40368 THE INTERNATIONALDEVELOPMENT ASSOCIATIONAND THE INTERNATIONALMONETARYFUND CAMEROON Decision Point Documentfor the EnhancedHeavily Indebted Poor Countries (HIPC) Initiative Prepared by the Staffs of the World Bank and the International MonetaryFund' September 15, 2000 Contents Page 1. Introduction .................................................... 5 II. Medium-TermPolicy Challenges and Outlook.................................................. 8 A. Overall Policy Framework.................................................... 8 B. Raising Rural Incomesand Living Standards .................................................... 9 C. Human Development................................................... 11 D. Institutions,Govemance, and Anticorruption ................................................... 15 III. Debt SustainabilityAnalysis................................................... 18 IV. Profile of Assistance and Potential Utilizationof HIPC Initiative Resources. .. 20 A. Assistance Under the Enhanced Initiative ................................................... 20 B. Key Poverty AlleviationActivities to Benefit from HIPC Assistance.................22 C. Monitoringand ControlMechanisms................................................... 24 V. The Floating CompletionPoint .. 24 VII. Issues for Discussion.26 'Approved by Kemal Dervis and Callisto Madavo (IDA), Masood Ahmed and Paul A. Acquah (IMF). -2 - Figures 1. Composition of External Debt, End-June 1999...................................................... 27 2. NPV of Debt-to-Export Ratios After Rescheduling, 1999/00-2018/19 .......................28 3. Key Debt Indicators, 1999/00-2018/19..................................................... 29 Tables 1. SelectedEconomic and Financial Indicators, 1996/97-2001/02 .30 2. Main Assumptions on MacroeconomicFramework,1998/99-2018/1 .31 3. Nominal Stocks and Net Present Value of Debt at Decision Point by Creditor Groups .32 4. HIPC Initiative Alternative Assistance Levels Under a Proportional Burden Sharing Approach.33 5. Discount Rate and ExchaLnge Rate Assumptions.34 6. Net Present Value of ExternalDebt after Rescheduling,1998/99-2018/19 .35 7. External Debt Service Alter Rescheduling, 1999/2000, 1999/00-2018/19 .36 8. Key External Debt Indicators,Before and After HIPC Initiative Assistance, 1998/99-2018/19 .37 9 Possible Delivery of IMF Assistance Under the HIPC Initiative, 2000/01-2009/19.38 10. Possible Delivery of WorldBank Assistance Under the HIPC Initiative, 1999/2000-2018/19 .39 11. Central Government Operations, 1999/2000-2002/03 .40 12. HIPC Initiative: Status of Country Cases ConsideredUnder the Initiative, July 24, 2000.41 Boxes 1. Key Reforms and Objectivesto be Monitored Before Decision Point .7 2. Status of Key Health Sector Reforms and Objectives Before Decision Point.13 3. Revised Short-term and Medium-termMilestones for Health.14 4. Actions Taken to Improve Governance .16 5. Main Factors Explaining Differencesin Debt Data Compared to those Presented in Preliminary HIPC Initiative Document .18 6. Main Assumptions in the Debt SustainabilityAnalysis (DSA).19 7. Key Reforms and ObjectivesTo Be Achieved Before Completion Point ................................. 25 Annexes I. Monitoring System for Poverty Alleviation Targets........................................ 42 II. External Debt ManagementPractices An Update.44 - 3- Cameroon: List of Acronymsand Abbreviations Acronym/Abbreviation AFD AgenceFrancaise de Developpement AfDB AfricanDevelopment Bank BADEA Banque Arabede Developpement Economique de l'Afrique BDEAC Banque de Developpement des Etatsde l'AfriqueCentrale BICEC BanqueInternationale pourle Creditet l'tpargne au Cameroun CAMAIR Cameroon Airlines CAMCUL Cameroon Cooperative UnionLeague CAMSHIPLines Cameroon Shipping Lines CAMSUCO Cameroon SugarCompany CAMTAINER SocidteNationalede Transport et de Transitdu Cameroun CAMTEL Cameroon Telecommunications (fixedtelephones) CAMTEL-Mobile Cameroon Telecommunications (mobile telephones) CDC Cameroon Development Corporation CEMAC Communaute Economique et Monetaire pourl'AfriqueCentrale CIMA Confdrence des Marches Interafricaine d'Assurances CNPS CaisseNationale de Prevoyance Sociale CNR CaisseNationale de Reassurance COBAC Commission Bancaire de I'Afrique Centrale DPT Diphtheria,polio,andtetanus DSA DebtSubstainability Analysis HEVECAM HeveaCamneroun MINEF Ministerede l'Environnement et des Forets MOH Ministryof Health NPV Net presentvalue NTBs Nontariffbarriers ONADEF OfficeNational de Developpement des F6rets PRGF Poverty Reduction and Growth Facility PNRVA Programme Nationalpourla Recherche Agricole et la Vulgarisation PRSP Povertyreduction strategypaper REGIFERCAM RegieNationaledesChemins de Fer du Cameroun SAC Structuraladjustment credit SCDP SocieteCamerounaise de Dep6tsPetroliers SGS SocieteGendrale de Surveillance SNEC SocieteNationaledesEauxdu Cameroun SNH SocieteNationaledes Hydrocarbures SOCAMAC Societ6Camerounaise de Manutention et d'Acconage SOCAPALM SocieteCamerounaise desPalmeraies SOCAR SocieteCamerounaise d'Assurances SODECOTON Societ6de Ddveloppement du Coton SONARA SocieteNationale de Raffinage SONEL SocidtdNationale d'Electricite du Cameroun SOSUCAM Societ :Sucrieredu Cameroun SOTUC Transports Urbains du Camneroun Socite Ides SRC Societe de Recouvrement des Creancesdu Cameroun UNAIDS Joint United Nations Program on HIV/AIDS - 5- I. INTRODUCTION 1. This paper presents a decision point assessmentof Cameroon's eligibility for assistance under the enhanced Initiative for Heavily Indebted Poor Countries (HIPC Initiative). The Executive Boards of the IMF and IDA discussed the preliminary HIPC document (EBS/00/91 and IDA/R2000-96)for Cameroonon June 7 and Junie 15, 2000, respectively,and agreed that Cameroon is eligible for assistance under the Initiative in view of its unsustainable debt burden and its satisfactory track record for macroeconomic managementand structural reform under IDA- and Fund-supportedprograms. They agreed to consider Cameroon's decisionpoint under the Initiative upon the successful completion of the final review of the existing PRGF-supportedprogram, continued satisfactory performanceunder the third structural adjustment credit (SAC III), the implementation of certainkey measures outlined in the preliminary document, and the adoption of a satisfactory interim Poverty Reduction Strategy Paper (I-PRSP). 2. During the discussion of the HIPC preliminary document, Directorsagreed with the assessment that while significantreforms have been undertakento date on the macroeconomicand structural front, poverty remains widespread in Cameroon, and weak governance and widespread corruptioncontinue to pose major challenges. They supported the staffs' recommendationthat, in order to attain sustainable poverty reduction, it will be necessaryto have high economic growth rates, greatly improved efficiency of public expenditure,and strengthened governance.To that end, Cameroon needs to consolidate gains made in recent years, widen and deepen the existing reform program, and establish a solid foundation for the next phase of reformns, which will more directly and urgently tackle governance and poverty. In this vein, a credible frameworkfor, and implementation of, the PRSP is crucial to ensure that the debt relief is explicitly and effectively used toward poverty reduction. The Boards stressedthat, at a minimum, well-definedsectoral strategies in education and health that focus, inter alia, on better targeting and improved efficiency of service delivery, needed to be prepared before the decision point. 3. Since the preliminary document, the authoritieshave made satisfactory progress with respect to the key reforms, objectivesand milestones set forth in Box 9 of the preliminary document and reproduced below (Box 1). In particular, the existing PRGF-supported program has been satisfactorilycompleted, SAC III continuesto be executed satisfactorily, and an interim PRSP has been prepared (see attached I-PRSP),that incorporatesthe outcome of participatory consultations 2 . Overall, the consultations were comprehensiveand enabled the poor to articulate their areas of concern. The consultationsprovided at times highly critical feedback on the impact of current economicand social policies, and generated a full agenda, which the final PRSP will endeavorto address. The dominantthemes that emerged were improved living standards and employment opportunities,better delivery of social services, enhanced rural developmentwith a more targeted regional focus, maintenance and 2The consultationswere conducted in April 2000 with a wide spectrum of Camerooniansthroughout the country; these were followed by a national workshop in May 2000. -6 - expansion of infrastructure,and fighting corruption and strengtheninggovernance. The interim PRSP has made preliminary proposals in these areas which will be further developed and refined in the full PRSP to be:prepared over the coming year. 4. The interim PRSP is complementedby the sector strategies which have been prepared for health and education and which focus on wider and more equitable access to services as well as improvementsin service delivery and HIV/AIDSprevention. Governanceissues have been addressed in the governance and anti-corruptionstrategy which targets in particular improving decentralizationand deconcentrationof key services, improvedmanagement of public resources (financial and human), and strengtheningthe judicial system. Furthermore, satisfactory progress has been made with respect to the key short-term milestones pertaining to governance, education, and health (see Box 1 for details). With respect to addressing HIV/AIDS, a national strategy has been prepared and was formally adopted and launched by the Prime Minister on September 12, 2000. The national strategy will seek to mobilize communities, promote awareness and behavioral change,increase condom use and improve access to voluntary counselling and testing. Finally, satisfactory arrangementshave been established for the effective use end monitoring of debt savings accruing to Cameroon under the Initiative. 5. The rest of the paper is organized as follows. Section II draws on the interim PRSP and existing economic reform program in order to present an overview of the medium-term policy challengesand outlook. Section III provides an update of the debt sustainability analysis (DSA). Section IV outlines the profile of assistance, with emphasis on IDA and IMF assistance, and potential utilization and safeguards of HIPC resources. Section V presents the floating completionpoint triggers, reflectingthe discussionsby the two Boards and agreementssubsequentlyreached with the authorities.Section VI presents issues for discussion by Executive Directors. Box 1. Cameroon:KeyReforms andObjectives To Be MonitoredbeforeDecisionPoint Area Measures Status PRGFprogram Completion program. Satisfactory of thecurrentPRGF-supported SAC III Continued satisfactory and timely execution of SAC Privatization and forestry broadly satisfactory, Ill1. transport sector marginally satisfactory (delays being experienced with respect to reforms in the port sector). Three of the six tranches have been released, most recently on June 25, 2000 (first privatization floating tranche). Two more tranches are currently expectedto be released in 2000/01, and the remaining one in 2001/02. Poverty Reduction Adoption of an Interim PRSP, taking into account Interim-PRSPofficially communicatedto IDA and Strategy Paper the results of the first round of participatory IMF. See joint staff assessment for staff evaluation. consultations. Governance Adoption of governance and anti-corruption National Govemance Program adopted as of June 30, strategy, including associated action plan. detailed implementation strategy and action plan ________ ___ ____ ___ ____ ___ ____ ___ ____ ___ prepared. Modification of procurement code to make provision Done; application decrees adopted,call for tenders for validation of the adjudication process by an issued. independent observer and for ex-post audits of contracts by independent,internationally reputed companies. Education and Adoption of education and health strategies, and Education.Sector strategy prepared and judged Health satisfactory progress with respect to key milestones acceptable; it will be further strengthenedover the set forth in Boxes 4 and 5 of the preliminary coming months. Satisfactory progress on the short-term document (educationand health). milestones. Health. Sector strategy prepared and judged acceptable; it will be further strengthenedover the coming months. Satisfactoryprogress on the short-term milestones (see Box 2). HIV/AIDS Satisfactory progress toward implementation of A national HIV/AIDS strategy and emergency action HIV/AIDS actions elaborated in paragraph 51 of the plan prepared with the assistance of UNAIDS was preliminary document. adopted and launched by the authoritiesin mid- September.This strategy.will be further developed and strengthened over the coming months. Communications campaign launched in newspapers, radio and TV in summer 2000. Technical ministries are developing sector-specific strategiesto fight HIV/AIDS. Use of HIPC Establishment of arrangements satisfactory to IMF Priority target sectors to benefit from HIPC assistance resources and IDA for the effective use and monitoring of are: education, health, HIV/AIDS, social affairs, rural savings accruing to Cameroon under the enhanced development,basic infrastructure,and governance. In HIPC during the interim period. each of these sectors, a set of budgetaryprograms and/orprojects is being prepared with the assistance of IDA and other donors as well as a detailed HIPC spending plan. These programs will be further developed and detailed during the discussions for the next three-year PRGF, scheduled for October- December2000. A special Treasury account will be set up at the Central Bank to receive the debt savings and will be restricted to settlement of HIPC assistance- related expenditures. To enhance monitoring and control,these expenditureswill be recorded in the budget with a specific code, will be subjected to existing budgetary control procedures, monitored by a committee consisting of representativesof the donor community and civil society,and be the subject of a technical and financial audit. (See paragraphs 38-40 for more details) Source: Box 9, Preliminary HIPC document (IDA/R2000-96 and IMF/EBS/00/91), and staff assessment. -8- II. MEDIUM-T,ERM POLICY CHALLENGES AND OUTLOOK A. Overall Policy Framework 6. The preliminary HIPC documentacknowledgedthat, although successive governmentswere slow to respondto the challenge posed by poverty, a comprehensive statement of intent, La Declarationde la Strategie Nationalede Lutte Contre la Pauvrete (DSNLCP),was published in December 1998. This declarationset the stage for a new era of poverty-focusedstrategy and outlineda framework for the developmentof more detailed action programs and partnershipsto implement and monitorthis strategy.The preliminary HIPC document also presented a more comprehensivepicture of Cameroon'smain poverty reduction challenges,based on available in-country analyses,as well as Bank and Fund staff views. Since that time, understandingof the country's poverty issues has been enhanced by the preparation-in a participatorymanner-of the interimPRSP. The interim PRSP draws heavily on the results of the participatoryconsultationswith civil society which provided a constructivechannel for bringingthe inputs of civil societyinto the poverty agenda, focusing attentionon problem areas in current economicand sectoralpolicies, initiating a dialogue on substantivesolutions and implermentation approaches,and starting to build partnerships for implementationand monitoring. 7. The interim PRSP is based on the following pillars: (i) promotionof sustainable and strong growth; (ii) adoption and implementationof specificpoverty reduction and sectoral policies; and (iii) strengtheningof governance to maximizethe impactof growth on poverty. In particular, the I-PRSP explicitly targets disadvantagedgroups by outlining a set of policies which involve (i) income generatingactivities; (ii) labor-intensiveprojects; (iii) micro- finance; and (iv) gender-basedprograms. As part of the overall policy framework, macroeconomicstability is consideredessential for promotingeconomicgrowth and reducingpoverty. Furthermore,poverty reduction activitieswill concentrateon improving governance and fighting corruption,fighting HIV/AIDS,rural developmentthrough diversificationof agricultural, livestockand forest products, industrialdevelopment, rehabilitationof basic infrastructure,improving the delivery of educationand health services, and strengthening the road network. 8. Although the growth rate averaged about 5 percent during the last five fiscal years, in sharp contrast to the previous decade's negative growth rates, income growth performance in Cameroonis still fragile and not inclusive.The Camerooniangovernment's macroeconomic objectivesfor the next three years are to: (i) increase real GDP growth rate from 5.3 percent in 2000/2001to 6 percent in 2002/2003;(ii) limit consumerprice inflation at around 2 percent;and (iii) contain the external current account deficit at about 2V2-3 percent of GDP (Table 1). In the longer term, the authorities' objective is to raise annual real growth rates to 7 percent, thus allowing for an increase in per capita private consumptionof about 3-4 percent, a rate that would permit tangible progress in povertyreduction. 9. The interim PRSP concentrateson a growth strategythat will correct the structural weaknessesin the economy,stimulateactivities and createjobs through actions targeting: -9 - (i) improved productivity and competitivenessby means of a program of privatizationand cost reduction;(ii) increased public and private savings; (iii) promotion of the private sector; (iv) growth in production and diversificationof exports; and (v) improved governance and transparency. The main sources of output growth in Cameroon will come from the non-oil sector through the development and diversificationof exports (agriculture, forestry, manufacturing,and aluminum). Such growth will require a gradual increase in the overall investmentrate, from 17 percent in 1999/2000to over 21 percent by 2005/06 onward. Domestic savings are expected to average 20-21 percent of GDP during the period. The governmentwill continue to implement sound economicand financial policies while broadeningand deepening structural reforms, improvinggovernance, and reducing corruption, so as to remove the remaining bottlenecksfor private sector development. 10. The impact of the measures proposed under the interim PRSP and the future full PRSP will be felt gradually. The projected growth of GDP and per capita private consumption suggest that the best outcome for 2003 would be a reduction of the poverty rate by 4 percentagepoints relative to 2000. Under this scenario, the poverty rate would be 44 percent in 2003, leaving the number of people living in poverty unchanged at over 7 million. In the longer run, the International DevelopmentGoals, as applied to Cameroon, would call for a reduction of the poverty rate to 25 percent by 2015, application of the principle of basic education for all by 2015 with the complete elimination of the gender gap, and a decline in the infant mortality rate from 77 per 1,000 in 1998 to the global objective of 22 for 1,000 by 2015. B. Raising Rural Incomes and Living Standards 11. Rural development. The participatory consultationsidentified many areas of weakness in rural development and agricultural sector policies, but most notably a perception that economic growth was not leading to higher rural incomes and that many public or formerly public services were failing to meet even basic needs. Consequently,the primary rural development objectivesunder the interimPRSP are: (i) diversification and transformationof agricultural, livestock and forestry exports; (ii) reconstitutionof financing mechanisms for rural activities; and (iii) extensionto rural populations of coverage under the national social security system. Attaining these objectiveswill require: (i) increased agricultural production and income to ensure food security; (ii) improvementin environmentalfactors and the incentive system through reform of taxation and management of land resources; (iii) modernization of the institutionalframework; and (iv) improved concerted management of rural areas in a sustainablemanner. 12. The necessary actions to be taken will be detailed in the integrated rural development strategy that will be formulatedin a participatory manner during 2000/01.3This strategy will 3This strategy should, in IDA's view, include proposed actions to increase on-farm productivity, improve storage facilities, facilitate the movement of agricultural commoditiesfrom surplus to deficit areas, develop rural infrastructure,improve the collection and diffusion of market price information,ensure greater access to agricultural inputs, and entrust a leading role to local communities and farmer-driven institutions for the management of services and infrastructure. The strengthening of land rights, especially for women, including through the reform of the 1974 Land Tenure Act, should also be an important priority. - 10- form a key part of the full PRSP also to be prepared in 2000/01 and will focus on revenue generatingactivities and job creation. It will likely emphasizethe development of rural infrastructure,which was identified in the participatoryprocess as key to enhancing growth and poverty reduction. Priority areas identified in the interim PRSP are rehabilitation and development of basic infrastructureand road maintenance.Future infrastructureactivities should also build on the privatizaltionof utilities (water and electricity) and should develop opportunities for the private provision and more effective and extended delivery of these services. 13. Forestry. Regarding the forestry sector and environmentalprotection, the government's objectives and policy reforms outlined in the I-PRSP, and supportedby IDA under SAC III, focus primarily on: (i) implementingthe Yaounde Declaration of conservation and sustainable management of forests, including fighting corruption, establishmentof an effective institutional system, and involving all stakeholders, particularly local communities in the management of forests; (ii) development and follow-up of managementplans geared to ecologically sustainable developmentof forest resources; (iii) preservation and stability of forest ecosystems,includingthe management of protected areas, and (v) implementation of an industrializationpolicy with high economic value added. For the poor, the main benefits of these policies will come through effective participationof local communities in forest and savanna land managementand more equitable revenue sharing. To ensure improved revenue sharing with forestrycommunities, the authorities also intend, in the context of the SAC III adjustmentprogram, to strengthen the administration of the revenue sharing facility, according to which 50 percent of "area fees" (redevance de superficie) are transferred to forest communitiesand effectively used to improve rural infrastructure.In the same vein, particular attentionwill be given to ensuring that the Forestry Fund is used in a manner that will furtherthe realization of sectoral developmentobjectives. 14. Development of rural firnance. The privatizationof BICEC (Banque Intemationale pour le Credit et l'Epargne au Cameroun) will strengthenits presence in rural areas. All 25 branches will remain in operation, and its main partner, Group des Banques Populaires,has undertaken to bring in the required expertise to increase its participation in agricultural finance. In an effort to strengthen and develop microfinanceinstitutions, the government is proceeding with the registering and licensing of these institutions. This will be followedby the establishment of prudential regulation by COBAC;the regulation should be well adapted to this sector by providing enoug]h room for growth for the institutions while protecting depositors. Finally, assistancewi]llbe provided to individualinstitutions to enable them to restore their financial health and iimprovethe delivery of services. The major provision of assistance to the group CAMCUI, (with 350 member cooperativesout of an estimated total of 650) is targeted as a priority. 15. Accelerating urban development. The interim PRSP suggests the government's understanding of the complexityof the problem and also the government's commitmentto conduct a study with a view to preparing a detailed action plan. It also outlines proposed urgent actions to be taken in the urban sector: (i) implementsewage programs; (ii) rehabilitate slums; (iii) improve security; (iv) provide more care to street children and the - 11 - handicapped;(v) fight drugs; and (v) raise awarenessamong commercialsex workers of the risks of SexuallyTransmittedDiseases (STDs) and HIV/AIDS.Urban developmentshould target the need to increase living standards and increasejob opportunities,especially for the young. Success of the strategywill require: (a) effective-yet, progressive- decentralization and deconcentrationof the public se,ctor;and (b) technical and administrativecapacity building at all relevant institutionallevels. Public sectorfinancingwill come from increased and more timely transfers from the central governmentto municipalities,as well as improved revenue mobilizationby the municipalitiesthemselves. C. Human Development 16. Education. The government,with the input of the main stakeholders,has prepared a sectoral strategy covering primary and secondaryeducation.The main sector development objectivesare: (i) improvedand more equitable accessto education;(ii) improvementin the efficiencyand quality of education;and (iii) better managementand governance of the educationsystem. The strategy concentrateson good governance,collaborationwith all actors at all levels, cost control, transferringresponsibilityto (local) communitiesthrough their active involvementand participationin education,and decentralizationof resource management.For each of the developmentobjectives,the strategydevelops a series of programs and subprograms,together with a matrix of actions by objective, including timing and cost estimates.The overall cost of the strategy for the first three years is about US$155 million. It should be noted that a number of importantreforms in the education sector have alreadybeen implemented(as elaboratedin Box 4 of the preliminaryHIPC document). 17. Regarding improvedand more equitableaccess to education,the main objective is primary educationfor all, with a concertedfocus on improvingenrollmentrates particularly in disadvantagedareas and for girls. In the provinces of the Adamaoua,the North and the ExtremeNorth, enrollmentrates are expectedto reach 70 percent by 2003 against 53 percent, 57 percent and 47 percent currently.Other objectivesarticulatedin the education strategy are to improve quality, with an aim to reduce the average drop out rate from 28 to 5 percent by 2005, and the repetition rate from 31 to 14 percent by 2005. 18. The quality of educationwill be improved by revising curricula(including treatment of importantsocial issues such as HIV/AIDS,drugs, nutrition, environmentalprotection), and increasing accessto schoolbooksand teaching materials for both students and teachers. At the same time, the supply of schoolingfacilities is supposedto improve significantlyas 2,500 classrooms are expectedto be built before the completionpoint. More teachers will also be needed, with improved career prospects and initial and in-servicetraining. In the areas of management and governance,a complete overhaul of existing systems is required. The new vision implies the need for promotion of partnershipsand participation at all levels which, in turn, will require significantdecentralization(and deconcentration)of resource management(human and financial). 19. On the governancefront, the management of schools will require the creation of school councils having responsibilityfor supervision,control and evaluationin the whole educationcommunity. Thesewill be buttressedby the creationof an education sector governancewatchdog (Observatoirede la gouvernance)as well as strengthening,withinthe Ministry, of the GeneralInspectoratesof Services and Teaching.Monitoringand evaluation - 12 - of the program and its implementationwill be participatory,with heavy involvementof beneficiaries,local communities,jparents,studentsand teachers themselves.This is a vast ten-year agenda, thus it is expectedthat the primary and secondaryeducationstrategy will be regularly updated. Moreover, it will be complementedby a higher education strategy currently under preparation. 20. Health. The majority of key reforms and objectivesprovided for the decision point have been achieved and the remainiingare in progressas shown in Box 2. In particular, the governmenthas designed a comprehensivehealth sectorstrategy with the involvementof all stakeholders.The health strategy aims to: (i) reduce infant and maternal mortalityrates by reducing the spread of HIV/AIDS,, fighting infectiousdiseases such as malaria, epidemics and diseases preventable by immunization,and increasing support to nutrition as well as maternal and child health programs; (ii) increase access, quality, and efficiency of basic health care services,including through the constructionof new primary health centers and assuringadequate availabilityof mnedical suppliesand essential drugs at affordable prices; (iii) strengthenthe institutional andimanagementcapacity of the health care system at all levels, particularlythrough increasing partnershipwith the private sector,NGOs, civil society and otherdonors; and (iv) ensure equitable and sustainablehealth care financing,channeling adequatelevels of financial resources to essential interventionsand reformingbudgetary proceduresand management of financial resources.The interim PRSP draws on the sector strategy and reflects these objectives. Box 2. Cameroon: Status of Key Health Sector Reforms and ObjectivesBefore DecisionPoint Measures Status Adoption of healthstrategy and * Publicationof the nationalhealth map. (In progress) satisfactoryprogress with respect . Sectorstrategy prepared andjudged acceptable.It will be further strengthened over to key milestones set forth in Box the comingmonths.(Achieved) 5 of the preliminary document. * Authorizehealth centers to retain the shareof their fee generated income actually remitted to the Ministryof Healthand identify alternativesources of financingfor the National Solidarity Fund. (Achieved) * Establishmentof legal and institutionalframework assigningto health management committeescontrol over and responsibilityfor the use of all funds generated from fees-for-serviceand drug revolving funds and from the govemment budget, includingthe deposit of such proceeds into a bank account opened in the name of each facility,with the oversight of communityrepresentatives.(Partly achieved) * Developmentof a draft monitoring frameworkto be used by the committees(i) to assess regularly (e.g., every 6 months) overall expendituresof health centers, as well as delivery performancefor key services , and (ii) produce reports for presentationto communities.(Achieved) * Preparation of a legal act (i) establishingprice caps on at least 30 essential low cost generic pharmaceuticalsmost likely to benefit the poor; (ii) allowing pharmaciesto replace brand name drugs by their generic equivalent;and (iii) obliging them to disclose this possibility to the public. (Achieved) . Adoption of staffing norms for health facilities(centers, district hospitals). (Partly achieved). . Adoptionof legislation to regulate incentivesof health staff. (Partly achieved) * Definitionof a framework for enhancingcollaborationand partnership with NGOs (both profit and nonprofit). (Achieved) * Publish Ministerial Circular on drug registrationprocedures.(Achieved) - 13 - 21. The sector strategy sets forth three key developmentobjectives to be achieved by 2009: (i) reduce infant mortality by 30 percent, maternalmortality by 50 percent, and the general mortality rate by 25 percent; (ii) ensure that 90 percent of the population lives within one hour's walk of a local health center; and (iii) ensure that 90 percent of health centers are efficiently run. These development objectivesare accompaniedby a set of programs and subprograms, together with a matrix of actions for the next five years (2000-2004). The overall cost of the strategy is about US$140 million. 22. Implementationof the strategy will require a complete reorganization of the sector. The key building blocks are: (i) active promotion of enhanced partnership between the public and private (profit and non-profit)sectors; (ii) decentralizationof public sector service delivery and resources to provincialand district health teams, under the leadership of the Ministry of Health; (c) reinforcing sector institutions, redefiningthe role of the Ministry of Health and strengtheningthe management capacityof the system; and (d) considerably increased community participationin health sector management.The health district will be the operational unit for decentralization.This ten year strategy proposes an ambitious and wide-reaching agenda, whose implementation will be regularly monitored and evaluated in a participatory manner, with the strategy being updated as needed. Salient objectives to be achieved before 2004, include: (i) 60 percent of the population would live less than 5 kilometers from a health facility as compared with 45 percent at the moment; (ii) the 4 would have increased from 5 percent to 25 percent; proportion of viable health districts (iii) DPT3 immunizationcoverage would have increased from 36 percent to 70 percent; (iii) the proportionof pregnant women immunized against tetanus would have increased from 49 percent to 90 percent; (iv) the proportion of births attendedby trained health personnel would have increased from 54 percent to 70 percent; (v) contraceptiveprevalence rate would have increased from 12 percent to 25 percent in urban areas, and from 4 percent to 15 percent in rural areas; (vi) coverage of children less than one year old with vitamin A supplementationwould have reached 70 percent; (vii)knowledge about protection and prevention measures against malaria would have substantiallyincreased (i.e., 50 percent of pregnant women would be using treated bed-nets).Measures for the next few years, distinguishingbetween the short-run (up to December 2000) and thereafter are summarized below in Box 3: 4Viable districts: districts where more than 80 percent of the population lives less than 5 kilometers from a primary health facility, and which have appropriate managementstructures. - 14 - Box 3: Cameroon: RevisedShort-termand Medium-termMilestonesfor Health Short term (before December 2000) * Publicationof the national health map. * Establishmentof legal and institutionalframeworkassigning to health managementcommitteescontrol over and responsibilityfor the use of all funds generatedfrom fees-for-serviceand drug revolving funds and from the government budget. * Adoptionof legislation to regulateincentivesof health sector staff. * Finalizationof statutes for CentreNational d 'Approvisionnement de MedicamentsEssentiels (CENAME) and Centres D 'ApprovisionnementPharmaceutiquesRegionaux (CAPPs.) * Publication of a legal act (i) establishingprice caps on at least 30 essential low cost generic pharmaceuticalsmost likely benefit the poor; (ii) allowing pharmaciesto replace brand name drugs by their generic equivalent; and (iii) obliging them to disclosethis possibility to the public. Medium term * Publication of most importantregulatorytexts for the implementationof the National Drug Policy. * Preparation of annual health budgets in the context of a Medium Term ExpenditureFramework,beginning with the budget 5 for 2001/02;and in that context increase share of health budget from 4 to 7percent of overall budget. * Increaseof allocation of funds to primarycare/key public interventionsto 45 percent of overall budget; * Adoption of a legal framework to allow direct budget transfersto districts and/ or health centers; * Developmentof criteria for performancebased budgeting. * Adoptionof a comprehensiveplan for the financingof health care, includingadequatearrangements to guarantee access to health care by those unable to pay. * Establishmentof a functioningpurchasing and auditing capacity at central level. * Implementationof new contractualarrangementsto foster partnership with profit and non-profit non-govemmental providers. * Publicationand disseminationof standardsfor essential (medical)treatments. 23. HIV/AIDS. Halting the spread of HIV/AIDS has been identified as a key challenge under the interim PRSP with the government's goal of containing the rate of infection below the critical 10 percent threshold. The government has now prepared and adopted a national HIIV/AIDs control and prevention strategy, with the assistance of the Joint United Nations Program on HIV/AIDS (UNAIDS) and other donors. This strategy proposes to take the same approach as that successfully undertaken in Senegal, Uganda, and Thailand; in particular, it will involve all groups and communities participating in the fight against AIDS, promote 100 percent condom use by groups most at risk (commercial sex-workers, soldiers, agricultural extension workers, truck drivers, students, teachers, etc.), promote behavior change among young people and increase use of voluntary counselling and testing. A public awareness campaign has been funded as part of the 2000/01 Budget Law. This campaign needs to be broadened to include regular radio and television messages, as well as specific messages promoting behavior change among the young. Concerned technical ministries (Health, Education, Agriculture, etc.) have agreed on the need to develop specific AIDS sub- strategies in the very short run. IThegovernment will also support intensified and expanded activities to prevent the spread of HIV, including the promotion of 100 percent use of 5 Tobe confirmed healthsectorfinancing by the on-going study. - 15 - condoms with the objective of attainingat least 50 percent utilizationrates by truck drivers, port workers, and soldiers, and 70 percentby commercialsex workersby 2003. D. Institutions,Governance,and Anticorruption 24. Governance strategy. The government's overall economicreformprogram of the past three years has aimed at addressingsome governanceissues by reducing incentives and opportunitiesfor rent-seeking mainly through improvedpublic expendituremanagement,the privatizationprogram,regular transfers of oil revenuesto the budget, etc. (Box 4). The impact of these activities remains modestand has not been able to reduce widespread corruption. The I-PRSP recognizes key shortcomingsof governance policies with respect to transparency,accountability, and the improvementof service delivery in the social sectors. Priority actions defined in the I-PRSP consequentlyfocus on (i) decentralizingservice delivery in key sectors, i.e., health and education,(ii) undertaking complementaryreforms to improvetransparency and accountabilityin the public sector, in particularwith regard to public procurementand the managementof public resources;(iii) judicial reformwith an initial focus on strengtheningthe independenceand internalcontrol of the Judiciary; and (iv) establishing an anti-corruptioncoalitionwhich includes all relevant stakeholdersand promoting public/privatesector/civil society partnerships. - 16- Box 4. Cameroon: Actions Taken to Improve Governance and Reduce Corruption PetroleumSector Therehave been majoradvancesintransparencyin the use of oil revenues: * Virtuallyall oil revenuesare now transferredfi-omNationalOil Company(SNH)to the budget. * SNH is subject,since December1997,to annualauditsby an internationally reputedfirm. * SNH'saccountingsystemrecentlyopenedup, thoroughlyrevised,and the processbegunof makingit compatible with international accountingnorms. * Operationaland managerial reputedfirmjust completed.Far reachingrecommendations audit of SNHby an internationally to be implemented over next 12-18months. ForestrySector Afterpetroleum,the forestrysector is the secondmost importantgeneratorof wealthand revenues.Untilthree years ago;this sector was riddledwith corruption,lackof transparency and weak institutions. . In 1999,majorpersonnelchangesin Ministryof Forestryincluding the replacement of a numberof seniorofficials. * Method,regulations and institutionalframeworkfor allocationof concessions were totallyrevampedand now basedon open calls for bids followedby a transparentselection processbased onpublished,objectivecriteria. * Processof bid evaluationandresults scrutinizedby an independent observerwhosereport is availableto all. * Stepped-upcontrolof forestryactivities,publicationof thenames of firmstransgressinglaws and regulationsand the imposition of financialand other sanctions.Firmsengagedin illegal activitiesare excludedfrombidding for new concessions- this has recently happenedto Cameroon'slargestforestryoperator.Changesin government policyand implementation are now beingacknowledged by some intemational NGOs. Public Procurement Policy * The ten largestpublic contractswere subjectedto auditby intemationally reputablefirm (first half, 2000). . Introductionof independent observersin the deliberationsof all key publicprocurementcommittees(Oct. 2000) * Automaticpost-hocaudits of all majorpublic procurements, effectivefrom September,2000. * Thoroughrevampof entire public procurement systemfollowingCPARscheduledfor October,2000. Education Sector * of schoolbooks (May,2000). Abolitionof monopolyon the productionand d.istribution . Removalof EducationMinisterinvolvedin, and majorpromoterof,the above(March,2000). * Abolitionof primaryschoolfees (muchof whichwere pocketedbyschool officials)announcedFebruary2000, effective September,2000. Transportation and Trade . Dismissalof NationalPorts OfficeDirectorin early 1998. * Legal,regulatoryand institutionalrestructuring of the Port of Doualato ensuregreaterprivatesector participationand transparency in port operations. * Establishment of independentRoadMaintenanceFundwith automaticfinancing,subject to strict scrutiny. * Abolitionof NationalShippingLine's rightto assign cargoesand NationalShippingCouncil levy on exportsand imports. . Appointmentof internationalsurveillancefirmto monitorCustomsperformance. * Dismissalof CustomsDirectorand severalsenior managers(September,1996andagain in March,2000). . Establishment of "one-stop shop" at Port of Douala. Privatization * being carriedout under the ongoingadjustment Publiclyowned companieswere centersof patronageand graft.Their privatization, program,is seriouslycurtailingopportunitiesfor illicitrent seeking. Sector Financial * Delinquentborrowersfrom commercialbanks(as per monthlylistingreleasedby the central bank) are preventedfrom furtherbank and publicprocurement. borrowingandfrom participatingin the biddingprocessfor privatization Other . on charges of corruption,late 1997. Removaland arrest of Ministerof Health(and formerSecretaryGeneralat the Presidency) * Removaland arrestof Telecommunications enquiry,on chargesof corruption,September,1999. Ministerafter Parliamentary * Removaland arrestof Headof Social SecurityAgency,on chargesof corruption,September,1999. * Major clean-upof Ministryof Financeincludingthe removaland arrestof more than 100 Ministryofficials, 1998-2000. - 17- 25. These actions are based on a focused strategy and associated action plan, which was adopted by the govermmentin August 2000. The action plan further operationalizesthe overall governance strategy as outlined in the National GovernanceProgram. This comprehensiveprogram to improve governance and reduce corruption, which was developed with assistance of UNDP, was adopted in June 2000. An initial set of anticorruption activities will be undertaken with the support of the highest authoritiesand the international financial community.This will also include the establishment of an effective and credible anti- corruption coalition to ensure broad-based support. 26. Decentralization of service delivery. The interimPRSP recognizes that many of the weaknesses in service delivery can be addressed only through more decentralizedapproaches at the level of the community itself. The ultimate goal is to enable communities to deliver core services in a decentralizedand more effective way by restructuring the relationship of line agencies to regional and local authorities ("collectivitesterritorialesdecentralisees") and progressivelyreassigning fiscal revenue, financial and administrativeresponsibilities. To prepare this process, beneficiary assessments, and budget tracking exercises to identify constraintsat the various institutional levels are planned which will identify the content of the institutional reform agenda.Adequate progress with regard to service delivery improvementsin key sectors, e.g., health, education, rural development,and infrastructure, will be a key benchmark for the completion point. 27. Complementary reforms. Some targeted reforms at the central government level are also necessary, in particular to strengthen the frameworkfor decentralized service delivery. These reforms should mainly focus on improving transparencyand accountability in the public sector. Key elements in this context are reforms of public procurement, financial management and human resource management as well as civil service reform. These will complement ongoing efforts to improve expendituremanagement,tax administration and the oversight of public sector agencies and enterprises through annual technical and financial audits. In this context, the authoritiesshould ensure that public financial management systems meet the following fiduciary benchmarks withinthe next two years: (i) regular and timely reporting by the governmentto the legislative and the public on budget execution during and at the end of the fiscal year; and (ii) regular and timely reports by the Chambre de Comptes(Accounting Chamber)or independent auditorsas to the accuracy of government accounts and compliance with financial laws and regulations. 28. Judicial sector. Judicial reform is another key area of the governance reforn agenda as a well-functioningjudicial system is the guarantor of the rights and the basic security for the poor. To begin to address the dysfunctional system, the government will conduct a technical diagnostic study to establish baseline data and points of intervention with particular attention to priority interventionsto reinforce judicial independence,the internal control of the Judiciary and its ability to serve as a check on the executivebranch. This study will be completed within one year and will serve as a basis for an operational action plan that will be developed by the end of 2001. Adequate progress on the implementationof the judicial reform agenda will be a benchmark for the completion point namely, concerning the creation - 18 - of the Chambre des Comptes (Audit Office)with the aim of increasing the accountability of the executivebranch and the ConstitutionalCouncil (Conseil Constitutionnel). 29. Participation. A participatory approach to poverty diagnosis, policy design, implementationof policies, and monitoring and evaluationwill be essential for building consensusaround the PRSP's proposals and a commitmentto their implementation across all levels of Cameroonian society. The interimPRSP proposes to mainstream participatory approaches,build partnerships with civil society and other developmentpartners, and establish a poverty monitoring and evaluationsystem. Key challenges for the government will be to build mutual trust between itself and civil society, find ways to listen to the poor and reflectthe diversity of poverty problems in key programs. III. DEBTSUSTAINABILITY ANALYSIS 30. The debt sustainability analysispresented in this section is an update of the one presented in the preliminary docurnent. The loan-by-loanreconciliationprocess has been virtually completedwith about 99 percent of the debt stock as of end-June 1999reconciled. The nominal stock of debt at end-June 1999was estimated at US$7,802 million. The NPV of debt has been revised downwards by about US$240 million, comparedto the preliminary HIPC document (Box 5). The results of the present DSA confirm those presented in the preliminarydocument: Cameroon'sexternal debt situation is unsustainable, even after the full application of all traditional debt relief mechanisms. Box 5. Cameroon: Main Factors Explaining Differencesin Debt Data Compared to Those Presented in Preliminary HIPC Document The nominal stock of debt as of end-June 1999 has been revised upward to US$7.80 billion compared to US$7.68 billion presented in the preliminary document. In contrast, the NPV before rescheduling has fallen from US$7.18 billion to US$6.60 billion. This is due to the fact that, as a result of the reconciliation, large arnounts of Paris Club debt, previously classifiedas rescheduled under nonconcessionaltermns, have now been identified as arising out of the concessionalParis Club V rescheduling. As a result, overall debt service, and thus NPV, have been reduced. Furthermore, for most French and Japanese ODA loans, the contractual interest rates are higher than the respective CIRR, and thus the NPV after traditional debt relief would be higher than that before rescheduling. For these loans, no rescheduling is assumed, leading to a decline in NPV after reschedulingrelative to figures presented in the preliminary HIPC docurnent of about US$160million. Overall, the NPV of debt after a hypothetical Naples terms stock-of-debt operation fell by about US$240 million, to US$4.7 billion. Therefore,the expected total assistance required under the Initiative is reduced by the sarne amount to US$1.26 billion. There are no revisions in the export data, 31. There is little change in the overall structure of the debt (Table 3). Multilateral creditors account for 26 percent of the overall NPV of debt after rescheduling. Bilateral creditors, account for 69 percent of the total debt in NPV terms, virtually all of it held by the Paris Club. Among the individual creditors, France still has the largest share (33 percent), followed by the World Bank group (14 percent), and Germany (11 percent). - 19- 32. Following the finalizationof the first report of the financial and legal advisorsfor the commercialdebt-and debt-servicereduction operation,the overall amount (including late interest) of commercialbank debt remains at almostUS$700 million (at end-June2000 exchange rates). It is expectedthat, following the renewalof formal contacts with the Bank AdvisoryCommittee by the Camerooniangovernment,negotiationswill be launched soon with the aim of achievingdebt relief at least comparableto that to be obtained under the enhanced HIPC Initiative (Cologneterms). 33. The macroeconomicframeworkwas updated slightlyto reflect the new debt service projections followingthe loan-by-loanreconciliation.The main assumptions are detailed in Box 6 below. Box 6. Cameroon:Main Assumptionsin the Debt SustainabilityAnalysis (DSA) The following long-termmacroeconomicassumptionshave been used for the 20-year baselineDSA scenario agreed with the Cameroonianauthorities(Table 2). Growth * Real GDP is expected to rise from about 5 percent currentlyto about 7 percent a year in the outer years as a result of a steady increasein investment,the continuingimplementationof structuralreforms, and the strength of non-oil exports.Inflation is projected to remainlow, at 2.0 percent per year. Exports and imports * The volume of exports of goods and services is projectedto grow at an annual average rate of 6.2 percent reflecting the continuingstrengthof non-oil exports (7.3 percent in real terms), despite decliningpetroleum exports on account of Cameroon's falling oil reserves. * Total imports of goods and services are projected to grow by an annual average rate of 6.8 percent in real terms. Capital account * Cameroon is expected to continue requiring concessionalassistancein order to meet its financing needs. Thus new financing is assumed to have a grant element of about 44 percent on average. Nevertheless,it is expected that the financinggaps will steadily declineand be completely eliminatedby 2010. Governmentrevenues * The current fiscal reform effortsare expected to graduallyincreasethe revenue to GDP ratio from the current level of 15.5 percent in 1998/99to about 21 percent over the next 20 years in order to meet the growing resource requirementsfor the social and rural sectorsand for infrastructure.Withinthis context, the primary balance would be graduallyreduced to about 3.2 percent of GDP, while the overalldeficit would be stabilized at about 0.6 percent of GDP. External public and publicly guaranteed debt * It is assumed that all officialbilateral creditorswould havebeen granted a Naples terms stock-of-debt operation(a 67 percent reduction in NPV terms) on pre-cutoff-datedebt in 1999. * New financing would continue to be highly concessional.The share of debt contracted on IDA terms (40 years' maturity, 10years' grace and 0.75 percent interest)is assumedto constitute60 percent of new borrowing. It is assumed that the remaining 40 percent wouldbe a mixture of IMF PRGF loans for the early years and bilateralloans contracted on rather less concessionalterms (25 years' maturity, 6 years' grace, and 2 percent interest). - 20 - Sensitivityanalysis 34. As in the preliminarydocument,the followingscenarioswere used (Table 8): (i) lower export volume growth(by 2 percentagepoints); and (ii) less favorable conditions for new external loan financing (reductionof the average grantelement from about 44 percent to 35 percent6).The strongestimpact wouldresult from a lower growth rate of exportvolumes: this would raiset]heoverall NPV of debt-to-exportsratio by an average of 42 percentagepoints relative to the baseline over the projectionperiod. The impact of less concessionalfinancing would be somewhatweaker,as on average the NPV of debt-to- exports ratio would increaseby 8 percentagepoints. The debt serviceratio would be most affectedby lower export growth; on average, it is about 3 percentagepoints higher than that in the baseline scenario. IV. PROFILE OF ASSISTANCE AND POTENTIAL UTILIZATION OF HIPC INITIATIVE RESOURCES A. AssistanceUnder the EnhancedInitiative 35. On the basis of the baselinescenario, the amount of assistancerequired to reach the NPV of debt-to-exportstarget of 150percent would be US$1.26 billion (Table 4), or about US$2.8 billion in nominal terms. The common reductionfactor would be about 26 percent. Based on proportional burden-sharing,bilateral creditorswould providemost of the assistance(US$874 million,or 69 percent). The rest of the assistancewould be from multilateralcreditors (US$324million, or 26 percent), and commercialbank creditors (US$62 million, or 5 percent).In calculatingthe relevantamount of assistancethe following assumptionswere made: • Floating completionpoint. The conditions are summarizedin Box 7. The authorities estimate that Camerooncould fulfill all conditionsfor a floating completionpoint within two-and-a-halfyears from the decision point. * Paris Club creditors.There would be a flow reschedulingon Cologne terms (90 percent in NPV reduction)followingthe decisionpoint, with delivery of the remainingrequired assistanceat the completionpoint through a stock-of-debt operation on Cologneterms. On the basis of the present calculations,it is expected that the delivery of assistancewould require reducingthe pre-cutoff date of non-ODA debt by 85 percent. * At least comparabletreatmentto the Paris Club group of creditors would be provided by non-Paris Club officialsbilateral creditorsand commercialcreditors. 6 Required minimum concessionalityunder Fund arrangement. - 21 - * The total amount of IMF assistance is US$36.9 million in NPV terms. The IMF is expectedto deliver interim assistance(US$4.0 million of which US$2.9 million would be made available at the decisionpoint to cover repaymentsfalling due until the end of 2001) from the fourth quarter of 2000 onwards and the full amount of assistance at the completion point. The delivery drawdown of assistanceis expected to follow a profile which smoothensthe debt service due to the Fund (Table 9). The result would be to reduce the debt service to the Fund by about US$1 million per year on average over the next three years, rising to an average of about US$7 million per year from 2003/04 to 2009/10as debt service due to the Fund increases. * World Bank Group. Cameroonis one of three HIPC countries for which IDA will 7 This is due to the composition need to provide debt relief on IBRD debt outstanding. of World Bank debt service in the medium term, with 74 percent of total World Bank debt service attributable to IBRD loans for the period 2000/01 to 2005/06. The HIPC Debt Initiative Trust Fund can providethis relief, but it can use only resources for that purpose from donors other than IBRD (as IBRD net income transfers may not be used to provide debt relief on IBRD debt). Additional donor funding specifically for WorldBank debt relief is thus needed. To the extent that donor funding is not available or sufficient for this purpose, IDA resources will need to be used to provide the required debt relief. In the event that adequate donor funding for this purpose is not provided, the proposed debt relief would be provided through: (i) IDA providing annually supplemental HIPC debt relief grants during the interim period to cover 45 percent of IBRD debt service due which would provide interim assistance (US$64 million); (ii) a supplementalHIPC debt relief credit from IDA of US$118 million at the Completion Point to repay outstandingIBRD debt; and (iii) a reduction of 51 percent in IDA debt service falling due after completion point and through May 2009. Executive Directors of IBRD may need to decide whetherto grant a waiver of the IBRD prepayment penalty that would normally be applied. The nominal assistance is estimated at US$203 million from 2000/01 to 2011/12 for IBRD and US$62 million from 2002/03 to 2008/09 for IDA, amounting to a total of US$265 million in nominal debt relief from the World Bank. This comparesto an additional US$28 million in debt service due to IDA between 2003/04 and 2018/19 for the supplementalHIPC debt relief credit disbursed at CompletionPoint. The overall result would be to reduce Cameroon'sdebt service to the World Bank by 57 percent or US$29 million per year over the period 2000/01 to 2008/09 (Table 10). * The African Development Bank (AfDB) would deliver interim assistance from the decision point onward to a maximumof 40 percent of total assistance in NPV terms. It is estimated that enhanced HIPC assistance would cover 43 percent of AfDB debt service from the fourth quarter of 2000/01 until 2007/08. Assistancefrom the AfDB 7 This is in accordance with the approved modality as outlined in paragraph 14 of the paper "Heavily Indebted Poor Countries (HIPC) Initiative: Note on modalities for Implementing HIPC Debt Relief Under the Enhanced Framework", IDA/R2000-4, January 10, 2000. - 22 - is estimated at US$13 million per annum on average over the period July 1, 2001 to June 30, 2008. All remaining multilateral creditorsprovide assistance from the completionpoint onwards. 36. On the basis of the above assumptions, the interimHIPC debt service reliefi would amount to an average of about US$ 100 million (about 6 percent of government revenue) per year for the next three years. Beyond the assumed completionpoint, the HIPC debt service relief would amount to about US$60-US$80million annually for ten years beginning 2003/04 (Table 7).9This would be equivalent to an average of 1.1 percent and 0.3 percent of GDP per annum, respectively,for the periods 2000/01-2002/03and 2003/04-2012/i3. The debt service ratio would be reduced by about 3-5 percentage points during the interimperiod and would remain below 9 percent of exports afterwards. 37. Assuming that the Executive Boards of IDA and the IMF approve the proposed assistance for Cameroonunder the enhanced HIPC Initiative, and in light of the recent indications by the Paris Club, financing of about 85 percent of the total NPV debt relief required would be assured. This Nvould provide sufficientassurance for both IDA and the Fund to proceed with interimrelief. B. Key Poverty AlleiviationActivities to Benefit from HIPC Assistance 38. The substantial debt service savings arising from HIPC Initiative assistance will be used to overcome the severe structural obstacles to social development in Cameroon, including low productivity in the agriculture sector, weak physical infrastructure, low levels of human development,and poor access to basic services.The government's strategy will center on the following key areas: education, health, HIV/AIDS, social affairs, rural development (including rural intfrastructure), basic infrastructure,and governance. Implementation of these key poverty programs will involve the support of donors,NGOs and all stakeholders. 39. In each of the priority target sectors, a set of budgetary programs-considered as crucial in the fight against poverty-are being identifiedby the authorities in a series of consultations involving ministries and stakeholders.These budgetary programs will initially involve expenditure allocations for ministries, althougha more detailed and participatory l his is the difference in debt service between the position followingfull use of traditional debt relief T mechanisms and that after the delivery of enhanced HIPC Initiativeassistance. 9Over the last three years, debt service paid has been very high, as was highlighted in the preliminary document. As a ratio of social expenditures it averaged more than 250 percent. However, as a result of both lower debt service and increasedsocial spending, this ratio is expected to decline significantly"falling below 50 percent by 2001/02. The actual debt relief is likely to be much higher than is assumed here if, as expected, most members of the Paris Club go beyond Cologne terms. In this context, it is expected that the debt service savings over the next three years could be at least double what is assumed here. - 23 - frameworkfor revenue use and program implementationwill be outlined in the full PRSP. They include: * education sector: school rehabilitation,school construction,construction of school catering facilities and health rooms; budgetary transfersto public and private schools in poor rural and urban areas, assistance to poor pupil families, including through grants and book-lendingprograms. * health sector: constructionand rehabilitationof health facilities; fight against malaria, immunizationprograms;budgetary transfersto public and private health facilities in poor rural and urban areas for maternal and child care, and provision of medical supplies. * HIV/AIDS: priority will be given to ensuring the effectiveimplementation of the national HIV/AIDScontrol and prevention strategythrough strengthening of the National Committeeto Fight AIDS, improved and better targeted information and communicationcampaigns,more widespreadcondomdistribution and support to NGOs and communitygroups fighting HIV/AIDS. * social affairs: supportto local NGOs clearly identifiedas involved in poverty related activities based on objectiveand monitorablecriteria; rehabilitationand strengthening of priority social centers and training facilities for women. * rural development:this will involve a multi-sectoralapproach with investmentsin increasing agriculturalproductivity(through provision of extension services, developing marketingchannels for agriculturalproducts, etc.); constructionand maintenance of rural roads; enhanced irrigation and potable water systems; implementationof the rural electrificationprogram;vaccinationsof the herd; other sanitary services; supportto the developmentof communityforestry and to the participationof civil society in illegal logging monitoring. * basic infrastructure:rehabilitationof urban services,in particular provision of water and waste collection;rehabilitationand new constructionof urban and rural roads and maintenanceof priority roads. * governance:the carryingout of the action plan on governanceas relating to service delivery in the above areas, with special attentionpaid to procurement. 40. Table 11 illustratesan indicative program budget for the next three years in which the budget allocations for the above sectors have been increased substantially.The full PRSP will solidify both these budget projections and the implementationframework for the targeted programs. In the meantime, and serving as a core input into the full PRSP, the program budget will be further developed and detailedduring the discussions for the next three-year PRGF arrangement,scheduledfor the second quarter of 2000/01. The PRGF will include a detailed HIPC spending program consistingof well-specifiedprojects and actions, which will be prepared with the assistanceof IDA and other key donors. These expenditures will be recorded in the budget with specific codes and will be subject to the existing - 24 - budgetarycontrol procedures at the commitment,payment order, and payment stages. The additionalHIPC resources for the year 2000/01 are estimated at some CFAF 42 billion. For the years 2001/02 and 2002/03, the amounts of HIPC assistanceare estimated at CFAF 89 billion and CFAF 87 billion, respectively. C. Monitoringand Control Mechanisms 41. Effective use of debt reliejfassistance remains a key objectiveof the enhanced HIPC Initiative.This requires that Camerooncontinue in its efforts to strengthenexpenditure managementand control, and improveservice delivery in the priority areas of health, education,and poverty alleviation.Hence an accountingsystem that would correctly identify and classifyexpenditures on any specificpoverty-relatedprograms and projects is considered the appropriatemechanismto allacate and manage the use of HIPC assistance in Cameroon. 42. While this system should be based on simplicity, and aim to ensure easy monitoring, control, and transparency, it requiresthat the authoritiesincrease their efforts to redress the weaknessesin the area of expendituremanagementand control. Overall,this mechanism would be centered on (i) the establishmentof a Treasury special account at the central bank where the budgetary savings from the Initiative will be deposited; (ii) the establishment of a monitoring committeeconsisting of representativesof the donor communityand the civil society; and (ii) the undertaking anldpublic disseminationof technical and financial audits to ensure effectiveuse of these resourcesin the form of goods and servicesdelivered, with a semi-annualperiodicity during the first two years and annual periodicitythereafter. 43. All current budgetary procedureswill be kept unchangedand the HIPC sub-account will be restrictedto settlement of poverty-relatedtransactions. To ensure transparency and control of the use of these funds, an inter-ministerialcommitteeco-chaired by the Minister of Financeand the Minister of Public Investmentsand Regional Developmentwill be entrusted with the responsibility of coordinatingthe preparationof quarterly financialand technical reports. These reports will be discussedby the monitoring committeeand made public through the media (newspapers,radio and television).In addition, semi-annualregional seminars,including representativesof civil society and the donor community,will be organized in the country's ten provincesto discuss these reports, and the conclusions of these seminarswill be disseminatedthrough the media. The modalitiesfor involvementof donors and all relevant stakeholdersin the use and monitoring of the debt resourceswill be detailed in the full PRSP. V. THE FLOATING COMPLETION POINT 44. Following the guidance of the Boards during the discussionson the preliminary document in June 2000, the floating completionpoint triggers have been negotiated with the Cameroonianauthorities.They have also been revised to make them more broad-based, while maintainingthe key features which are objectivelymonitorable. Box 7 presents a summaryof these triggers. - 25 - Point Beforethe Completion to be Achieved andObjectives KeyReforms Box7. Cameroon: The floating when: point wouldbe achieved completion StrategyPaper PovertyReduction . The full PRSPhas beenpreparedandsatisfactorily for at leastoneyear. implemented reforms andstructural Macroeconomic * There is continuedmaintenance and satisfactory environment of a stablemacroeconomic implementation of a new,three-year PRGFprogram. * Thebudgetary withthe criteriaset forth savingsfromthe debtreliefhavebeenusedin accordance at the decisionpoint(controland monitoringmechanisms). * manner. in a satisfactory andreformshavebeenimplemented SACIIIhas beenconcluded andanti-corruption Governance . Thepriority strategy and action plan for improvinggovernance andcombatting corruption attachedto the I-PRSPhavebeensatisfactorilyimplemented,in particular: - in the areaof judicialreform,(i) the Chambre des Comptes (auditoffice)and(ii) the Conseil Constitutionnelhavebeencreated. - the publicprocurement systemhas beenreformed auditsforthe preceding and,in particular, fiscalyearhavebeencompleted and appropriate follow-upactionsimplemented, in accordance with the law. - in the areaof budgetaryexecutionandservice the resultsof the budgettracking delivery, exercises assessments andbeneficiary andhealthhavebeenpublished foreducation andthe relevant recommendations havebeenimplemented. * agencies. Regulatory Regulatory for keysectors agencies (including water,electricity and are autonomous telecommunications) andare operatingin an efficientand professionalmanner. Socialsectors * Education implemented sector.The sectorstrategyhas beensatisfactorily in a timelymanner,and 2,500newclassrooms in particular:.(i) havebeenbuilt;and(ii) teachermanagement has been effectivelydecentralizedandnewteacherstatutes havebeenadoptedandimplemented. * Healthsector.The sectorstrategy implemented has beensatisfactorily in a timelymanner,andin particular(i) childimmunization ratesforDPThavebeenincreased to 70 percent; and(ii) knowledge aboutprotectionandprevention measures againstmalariawill havesubstantially increased,ie., 50 percentof pregnant womenare usingimpregnated bed-nets. HIVIAIDS * Concreteprogresshas beenmadeto prioritize the fightagainstHIV/AIDS in the government's overalldevelopment agendaandto curb infection ratesamongthe population, withparticular emphasis on educationto promotethe use of condoms to portworkers,and soldiers by truck drivers, 50 percent,andby commercial sex workers to 70 percent. - 26 - VII. ISSUESFORDISCUSSION 45. Executive Directors' views and guidance are sought on the following issues: * Eligibility and assistance under the HIPC Initiative and interim relief. Overall, Cameroonhas made progress with respect to the key reforms, objectivesand milestones as outlined in the HIPC Preliminarydocument. While the challenges facing the country are inmmense, Cameroon would seem to be prepared to effectively use the HIPC resources for poverty alleviationpurposes. Therefore, the management and staff believe that Cameroon qualifies for assistanceunder the enhanced HIPC Initiative and recommendapproval of a decision point. Do Directors agree?. * Amount and delivery of assistance. In order to reduce the NPV of debt to exports ratio to 150 percent, the total amount of assistance required is US$1.26 billion in NPV terms. Do Directors agree? In view of the fact that satisfactory financing assurances would have been provided by creditorsholding about 85 percent of total debt (NPV terms), the staff proposes that interimassistance be provided to Cameroon by the Bank and the Fund between the decision point and the completion point. Do Directors agree? - Completionpoint. The management and staff recommend a floating completion point that would be reached when the triggers specified in Box 7 are achieved. Do Directors agree? - 27 - Figure 1. Cameroon: Composition of External Debt, End-June 1999 Before Rescheduling: NPV of Debt-US56, 601 million Commercial World Bank Group 11% l10 IMF Non-Paris Club AfDBAfDF 1% /- 4% Other multilaterals 2% Paris Club 70% After Rescheduling: NPV of Debt-US$4, 691 million 11 Commercial World Bank Group 5% 14% Non-Paris Club j IMF 1% --- 73%/ / AfDB/AfDF Other multilatemiss 2% Paris Club 69% Sources: Cameroonian authorities; and staff estimates. 11After simulation of traditionaldebt relief mechanisms. - 28 - Figure 2. Cameroon: NPV of Debt-to-ExportsRation (After Rescheduling), 1999/00-2018/19 NPV of Total Debt to ExportsRatio 200.0- 180.0 160.0 140.0 120.0 100.0 80.0 60.0 40-0 20.0 - 0.0 1999/00 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008109 l- ' ftertraditionaldebt relief -Alter enhanced HIPC assistance Camneroonian Source: authorities andstaff estimates and projections. - 29 - Figure 3. Cameroon: Key Debt Indicators, 1999100-2018/19 Debt Ratio1I Service 16.0- 14.0 12.0 10.0 - R 8.0 , . - _ ~~~~~~---------- 6.0 4.0 - 2.0 0.0 1999/00 2000/01 2001/02 2002/03 2003/04 2004/05 2005106 2006107 2007/0S 2008/09 - Aftertraditional debtrelief-... HIPC assistance Afterenhanced Debt Serviceto GovernmentRevenuesRatio 1/ 25.0 20.0 15.0- ' 10.0 5.0 0.0 1999/00 2000/01 2001/02 2002103 2003104 2004105 2005/06 2006/07 2007/08 2008/09 |-A fter traditional debt relief. After enhancedHIPC assistance Source: Cameroonian authoritiesand staffestimates and projections. 11Scheduled debt service. - 30 - T1.b 1.Cante_o SfWd 6000.3 d Pae. _ Iailw,, 197.22 21 290W7 1MM97M 19"9 mo 2061"9 2f1, ft$. h.es rt Nawl ptt.bogt id pri ) aad 34a2os2woobe pnc 9DP'temstaonpaeus 35 5.0 4.4 43 42 42 5.3 3.7 OfoAlch: mv.4n CDP 5.n S.n 4.4 13 46 46 5.7 611 GD? dfotwr 21.1 1.2 .1.2 2.1 13 I3 Ia I I con-orrdc,(12watulen m, ) 2 4.1 19 29 2n 211 et 2n 2.0 Corbm-picab(l-doprd) 71 22 2.2 2.n 2n a ll 2t 20 Nooiol GDP Cm bitr. of CFA rfoAl 4,*932 5.240 3.406 . .7 3,111t 57111 Sllt 6.576 Gi3o.0om t orbariof adk.) 211 Its 119 I2I 114 113 lie 3111 E.wval Indc Evn CmSD(Is) 194 43 .354 76 242 2521 14 25 Of..hJh: cw4dcoi 3611 .167 .94 211 772 b1ig .125 *132 I..p^ .SDR.) 26.5 132.4 3.1 4? 54 1 1 22 1.9 Enpoia,lIm 13.4 11A 1.2 2.3 .0.l .11 5.4 5.4 Of.llJc: it-an .2c0 15.4 16.5 3.3 1.3 1.1 233 9.4 3.7 lm0po016olunt 19.3 14.3 1.6 6.1 22.t 16 1.2 9.3 Avdp oi-o.prkn (U,1do32,pobtorrl It9.7 U2.3 12.3 11.2 22' 23.6 21.2 IJ2 N alitel.chompra' -2.4 *19 24.5 4.1 - Rn5ef_tt4ewo..oba.a.,o5' *1.. 4.6 .3 _1. . .123 Ange, .ooaVul.(CPA tfts pCSD1) 767 1 2 1.., ... ... Ta..iv othog 1.1 .4 ."'3 t.0 324 3.35 46.4 *2.7 No..o4.oxopr4ouiathnCmCFAfrnoa) .4.4 9.2 -2.3 23 9.7 [22 4.2 3.6 Mot, od oredit (god orfp iWD Met do..cd w' .3,s 12.7 9.2 4.t .6.4 .34 4.9 3.6 .dkod. Net pd.Wkr ' 3.1 2.0 4.2 0. .11.2 .7.9 *1.. *2.9 C.di2to o p4tw row 3.3 3113 11.2 20.4 9? 11.0 11.6 11.7 Stood mo.y (M2) 13. '2 9.7 12.3 m1.5 2121 .6 11.3 Veloity(GDftnop 2 r.i 7.6 7.2 619 62 6? 65 6.3 D6Colit UN. (WedcfpUiod: i3. _00 ) 7.3 7.0 1.6 ... ... .. ToW mvam 10.9 17.2 .11 24.S 294 30.3 2. 2.0 Ofon*.: o.l Comm 2.9 23.1 9.S 2o.6 S.3 90 22.6 11.9 Total _w iow. t7 1.2 9.2 1j0 7.9 .04 4.1 16.9 CoaTo2s,pendiloc 2.7 10.6 5.7 2.0 2.2 2.1 3.6 13.3' Capialepeditatr" 51.1 41.7 12.7 69.1 614 42.4 173 11.0 (2. pw tdGDP. o.6mw. i_dicomedJ Cronmaiolusvlmp 133.4 15.7 15.2 16.6 15.2 15.3 15.0 23.3 Goo. do.ew alin ag, 262 12.4 19.5 19.J 11.0 16.0 17.4 27.9 CoeouvlSvmmoo-nooos 15.1 1562 13.5 16.6 19.0 192 19.3 123 Of-.hic: iooAli-eao 11.0 22.3 23.0 1 32 23.3 1 3.5 24.4 14.6 .o-oil2 re 12.2 13.4 13.9 14.5 23. 13.7 15.3 12.9 C00t9 010l.oam w2ed.it_ 36.3 17.9 a0,9 19.6 . 19.4 17.9 its 20.4 02322l.defficit (ML gmat) .1.0 *1.7 .3.4 .2.9 .e.3 13 0.5 2L1 0elol oideflilt(OL10nD0) .1.0 -1.4 .3.2 .2.6 .. 1 1.6 0.6 .20 P*imog... l 3.3 5.9 4.6 3.2 7.1 7.2 6.7 4. Of nch: io-ol wow 1.7 2.n 21. 2.0 1.6 1.3 1.4 0.9 N2 oreun r 9.3 2n.3 11.0 11.6 11.9 12.0 12.7 13.1 NoMCbe p.blodedb(b.tfof wbdit) 32.3 25.5 233 203 20.5 I2.3 14.1 22.2 Cwr. anamea 6.2... (lactifditag,ot) *2.2 .27 -43 .33 .2.7 1.6 .24 2.4 E0.oal p.li debl' *3.5 *t.S 07.9 n7 tI 2..0 m. 7t5.0 N.6pmeo.ook...(N ?V)ot.oo..e.Ipebbd btl 271.1 2100 203.1 09.4 203.0 192.2 179.0 160.3 Soh2,d de,ool d.6geeia* 44.3 40.4 43.1 42.2 34.0 31.4 29.4 249 S&W0wd_d _ M -n-.0 74.1 6.2 71.22 IS.7 36.9 51.6 463 39.4 A .e,akdmi 19fi 161 27. 1729. .0 142 Aco.a.ro_lo,..3do2.eoo. 732.t ' 26.4 2211. 23.0 Cum acrlooObe.Iaoc .36 *173 -292 .221 .77 .2104 .163 .174 GOv -lbolimm0otpe3 -033e .336 *249 .3S6 .337 .I96 *142 .2 *197 Neti gm-Aa.A.o ove so(cdofpoaod) .2K .*312 2911 .231 .145 . 40 30 Soooa: C_nbr..a4,0h6e9 as otuff ,,.sg p.ojeos~ 1/ 1icl ywbWo h n ly. 3YFor 199l20e0. dAb fn Jl,y 1999o Apr2 7Co 4 SutiasinL 192939t7.am m tbuoed bo etd iatomao. O to baId r*4 ie IWt9. it 2.p.oofo.Oo(6.od bq2.11.gof6.pa4 61 ExcI.fdio h3 t iti4haixea. adddo. d. p6eeo.y op.di.* I. oIeadOoormat2ig .opeadiotv. 71 Iapo.edGDP V/ E0un.l 9oc0s1 dw, md of 193971 Im beanrmioawd wd030 r12od@@t* diwlg*ad dlb c i0u P.4 Ci bV d006io 6W o3 g. 91 Sdo. aplo flhsloofdufde ds. I242sefb e0 4 - 31 - Table2. Cameoon: Main Assumptions on Macroeconomic Framewotlc,1998/99.2018U19 i1 _ , ~~~~~~~~-=!L_ _ _ A_n 2010/11-013114.016/17. 1998/99 2000/012001102 1999100 2002/032003042004/03 20W07 2007/002009 2005/06 2014/19 2009/10 2012/132013116 of GDP. (In perceno unlessodawisoindicated) Eeanoc girwth andpries RealGDPpercmnemtchange) 4.4 42 53 5-7 60 60 6.0 60 65 6.5 65 65 6.1 61 70 62 RealGDPpercWirta(percentapehange) 16 14 23 29 32 32 3.2 32 40 40 40 40 42 43 45 16 Conmesrprices(wail prentage change. neraag) period 29 08 20 2.0 2.0 20 20 20 20 20 2.0 2.0 20 2.0 20 20 Nadaln aeteuowt Groudomesucinvesunt 19S 16.1 17.4 17.9 1t.t 20.2 20.7 212 21.4 21.6 21.7 218 21.7 217 217 20.7 OoG,mnawu 23 1.4 2.0 27 3.3 4.3 4.6 4.7 4.z 3.0 5.0 3.1 3.1 5.1 5.1 43 Othe 17.1 15.4 15.4 15.2 15.5 15.9 16.2 16.5 16.6 16.7 16.7 16.7 16.6 16.6 16.7 16.3 GrandoeMaucmAvnp 19.0 20.9 19.3 18.8 19.0 20.1 20.2 20.4 206 20.8 20.8 20.9 21.0 20.9 20.9 20.4 Gaenumant 5.0 1.4 *.0 60 5.5 5.1 S.1 48 52 5.4 5.3 5.0 5.8 5.4 5.8 5.7 Otheu 14.1 12.6 11.3 12.8 13.5 15.0 13.1 15.6 15.4 1I.4 IS.4 15.9 15.2 l5.4 15.1 14.7 SavinsAvesorAntobunw .4.3 -1.6 .2.4 -2.4 .2.5 -2.3 -2.2 *2.0 *1.9 .1.7 -1.6 .1.4 -1.3 .1.3 *1.1 -1.t Gaveemmun fbuknc* Totalrevenue 155 192 19.3 It3 II.8 19.3 19.t 19.8 203 20.3 20.5 204 20.7 20.7 20.1 19.9 Oilrevenue 25 5.7 5.3 37 28 2.3 2.1 1.5 1.2 1.0 0.8 0.7 0.6 0.4 0.3 16 No-oilrevereso 130 135 14.0 146 160 17.0 17.8 It3 19.0 192 19.6 19.7 20.1 20.2 20.5 Is.3 Total expenditurt IS9 17.9 18.1 204 210 22.3 22.8 23.1 2.3 23.4 23.7 24.0 23.4 21.5 23.0 22.3 Carrntenpadle 15.2 149 15.0 15S 15.9 16.S 16.7 169 16.9 16.7 16.9 17.1 16.6 16.7 16.3 16.4 Capitsexpaadtu 36 2.7 3.I 4.5 5.0 5.8 6.1 6.3 6.4 6.6 6.7 6.8 6.8 6.8 6.7 6.0 PaimmyWmloce 4.6 72 6.7 4.6 38 2.9 26 2.1 2.2 2.1 1.9 1.3 1.S 1.0 1.0 25 Ovral balnce (commirenAt bli. excludingnes) .3.4 1.3 0.5 -2.1 -2 1 -3.0 -2.9 .3 3 -3.1 -3.1 -3.2 -3.6 .2.7 .2.9 .2.2 -2 5 Ohlanceorpaymets (in billion of CFAfranc. uotbenitc indicaud) Exporsofgodsa ndsarvicus 2 1,323 1,770 1.,25 1,873 1.974 2.105 2,244 2.379 2.522 2.677 2.140 3,023 3.486 4,29S 5.326 (in million ofU.S. dollars) 2.249 2.743 2,766 2.868 3.051 3,286 3,38 3,768 3.995 4,240 4.499 4,791 5.521 6.801 t,436 Exporsofpods andoeanices (3-yer mvg vg.) 1.320 1.494 1.640 1.823 1.,91 1,915 2,108 2.243 2,3S2 2,526 2,680 2,947 3,251 4.011 4.964 (in millionsof U.S.dollar) 2,27 2,432 2.5Z6 2,792 2.895 3,068 3,292 3,531 3.767 4,001 4.245 4.510 5,161 6.353 7.t63 As apercenotfGOP 24.4 26.2 26.8 27.7 267 25.9 25.5 25.1 24.5 24.0 23.4 22.9 22.1 21.1 20.1 Impomofgoodsandervioe 2 -*1347 .1.584 *1.712 -1.800 -1.947 -2,099 .2,273 2.431 *2.588 .2.756 .2.933 .3,123 .3.567 .4,429 .5499 (in millionsof U.S.dollus) -2,290 -2.435 -2.595 *2,753 .3.010 -3.276 -3,5e4 .3,s51 -4,100 .4,365 -4.646 .4.948 .5,651 -7D016 -S.711 Current ccnt, incehding pants .211 -139 .165 *.-176 -173 -171 -175 .183 .194 .203 -217 .223 .271 .340 .402 (in dllionsof U.S.danlls) .393 .215 *2S1 .269 -267 *266 -273 .70Q -307 .321 .344 -354 *429 .539 .637 Cume wcour, exduluggpnto .241i 139 -171 .1*2 -;-73 -171 .175 -123 .194 .203 -217 .223 .271 .340 .402 (in millionsofU.S. dollies) -410 .215 -260 .278 -267 .266 .276 .290 .307 -321 -344 *354 *429 .539 637 Cvmt acenu including Wra 0n percnsofGD?) -4 -2.4 -2.7 -2.7 -2.4 -2.2 -2.1 -2.1 -2.0 -19 .1.9 -1. .1.1 -1.1 -1.6 -2.1 Ovendlbalance .314 -152 .149 -14S 204 171 252 *127 .79 .64 .72 .t0 67 t2 9t (inmiIliinsofU.S.dollaes) .534 .235 -226 .227 316 268 397 .201 -125 -102 -114 .127 107 131 154 NewnonswborrwAing 236 214 265 286 301 321 342 364 3I1 398 471 436 451 493 124 (in millionsofU.S. dollros) 342 299 369 405 431 466 503 541 568 595 710 634 679 745 795 OverallfinancingPo 0 0 a 3 3 4 4 3 3 3 3 4 3 4 6 (nminnm ofU.S.dollem) 0 0 12 4 5 7 7 5 5 5 6 6 5 6 9 Groaoof6cielnemavu(ovwuukofinm u)y3/ . 0.4 0.3 0.7 1.1 3.4 4.5 6.0 8.7 10.3 12.1 15.3 17.0 19.1 203 20.6 17.4 Expovolungowth me)" chde 8.2 -1.1 5.4 5.8 3.3 3.7 4.4 4.8 5.4 5.6 5.6 6.1 6.9 7.0 7.3 5.8 Inv*"tolwnmcowda( i nme)3/ 1.0 8.6 8.2 9.3 7.6 7.5 1.5 7.3 6.6 6.6 6.5 6.6 7.2 7.5 7.5 7.2 TmnmofTnode(p.ecupdchaen) -15.3 3.5 .6.4 -2.7 0.1 2.2 1.5 0.6 0.1 0.0 0.0 0.0 0.1 0.0 0.0 0. Oilpncas forComemon(USSpetbwrl)4/ 12.3 23.6 212 lI2 17.7 17.9 11.1 1t2 1.2 1.2 It.2 11.2 18.2 162 18.2 18.2 M.mrnoumt hern: NominalGDP tnbillionsofCFPAfro,cs 3,406 3.701 6.111 6.576 7.096 7.657 S,262 8.933 9,704 10,341 11,451 12,439 14.749 19,056 24.736 Cminillionsof U.S.dollas) 9.1t6 *.681 9.191 10.059 10.ff9 11.932 13,024 14,150 15.371 16,69t 11,139 19,704 23.363 30.186 39,214 Governmentveues 838 1.093 1.179 1.202 .I3S 1.475 1.639 1.772 1.967 2136 2.342 2,532 3.052 3,939 5.140 (in inillionsofU.S dollwtn) 1,424 1.666 1,773 1,39 X064 2.303 2.5t4 2,807 3.116 3.384 3.710 4.011 4,835 6,240 8,142 Sounci Caaenian ar'oenatis sta tndmen md pt4ocd3 mnd n I/ FVcl yer beins in July. 2/Eupors(impots)of goodo d Asnmenal defined n i ld, alane ofP to s onau. 5Oh 1993. edison. 3/Merchindie only(f.b). 4/WEOoil pricesdiscoosted per bwrL byUSSI - 32 - Table 3. Cameroon; Nominal Stocks and Net PresentValue of Debt at DecisionPoint by Creditor Groupsas of end-June,19991/ Nomninal DebtStock N'PV of Deti Niv ofDebt Aftr Rescheduling 2 USS imillion Percent USS mrillon percent USS million Percent of total of tota of total Total 7,802 1000 6,601 100°. 4,691 100.0 IMultilateral 1,642 21.1 1,206 15.3 1,206 257 African Development BankGroup 304 39 293 44 293 62 Arican DevelopmentBank 230 29 262 4.0 262 56 African Development Fund 74 09 30 05 30 06 World BankGroup 1.023 13.1 666 10.1 666 142 IBRD 294 3.S 307 4.7 307 6S IDA 723 9.3 359 5.4 359 7.7 tMF 176 2.3 137 21 137 2.9 IFAD 15 0.2 11 0.2 I1 0.2 BADEA 7 0.1 7 0.1 7 0.2 1DEAC 3 0.0 3 0.0 3 0.1 EU 94 1.2 68 1.0 68 1.4 EIB 20 0.3 20 0.3 20 0.4 EDF 74 1.0 47 0.7 47 1.0 OPEC I 0.0 I 0.0 1 0.0 IsDB 7 0.1 7 0.1 7 0.2 NIB 13 0.2 13 0.2 13 0.3 ParisClub: 5,365 68.8 4,614 69.9 3,205 68.3 Post-cutoffdate 1,276 16.4 1,094 16.6 1.094 23.3 Pre-cutoffdate 4,088 52.4 3,520 53.3 2.111 45.0 ODA 834 10.7 650 9.9 562 12.0 Non-ODA 3,254 41.7 2,869 43.5 1.549 33.0 by country: Austria 512 6.6 432 6.6 267 5.7 Belgium 206 2.6 183 2.8 124 2.6 Canada 309 4.0 259 3.9 128 2.7 Denmark 118 1.5 101 1.5 59 1.2 Finland I 0.0 I 0.0 I 0.0 France 1.955 25.1 1,731 26.2 1,548 33.0 Genrany 1,410 18.1 1,132 17.1 536 11.4 Italy 199 2.5 170 2.6 130 2.8 Japan 34 0.4 35 0.5 35 0.7 Netherands 58 0.7 44 0.7 27 0.6 Spain 100 1.3 92 1.4 91 1.9 Sweden 124 1.6 116 1.8 48 1.0 Switzcrland 47 0.6 44 0.7 32 0.7 UnitedKingdom 209 2.7 202 3.1 132 2.8 UnitedStates 82 1.1 73 1.1 48 1.0 Otherofrieialbilatmral: 99 1.3 s5 1.3 49 1.1 Post-cutoff date 23 0.3 23 0.3 23 0.5 Pre-cutoff date 76 1.0 62 0.9 26 0.6 ODA 51 0.7 46 0,7 20 0.4 Non-ODA 25 0.3 16 0.2 6 0.1 by country: China 51 06 40 0.6 I 0.4 Kuwait 25 0.3 23 0.3 21 0.4 SaudiArabia 24 0.3 23 0.3 lo 0.2 Commercial 3/ 696 8.9 696 10.5 230 4.9 Sources; CanerDonian authoritiesand staffestimates. I/ Information basedon latestdataavailable at decision point 2/Stockof debtoperationon Naplesterms from oflicial bilateralandcommercialcreditors. 31AlthouBhasmallpart of the debt is not in arreaes,for the purposeof thepresentDSA,all the debt is assumed to be it arrears sincethe goverment hasnot beenservicingthisdebtfor a longtime. - 33 - HIPCInitiative--Alternative Table4. Cameroon: Assistance Undera Proportional Levels Burden-Sharing Approach 1/ (in millionsof U.S.dollarsin end-June 1999NPVterms,unless otherwise 2/ indicated) Memoitem: Total Multilaterals BilateralsCommercial Common RequiredNPVdebt Banks Reduction reductionon Factor 3/ comparabletreatment on (Percent) bilateraldebt based on overallexposure4/ (Percent) Debt reliefunderbaselinescenario 1,260 324 874 62 26.9 Memorandumitems: NPVof debt5/6/ 4,691 1,206 3,255 230 exportaverage Three-year 2,287 ratio (percent)7/ NPVof debt-to-export 205 ParisClubcreditors: 75.6 of which:pre-cutoff datenon-ODA 85.2 Non-ParisClubCreditors: 75.6 of which:pre-cutoff date non-ODA 77.3 authorities;and staffestimatesand projections. Source:Cameroonian I/ Assumesproportional burden-sharing as describedin "HIPCInitiative:Estimated CostsandBurden-Sharing Approaches" (EBS/97/127; 7/7/97,and IDAISECM97-306;7/7/97), that is, after full application of traditionaldebt reliefmechanisms. 2/ Usingsix-month backward-looking discountratesat end-June1999and end-June1999exchange rates. 3/ Eachmultilaterals'NPV reductionat the decision point in percent of its exposureat the decisionpoint. 4/ Includestraditional debt relief. 5/ Appliesa hypothetical stock-of-debtoperationonNaplestermsfor dataat end-June1999. 6/ Basedon latestdata availableat the decisionpoint after full application of traditional mechanisms. debt-relief 7/ Uses the latestannualdata at the decisionpoint on the three-yearaverageof exportsof goodsand nonfactorservices. - 34 - Table 5. Cameroon:Discount Rate and ExchangeRate Assumptions as of end-June, 1999 Currency Discount Rates 1/ ExchangeRates (in percent) (perUSdollar) Austrianschilling 4.61 13.32 Belgian franc 4.61 39.06 Canadian dollar 6.02 1.47 CFAfranc 4.61 635.12 Swissfranc 3.74 1.55 Chineseyuan 4.87 8.28 Deutsche mark 4.61 1.89 Danishkrone 4.81 7.20 Europeancurrency unit/euro 4.61 0.97 Finnishmarkaa 4.61 5.76 Frenchfranc 4.61 6.35 U.K. pound 5.82 0.63 Italianlira 4.61 1,874.78 Japanese yen 2.32 121.10 Kuwaitidinar 4.87 0.31 Dutchguilder 4.61 2.13 Norwegian kronor 6.02 7.85 SaudiArabian riyal 4.87 3.75 Special Drawinglights 4.87 0.75 U.S.dollar 6.00 1.00 Cerntral Sources: European Financial Bank;IMF,International OECD;andst Statistics; 1/ The discountratesusedare the averageCommercial Interest ReferenceRates(CIRR)forthe respective period overthe six-month currencies prior to end-June1999. Net Present Table6.Cameromo: 199S/99.201819 ValueorExterml Deh Afta Rescheduling. I/ caberia indctsd) (in millios of U.S.dolla. mnlks 201011- 201V114- 2016117. 1991s 1990100 20001012001102 2002103 20D3104200410 200506 2006037 2007100 20019 2000110 20121V32015116201U119 Ace_ Estimme L AlXtr tradiliana debt relid TOtW I.NPVoftnIdebl(2+5) 4,691 4.675 4.630 4.700 4.777 4.,73 4.9S9 5,070 5.206 5.311 5.432 5.567 5,377 6,443 7.057 2. NPV*el det(3r+4) 4,691 4,535 4.3R2 4,250 4.102 3.946 3.766 3.597 3.445 3.299 3.169 3.054 2.557 2,573 2,210 3.Or tdbikata nlcoemmecial 3.415 3.445 3.391 3,336 3.252 3,16S 3.064 2,964 2.,75 2.780 26.7 2.594 2,42t 2.170 1.64 L ParisCkb 3.205 3.162 3,116 3,063 2X982 2.,97 2,797 2697 2.611 2.51b 2.430 2.342 2.184 1.966 1.714 b.Oter oieinlbititarad 49 47 46 43 41 33 33 33 37 37 36 35 35 35 34 C Com _wia 230 230 230 230 230 230 230 229 227 225 221 16 202 169 116 4. Multlaa 1,;07 1.090 491 914 I50 721 702 633 570 520 432 460 436 403 346 WarldMlnk Gop 666 615 569 323 496 46i 433 420 407 399 339 379 364 333 239 IMF 137 123 116 121 122 109 i5 60 34 t0 0 0 0 0 0 AID8IMDF 293 260 229 I9 169 146 124 102 so 65 50 40 35 33 32 Odm0 III 92 73 68 a 63 S 55 Sl 43 45 43 41 33 32 26 5.NPVofnewd lt 0 139 247 451 675 927 1.19 1,473 1,761 2.011 2,263 2.513 3.020 3.370 4,846 IL After eabsond RlPCaalnmact Teaw l. NPV toloud debt(245) 6.602 6,392 4.977 5.195 3,358 3,471 3,376 3,699 31,49 3.973 4.110 4.246 4.574 5,205 5,971 2. NPVoodet(3+4) 6,602 6.253 4,729 4.744 2.613 2,544 2.334 2,226 2.017 1.962 1,U47 1.735 I.553 1.331 1,125 3.Of3ilbiluaweal ndoammaercial 5.396 5.163 3,926 3.,76 2,124 I,991 1.65 1.721 1.606 1.499 1.39g 1.304 1.142 955 793 L Pods C,,b 4,615 4.339 3.705 3.758 2.011 1,392 1.755 1,621 I,SII 1.405 1,306 1.21) 1.054 172 71S b.Odw1r11cialbilur $S 73 53 Sl 45 36 34 30 26 25 24 23 22 21 22 ;Com_ida 696 696 69 69 69 69 69 69 69 69 69 68 67 62 53 4. Mutilas 1.207 1,090 903 367 553 545 526 5C6 432 463 443 431 411 383 332 Wod BankGoup 666 615 512 494 321 13i 342 350 355 366 372 36S 352 323 232 lIW 137 123 IIS 120 34 73 55 42 22 4 0 0 0 0 0 AIDS/AIDF 293 260 202 1ss 121 103 97 36 75 67 52 42 37 3S 31 Others III 92 74 65 33 31 29 28 26 25 24 24 22 20 13 S.NPVd newdbet 0 139 247 451 675 927 1.193 1.473 1,761 2.011 2.263 2.513 3.020 3.370 4.846 IIL After im a ledeRvemy ofebaaeedHllC aIsblace at the refertan dale(June 199) Toald I. NtPVofoaldebt(2+) 3,430 3.485 3,558 3.753 3,353 3,471 3.576 3.697 3.S49 3.973 4,110 4.245 4.574 5.20S 5.971 2. NPVefolddeo (34) 3.430 3,345 3.310 3.303 2.6i3 2,544 2,334 2j226 2.037 1.962 1,U47 1.735 1.533 1.336 1,125 3.Olrilbieal andommercial 2.549 2595 2.641 2.6i7 2.124 1.99S I1,s5 1.721 1.606 1.499 1.399 1.304 1.142 95S 793 aParisChib 2.344 2,441 2,538 2.635 2,011 1,392 1,755 1.621 1.511 1.405 1.306 1.213 1.OS4 n72 713 eoeffioiluntan b.Orw 47 35 24 12 45 36 34 30 26 23 24 23 22 23 22 c Com_eiat 157 [is 73 39 69 69 69 69 69 69 69 63 67 62 53 4. Mutiutual 332 7531 670 616 553 545 526 506 432 463 443 431 411 383 332 Woadd lnkGroup 487 425 390 364 321 332 342 350 356 366 372 365 352 323 292 3543 lOo S5 73 *2 34 75 5S 42 22 4 0 0 0 0 0 AIDB/MD?F 214 171 154 134 121 108 97 66 75 67 52 42 37 35 33 Otbhr 0o 62 47 36 33 31 29 2n 26 25 24 24 22 20 1a 5. NPVof newdebt 0 139 247 451 675 927 1.193 1,473 1.761 2.011 2,263 2.513 3,020 3,370 4,U46 Soeu aalhoitiea. Cesoroonian aN,5ff maitatra. ItAu dARitdiao to publicand refer plidy guaateed (PPt) deb andwe defm indikaed edafterrackedlin. aunlt otherebise Table 7. Cameroon: ExtermalDebt Service After Rescheduling, 1999/00-2018/19 (in millions of U.S. dollars,unlessotherwise indicated) Averages 2010/11- 013/14- 016/t7- 1999/00 2000/01 2001/02 2002/03 2003/04 2004/052005/06 2006/07 2007/08 2008/09 2009/10 2012/13 20151162018/19 Estimate After traditional debt relief Total 384 372 353 366 374 411 418 414 425 432 440 442 473 537 Existing debt 382 368 344 352 354 372 359 334 320 298 274 236 228 242 Multilaterals 179 152 129 112 113 123 115 106 90 75 54 34 34 39 WorldBankGroup 88 80 72 60 54 54 41 34 29 30 30 26 28 34 IMF 21 10 2 6 20 33 40 40 36 22 9 0 0 0 BankGroup AfricanDevelopment 46 44 42 38 31 29 28 26 20 19 12 4 2 2 Others 24 IS 13 9 8 6 6 5 5 4 4 4 4 3 Offcialbilateral 193 205 204 229 230 238 233 216 217 209 204 184 173 176 ParisClub 188 201 200 225 225 236 231 214 215 207 202 182 171 174 NonParisClub 4 4 5 4 5 2 2 2 2 2 2 2 2 2 Commercial :i i ii I1 It 11 11 12 13 14 15 17 21 27 New debt 1 4 9 14 20 39 59 80 106 134 166 206 245 294 AfterenhancedHIPCassistance Total ... 312 226 242 291 328 347 340 346 360 378 375 389 431 Existingdebt ... 308 217 228 271 289 288 260 240 225 212 170 144 137 Multilaterals ... 123 85 61 42 52 60 61 55 52 48 32 32 38 WorldBankGroup ... 58 46 30 6 S 10 11 11 14 26 26 28 34 IMF ... 7 2 4 14 24 32 32 30 17 7 0 0 0 AfricanDevelopmentBankGroup ... 39 24 22 18 17 16 15 11 19 12 4 2 2 Others ... 18 13 5 4 3 3 3 2 2 2 2 2 2 Official bilateral ... 184 129 164 226 234 225 196 182 170 161 134 107 93 ParisClub ... 178 122 155 214 225 216 187 177 164 155 128 101 86 Non ParisClub ... 4 4 6 9 6 5 6 2 2 2 2 1 1 Commercial ... 2 3 3 3 3 3 3 3 3 4 4 5 6 Newdebt ... 4 9 14 20 39 59 80 106 134 166 206 245 294 HIPCassistance Differencebetween and traditional debtrelief ... 60 127 124 83 82 71 74 79 73 62 66 84 105 Memorandum items: Exportsoftgoodsandnonfactorservices2l 2,743 2,766 2,868 3,051 3,286 3,538 3,768 3,995 4,240 4,499 4,791 5,521 6,803 8,436 Debtserviceratioaftertraditional debtrelief 14.0 13.5 12.3 12.0 11.4 11.6 11.1 10.4 10.0 9.6 9.2 8.0 7.0 6.4 Debt scrviceratio after HIPCassistance ... 11.3 7.9 7.9 8.8 9.3 9.2 8.5 8.2 8.0 7.9 6.8 5.7 5.1 Sources:Cameroonianauthorities;and staff estimates. defined after rescheduling,unless otherwiseindicated. 1/ All debt indicatorsrefer to publicand publiclyguaranteed(PPG)debt and are 2/ Asdefined in IMF, Balanceof PaymentsManua4 5th edition, 1993. Key ExternalDebt Indicators, 1999/99-2018/19 1/ Table 8. Cameroon: indicated) otherwise unless (in percent, Averages 2010/11-013/14- 016/17. 2002/032003/042004/052005/062006/072007/082008/092009/102012/132015/162018/19 1998/99 1999/002000/012001102 Actual Estimate After traditional debt relief NPVofdebt-to-GDPratio 51.1 53.8 50.4 46.7 43.6 40.8 38.1 35.8 33.9 31.8 29.9 28.3 25.2 21.4 18.1 NPVofdebt-to-exportsratio 205.1 192.2 179.0 168.3 165.0 158.8 150.6 143.6 138.2 132.7 128.0 123.4 114.1 101.6 89.9 ratio NPVofdebt-to-govemment-revenues 329.5 280.6 261.1 255.5 231.5 211.6 191.9 180.6 167.1 157.0 146.4 138.8 121.9 103.6 87.0 Debtserviceratio ... 14.0 13.5 12.3 12.0 11.4 11.6 11.1 10.4 10.0 9.6 9.2 8.0 7.0 6.4 ratio Debtservice-to.govemment-revenue ... 23.0 21.0 19.2 17.7 16.2 15.9 14.9 13.3 12.6 11.6 11.0 9.2 7.6 6.6 After enhancedHIPC assistance NPVofdebt-to-GDPratio ... ... 54.1 51.6 30.6 29.0 27.5 26.1 25.0 23.8 22.7 21.6 19.6 17.3 15.3 NPVofdebt-to-exportsratio .,. ... 192.5 186.0 116.0 113.1 108.6 104.8 102.2 99.3 96.8 94.2 88.7 82.1 76.1 ratio(existingdebt NPV of debt-to.exports only) .. ... I82.9 1 169.9 92.7 82.9 72.4 63.0 55.4 49.0 43.5 38.5 30.3 21.2 14.4 NPVofdebt-to-government-revenues ratio ... ... 280.7 282.4 162.7 150.7 138.4 131.8 123.5 117.4 110.8 105.9 94.8 83.7 73.5 Debtserviceratio .,. ... 11.3 7.9 7.9 8.8 9.3 9.2 8.5 8.2 8.0 7.9 6.8 5.7 5.1 ratio Debt servicc-to-govemment-revenue .,. ... 17.6 12.3 11.7 12.6 12.7 12.4 10.9 10.2 9.7 9.4 7.8 6.3 5.3 committedirrevocably(at the CompletionPoint) assumed HIPC assistance After enhanced NPVofdebttoGDPratio 37.3 40.1 38.7 37.3 30.6 29.0 27.5 26.1 25.0 23.8 22.7 21.6 19.6 17.3 15.3 NPVofdebttoexportsratio 150.0 143.3 137.6 134.4 116.0 113.1 108.6 104.8 102.2 99.3 96.8 94.2 88.7 92.1 76.1 NPVofdebt-to-govemment-revenuesratio 241.0 209.2 200.7 204.1 162.7 150.7 138.4 131.8 123.5 117.4 110.8 105.9 94.8 83.7 73.5 _t Sensitivityanalysis Lowerexports seeneno NPVofdebttoexportsratio ... 192.1 176.7 164.5 160.3 153.4 156.4 161.1 167.6 158.9 149.6 141.0 127.9 111.7 95.3 Dcbtserviceratio ... 14.0 13.6 12.2 11.9 11.3 14.6 14.2 13.2 12.5 11.8 11.2 9.9 8.6 7.8 Debtscrvico-tgovernment-revenucrstio ... 23.0 21.2 19.1 17.6 16.1 15.8 14.7 13.1 12A. 11.5 10.7 8.9 7.3 6.2 loansscenario Lcssconcessional NPVofdebttoexponsratio ... 192.1 175.1 160.3 152.4 141.4 139.2 137.9 137.4 124.1 110.8 99.7 80.0 58.4 41.2 Debtserviceratio ... 14.0 13.6 12.1 11.7 10.9 14.0 13.5 12.4 11.5 10.5 9.6 7.6 5.6 4.3 Debtservice-to-government-revenueratio ., 23.0 21.1 18.8 17.2 15.6 15.1 14.0 12.3 11.3 10.2 9.2 6.9 4.7 3.4 Memorandum items: (in millionsof U.S. dollars) debtrelief NPV of debtaftertraditional 4.691 4,675 4,630 4.700 4,777 4,873 4.959 5.070 5,206 5,311 5,432 5,567 5,877 6,443 7,057 debtrelief Debtserviceaftertraditional ... 384 372 353 366 374 411 41S 414 425 432 440 442 473 537 NPVofdebtafterHIPCassistance ... ... 4,977 5,195 3,358 3,471 3,576 3,699 3,849 3,973 4,110 4,248 4.574 5,208 5,971 HIPC assistance ... ... 312 226 242 291 328 347 340 346 360 378 375 389 431 Debtserviceafter GDP 9,186 8.688 9,191 10,059 10,969 11,952 13.024 14,150 15,371 16,698 18.139 19,704 23,363 30.186 39.214 of goods andservices 2/ 2,249 2,743 2.766 2,868 3,051 3,286 3,538 3,768 3,995 4,240 4,499 4,791 5,521 6,803 8,436 Exports ofgoodsand services (3-yearmvg.avg.)3/ 2,287 2,432 2,586 2,792 2,895 3.068 3,292 3,531 3.767 4,001 4,245 4,510 5.161 6.353 7.863 Exports Government rewnue4/ 1,424 1,666 1,773 1,839 2,064 2,303 2,584 2,807 3,116 3,384 3,710 4,011 4,835 6,240 8,142 andstaffestimates. authorities; Cameroonian Sources: referto publicandpubliclyguaranteed I/ All debt indicators (PPG)debtandaredefined otherwise unless afterrescheduling, indicated. 2/ Asdefined in IMF, Ilalw,ceof Pa,nentsMauwl, 5thedition,1993. 3/ Based on a three-year average year(e.g..export on the previous of exports over 1997-99 average ratio in 1999). for NPVof debt-to-exports 4/ Revenues aredefined ascentralgovernment grants. cxcluding revenues, Table 9. Carneroon: Possible Delivery of IMF Assistance under the HIPC Initiative, 2000/01-2009/10 I/ unless (In millionsof USdollars. indicated) otherwise Financial Years 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 Financial Years 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Delivery of IMFassistance schedule (in percent of totalassistance) 8 1 2 8 15 18 I8 I5 12 3 0 I DebtservicedueoncurrentlMFobligations2/ 10.1 2.4 5.9 20.2 33.1 40.1 39.9 36.2 21.7 8.6 1.0 of which:Principal 7.9 0.0 3.6 17.9 30.9 3S.1 38.1 34.5 20.2 7.1 0.0 Interest 2.2 2.4 2.4 2.3 2.2 2.0 1.8 1.7 1.5 1.4 1.0 - deposits IMF assistance account: intoCameroon's 1/ InterimAssistance 2.9 0.4 0.7 CompletionPointAssistance 32.8 schedule IMF assistance--drawdown 3/ 3.0 0.4 2.3 5.9 8.8 7.9 7.6 6.1 4.7 1.2 0.0 withoutinterest IMFassistance 2.9 0.4 0.7 2.9 5.5 6.6 6.6 5.5 4.4 1.1 0.0 dueoncurrent I Debtservice IMFobligations after totalIMF assistance 2/4/ 7.1 2.0 3.7 14.3 24.4 32.2 32.3 30.0 17.0 7.4 1.0 I 00 Share dueoncuffentIMFobligations of debtservice covered percent) by totallMFassistance(in 2/3/ 29.6 16.8 38.3 29.2 26.5 19.7 19.0 16.9 21.7 13.9 0.0 Memorandum items: of each Proportion fallingdueduring repayment to bepaidby theperiod I HlPCassistancefromtheprincipaldepositedinCameroon'saccount 37.3 0.0 20.7 16.5 17.9 17.4 17.4 16.0 21.9 15.5 0.0 due5/ Totaldebtservice 310.3 220.6 234.6 283.5 318.2 332.7 321.3 316.1 316.3 306.0 285.3 of totaldebtservice Share bytotalIMF assistance covered 3/ (in percent) 1.0 0.2 1.0 2.1 2.8 2.4 2.4 1.9 1.5 0.4 0.0 Debtservice IMFobligations dueoncurrent 2/4/ aftertotalIMFassistance of exports) (in percent 0.3 0.1 0.1 0.4 0.7 0.8 0.8 0.7 0.4 0.2 0.0 Cameroon Source: andIMFstaffprojections. authorities 1/ TotalIMFassistance under theHIPCInitiativeisUSS36.9millioncalculated onthebasis of dataavailable point,excluding at thedecision interest earned ontheescrow account andoncommitted butundisbursed amounts asdescribed in footnote3. I 2/ Asof September I, 2000; obligations fromexisting drawings,converted usingthelatest USS/SDR exchange rateavailable. 3/ Includes estimated interestearnings on:(1)amounts heldinCameroon's account; and(2),upto thecompletion point,amountscommitted but notyet disburscd. It is assumed thatthese amounts eama rate of returnof 5.25percentin U.S.dollarterms; actualinterest earningsmaybehigher or lower. Interest accrued on(I) duringa calendar yearwill beused toward thefirstrepayment obligation(s) fallingdue in thefollowingcalendar year except in thefinal year. when it will beused toward payment of thefinal obligationfailingduein thatyear. Interest accrued on(2)during theinterim periodwill beusedtoward therepayment of obligations fallingdueduringthethree years afler thecompletion point Thecompletion pointisassumed to bein March 2003. 4/ Totalobligations less IIIPCInitiative assistance. Table 10. Cameroon: Possible Under the HIPC Initiative, 1999/00to 201U/19 Delivery of World Bank Assistance (in millions of U.S. dollars, unlessotherwiseindicated) 2003104 1999f002000(012001/022002V03 2005106 2004V05 2006(072007s08 2014/15 20151162016/17 2017/1S201V119 2008(09 2009/102010/11 201111220121132013114 World Bankdebt servicebeforeHIPC relief *2 79.6 72.4 59.9 S4.3 4.5 41.4 34.2 29.0 30.1 30.0 27.1 26.4 25.7 25.1 2t.6 30.6 33.7 33.1 34.5 IBRD 76.2 67.1 59.6 471 41.6 37.9 21.9 11.4 6.4 3.7 3.7 1.1 0.5 0.0 0.0 0.0 0.0 0.0 0.0 .0 IDA 12.0 12.5 12.8 12.7 12.7 16.6 19.5 22.t 22.6 26.4 26.3 26.1 2S.3 25.7 25.1 2s.6 30.6 33.7 33.1 34.5 Wolid Dankdebtservicc afterHIPC relief 38.2 58.4 45.7 30.2 7.1 9.1 10.5 12.1 12.0 1$.3 27.2 26.9 26.7 26.6 28.4 31.8 33.s 36.9 36.3 37.7 IBRD - 76.2 45.9 32.9 19.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 IDA 12.0 12.5 12.S 10.5 7.1 9.1 10.5 12.1 12.0 15.3 27.2 26.9 26.7 26.6 2t.4 31.8 33.8 36.9 36.3 37.7 1/ WorldBankassistance 0.0 21.2 26.7 29.7 4t.0 46.3 31.8 23.0 17.9 15.7 3.7 1.1 0.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Memorandum itenm: IBRD Debt reliefas percentof IBRD debtservicedue (in percent)2/ 0.0 31.6 44.7 58.1 200.0 100.0 200.0 200.0 100.0 200.0 100.0 100.0 100.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Interimasistance3/ 59.64 Interimreliefas percentof total 3/ 33.33 Sou: and Cunerosauthosities; IDA staffestimtecs. I/T rsulateintoUS$173.9 millionis NPVtaunms disou sd ecehge rat. tag updated 2/It ismasued thatIDA wouldprovide suppemen HIPC asingle debt eiferedit torepay ibeamount of IBRD outstanding debt thersaining NPVorreliefto be requiredto achieve povided t Worldflask reupdeM. Is mt pr_pentvalue(NV) tuMs - 40 - Tatle 11.Caneroon: Centa Govermnt operations, 199 ,99-2000f11/ (In biltions of CFA francs,unlessotherwiseindicated) 1999i2000 2000/01 200l/02 2002/03 2000/02 2002/02 2002t03 Before HIPC HIPC Atker Total revenue andgnts 1.093 L1IS5 1.20S 1,335 1.227 1,297 1.422 Totalrevenue 1.093 1,179 1,202 1,335 1.179 1,202 1.335 Oil sector revenue 325 323 244 191 323 244 191 Non-oilsectorrevenue 768 ES6 950 12137 156 951 1.137 Totalgrants(current) 0 6 6 0 40 95 17 HIPC 0 0 0 0 42 19 87 Other 0 6 6 0 6 6 0 Totalexpenditure 1.019 12146 1.339 1,488 2.,8I 1,42S 2.575 Currentexpenditure U47 914 1,040 1,130 935 1,085 1,173 Wages andsalaries 293 326 362 374 326 362 374 Othergoods andscrvices 191 229 294 40S 244 326 438 Of which:HlPCaistance 0 0 0 0 Is 31 30 Education 0 0 0 0 7 15 15 Health 0 0 0 0 4 9 a Socialaffairs 0 0 0 0 2 4 4 Ruraldevelopmnent 0 0 0 0 1 2 2 Goverance 0 0 0 0 2 2 2 Subsidies;andtnansfers 109 225 126 12S 121 140 141 Of which:HlPCassistance 0 0 0 0 6 13 13 Private schools 0 0 0 0 3 6 6 Private health cnters 0 0 0 0 2 4 4 Localcommunities (water,sjaitation.wa:tecollection) 0 0 0 0 1 3 3 Interest due 254 245 258 220 245 251 220 Capitalexpenditure 156 232 299 358 252 343 402 Foreign-finaced investment 51 92 144 19S 92 144 191 Domestically financedinvetment 73 110 125 160 130 170 204 Of which:HIPC 0 0 0 0 21 45 44 Education 0 0 0 0 S IS 17 Health 0 0 0 0 6 13 13 Social affairs 0 0 0 0 3 7 7 Ruraldevelopmeint 0 0 0 0 3 7 7 Restructuring 32 30 30 0 30 30 0 Overallbalance, commitments basis,excludinggrnts 75 33 -137 -153 .9 -226 -240 Overallbalance,comnitmentsbasis,includinggrunlu 75 39 -131 -153 39 -131 -153 Netchange in ana 99 .424 -100 -100 .424 -100 -100 Overil balance, cashbasis, excluding grants .24 .391 -237 -253 -432 -326 -340 Overt bilalnce, cashbasis, includingupmnts -24 -3Ss -231 -253 -335 -231 .253 Financing 25 -384 -25 -49 -3W4 .25 -49 External financing(net) 85 -287 -29 -74 -287 -29 -74 Domestic financing (net) .60 -96 4 25 -96 4 25 BankingsyStem -75 -14 -30 -10 -14 -30 t10 Of which:HIPCsub-account 0 0 0 0 0 0 0 Other 14 -82 34 35 -12 34 35 Remaining financingneeds 0 76S 256 302 768 256 302 Of which:possibledebt elief 0 768 256 0 763 256 0 Residualfinancing gap 0 0 0 302 0 0 302 Memorandum items: Primarybudgetbalance 411 410 305 267 368 216 Ig0 Primat,y budget balance (in percent of GDP) 7.2 6.7 4.6 3.3 6.0 3.3 2.5 Noninterestexpenditure 682 779 908 1,070 737 Itl 933 Sources: Cameroonian authorities; andlstaff satmatesandprojections it Thistableis for illustrative purposes only, pending thedecision point nd furtherdiscussions with theCanmeroonian authorities duringthe negotiationof thenewPRGF-supporewd Program. Table 12. HIPClnitiative:Status of CountryCases ConsideredUnderthe Initiative, September13, 2000 Target EstimatedTotal NPV of Debt-to- Aaistune Level 1/ Pereentage NominalDebt Satisfactory Decition Completion GOv. (In miUions of US. dollars,preset value) Reduction Seavice Relief Asuratnces Country Point Point Export revenue Total Bilat- Multi- IM Wodd in NPV of (In millionsof fron Other (in percent) cral laterl Bank Debt V U.S. dollar) Creditor Completionpoint reached underenhanced famework Ugatd 1,003 183 820 160 517 1,950 originalframrework Apr. 97 Apr. 98 202 347 73 274 69 160 20 650 Received enhancedframework Feb. 00 May00 150 656 110 546 91 357 37 1,300 Receiwd Decisionpoint reached under etnhnced framework Boitn JUL00 Floating 150 265 77 189 24 84 31 460 Received Bolivia 1,302 425 B76 84 194 2060 oaiginaiframetoork Sep. 97 Sep. 98 225 448 157 291 29 53 14 760 Receiwd enhasesdframework Feb. 00 Floating 150 854 268 585 55 141 30 1,300 Being sought Burkina FaY 39B 56 342 42 162 700 originaiframework Sep. 97 JuL 00 205 229 32 196 22 91 27 400 Receiwd enhancedfraork JUL 00 Floating 150 169 24 146 20 71 27 300 Rcewved Honduras Jun 00 Floating 110 250 556 215 340 30 98 18 900 Being sught Mali 523 162 361 58 182 870 originalframework Sep.98 Sep. 00 200 121 37 84 14 44 9 220 Receiwd ehancedfiramwork Sep. 00 Floating J50 401 124 277 44 138 28 650 Receivd Maurit*iatn Feb. 00 Floting 137 250 622 261 361 47 100 50 1,100 Received Mozambique 1.970 1,235 736 141 434 4,300 origifalframewerk Apr. 98 JUnI99 200 1,716 1,076 641 125 381 63 3,700 Received enhancedframework Apr. 00 Floating 150 254 159 95 16 53 9 600 Received Senegal Jun. 00 Flotting 133 250 488 193 259 45 124 19 S50 Received Tanzania Apr. 00 Floating 150 2,026 1,006 1,020 120 695 54 3,000 Received Completionpoint reached underoriginal framework Guyana Dec. 97 May99 107 280 256 91 165 35 27 24 410 Received Decisionpoint reched underoriginal framewoek ColedIvoire Mar. 9 Mar. 01 141 280 345 163 182 23 91 6 3/ go0 Beingsought Total ssIstace provided/commltted 9,754 4,067 5,651 809 4/ 2,708 17,400 PreliminaryHIPC document issued St Cameroon ... 150 1,466 1,047 358 41 197 30 2,700 Chad 150 157 34 123 15 65 27 250 Ethiopia 200 636 225 411 22 214 23 1,300 Guinea ... 150 638 256 383 37 173 34 1,150 Guinr-Bjizau 200 300 148 153 S 73 73 600 Malawi ... 150 629 163 *466 29 323 43 1,100 Nicragu ... 150 2,507 1,416 1,091 32 IS 66 5,000 Rwanda ... 150 447 56 391 43 227 71 800 Zambia 150 2,46S 1,121 1,326 600 491 62 4,500 Soures IMF and WorldBank Bord decisions,completion point documents,decision point documents, preliminaryHIPC documents, and staff calculations. 1/ Asistance evels are atcountries'respectivedecision or completion points,as applicable. oftraditional debt-reliefmechanisms. 2 In percent ofthe net preent valueof debt atthe decision or completionpoint (as appicablel) after the full uwe 3/ Nonreaclredulabl dekbt tonon-ParisClub official bilateral crediton andthe London Club, which wa already subjectto a highlyconessional restructuring, is cxcludcdfromn the NFV of debt aethe completionpoint in the cakulation of this rtio 4/ Equivalent to SDR 618 milliDnat an SDR/ISD exchane rate of 0.768. 5/ Figures re ased on preliminary mass nts at thetime ofthe issunce ofthe preliminary HIPC document; and am subject to change. Assistance levels for Ethiopia and Guinea-Bisu were bed on the oci frameweok nd applied atthecompietion point; for Cameroon,Chad Guines, Malgwi Nicaragua, Rwanda and Zambia,targets are baed on the enanced fratnewowk and castacelevels ar at the asumed decision point -42 - ANNEX I Monitoring Systemfor Poverty AlleviationTargets 1. Overall structure. Under the interim PRSP, the governmenthas proposed a multi- tier monitoring system. This covers: (i) statistical monitoring of overall poverty trends and the impact of the poverty reduction strategy; (ii) monitoring of strategy implementation and impact by a national poverty network composedof institutions with national expertise and major stakeholder groups; and (iii) participatory monitoring by stakeholders,both at the national level by appropriate institutions of the state and at the local level by local authorities and local stakeholders. 2. While this proposal represents a comprehensivestructure for poverty monitoring, the Interim PRSP recognizes that many of the necessary capacities are either weak or non- existent, and thus it recommends an importanteffort in capacitybuilding. The proposals for monitoring also recognize the need for greatly improved communicationsin all directions (upwards,downwards, across) and proposes a strengthening in these areas. 3. Statistical monitoring. The governmentwill undertake activities to monitor the overall effectivenessof the poverty strategy and its impact on the poor. The main tool will be repeat surveys of household living standardsby Direction de la Statistiqueet de la CompatibiliteNationale. 4. A household survey (ECAM2000)is to be undertaken as early as possible, but not later than mid-2001 to record results since the last such survey in 1996and also to establish a more accurate baseline for the new poverty strategy. 5. A repeat household survey is planned for 2003 (ECAM 2003). 6. A Demographic Health Surveywas undertaken in 1998. Follow-up surveys are desirable at five year intervals. 7. In addition to these surveys,a national population census is overdue,the last one having been taken in 1987. Community level mapping is expectedto start in 2001 to prepare for a census as early as possible, but no later than 2002. 8. In the case of all statistical surveys, the design of the survey will be discussed with stakeholders.The results will alsc be made easily available and in a timely way to all stakeholders. 9. National poverty network.In the interim PRSP, the government has proposed the creationof a national poverty network and an Observatoire des conditions de vie et de la pauvrete. The network is expectedto provide a forum for critical review of poverty actions and trends, while the observatoire is expected to provide a central point for the gathering and disseminationof poverty information.Among the activities that are proposed for the coming year are participatory user surveys in the health and education sectors to collect feedback on users' (and non-users') views of the services provided, of issues relating to accessibility and - 43 - ANNEX I quality. To facilitate sharing and disseminationof poverty information,the govenment has proposed initiatives such as the creation of a website. 10. Participatorymonitoring.The Interim PRSP proposesextensive monitoring of poverty outcomes,including in many cases reinforcingthe role that some institutionsof the state should be expectedto play. The PRSP documentrefers to the role of the National Assembly and the Economic and Social Council in monitoringthe evolution of living conditions and social trends. It also recommendsa marked strengtheningof capacities to monitor poverty activities and outcomes at the communitylevel, whether by local governmentsor other local organizations.The precise way in which this proposal can be implementedon the ground is expectedto be set out in the full PRSP. 11. The governmenthas already made a start in the implementationof a participatory approach to monitoringin July/August2000. It conferredfurther with local commnunities on the conclusionsof the initial participatoryconsultationsand presented an outline of the actions that it proposesto include in the PRSP in response to the issues they raised. These actions largely make up the interim PRSP. The final PRSP should state how the Government will structure its poverty strategy to respond directly to the issues raised at the community level and what actions are envisagedto build the capacities of communitiesto play a more decisive role in their own development. - 44 - ANNEXII Cameroon:ExternalDebt ManagementPractices-an Update 1. Since 1990, Cameroon'spublic debt has been managedby an autonomous government agency, the CaisseAutonomed'Amortissement(CAA), which has its own board of directors.The CAA acts on behalf of the government in the following capacity: (i) safekeepingof all loan agreementsand related documents;(ii) ensuring timely debt servicing; and (iii) advisingthe governmenton all issues relatedto debt. It should be noted that CAA is also responsiblefor domestic debt management. 2. For external debt management,the CommonwealthSecretariat's Debt Recordingand ManagementSystem (CS-DRMS)is the main applicationused by the CAA for record keepingand debt service projections.This software, which allows users to input data and prepare various reports, is set up in a network environment.The network is now fully operationalbut some users are still waiting for training. The day-to-daymanagement of the system is entrusted to an ad hoc committee,but efforts are under way to ensure that all relevantdepartments are awareof its full potential. 3. The following debt servicepFoceduresare typicallyfollowed.At the beginning of each month, the CAA sends the treasury a statement of all the loans falling due and payment orders for ministerial approval and signature.Once this is done, the treasury transfers the required amount to a CAA account,either at the central bank or at a commercialbank. The procedure is often too long and, unlike in most countries,is not premised on the presumption that all debt service as recordedin the Loi de Finances is due without further justification and ministerialapproval. As a result, delaysin the past have often occurredbecause the treasury has tended to "bunch up" payments instead of effecting regulartransfers on a daily or weekly basis. The delays are also due to major weaknesses in cash management at the treasury. 4. The debt managementpracticesat the CAA have considerablyimproved over the past two years owing to a change in management and the realizationby the authoritiesthat the successof the current adjustmentprogram criticallydependson maintaining good financial relations with external creditors.In general, the CAA provides up-to-date data on virtually all externaldebt aggregates. However,considerableweaknessesremain in the following fields: (i) keeping track of debt serviceprojections before and after debt relief; and (ii) conducting in-depthanalyses on externaldebt issues,for example,DSAs.Overall requirementshave been identified in the followingareas: (i) updating the currentversion 7.2 of CS-DRMSto CS-DRMS2000+ in order to increasethe user-friendlinessof the applications; (ii) reinforcing the current network in order to accommodatenew memory-intensive applicationsin a multi-taskingenvironment;and (iii) providingfurthertraining in the preparationof DSAs. In the interimthe CAA has acquiredDebtPro software for use in DSA simulations.Considerabletechnical assistance has been given in recent years by the CommonwealthSecretariat,the AgenceFran,aise de Developpement,Debt Relief International(DRI), the IMF, and the World Bank. 5. As a part of these continuingefforts to build debt-managementcapacity, the CAA, in collaborationwith DRI, organizeda national debt strategyworkshop for Cameroon during - 45- ANNEX II November 1999. The workshop, involvingabout 34 participants from the Ministry of Finance and other government agencies concernedwith the social sectors, prepared a DSA for Cameroon and also discusseda strategyfor the use of potential HIPC assistance. Additionalefforts have been made in the area of debt recording and management,with the establishmentof a pilot technical assistanceprogram by the CommonwealthSecretariat in Cameroon.It is envisaged that the provisionof furthertraining in CS-DRMSwould enable CAA personnel to be involved in capacity-building efforts in other countries within the region. 6. For the foreseeable future, Cameroonis likely to require concessionaldebt financing, and the government debt strategy is aimed at borrowing on only highly concessional terms. However,more work needs to be done in order to improve domestic debt management, which is a critical component in the country'sefforts to strengthenits public finances. Since the launching of the PRGF and SAC-supported adjustment programin mid-1997,the governmenthas made substantial progress,including the systematizationof audits of arrears and the launching of a securitizationprogram.Work to prepare a census and validation of remainingarrears and a settlement schedulethereof has now been completed.