being part of an integrated community, Cameroon began to suffer from the negative impact of the less resilient economies in the sub-region and the subsequent security-related shocks. The macroeconomic consequences were immediate, resulting in a sharp decline in international reserves of the CEMAC zone in general and then finally to those of Cameroon specifically.
To stop this downward trend, the country developed a three-year economic and financial plan to restore the stability and external viability of the economy, while improving its competitiveness, strengthening the resilience of the financial sector and promoting a vigorous and sustainable growth.

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