Document of
The World Bank
FOR OriqCLAL USE ONLY
Report No. P-5079-CM
NEMORANDUM AND RECOMMENDATION
OF THE
PRESIDENT OF THE
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT
TO THE
EXECUTIVE DIRECTORS
ON A
PROPOSED LOAN OF US$150 MILLION EQUIVALENT
TO
THE REPUBLIC OF CAMEROON
FOR A
STRUCTURAL ADJUSTMENT PROGRAM
MAY 16, 1989
Thls docmet has a rerted distribuion and may be nsed by redpients only In the performance of
their offcial dties Its contents may not otherwise be disosed without World Bank authorization.
CURRENCY EQUIVALENTS
The CPA Franc (CFAF) is tied to the French franc (FF)
in the ratio of FF 1 t' CFAF 50. The French franc is
currently flosting. The rate of CFAF 305 to the US dollar
is used for the economic projections beginning 1989190.
Currency unit - CFA Franc (CFAF)
US$ 1.00 - CFAF 3t5
CFAF 1.0 billion - US$ 3,3 million
SYSTEM OF WEIGHTS AND MEASURES
Metric System
GLOSSARY OF .ACRONYMS
BCD Banque Camerounaise de Developpement
BZAC Banque des Etats d'Afrique Centrale
BIAOC Banque Internationale pour l'Afrique
Occidentale - Cameroun
BICIC Banque Internationale pour le Commerce
et l'Industrie - Cameroun
BPPBC Banque de Paris et des Pays-Bas - Cameroun
CAMAIR Cameroon Airlines
CDC Cameroon Development Corporation
CRTZ Cameroon Television
FONADER Ponds National de Developpement Rural
HEVECAM Hevea Cameroun
ONCPB Office National de Commercialisation des Produits
(NPMB) de Base (National Produce Marketing Board)
QRs Quantitative Restrictions
REFIFERCAM Regime de Fer Camerounais
SCB Societe Camerounaise des Banques
SGBC Societd Generale des Banques au Cameroun
SNEC Socite Nationale des Eaux du Cameroun
SKI Societd Nationale d'Investissements
SOCAPALM Societ4 Palm
SODECAO Soci4td de Developpement de Cacao
SODECOTON Soci6te de Developpement de Coton
SONEL Societe Nationale d'Electricite
UDEAC Union Douaniere des Etats de l'Afrique Centrale
FISCAL YEAR
July 1 to June 30
Republic of Cameroon FOR OVm CUAL USE ONLY
Structural Adjustment Loan
Loan Summary
Borrower: Republic of Cameroon
Amount: US$150 million equivalent
Terms: 17 years, including five years of grace, at the
Bank's standard variable interest rate
Program Descriptions The Loan would support the first phase of the
Government's adjustment program for addressing
key macro-economic and sectoral issues facing
Cameroon over the medium-term. The objective of
the program is to redress the recent substantial
decline in GDP and to achieve a positive rate of
per capita growth by 1995. The basic elements of
the program ares (a) restructuring of public
finances over the medium-term, through improved
programming and budgeting of government
resources, better control over government
salaries. improvement in the productivity and
management of the civil service, and an increase
in non-oil tax revenues; (b) restructuring and
rehabilitation of the public enterprise and
banking sectors; (c) in agriculture, financial
stabilization of the marketing structures for the
principal export crop (coffee, cocoa, cotton),
progressive liberalization of trade in these
crops, and creation of incentives to increase
food security and promote non-traditional
agricultural exports; (d) deregulation of
internal commerce with a view towards lowering
the domestic cost structure, and rationalization
of external trade regulations and effective rates
of protection; (e) improvement of incentives for
petroleum exploration and production; (f)
reorientation of policies in the forestry, health
and education sectors; and (g) establishment of
specific action programs to reduce the social
cost of adjustment. The program is described in
detail in the Government's Declaration of
Development Strategy (Annex V) and the action
program is detailed in the Policy Matrix (Annex
VI). The foreign exchange provided under the
Loan would be used to finance essential imports.
Benefits: The proposed operation would help reestablish
basic financial equilibria in the banking, public
enterprise and agriculture sectors and shift
incentives towards production of tradeable
This document has a restricted distribution and may be used by recipients only in the performance
of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.
- ii -
goods, thereby providing a aound basis for
diversified economic growth. The operation will
lead to a more efficient use of public resources,
stimulate the non-oil productive sectors, and
achieve a more appropriate balance between the
public and private sectors. The particular
benefits from public enterprise adjustment
measures are the lessening of the financial
burden on the Government, the increased
transparency of the financial relations between
the State and public enterprises, and the
rationalization of resource allocation to these
enterprises.
Riske: The main risks associated with the proposed
operation are that, as a result of social
pressure and untested Government implementation
capacity, the reform program would be implemented
more slowly than expected, or that the measures
would not be strong enough to elicit the
envisaged increase in private investment and non-
oil exports or to increase domestic resource
mobilization sufficiently to reduce the budget
deficit and conform import demand to projected
levels.
Estimated Disbursements: The Loan would be disbursed in three equal
tranches of US$50 million. The first tranche
would be available upon effectiveness, and the
second and third tranches, not earlier than March
31, 1990 and December 31, 1990, respectively,
upon satisfactory progress in implementation of
the program. Special conditions for loan
effectiveness and for release of the second and
third tranches are presented in Annex III.
Retroactive Financings Out of the proceeds of the loan, US$15 million
(or lOZ of the total loan) will be disbursed
against the country's actual imports, excluding
items covered by the negative list, since March
31, 1989, i.e. less than four months prior to the
expected date of l^an signing. This retroactive
financing is justified by the up-front action
already taken by the Government on many important
elements of the structural adjustment program.
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CAMEROON - STRUCTURAL ADJUSTMENT PROGRAM
TABLE OF CONTENTS
Page
PART I - THE ECONOMY
A. Background g........d............. ..........
B. The Current Crisis .....t... .................. C r** 2
C. The Stabilization Plan for Public Finances . .......... 3
D. Structural Issues ......................... . ... ......... 4
PART II - TME STRUCTURAL ADJUSTMENT PROGRAM
A. Objectives and Approach ..................... .............. . 11
B. The First Phase of the Adjustment Program .................. 12
Public Sector Resource Management ....................... 13
Public Enterprise Reform .................................... 15
Financial and Banking Sector .. .......................... 17
Agriculture and Forestry ..... . . .*. .................... 20
Industrial Policy and Trade Reform ....................... 22
Reorientation of Sector Strategies ......* ............... 24
Social Dimensions of Adjustment . ...... ......... 25
PART III- ECONOMIC AND FINANCIAL IMPACT OF ADJUSTMENT
Medium-Term Prospects for Growth ....oset or v.... th............. 26
External Capital Requirementu . . .................. 29
Creditworthiness and Risk . ...................................... 31
PART IV - THE PROPOSED LOAN ........ ......................................... 33
A. Loan History ...................... ................... 33
B. Loan Amount and Co-financing . ................. . .. ..... . 33
C. Monitorable Actions ....................................... 34
D. Program Management and Monitoring .... ..................... 37
E. Procurement, Disbursement and Auditing ..................... 38
PART V - BANK GROUP OPERATIONS AND STRATEGY .................*........ 38
PART VI - COLLABORATION WITH IMF AND OTHER DONORS .................... 40
PART VII- RECOMMENDATION ..................................... ...... .. 41
- iv -
ANNEES
ANNEX I - MACROECONOMIC INDICATORS AND PROJECTIONS
ANNEX II - SOCIAL INDICATORS
ANNEX III - SUPPLEIMENTARY LOAN DATA SHEET
ANNEX IV - STATUS GE BANK GROUP OERATIONS
ANNEX V - DECLARATION OF DEVELOPMENT STRATEGY
ANNEX VI - MATRIX OF POLICY ACTIONS
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT
MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT
TO THE EXECUTIVE DIRECTORS
ON A PROPOSED LOAN OF US$ 150 MILLION EQUIVALENT
tO THE REPUBLIC OF CAMEROON FOR
A STRUCTURAL ADJUSTMENT PROGRAM
1. I submit the following memorandum and recommendation on a
proposed loan in th- amount of USS 150 million equivalent to i Republic
of Cameroon to support the Government's Structural Adjustment Program. The
proposed loan would be on standard IBRD terms with 17 years maturity
including 5 years of grace.
2. A Country Economic Memorandum (Report No. 6395-CM) was
distributed to the Executive Directors in February 1987 and a Financial
Sector Report (Report No. 6028-GM) was distributed in June 1986. The
report which follows is based on the conclusions of those reports and the
findings of three missions for the structural adjustment program that
visited Cameroon in July 1988, November 1988 and February/March 1989.
Updated country economic data are shown in Annex I.
PART I - THE ECONOMY
A. Backaround
3. Cameroon, with a per capita GDP of USS 955 and 10.9 million
inhabitants in 1987, is one of Africa's most diverse countries in terms of
human resources and natural geography. Agriculture, livestock, and
forestry production are major potential sources for growth; the scope for
expanding agricultural production of a wide range of products is
significant given the favorable landlpopulation ratio, below-potential
yields and underexploited natural resources. The mineral resource base is
also diversified with reserves of oil, bauxite, iron ore and natural gas.
The exploitation of hydroelectric and mineral resources, the processing of
agricultural, forestry, and mineral products for export, plus selected
forms of manufacturing for the regional common market, the Union Douanibre
des Etats de l'Afrique Centrale (UDEAC), and other countries could
significantly contribute to the economy's growth.
4. Economic growth was high (about 8 percent per annum in real
terms) throughout the 1970's and until 1985. In the period after
Independence, Cameroon relied heavily on agriculture, which still remains
the key economic sector, employing about two-thirds of the population and
generating 40 percent of export receipts. However, oil became a major
source of growth after 1978 when production commenced in Cameroon. By
1984185 oil production accounted for more than 15 percent of GDP, 45
percent of government revenues and almost two-thirds of total merchandise
exports. Oil production reached a peak of 8.9 million metric tonnes in
1985/86. During this period the share of agricultural production in total
GDP fell from above 30 percent in the 1970's to 21 percent in 1984185.
5. Oil revenues boosted public and private spending, enabilug gross
fixed inve3tment to grow at an average real rate of 7 percent during the
first half of the 19809 and to maintain a high level of 20 percent of GDP.
Governmwnt direct inveitment increased much faster than private sector
investment and its share (excluding investment of the public enterprises)
in total investment rose from one-fifth in 1979180 to one-third by
1984185. In addition, there was considerable expansion in the public
enterprise sectors during 1982-1985 the sector accounted for 12.5 percent
of gross fixed capital formation (but contributed only 7 percent of GDP and
employed only 2 percent of the economically active population).
6. Until the mid-1980s, the Government nevertheless maintained a
balanced budget, despite large capital expenditures. Given the
Government's policy of using its own resources, foreign financing
contributed little to the State's total financing requirements. It
amounted to less than CFAP 40 billion a year. or around 6 percent of total
expenditures until 1984/85. In addition until 1985/86, the Government
accumulated large deposits in the domestic banking system, depositing on
average CPAF 35 billion per annum of savings. Furthermore, a significant
proportion of Government's receipts from the oil sector was accumulated in
external reserves and the balance of payments remained consistently in
eurplus. Cameroon is a member of the French Monetary Cooperation Zone, and
its currency, the CFA Franc (CFAF), is freely convertible into French
Francs.
7. Since Independence, the Government has sought to provide
universal education at the primary level and to increase access to other
levels of education for large segments of the population. The primary
enrollment ratio is 107, one of the highest in West Africa. In secondary
and higher education the gross enrollment ratios are 27 percent and 1.6
percent respectively. Other social indicators are shown in Annex II.
8. The population growth rate was most recently estimated at 2.9
percent based on a 1987 census. During the past decade, the urban
population increased at an annual growth rate of 7 percent from 2.2 to 3.9
million. Nearly 40 percent of the population now live in towns.
S. The Current Cri3is
9. Since 1985, the fall in the US$-denominated prices of Cameroon's
major export commodities (oil, coffee and cocoa) and the depreciation of
the US$ have exposed major structural weaknesses in the economy and have
plunged it into a deep recession. Between 1985 and 1987, Cameroon's export
price index in CFAF terms fell by 65 percent for oil, 24 percent for cocoa,
11 percent for coffee, and 20 percent for rubber, causing a 47 percent
deterioration in the terms of trade. The balance of payments registered a
current account deficit of 8.8 percent of GDP in 1986/87 compared to a
surplus of 3.9 percent in 1984/85. These exogenous factors undermined
Cameroon"s economic and financial viability and brought a halt to economic
- 3 -
growth. The economy stalled in 1986187, with GDP falling by 3 percent. It
is estimated that GDP fell by 9 percent last year (1987/88) and will fall
by a further 6-7 percent this year. Investment and imports are about 50
percent and 40 percent, respectively, below their levels of three years
ago.
10. The fall in export earnings, together with internationally
uncompetitive domestic interest rates which encouraged capital flight,
resulted in a dramatic decline in Cameroon's net foreign assets from CFAF
+128 billion in June 1986 to CFAF -147 billion in June 1988. This has led
to a sharp contraction in the liquidity of the domestic banking system,
which is, in turn, further constraining economic activity.
11. In 1986/87, Government revenues fell by CFAP 146 billion and,
for the first time in Cameroon"s history, government operations recorded a
large deficit (ClAF 508 billion, equivalent to 12 percent of GDP). This
deficit resulted from a 28 percent fall in oil revenues between 1984/85 and
1986187, plus a continued increase in recurrent expenditurei, mainly on
personnel, and the failure to scale back public investments fast enough.
It was financed by (i) a build-up of domestic arrears amounting to CFAP 240
billion (mostly to domestic contractors working on investment projects),
(i3) a drawdown of deposits held both externally and with the domestic
banking system (exacerbating the latter's liquidity constraint). and (iii)
an increase in foreign financing - public and publicly-guaranteed external
debt at end 1987188 is estimated at US$ 2500 million, equivalent to 19
percent of GDP. The creation of domestic arrears has acted as an
unanticipated tax on the private sector and has contributed to the slowdown
in economic activity and the illiquidity of the banking system. The
resolution of this proble- is an essential first step for getting the
economy back on track.
C. The Stabilizat-in Plan for Public Finances
12. To deal with its deteriorating finances, the Government first
launched an austerity program in 1987188 to restore budgetary balance.
This progrr.a succeeded in cutting the Government's deficit to 6 percent of
GDP last year. Expenditures were reduced by 34 percent or ClAF 415 billion
over the previous year; on the other hand, revenue also fell by CFAF 120
billion to about 80 percent of the 1986/87 level. The largest expenditure
cut was the elimination of extrabudgetary spending (ClAF 250 billion) which
covered a variety of recurrent and capital expenditures. In addition,
capital expenditures were reduced by CFAF 212 billion (48 percent) and
recurrent expenditures (excluding debt service) by CFAF 88 billion (18
percent); the latter included a freeze on wages, a 27 percent reduction in
transfers and subsidies, and a 38 percent cut in goods and services.
Interest payments were the nly item to increase.
13. The second year of the Government's stabilization program is
supported by an 18 month Stand-by arrangement approved by the IMF in
September 1988. The 1988/89 budget aims to reduce the overall deficit
further to 2 percent of GDP. This is being accomplished through a further
reduction of capital expenditures, which are programmed at one-third of
their average 1984/85 - 1986/87 level. In addition, efforts are underway
to reduce personnel expenditures by reviewing the payroll for *ghosto
- .4 -
woreiers and to increase nonoil tax revenues mainly through excise taxes on
alcohol and petroleum products and improved tax administration. As of
December 1988, the Government's budget was on track with the exception of a
slight revenue shortfall, attributable to the decline in economic activity,
and the accumulation of a moderate amount of external debt arrears. The
Government has requested a rescheduling of these arrears, as well as a
portion of current maturities, through the Paris Club. In addition a
rescheduling plan for domestic arrears has been negotiated with most large
domestic creditors. The Government intends to pay 15 percent in cash with
the balance in negotiable, seven-year Treasury bills at the Central Bank
rediscount rate, currently 9.5 percent. The cash payment may be
insufficient, however, to restore liquidity in the banking system,
especially since a portion of these payments will be repatriated to foreign
firms that had been working through domestic contractors. Taking into
account the above measures, the IMF has concluded that Cameroon remains in
compliance with the September 1988 Stand-by arrangement.
14. The severe cutback in overall government expenditure during the
past two years, to 60 percent of the average 1984185 - 1986/87 level, is a
major cause of the slowdown in economic activity. Due to the across-the-
board nature of the cuts, it has also resulted in severe underfunding of
essential economic and social services and has left numerous investment
projects uncompleted. The Government has recently completed reprogramming
its capital expenditures based on criteria, agreed with the Bank, that aim
to concentrate resources on those projects nearest completion and to
emphasize the maintenance of existing assets. Nevertheless, the overall
constraints on the budget will result in slower than desirable
implementation of most development projects.
15. The financial crisis has also prompted the Government to take a
closer look at its public and parapublic enterprises that absorbed large
amounts o.; Dublic resources in recent years and drained liquidity from the
banking sy.tem through a combination of non-performing loans, unpaid crop
credit and a build-up of arrears to domestic suppliers. A Public
Enterprise Rehabilitation Commission was set up in July 1986 to recommend
measures to reduce the heavy burden of this sector on public finances,
improve companies' performance, and rationalize state participation. Since
August 1987, the Commission has shown considerable energy and determination
in pursuing its mandate and has carried out audits on companies which have
led to recommendations concerning their restructuring, privatization or
liquidation. It has also evaluated their cross-claims and debts. A review
of the institutional, regulatory, and macroeconomic environment has been
carried out concurrentlt with these audits to assess and rationalize the
environment for the companies that are to be retained in the Government's
portfolio. The policies examined relate to pricing, trade, credit,
employment, wages, investment, and privileges that these companies
currently enjoy.
D. Structural Issues
Public Finance Management
;.. With the drop in oil revenues, the need for a tight budgetary
policy has become an urgent task for the Government. The challenge is to
control expenditures without excessive costs in terms of growth foregone.
Restoration of equilibrium vill require that the Government erhances its
domestic revenue effort and adjusts spending to a level consistent with
available resources. Non-oil tax revenues have been eroded in the 1980's
and need to be increased from their current level of 10 percent of non-oil
GDP to thei: historic level of 14-15 percent, in order to attain budgetary
equilibrium in the medium-term. This will require a medium term
restructuring of the tax system which should be accomplished primarily by
broadening the tax base and improving tax administration and compliance,
rather than by increases in tax rates. For the next few years, until this
restructuring can be accomplished, the Government will have to rely heavily
on foreign borrowing to maintain a minimum level of capital investment
consistent with reviving the economy and sustaining growth in the medium
term.
17. On the recurrent expenditure side, the main effort needs to be
on containing personnel expenditures. Civil service salaries are
relatively high reflecting the period of high oil revenues. The existing
freeze on the wage bill needs to be continued; new hiring, including
graduates trained in public administration institutions, should be further
reduced; and the costly system of benefits and allowances requires
rationalization. The Government also needs to improve the quality of its
recurrent expenditures by adopting operating standards that ministries
should strive to achieve and that could be used for allocating resources
based on performance. Budgetary allocations will need to be better
designed than during the past two years when non-wage recurrent costs were
sharply reduced with no prior planning. The sharp reductions in non-wage
recurrent expenses have reduced vital maintenance of capital infrastructure
and provision of services in health, education, transport, agriculture, and
urban services, and could lead to dramatic repercussions on the country's
future growth.
18. In general, considerable improvements are required in the
mAnegement of government resources. Budget planning does not yet take
place within a medium-term framework incorporating revenue and expenditure
projections based on the forecast behavior of key macroeconomic variables;
sectoral allocations are often made on a rather arbitrary basis especially
when expenditure cuts are required due to lack of coherent sector
strategies; public finance data are not presented in a consolidated form
which seriously hinders effective management of scarce public resources;
project appraisal, monitoring and evaluation are frequently neglected or
poorly executed; and procurement procedures are often unclear and
implementation slow.
Bankiab Sector and Financial Policies
19. Cameroos's banking system comprises ten commercial banks with
varying degre_s of state, parapublic and foreign shareholding, and three
state-owned banks, of which one is a commercial bank and the other two are
development banks specializing respectively in agriculture and industry.
Over the past two years, the banking system has become heavily illiquid,
and many individual bankR, particularly the three state-owned banks but
also some large jointly-owned commercial banks, have become technically
insolvent, largely on account of the accumulation of high portfolio
arrears. The aggregate deficit of the banking system is estimated to range
from ClAP 300 - 375 billion or almost one-third of their outstanding
portfolio and approximately 102 of the country's GDP. The sinancial
difficulties of the banks have led to a de facto rationing of deposit
withdrawals and have severely limited their capacity to finance productive
activities. The mounting disarray of the formal banking system is believed
to hbve been paralleled by an expansion of the informal financial market,
consisting of utontinesa and other mutual savings mechanisms, which has
always been active in Cameroon and is now estimated to hold about CFAP 200-
300 billion of deposits or almost one-third of total deposits of the
flnancial system.
20. This situation of banking distress has resulted from a
combination of factors. The sharp decline in real GDP over 1986187-1987/88
was bound to spill over into the financial sector. The Government's
budgetary difficulties since 1986 led to a reduction of public sector
deposits that directly affected banking liquidity, as well as the
accumulation of government arrears vis-s-vis private sector contractors,
which impaired the latter's capacity to service their banking debts.
Another factor was the involvement of the banking system in the provision
of seasonal agricultural credit (mostly for cocoa, coffee and cotton)
including for domestic marketing costs and taxes, without taking into
account declining export prices, resulting in an overhang of unpaid crop
credit exceeding ClAP 100 billion. Credit to public enterprises, many of
which are poor performers, is estimated at some CFAP 150 billion and
constitutes another source of banking arrears. Furthermore, banking
management was weak, particularly in state-owned banks and those in which
the state was predominant. Finally, banking control exercised by the
national authorities and by BEAC (the Central Bank common to Cameroon and
the other fire countries of the region) was ineffective until a start was
made in 1987 to strengthen it.
21. Apart from these factors which have precipitated the current
banking crisis, there are other inadequacies in the policy, regulatory and
institutional framework that have impeded the efficient functioning of the
financial sector and banking system. Banking profitability has been
undermined by restrictive margins set on credit, by an over-extended branch
network partly due to government pressure, and by excess staffing. A
myriad of administratively-mandated interest rates, on both loans and
deposits, has stiflFI banking competition and discouraged the introduction
of new, more diversified financial instruments. Banking competition was
further curtailed by the setting of quantitative Central Bank rediscount
ceilings both on individual banks and individual borrowers. The relatively
low Central Bank rediscount rates, of 6.5 percent and 9.5 percent
respectively for preferential and normal credits, compared with the money
market rates in Paris, may also have encouraged capital outflows, in light
of the freedom of financial transfers within the Franc Zone. They have not
been conducive to domestic savings mobilization. The lower rediscount rate
of 6.5 percent for priority activities such as agriculture and SMEs may
have resulted in some diversion of credits from their intended purposes,
while the low banking margin '4 3 percentage points for the same activities
may effectively have discouraged the banks from lending for them. Finally,
although BEAC has at its disposal a vast array of control instruments and
regulations including prudential banking ratios (e.g., capital adequacy and
-7-
liquidity ratios), these are overly complex and not systematically
monitored and enforced in practice.
ARriculture
22. After a period of moderate growth in the 1970's, the agriculture
sector has stagnated since 1982. The unfavorable climate of 1982-84 partly
accounted for this poor performance, but the stagnation can largely be
explained by a longer-term decline in cash crop production. This is a
cause for concern as Cameroon will have to rely on agriculture for export
revenues in the face of depleted oil reserves. The Government's objectives
for the sector emphasize food security, the promotion of exports and
expansion of crops used by local industry, and in general an increase zn
rural incomes which are about one-half the national average. However, the
Government's agricultural policy has been restrictive. particularly in the
pricing and marketing of export crops.
23. Pricing and Trade Policies. Weak commodity prices, the
depreciation of the US dollar vis-a-vis the CFAP, dumping and subsidy of
food exports from surplus countries, plus high domestic labor and
intermediate costs have eroded Cameroon's competitive position for most of
its tradeable crops. At current world price levels, marketing losses
amount to CFAF 100 to 200 per kg of cocoa, coffee and cotton exported,
vhich is estimated to represent a net drain of CFAF 50 billion per annum on
public sector resources. The losses of recent years have been financed by
a combination of drawdowns of previously accumulated stabilization reserves
on deposit in the banking system and by unpaid crop credit. Producer
prices for major export crops are set by the Government independently from
world market trends. In the past, when world prices were considerably
higher, relatively iow fixed producer prices for export crops resulted in
heavy taxation of producers. Today, however, Cameroon's official producer
prices are among the highest in francophone Africa, as a result of steady
increases in the official price during recent years. But with today's
depressed world prices and the tight monetary situation, the Government is
facing difficulty in supporting the present producer price level. Present
producer prices are projected to result in substantial and unsustainable
deficits well beyond 1990. A recent diagnostic study of the National
Products Marketing Board (ONCPB) indicates that the expected deficit from
exporting cocoa, coffee and cotton this year will exhaust all remaining
liquid reserves that ONCPB holds in the banking system and on account with
the Treasury. Future financing of this deficit would require direct
budgetary subsidies andlor a further deterioration in the banking system.
24. Marketing of coffee and cocoa is subject to Government
regulation and control. The Government establishes an annual price
schedule (barame) to regulate all costs and marketing margins, and assigns
the quota and zone of marketing to specific traders and cooperatives. This
system is inefficient as the lack of competition creates opportunities for
traders to collect rents and it discourages cooperatives from minimizing
costs. Internal marketing costs are also high compared with neighboring
countries.
25. Institutional Constraints. Excessive Government interference
in the administration of cooperatives and its poor management of the
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delivery of farm inputs and extension services has proved very inefficient
and costly; agencies have proliferated often duplicating each other's
functions and their scope of activities has been defined too widely to
include services which could be more efficiently provided by the private
sector.
26. Food Security. In spite of its overall favorable position as
regards food self-sufficiency, the country faces three food security
problems. First, continuing chronic malnutrition affects about one-quarter
of the rural population under five years of age spread over all provinces.
Second, transitory food insecurity exists in the northern provinces due to
unfavorable climatic conditions, low productivity of agriculture, and
little crop diversification. Third, the food distribution system is
inadequate due to the inaccessibility of some areas, poor storage and lack
of processing facilities. In addition, price controls and quantitative
restrictions on food imports are major policy constraints.
27. Forestry and Environment. Cameroon's forestry subsector has
considerable potential for increased sustainable production, as well as for
increasing government revenues. Only about 40 percent of the country's
forest resources are being exploited and many lesser-known species with
economic potential are being neglected. Forest exploitation is not
efficiently controlled due to the lack of a land-use plan, inadequate
policy in granting concessions and lice3ses for exploitation and exports,
and poorly-trained staff running the Directorate of Forestry which is
responsible for planning and protection in forest areas. In addition,
government regulations require 60 percent of wood exploitation to be
transformed into semi-finished products. Because of low conversion ratios
in the wood processing industry, this has encouraged wasteful exploitation
of forest resources and lower export revenues for the sector.
Trade and Industrial Incentives
28. Depressed domestic demand during the past three years has put a
halt to the steady growth of the manufacturing sector, which grew by about
10 percent per annum since independence. It has revealed the sector's lack
of competitiveness and high costs which are the result of the long-standing
protectionist policies and regulations. For more than twenty years, high
trade barriers and the nature of the Investment Code increased the relative
profitability of import-substitutes, leading to the establishment of highly
capital-intensive activities and low value-added assembly/packaging of
consumer goods. Restrictive labor legislation and price controls increased
inefficiency and distorted market mechanisms. Incentives to base
production on donestic resources and to produce for export markets were
limited. Manufacturing relied on an escalation of protection, thereby
imposing considerable costs on the rest of the economy. The resulting
highly dispersed levels of effective protection distorted resource
allocation among sub-sectors of industry.
29. Trade Policy. Both domestic and foreign trade are heavily
regulated in Cameroon. Imports are subject to import licensing and the
vast majority of locally produced goods are protected by quantitative
restrictions (QRs). The tariff system is complex and results in highly
dispersed tariff rates, ranging from zero to 180 percent with an average of
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45 percent. Tariff instruments include the 'entry duty' and the *customs
duty' which are fixed for all UDEAC members and the "complementary import
duty tax' (0-50 percent) which is fixed by each member country. Protection
is aggravated by widespread exemptions from import duties through the
Investment Code and other similar fiscal regimes. Exports outside the
UDEAC zone are taxed at 2 percent, with the exception of coffee, cocoa and
wood which are taxed at higher, specific rates. Industrial exports within
UDEAC are taxed under the single tax regime for eligible firms.
30. Price Control. Domestic prices are either fixed or officially
approved on a cost-plus basis. Maximum wholesale and retail margins are
fixed for all goods and services with specific rates for production and
distribution of domestic goods, goods under QRs and some key consumer
imports. A minimum margin is guaranteed for retailing. As a result, the
system is inflationary; its administration rigid and prone to abuse. The
price control system is reinforced by rehulations governing entry into
wholesale and retail trade (Law 80/25).
31. Investment and Fiscal Incentives. Because of its content and
discretionary administration, the Investment Code is the main source of
market distortions, and restrictions on competition. Investment incentives
are provided through the different regimes of the 1984 Investment Code
derived from the UDEAC general guidelines and the regional single tax
('taxe unique') regime. Benefits are granted for 10 to 25 years and
increase with the size of the investment. Larger investments benefit from
'special conventions' with the State which freeze company-specific fiscal
advantages for up to 25 yLars. Most enterprises in UDEAC, and therefore
Cameroon, benefit from the Code, which grants import duty exemptions on
inputs and a maximum of 5 percent import duty on capital goods. The single
tax replaces all indirect taxes and is levied on the firms' operations for
goods sold within UJDEAC. However, its rate varies between firms, products
and UDEAC countries. It is collected from the final user. The internal
turnover tax ("taxe int6rieure a la production") regime grants similar
advantages to companies selling on their domestic market but is collected
by the Customs Department. These incentives encourage over-investment in
fixed capital, discourage the use of labor and regional integration, and
cause a considerable loss of fiscal revenue.
32. Regulatory and Institutional Environment. The business
regulatory environment is often inadequate, obsolete or incomplete.
Private sector wages are, for instance, regulated in accordance with
extremely detailed public sector wage categories. Entry is restricted in
certain sectors, and monopoly privileges are granted to certain Investment
Code beneficiaries. The legislation governing contracts, incorporation,
partnerships and exit from production needs to be clarified, and
protection against unfzir business practices should be strengthened.
Institutions supporting the private sector, and in particular small and
medium scale enterprises and export activities need to be profoundly
restructured.
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Oil Production
33. Cameroon's oil production will decline and reserves will be
depleted by the end of the century unless new discoveries are made.
Although the likelihood of untapped petroleum resources is coAsidered high,
new discoveries are unlikely without better incentives for oil exploration.
Compared to neighboring oil-producing countries, Cameroon's legislation and
taxation policy does not encourage oil companies to undertake further
exploration activities and none are currently taking place. Companies are
expected to bear the entire cost of exploration drilling, with the 'Soci6t6
Nationale des lydrocarburesl (SNH) reimbuzsing 60 percent of the cost only
if oil is found and as and when revenues allow. In addition, exploration
contracts stipulate minimum work programs which are often excessive.
Moreover, the fiscal regime applied to production is not appropriate to a
period of low oil prices and declining reserves, since it taxes the net
cash flow of the oil industry at 87 percent. This level of taxation is a
serious disincentive to further exploration and development.
Human Resources
34. The constraints on budgetary resources, together vith the
existing deficiencies in education and health services, pose a serious
threA* to the well-being of society and the future development of the
country. Without corrective action in the near future, Cameroon risks a
depletion in human capital, increased health risks and increased inequity
In the provision of basic socio-economic services. The Government is
anxious to incorporate a social dimension in its adjustment program, but
has yet to link fully the objective of poverty alleviation with the central
priorities in the education and health sectors, and to formulate a coherent
and financially sustainable strategy for each sector, including the
protection of a minimum level of funding for basic services. At present
the Government allocates the considerable funds it spends in the education
and health sectors mostly on secondary and tertiary services. The
rigidities in reallocating expenditures include large wage bills, an
entrenched pattern of allowances for universiiy students, a penchant for
modern and expensive schools and hospitals, and a lack of cost recovery
policies.
35. Education. Education development in %ameroon has focussed on
expansion of the formal system but very little on quality. Even so,
expansion of the system has not kept pace with school-age population
growth, leading to overcrowding and inadequate provision of trained
teachers and vital educational inputs. Low attainment in relation to years
of education and often inappropriate qualifications characterize the
educated manpower in the labor market. Persistent shortages of experienced
managerial, technical, and skilled manpower seriously impede economic
development. On the other hand, the informal sector plays a valuable role
through its extensive apprenticeship system. There is a need to improve
siubstantially the standards of primary and technical education, as well as
the effectiveness of vocational education, and adjust the curricula and
training approaches to respond to the needs of the economy.
36. Health. Poor management of the health care system coupled with
inadequate and poorly allocated expenditures threaten to compromise the
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gains of the past decade in reducing mortality and morbidity. An Important
part of past and future expenditures has been allocated to sophisticated
hospitnls, while insufficient resources are available to operate and
maintain the existing hospitals, much less new facilities. A strategy
needs to be devised to reallocate expenditure patterns towards broad-based
primary health care, including maternal and child health programs, and
introduce cost-recovery methods throughout the spectrum of health services.
The Government's population policy is cast in terms of "responsible
parenthoodu, but active pursuit of this policy is limited by the same
inadequate attention and financing that affects primary health care.
Part II - The Structural Adjustment Program
A. Objectives and Approach
37. The Government started preparing its medium-term adjustment
program in early 1988. At that time it established a working level
cuamittee comprised of directors and senior technicians from all major
operational ministries. This committee was divided into subcommittees
along functional lines and was charged with drawing up the Government's
Statement of Development Strategy. The establishment of this working
committee created for the first time in Cameroon an opportunity for the
technical level of Government to put forward its own agenda for reform on a
comprehensive economy-wide basis. The President added increased importance
to this exercise in December 1988 by establishing an Interministerial
Committee responsible for steering the preparation of the structural
adjustment program and for monitoring its implementation. This Committee
is assisted by two technical secretaridts, one dealing with the IM
stabilization program and the other with the adjustment program developed
in collaboration with the World Bank and the African Developmert Bank.
38. While the resulting Declaration of Development Strategy (Annex
V) was developed and discussed with three joint World BanklAfDB missions
over the past nine months, the Declaration is very much regarded as the
Government's own program and benefits from the wide range of technicians
throughout Government who have participated in its preparation and are
committed to its implementation. The Government intends to publish this
Declaration to inform the Cameroonian public of the specific contents of
the adjustment program, as well as to mobilize the external resources from
the donor community needed to finance the program.
39. The broad objectives of the Government's adjustment program can
be summarized as follows:
a) to reestablish a positive rate of per capita income growth;
b) to reduce progressively the constraints which hinder a
general opening of economic opportunities, through
fostering increased competition and reducing the
inefficiency of domestic markets;
c) to reorient the role of the State from one of direct
intervention in the production and distribution of goods
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and services to one of facilitating the operation of-the
private sector;
d) to reoriett public services towards programs which Improve
the well-being and productivity of all Cameroonians, taking
into account the social dimension of adjustment.
40. The Government aims to attain these objectives through a series
of measures that will:
- stabilize and restructure public f:.ances over the medium-
term, through improved programming and budgeting of
government resources, better control over government
salaries, improvements in the productivity and management
of the civil service, and an increase in non-oil tax
revenues;
- restructure and rehabilitate the public enterprise sector;
- restructure the banking sector, including improved monetary
and credit policies;
- stabilize the finances of the agricultural marketing
structures for the principal export crops (coffee, cocoa
and cotton), liberalize progressively trade in these crops,
and create programs to increase food security and promote
non-traditional agricultural exports;
- deregulate internal commerce with a view towards lowering
the domestic cost structure, and rationalize external trade
regulation and effective rates of protection;
- improve incentives for petroleum exploration and
production;
- reorient policies in the health and education sectors,
especially toward the primary level, to improve human
resources development;
- establish specific action programs to reduce the social
cost of adjustment.
B. The First Phase of the Adjustment PrRram
41. Many of the above objectives are likely to require three to five
years for implementation to be completed. This is particularly the case
for public enterprise reform, the banking sector and administrative reform
of the civil service. Also, a sustained effort will be required over the
medium-term to increase non-oil tax revenues in order to stabilize public
finances and cover Cameroon's increased debt burden. The Government
therefore considers its Declaration of Development Strategy as a medium-
term framework within which the specific actions described below and set
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out in the Matrix of Policy Actions (Annex VI) represent the first 18-24
mouth phase of the adjustment program.
Public Sector Resource Management
42. Under the structural adjustment program, the Government will
take a series of interconnected actions to improve the mobilization and
management of public sector resources. These messures aim to present a
clearer and more comprehensive picture of Government finances, reestablish
an equilibrium between expenditures on personnel versus goods and services,
improve the management and efficiency of the civil service, and improve
revenue collections while taking initial steps towards a more comprehensive
rationalization of the tax system.
43. Until now annual budgets have been prepared in the absence of a
clear link with the macro-economic circumstances of the country. In
addition, the budget submitted to the National Assembly has not taken
account of expenditures financed by sources other than tax revenues,
namely, externally financed projects, and, until recently, the considerable
expenditures financed by the Government's outside accounts ('comptes hors
budget*). In order to present a clear'r and more comprehensive account of
Government resources and expenditures, &":, Government will prepare each
year a set of medium-ter.. macro-economic projections that will provide the
broad parameters for the following year's budget. Within this context, the
Government will draw up a rolling four-year public investment program that
will include all sources of financing. This program will be based on a
soon-to-be installed system designed to monitor the physical and financial
execution of projects currently under implementation. This system will, in
addition, produce quarterly monitoring reports that can be used by
ministries to measure progress on all projects in a given sector, or, for
example, all projects financed by a given external donor. In the first
instance, this system will cover all projects in the Government's budget,
but will eventually be extended to monitor the investment programs of the
public enterprises, in particular, the portion financed by government
guaranteed debt. Starting with the 1989190 budget, the first year of the
investment program will appear as an annex in the annual public finance law
('Loi de Finances") which will set limits on the disbursement of externally
financed projects, in order to ensure execution of the budget in line with
the multi-year investment program.
44. The Government has also decided to revise its procurement
procedures with the aim of reducing the administrative delays that have led
to considerable cost overruns. For this purpose, it has created a separate
unit as part of the Presidency, the Direction Generale des Grands Travaux
du Cameroun (DGTC), that will supervise the physical execution of all major
capital expenditures by the Government. The first practical steps to be
taken towards improving the procurement process will include
standardization of bidding documents and a program to train personnel
responsible for the tendering process. In addition, procurement procedures
will be reviewed and revised with a view to reducing delays and assigning
specific responsibility and deadlines for the various steps to the agencies
involved in the procurement process. These measures will be in place by
mid 1990.
- 14 -
45. As mentioned earlier, the Government has taken major efforts to
stabilize public finances and reduce the budget deficit. A different kind
of adjustment is now required to reestablish a balance among categories of
expenditures. In this regard, the adjustment program ervisages two major
efforts: establishment of minimum levels of expenditure on key development
services and better control on personnel expenditure. Regarding the
former, the Government intends to increase the non-wage recurrent
allocations for education, health, agricultural research and extension, and
road maintenance by 53 percent, or FCFA 7.6 billion in the 1989190 budget.
This increase will nearly restore the level of expenditure of these key
sectors to that of two years ago. In the medium-term, expenditure on these
services will be adjusted to correspond with the results of operational
audits for the respective ministries that will be carried out in connection
with the Government's program of administrative reform (see below).
46. The Government has already achieved a 12 percent reduction in
the wage bill during the past two years through a series of measures that
have frozen nominal salaries, reduced the number of new recruits, purged
non existent employees from the wage bill, enforced the age limit for
retirement from the civil service, and reduced benefits and allowances for
certain categories of personnel. The Government intends to consolidate
this effort and carry it further by adopting a program of administrative
reform aimed to reduce further the cost of the civil service while at the
same time improving its efficiency. In the short term, these measures
include improved management of the payroll system and the establishment of
a scheme for voluntary departure from the civil service. In addition, the
Government intends to review and revise the system of allowances for family
allocations, housing and transportation while on leave, as well as the
legislation governing retirement. Finally, the Government will begin a
series of operational audits in 1989 that will review the mission of each
ministry, in order to determine the appropriate structure and staffing
level as well as the appropriate recurrent budget needed to accomplish the
ministry's objectives. Management audits of four central ministries
(Finance, Plan, Civil Service and Commerce and Industry) will be carried
out by March 1990 and the process will be extended to key sectoral
ministries later that year. These audits will be supported by the proposed
economic management project that is being processed in parallel with the
SAL. Civil servants identified by these audits as superfluous to the
ministries' staffing requirements will be provided incentives to leave the
civil service, including facilities to retrain for private sector activity.
47. The second major objective of the Government's program of
administrative reform is to improve the efficiency of the civil service by
introducing new policies for the evaluation of individual performance and
the management of personnel files. This is a medium term program that will
require approximately two years to complete. As a first step, the
Government will review the laws and regulations concerning the civil
service and will harmonize the statutes applying to different categories of
employees, i.e. permanent civil servants, part-time and non-civil service
employees. The compensation system will also be revised, in order to
better balance salary and benefits. A new system of performance evaluation
will be introduced based on individual performance plans, and promotion and
remuneration will be based on the results of this system. In order to
Improve the long term quality of the civil service, a system of career
- 15 -
planning and professional training will be established. Finally, overall
management of the civil service will be improved by strengthening the
computerization of personnel files, including all important data concerning
salaries, length of service, promotion and career development and the
production of coherent statistics.
48. As discussed in Part I. due to the expected secular decline of
petroleum revenues during the next decade, a sustained effort to increase
domestic resource mobilization will be required over a number of years, in
order to restore the contribution of non-oil tax revenue to its former
level of around 14-15 percent of non-oil GDP. As a start, the Government
introduced a land tax in 1988/89, and cadastral surveys will soon be
undertaken to extend the land tax throughout major areas of Douala and
Yaound6. Also a number of measures have already been initiated to improve
tax collection and reduce fiscal fraud. Among these is the requirement
that all imports of a value higher than the equivalent of USS 3,300 obtain
a certificate of inspection by specialized agencies in the country of
export; this should improve the proper declaration of content and value for
the purpose of collecting customs duty. The Government will soon begin a
program of negotiating duty free import quotas for all diplomatic missions,
and will strictly enforce the practice of collecting import duties on all
Imports by Government ministries and agencies, including imports financed
by external sources. The Government's intention is to reduce import duty
exonerations as much as possible, which currently permit as much as 60
percent of imports to enter Cameroon duty free. This will require revision
of the Investment Code and renegotiation of existing exonerations with
current beneficiaries which will take a number of years and is not expected
to yield significant increases in revenue in the short term.
49. Over the medium term, the Governmentgs adjustment program
envisages a restructuring of the fiscal system. First, the individual
income tax system would be rationalized to reduce its complexity, broaden
the tax base and perhaps lower individual rates. To this end, a study will
be completed by (December 1989). A system of unique taxpayer
identification numbers will be introduced for all individual and corporate
tax payers. Second, the Government intends to introduce a value added tax
(VAT) in 1991192, to replace the extremely complicated current system of
indirect taxes including the domestic turnover tax ("impOt sur le chiffre
d'affaires interieur*), the single tax ('taxe unique") and the tax on
domestic production ('taxe interieure a la production"). Since these last
two taxes are comon to the UDEAC zone, introduction of the TVA will have
to be coordinated at the UDEAC level. As a first step, the Government will
complete a study on introduction of the VAT by December 1989.
Public Enterprise Reform
50. The Government is well underway in addressing the severe
financial problems of the public enterprise sector. For the past year, the
Interministerial Commission for Public Enterprise Reform has been
conducting diagnostic studies of the 75 public enterprises that represent
the heaviest financial burden on public resources, including all commercial
and state owned banks. Decisions have been taken to liquidate and/or
privatize 22 of these enterprises. Liquidators have been appointed for
four public enterprises and the Commission completed a privatization
- 16 -
strategy paper in mid-April. A proposed legal text governing the
procedures by which public enterprises are to be privatized will be
completed by August 1989.
51. Decisions have also been taken to rehabilitate 38 strategic
enterprises which will remain in the Government's portfolio.lt These
include the major utilities, transport parastatals, research institutes and
agricultural marketing organizations. Action plans have been prepared for
these enterprises which identify the resources required for the financial
restructuring of each enterprise's balance sheet (working capital and
settlement of arrears) and establish plans for the technical rehabilitation
of the enterprise, reduction in work force, and an appropriate medium-term
investment program. A performance contract will be signed between the
Government and the management of each enterprise. These contracts will set
out performance objectives and timetables, establish areas of management
autonomy and, within the context of minimizing financial transfers from the
Government, identify specific obligations of the Government towards the
enterprise in the case where the enterprise is required to carry out non-
profitable activities. Performance contracts for 7 major enterprises will
be signed by September 1989 and for another 9 major enterprises by April
1990. Diagnostic studies for a second group of 45 enterprises will be
completed by December 1989, and decisions on the status of all remaining
public enterprises will be taken by March 1990.
52. The estimated cost for rehabilitating the first group of
enterprises (excluding banks) is estimated at CFAP 377 billion over five
years. This includes approximately CFAP 25 billion for redundancy payments
for approximately 14,000 employees that are estimated to become redundant
in the first group. Before any employees are dismissed, however, a set of
measures will be pnt in place to provide compensation for their loss of
employment and to assist those who wish to enter the private sector find
jobs or establish their own business. To this end facilities for
retraining, and/or establishing a new business will be made available to
all interested employees.
53. The Government is in the process of reviewing the results of the
restructuring plans with a view to reducing the total estimated cost to a
level consistent with available resources. To date, external financing has
been lined up to cover about CFAF 60 billion of the total cost, and
government resources could cover an additional CFAF 50 billion per annum.
Additional assistance from multilateral and bilateral donors will thus be
required to meet the cost of the program, and close coordination among
donors and the Government is a prerequisite for its success.
54. As part of its decision making process, the Interministerial
Commission also took a number of decisions concerning the institutional and
macroeconomic environment in which public enterprises function. Concerning
the former, the commission decided that public enterprises should function
with the maximum amount of autonomy possible and that the management must
1/ Of the 75 enterprises studied, 14 are banks and financial
institutions and one is the agricultural marketing board (ONCPB), which
are dealt with in the following sections.
- 17 -
be responsible for the performance of each enterprise. The board of
directors for each enterprise will ba open to members of the private
sector, and members of the Government vill no longer be appointed as
chairman of the board. The role of the supervising ministry will thus be
significantly reduced in terms of day-to-day management of the enterprise.
Nevertheless, decisions concerning the investment program, hiring and
firing of staff, capital structure and borrowing will still require the
prior approval of the supervising ministry. Legislation concerning these
points, as well as redefining the general statutes governing the
organization and operation of public enterprises will be enacted by
December 1989. Public enterprises are to be classified as (a)
administrative entities (*Etablissement & Caractere Administratif'), (b)
state-owned enterprises ("SociOth d'Etat'), or (c) joint-ventures
('Socidtds d'Economie Mixte'). Those in the first category - research
institutes and other entities with a social purpose - will continue to
receive government subsidies but will have programs designed to improve
their efficiency and effectiveneso. Those in the second and third
categories will operate on commercial principles and will be veaned from
Government subsidies. Concerning the macroeconomic environment, the
Interministerial Commission adopted a series of decisions that will lead to
a progressive liberalization of the commercial and trade regime. These are
discussed below under the section on Industrial and Trade Reform.
55. Implementation of this extensive reform program will be
monitored by the Commission, whose mandate has been extended for this
purpose. The Commission is assisted by a technical Committee that has
supervised the diagnostic studies and is responsible for monitoring the
implementation of the action programs and maintaining a central file on
performance of the public enterprise sector. A supervision committee
('Comitd de Suivia) will be established for each enterprise to negotiate
and monitor the performance contract and will include representatives from
the concerned ministries, the Director General of the enterprise concerned
and a representative of the technical committee.
Financial and Banking Sector
56. The present distress of the banking system represents a major
obstacle to the resumption of normal economic activity, and its resolution
is a prequisite for the success of the structural adjustment program. In
collaboration with the Bank and IMF, the Government has taken initial steps
to address the situation. Diagnostic studies and financial audits have
been carried out or are in process for each individual bank. A
comprehensive program for reforming the financial and banking sector has
been formulated, which includes the following main elements:
Mi) an action plan for the restructurlng of distressed banks
including: (a) liquidation of Cameroon Bank, a state-owned
commercial bank, and of the state-owned specialized banks
BCD and FONADER; (b) restructuring of the state holding
company, SNI; (c) consultations with the foreign partners
in jointly-owned commercial banks (including SCB, BIAOC,
SGBC and BICIC) toward the formulation of specific
rehabilitation proposals for these banks, comprising
financial restructuring as well as organizational reforms
such as branch office closings and personnel reduction (by
March 1990); (d) joint preparation with the foreign
- 18 -
partners of a plan for either restructuring on liquidating
the BPPBCt (e) progressive divestiture of a significant
portion of state shareholding in existing banks (upon
completion of their rehabilitation) in favor of private
Cameroonian or foreign investors. with as a corollary the
withdrawal of Government from the management of these
banks; and (f) the carrying-out of feasibility studies that
would determine the viability of new banks with state
shareholdings prior to their establishment;
(ii) a program of emergency measures to relieve the banking
liquidity crisis, including: (a) the settlement of
government arrears vis-a-via the private sector (to be
completed by September 1989); (b) the consolidation of part
of government deposits with the banks; and (c) the
rescheduling of a portion of outstanding debts owed to BEAC
by the banks (negotiations Government-BEAC to start by June
1989);
(iii) in conjunction with BEAC, the formulation of an action plan
for putting the crop credit system on a sound footing.
This plan will include (a) the settlement and/or
rescheduling of past unpaid crop credits refinanced by BEAC
(negotiations Government-BEAC to start by June 1989); and
(b) new modalities to ensure the sound provision of crop
credits beginning with the 1989/90 crop season, including
limiting bank financing to expected export receipts and the
reinforcement of control over financed stocks:
(iv) in consultation with BEAC, appropriate steps to strengthen
the control of banking institutions by the authorities,
through the reinforcement (started since 1987) of the
Inspection unit of BEAC complemented by that of the
Ministry of Finance. In addition, prudential banking
ratios (e.g., capital adequacy and liquidity ratios) will
be more strictly monitored and enforced, following the
banking restructuring; and
(v) a set of selective policy reforms, to be formulated in
consultation with REAC, includings (a) the gradual increase
in banking margins (to be subject to annual review starting
in November 1990), as a first step toward their eventual
liberalization; (b) the reduction in the excessive range of
interest rates (from about 40 to 4, already in force) and a
gradual increase in their level, prior to their eventual
liberalization; (c) studies on the reduction or abolition
of taxes applicable to financial transactions (by March
1990); and (d) the preparation of legislative, regulatory
and administrative measures to improve the recovery of
banking loans (by March 1990).
- 19 -
57. Apart from the immediate measures outlined in the preceding
paragraph, the Government's program envisages more in-depth reforms of the
financial and banking sector to address the following issues at the central
bank levels
Mi) the progressive phasing out of interest subsidies, starting
with the merger of the preferential rediscount rate with
the normal rediscount rate;
(ii) with the return to monetary equilibria, the gradual
abolition of bank-by-bank credit ceilings (for which
Government will initiate consultations with BEAC, IM4 and
IBID by September 1989);
(iii) adjustments in the BEAC rediscount system to encourage
medium- and long-term credits in relation to short-term
credits;
Uiv) a study (to be initiated upon completion of banking
restructuring) on the establishment of a money market,
which would gradually complement BEAC's rediscount system,
and whose interest rates would become reference rates for
the banking system; and
iv) a study on the introduction of new capital market
instruments such as corporate securities, commercial paper,
obligations, treasury bills, mutual funds, SICAVs, etc.
58. The financial cost of restructuring the Cameroonian banking
system, that is, the amount needed to settle the losses of the banks to be
liquidated as well as of those to be rehabilitated, can be determined with
some degree of accuracy only upon completion and review of specific
proposals for their liquidation or rehabilitation. In the meantime, on the
basis of available information including the financial audits recently
carried out for the major commercial banks, the overall deficit of the
banking system can be roughly estimated in the range of CFAF 300-375
billion. It is impossible at this stage to estimate bow the losses of
jointly-owned banks will be shared between the Government and its foreign
partners, particularly the five European banks holding shares in the five
major Cameroonian commercial banks ranging from 35 to 49 percent, pending
the outcome of ongoing bilateral negotiations between the Government and
the foreign partners, as part of the preparation of rehabilitation
proposals for jointly-owned commercial banks. However, the Government will
most likely have to cover the bulk of these losses, as well as the losses
of the state-owned banks for which the Government bears full
responsibility. Actual losses will certainly differ from current
estimates, depending on the success of future efforts to recover those
banking credits presently considered as non-performing. Furthermore, with
the expected improvements in the banking environment, it should be possible
for some presently distressed banks to continue to carry on their books a
moderate amount of non-performing assets and be able to gradually amortize
- 20 _
these over the next several years, thr3ugh their future earnings. The
aggregate deficit of CFAF 300-375 billion could conceivably be covered by
the following combination of cash and non-cash modalitiess
(a) consolidation by BEAC of banking debts for up to CFAF 200
billion including arrears on crop credits estimated at some CFAF
110 billion, over at least 10 years with 3 years of grace
(preferably 15 years with 5 years of grace);
(b) consolidation of government deposits of up to CFAF 100 billion,
or about two-fifths of the CFAF 250 billion of such deposits;
(c) cash contribution of up to CFAP 75 billion by the Government and
other shareholders toward the financial restructuring of banks;
and
(d) the issuance of Government bonds bearing medium-term maturities
(7-10 years) and market-based interest rates, to cover any
residual balance.
59. The implementation of the agreed reform program is expected to
put the Cameroonian financial and banking sector back on a sound footing,
thus providing a necessary complement to the structural adjustment program.
The rehabilitation of distressed banks will restore their solvency,
liquidity, profitability and operational capacity, enabling them to resume
and expand financing of the productive sectors. The liquidation of some
banks beyond repair will stop the drain on financial resources and remove a
previous source of credit misallocation. The comprehensive set of policy,
regulatory and institutional reforms (e.g., interest rates, elimination of
taxation on financial transactions, agricultural crop credit, banking
inspection and control) -till facilitate the emergence of a new banking
system with more professional standards of operation and an enhanced
capacity to mobilize and allocate resiaurces.
Agriculture and Forestry
60. The Government's development objectives for agriculture
emphasize food security, promotion and diversification of exports and
increasing rural incomes. To attain these objectives, the Government
intends to support traditional farmers and livestock owners, promote the
creation of modern medium-sized farms, and increase the use and
transformation of domestic agricultural products. The reform program
emphasizes both price and non-price incentives.
61. Pricing and Marketing Policies. The marketing of most foodcrops
is handled by the private sector in a de facto environment. Given the
competitive nature of these markets, price controls are not enforced. The
Government intends to reduce its involvement in the production and
marketing of the few basic commodities in which public enterprises are
currently involved. For example, rice marketing has recently been
liberalized, and responsibility for rice production and marketing will be
- 21 -
transferred gradually to the private sector in the North. Sugar production
and marketing will also be privatized, and the palm oil industry is being
restructured for eventual privatization. Domestic production of rice, palm
oil and meat products suffer from competitive imports. In response to this
situation, the Government has imposed additional tariffs on import
substitutes such as rice, meat products, palm oil and sugar to offset the
effect of export subsidies and dumping from surplus countries.
62. For the major export crops, the Government has already taken
measures to reduce intermediary costs, in order to cut down the deficit
from exporting these crops in 1988189. However, these measures are not
sufficient to eliminate the deficit or reduce it to an affordable level.
For the 1989190 season, the Government intends to implement a pricing
policy that would minimize the risk of requiring a state subsidy through
further reductions of the intermediary costs of both private agents and the
marketing board, suspension of export taxes, and a lowering of producer
prices. The Government will institute a floor producer price for coffee,
cocoa and cotton, agree on the specific amount and the content of
intermediary margins, and distribute the residual excess revenue, if any,
afforded by the existing world price among producers, the stabilization
fund and the Government in the proportion of 40-40-20 percent,
respectively. The Government will also increase the price differential
between superior and inferior quality arabica coffee to increase the
competitiveness of this product in the world market. The new pricing
system will be in effect for the 1989/90 crop season.
63. The Government also intends to liberalize the marketing system
over time. As a first step, the Government intends to introduce more
competition in the Northwest region where inefficient cooperatives and the
marketing board currently have a monopoly over the marketing of coffee by
allowing private traders to enter the market. In the 1989190 crop season,
private traders will be allowed to compete with cooperatives in the
internal marketing of coffee. In the 1990191 crop season, following a
review of the marketing board's role in the region, the Government intends
to allow cooperatives and private traders to compete with the marketing
board in the export of coffee. Further liberalization will be extended to
other regions and products depending on the results of the first step. The
Government has also completed a financial and management audit of the
National Produce Marketing Board (Office National de Commercialisation des
Produits de Base, ONCPB), and the Cotton Development Agency (Societe de
Ddveloppement du Coton). A performance contract between the Government and
ONCPB will be signed not later than September 1. 1989 and between the
Government and SODECOTON not later than December 1, 1989. Parallel with
the adjustment program, the Government is working to improve export
performance through rehabilitating cocoa production and related support
services and is preparing an export promotion and diversification project
that will include institutional reforms and support for exporting
agricultural products.
64. Institutional Reform. The Government recognizes that its
excessive interference in the administration of cooperatives and in the
- 22 -
delivery of Inputs has proven very inefficient and costly. It intends to
disengage from cooperatives to enhance their autonomy and reorganize the
public support agencies. The governing legislation is being revised to
deregulate the cooperative movement. The role of public support agencies
will be redefined to provide more effective technical support to
cooperatives and to vithdraw from interference in the cooperatives'
administration. A reform program to privatize the distribution of Inputs
and to phase out input subsidies is tinder implementation. Fertilizer
distribution has recently been privacized and subsidies will be phased out
over the next three years as part of a program agreed with USAID. The
extension services will be streamlined to become more cost effective,
including harmonization of services between parastatals and government
ministries and the adoption of the training and visit extension system on a
nation-wide basis. Research institutes will be restructured and reinforced
to provide better linkage with extension services. In addition, a program
to privatize veterinary services has recently started.
65. Forestry and Environment. Only about 40 percent of Cameroon's
forest resources is being exploited. However, forest exploitation is not
efficiently controlled due to the lack of a land use plan, inappropriate
policy in the granting of concessions and licenses for exploitation and
exports, and poorly trained staff. The Government is conscious of forestry
and environmental problems and has completed a Tropical Forest Action Plan.
The Government intends to implement the recommendations of this action
plan. It will reinforce the Directorate of Forestry in forest management
and streamline services provided by parastatals in forest inventory and
forest plantation. The reform will involve the revision of the forestry
code to authorize long-term concession arrangements in order to provide
incentives for the concessionaries to maintain and control access to their
areas of operation, rather than to exploit the areas on a one-time basis
and move on to the next tract of forest, a prime cause of environmental
degradation. The taxation system and the existing quota on log exports
will be revised to provide incentives for exploitation of lesser known
species and for better wood transformation. Norms and standards on wood
products will be introduced to enhance the marketability of wood exports.
The forestry code will also be modified to provide a legal basis for
promoting agro-forestry, and for integrating local populations in the
protection of national parks and reserves.
Industrial Policy and Trade Reform
66. Industrial and trade policy reform is crucial to the success of
the Government's adjustment program. As mentioned in the section on Public
Enterprise Reform, the Interministerial Commission charged with this
process has taken a number of basic decisions to liberalize and decontrol
the economy and improve the incentives for production and export.
Dismantling of the heavy regula.ory framework should permit a significant
increase in the competitiveness and efficiency of the internal distribution
system, which is necessary for Cameroon to improve its international
competitiveness and establish new sources of export growth.
- 23 -
67. Concerning external trade, the adjustment program will
progressively eliminate quantitative restrictions (QRs) on the Import of
all controlled goods, currently 180 lines in the tariff schedule. To allow
adjustment of local production, QRs will be removed in three phases by 1991
for all goode except a very short list of strategic items. A first group
comprising mostly consumer goods with very limited local value-added (e.g.
water, paint, chemicals, non-plastic shoes, pipes, hand-tools) will be
liberalised in June 1989. A second group including key intermediate and
locally produced consumer goods (e.g. metals, plastics, paper, appliances,
flour, batteries) will be liberalised in February 1990. The third group
covering locally produced goods with high market share (e.g. soap, milk,
salt, cement, garments) will be liberalised in January 1991. Given high
levels of local value-added and employment, decisions on the phasing out of
the remaining QRs strategic goods (i.e. vegetable oil, rice, sugar, cotton
textiles) will be made in the first quarter of 1990 after analysis of the
restructuring potential for the industries concerned. Tariff protection
will be adjusted as necessary and will decrease over time to allow a
progressive increase in external competition and an appropriate period of
adjustment for domestic industries. The elimination of QRs will be
complemented by the elimination of import licenses for all products not
still subject to QRs; this measure will be taken in June 1989 with the
elimination of the first group of QRs, prior to effectiveness of the loan.
68. The tariff retime will be further rationalized by the
establisbment of a minimum import duty and the reduction of maximum
cumulative duties in July 1990. This will provide a minimum amount of
protection to domestic production of intermediate goods that are currently
imported under low or duty free rates and will contribute to the reduction
of the wide dispersion in existing effective rates of protection.
Furthermore, the Government intends to support actively the process of
reform of the common external tariff currently being studied by UDEAC.
Finally, on the expor. side, all export taxes will be eliminated in July
1990 with the exception of export taxes on logs which will be reviewed in
conjunction with the revision of the fiscal regime applicable to forest and
wood products.
69. Concerning domestic commerce, the Government has embarked on a
process of eliminating price controls for all goods and services with the
exception of a short list of products of basic necessity. A first step was
taken in this direction in January 1989 when the number of products and
groups of products subject to price control was redefined and reduced from
87 to 35. The remaining categories are, nevertheless, extensive and
include all inputs to products that remain subject to price control. The
decontrol of prices will be fully effective in June 1989 with the
elimination of the system of administered margins for all goods and
services not remaining subject to price controls andlor QRs. This system
currently determines the mark up for all products and services in the
economy at both the wholesale and retail levels. The Government has now
decided to eliminate the system of price controls except for a very short
list of basic goods and services (mainly pharmaceuticals, flour, milk,
- 24 -
bread, rice salt, meat, petroleum products, passenger transportation,
health services, water and electricity) and for a few other goods still
under QRs. Price controls on the latter will be subsequently removed in
parallel with the phase-out of QRs.
70. In addition to price decontrol, the Government intends to revise
the re8ulatory environment governing commerce, business incorporation and
partnerships, labor regulations and the Investment Code. The legislation
governing commercial activity (loi 80125) will be revised by December 1989
to permit free competition at all stages of the distribution process, while
protecting the consumer from unfair business practices and excessive
concentration of commercial power. Second, the legislation governing
business incorporation (OCode des Societesn) will be modernized in 1990 to
facilitate incorporation and dissolution of companies. Third, the Labor
Code will be revised by December 1990 to reduce labor market regidities.
Last, the Investment Code will be revised by December 1989 to grant
Incentives based on measures of performance such as value added, employment
creation, training andlor export activity, rather than providing duty
exemptions on imports. Eligibility under the new code will be open to all
new investments, including extensions to existing production units. As a
complimentary measure to promote exports, a study will be completed by
December 1989 to identify appropriate export incentives, including
improvements to existing institutional facilities.
Reorientation of Sector Strategies
71. As a result of the wide participation of all major sector
ministries in the development of the Government's structural adjustment
program, the program includes a wide variety of measures to improve the
performance of the economy in areas other than those described above. The
matrix of policy actions presents the full extent of the Government's
program, while the more important measures are summarized below:
(i) increases in transportation user taxes for heavy vehicles using
the road network, the ports and airports;
(ii) definition of an air transport sector strategy, including a plan
for rehabilitation, organization and operation of airports;
(iii) formulation of operational strategies in the health and education
sectors with a view towards preventing any decline in existing
levels of coverage, particularly for primary services, improving
quality and pertinence and recovering costs where possible;
(iv) elaboration of a master plan for urban water supply and
sewerage, and of a strategy for the participation of rural
populations in the installation and maintenance of rural water
supply systems;
(v) revision of the petroleum legislation to encourage exploration
by the international oil industry;
- 25 -
(vi) revision of the mining legislation to facilitate exploration
permits and to grant mining concessions based on competitive
bidding; and
(vii) adoption of environmental norms and standards including
regulation governing industrial wastes.
Social Dimensions of Adiustment
72. The present economic crisis has led to a sharp reduction in per
capita income and private consumption during the past two years, by -24
percent and -15 percent, respectively, compared with the 1985186 levels.
In addition, in its zeal to redress the budget deficit, the Government
sharply reduced expenditures on services that are crucial for the provision
of basic needs of the poor, such as primary health and education.
73. The urban population has been most affected by the present
crisis and will bear the brunt of the adjustment and restructuring measures
included in the present program. The public enterprise reform will entail
a curtailment of staff while the restructuring of government expenditures
will reduce staff benefits and eventually the number of civil servants.
Also, the envisaged tax increases will be borne mostly by the urban middle
class.
74. On the other hand, the adjustment program contains a number of
structural measures that will stimulate the urban private sector and
facilitate the absorption of additional manpower. Among these are the
gradual disengagement of the public sector from productive activities, the
simplification of administrative regulations required to set up a private
business, an improved incentive framework for SMEs, and the easing of
liquidity problems in the banking sector. The liberalization of trade and
commerce should also reduce the cost of many basic consumer goods that are
produced locally, but are highly protected and expensive. Improved
training policies would contribute to the strengthening of productive
activities.
75. Until now, incomes in the rural sector have been protected from
the harshness of the economic crisis by a system of price supports for
major export commodities. However, this system is no longer sustainable in
view of the negative effect on public sector resources, and official prices
will have to be adjusted downwards next year. On the other hand, sectoral
programs are being put in place to enhance the efficiency of cotton, cocoa,
and coffee production and to cut processing and marketing costs. The
foodcrop and livestock sectors will also benefit from better support
services which will increase rural incomes.
76. The Government is extremely conscious of the effect that the
decline in economic activity has already had on the poorer levels of the
population and, for this reason, is both hesitant about proceeding too
quickly with the envisaged liberalization of the economy and eager to put
- 26 -
in place mechanisms to assist the vulnerable groups mentioned above through
the adjustment period. It is, therefore, in the process of drawing up an
action program, to be supported by a proposed Bank financed SDA project
(poverty alleviation and socio-economic participation) which is an advanced
stage of preparation, to address these concerns.
77. The Government's SDA program is being elaborated by five working
groups that deal respectively with population/health/social security,
education/training, employment, the role of women in development, and the
institutional framework including statistical measurement of social
indicators. These working groups are developping action programs that
involve all concerned parties, particularly non-government organizations,
in a concerted effort to refocus and improve the social services currently
available to the population. A particular emphasis will be placed on
services aimed at primary health care, retraining of individuals who have
lost their jobs, identification of labor intensive methods for carrying out
public works and establishment of permanent household surveys to measure
social conditions. Their work should generate important inputs and
momentum in.o the development of human resource strategies.
PART III - ECONOMIC AND FINANCIAL IMPACT OF ADJUSTMENT
Medium-Term Prospects for Growth
78. Implementation of the Government's reform program is expected to
arrest the three year decline in economic activity and restore the
conditions necessary for a resumption of growth. The restructuring of the
banking system and the settlement of government arrears to domestic
suppliers, together with improved financial policies, should restore an
acceptable level of liquidity to the economy and permit everyday
transactions to occur on a normal basis. The restructuring of non-banking
public enterprises will improve their efficiency, reduce the existing drain
on public resources and increase their contribution to value added. The
Government's program of administrative reform will improve control over
personnel expenditures and enable the Government to stabilize its overall
level of expenditure without further reductions that would jeopardize the
economy's ability to respond to improved incentives and an improved
financial environment. The program will also permit a restoration of key
non-wage recurrent expenditures, as well as a minimum level of capital
investment consistent with the growth potential of the economy.
79. In addition, the Government's program to liberalize trade and
reduce administrative controls should result in a lowering of the cost
structure throughout the economy. This will improve the incentive
framework for the production of tradeable goods and the international
competitiveness of the economy, thus enabling the economy to re-establish a
growth path based on the exploitation and transformation of Cameroon's rich
natural resource base.
80. With improved incentives and a resurgence of private investment,
long-term growth of three percent per annum should be achievable, led by
- 27 -
the agriculture and manufacturing sectors. Non-oil GDP could grow by four
percent per annum, while petroleum production is expected to decline by
eight percent per annum.21 Restoration of a positive overall rate of
growth would be a significant accomplishment following the ten year cycle
of boom and bust, induced by fluctuations in world commodity prices, that
allowed many structural problems to imbed themselves in the economy.
81. The resumption of sustained growth will require a restoration of
the domestic investment rate in both the private and public sector. The
current level of 10 percent of GDP will have to rise to 14-15 percent of
GDP by 1995 (compared with 19 percent of GDP over the past decade),
Implying a growth rate of 7 percent per annum over the next seven years.
Since the Government will no longer have the resources to act as an engine
of growth, private sector investment will have to grow faster than
Government investment and regain to its pre-oil dominance of 80 percent of
total investment in the economy. Import volumes will also have to Increase
for growth to occur, but given the planned changes in the incentive
structure (i.e., a more uniform application of import duties and a lowering
of domestic costs of production), it should be possible to reduce the
relative import content of industry, investment and consumption over the
next decade, and contain overall import growth to about one percent per
annum.
82. The macroeconomic projections shown in Annex I and summarized
below are conservative in that they do not include any new oil production
and oil exports. Traditional agricultural exports of coffee and cocoa are
expected to grow at 3 percent per annum or slightly faster than long-term
world demand as a result of improved pyxduction efficiency, switching into
production of arabica coffee, and aggressive seeking of market share in the
specialized cocoa Cameroon produces. Other agricultural exports, including
timber, and manufactured goods are expected to grow by 4-5 percent per
annim starting in 1990, as a result of government policies to lower
domestic costs through deregulation and to provide better export
Incentives. The growth in non-oil exports will, nevertheless, not be
sufficient to compensate for the decline in oil exports over the next ten
years, and the overall volume of exports of goods and non-factor services
is projected to decline by 2.5 percent per annum through 1995. A positive
overall growth in export volumes could occur towards the end of the next
decade, however, once the negative effects of the decline in oil exports
have worked themselves out of the picture.
2I Without new oil discoveries, the decline in petroleum production over
the next ten years will be equivalent to one percent of GDP per annum and
result in a contraction of the sector's contribution to GDP from 17 percent
today to 5 percent in the year 2000. Oil exports are expected to decline
by 10 percent per annum, which would represent a cumulative loss in foreign
exchange earnings of CPAP 325 billion in nominal terms between now and
1995, despite a projected increase in world petroleum prices.
- 28 -
Key Economic Indicators (Base Case)
Growth Rates (percent) 1987 1988 1989 1990 90-95 95-2000
GDP -2.8 -8.6 -6.0 2.4 2.3 3.4
Domestic Income -7.8 -10.0 -8.0 3.9 3.5 4.1
Exports -7.3 -3.8 -1.0 -1.7 -2.6 -0.4
Imports -9.8 -17.8 -18.0 2.3 0.3 2.0
consumption 0.9 -10.8 -6.7 2.7 2.9 3.9
investment -18.8 -19.1 -29.7 12.4 6.5 4.5
Domestic Savings -42.9 -4.7 -16.4 '3.2 7.3 4.9
Other Indicators (end of period)
GDP per capita (1985 CFAP 000's) 393 348 318 316 305 313
Terms of Trade (1985-100) 53 50 47 49 58 68
Current Account (2 of GDP) -9.3 -6.8 -4.5 -4.7 -5.0 -4.3
Budget Surplus (2 of GDP) -12.6 -5.7 -1.5 -2.2 -0.4 0.1
83. Despite good growth in the non-oil economy, GDP per capita
is expected to remain essentially constant over the next decade, as a
result of population growth (2.9 percent per annum) and the decline of oil
production. On the other hand, Cameroon's terms of trade are expected to
imrove gradually over the next decade, from its current level of one-half
the 1985 index to about two-thirds the 1985 index by the year 2000. This
would cause domestic income to grow more rapidly than GDP, by 0.7 percent
per annum, and permit a one percent per annum increase in per capita
consumption during the second half of the 19909.
84. The Government's budgetary policy will contribute to the re-
establishment of growth by maintaining a tight fiscal stance that avoids
draining resources from the banking system and private investment. This
implies limiting the budget deficit to a level slightly below expected
disbursements of foreign financed investment projects, or about three
percent of GDP during the next three years. Subsequently, the expected
increase in non-oil tax revenue should be sufficient to attain basic
budgetary equilibrium in the early 1990s. However, in addition to the
structural deficit during the years of adjustment, the Government will have
to mobilize considerable resources for the restructuring of public
enterprises and banks over the next four to five years, which will increase
the reliance on external borrowing. Budgetary policy will thus have tc.
provide for a sharp increase in scheduled external debt service which las
already risen from 10 percent of government revenues in 1985-87 to 27
- 29 -
percent this year and is expected to average 30 percent of Goverrment
revenues over the next five years. The Government's policy of
administrative reform (to control and reduce wage expenditures) and revenue
restructuring (to restore non-oil tax revenues to 14-15 percent of non-oil
GDP) are thus key elements of the adjustment strategy.
External Capital Requirements
85. The combination of declining export volumes, import
requirements needed for growth and sharply higher interest payments
indicate that the current account will remain in deficit throughout the
next decade. It to expected to average US$625 million per annum over the
next five years, equivalent tu 5 percent of GDP. Given the desirability of
bringing net official reserves up to a positive level and meeting sizeable
amortization payments, much of which is private non-guaranteed debt, gross
capital requirements will average USS 1150 million per annum. About one-
fifth of this amount can be expected from private investors and creditors
in view of large undisbursed balances from these sources. The balance,
about US$ 950 million per annum, will need to come from official creditors.
This will require a combination of continued project loans, quick
disbursing assistance, on the order of USS 250-300 million per annum over
the four year period 1989190 to 1992193 and probably some debt relief.
Some additional non-project assistance may be required for two to three
years after this period, which indicates the long-term nature of Cameroon's
financial difficulties. Rescheduling of bilateral debt with the Paris Club
is expected to occur for the first time in May 1989; it would cover
existing arrears as well as current maturities through the end of the
existing IMP Stand-by program, i.e., March 1990. Additional reschedulings
may be required during the following two years to finance the remaining gap
through 1991/92 if sufficient fresh money cannot be mobilized.
- 30 -
Gross Capital Requirements 1988189 - 1992193
1988189 1989/90 1990/91 1991192 1992193
(in million of US$)
Current Account Deficit 452 559 655 686 625
Amortization Payments 472 462 439 412 395
Incr. in Reserves (incl.IMF) -120 75 98 136 67
Reduction in Arrears 623 - - _ -
Total Requirements 1427 1096 1192 1234 1087
Resources
Disbursements of medium and
long-term loans 456 768 937 954 889
Multilateral 109 361 397 396 387
olw IBRD (73) (193) (211) (202) (195)
Bilateral 117 214 349 340 303
Private 229 191 191 218 199
Debt Relief 901 308 314 255 -
Other Capital (incl. GAP) 70 20 -59 23 198
Total Resources 1427 1096 1192 1234 1087
86. The likelihood of realizing the above capital flows is
supported by the large amount of committed but undisbursed project loans
(US$ 1.7 billion as of June 1988) which should be disbursed within the
above period, even with a rephasing of the Government's investment program.
Nevertheless, an increase in the amount of official commitments to Cameroon
above the average rate of the past four years (i.e., from US$ 350 million
per annum to US$ 450 million p.a.) will also be required. It is expected
that multilateral institutions would finance a larger share (60 percent) of
the non-project assistance, while bilateral donors will increase the
concessionality of their assistance from the current average grant element
of 18 percent to an average grant element of 35 percent (e.g., terms of 25
years maturity, 5 years grace and 5 percent interest). In total,
multilateral institutions would finance about 30 percent of Cameroon's
gross capital requirements and bilateral donor. about 50 percent, one half
in fresh money and one-half in debt relief.
87. In sum, Cameroon's macroeconomic prospects require a medium-
term increase In indebtedness, in order to finance sufficient imports to
stabilize production, increase investment and provide sufficient time for
growth in non-oil exports to catch up with the decline in oil export
earnings. The non-project borrowing contained in the above scenario would
_ 31 -
provide sufficient resources for the Government to restore essential
services, complete unfinished projects more quickly than otherwise, and
finance a large share of the restructuring costs of public enterprises and
banks. In later years, when the cost of public enterprise restructuring
would be over and budget equilibrium restored, the Government should aim to
continue borrowing on a moderate net basis from external sources, as a
means of financing the country's import requirements, and use these
resources to reduce its indebtedness to the central bank and to transfer
resources to the private sector by accumulating balances in the domestic
banking system, as was the case prior to the current crisis.
Creditworthiness and Risk
88. Cameroon's external debt ratios are rising quickly as a
result of falling export values and the commitment of large loans on
commercial terms during the past two years. Debt s,ervice on public and
publicly guaranteed (PPG) debt has risen from 11 percent of exports three
years ago to a projected 23 percent this year (1988189) before
rescheduling; it will be 9 percent after rescheduling. In the absence of
debt rescheduling, the capital inflows discussed above would increase the
PPG debt service ratio moderately from 23 percent today to 29 percent in
1995 and 30 percent by the year 2000. The need to reschedule debt service
over the next three years will exacerbate this pattern, however, by pushing
PPG debt service up to 37 percent of exports in 1995, and 34 percent by the
end of the century. Total debt service, including non-guaranteed debt,
repurchases from the IDF and unidentified GAP financing would similarly
remain lower than otherwise during the years of rescheduling, then average
about 45 percent of exports between 1995 and the year 2000. PPG debt
outstanding and disbursed would rise from 30 percent of GDP this year to 49
percent in the mid-1990's, and then decline sligthly by the year 2000.
External Debt Service Ratios after Rescheduling
(percent)
1986 1988 1989 1990 1991 1992 1995 2000
Debt Service I Exports
Public & Publicly Guar. 11 18 9 14 17 22 37 34
Total, incl. Pvt, IHY
& GAP 29 33 22 23 25 30 43 47
Debt Out. & Dsbd. I GDP
PPG 19 19 30 37 43 48 49 45
Total 24 23 35 41 47 52 56 58
89. Under the adjustment scenario outlined above, gross capital
flows from the IBID would amount to US$ 935 million over 5 years. On a net
basis, PPG debt would rise by US$ 3045 million during 1989190 - 1993194
- 32 -
after debt relief of US$ 1800 million. The Bank's net credit position
would rise by USS 680 million during this period or by 22 percent of the
net capital flows. Multilateral debt outstanding and disbursed as a share
of PPG DOD vould rise from 27 percent in 1989 to 36 percent in 1994, as no
net change in debt outstanding to commercial banks is assumed. The
Bsnk/IDA share of PPG DOD would remain constant at 20 percent over the
period; within this total, IBRD exposure would rise from 13 percent to 17
percent in 1994, while IDA's share of debt outstanding would decline from 7
percent to 3 percent. Debt service to the IBRD would remain at its current
share of PPG debt service, about 19 percent, through 1994 and rise to 21
percent by year 2000. Debt service to the IBRD as a share of exports would
rise from 5 percent to 7 percent by the end of the century.
90. While the Bank's exposure would rise over the period, PPG
debt service would decline after 1995 as the effects of rescheduling work
themselves through the system. For countries in the CFA zone, the key
indicator is external debt service as a share of fiscal revenues. This is
currently 27 percent and is expected to average 30 percent of revenues over
much of the next decade. While this level is high, the public finance
scenario envisages a sustained reduction in domestic debt throughout the
next decade, as well as real increases in capital expenditures and
recurrent services. There would thus be a margin to reduce other budget
items to deal with an unforeseen revenue shortfall before endangering the
service of external debt.
91. The risks in this scerario stem from a slower Implementation
of the Government's reform program thain expected, or from adjustment
measures that are not strong enough to elicit the envisaged increase in
private investment and non-oil exports. Slippage irn the reform program
would be recognized by the international community and result in lower
levels of quick disbursing assistance needed to finance restructuring of
the banking sector and public enterprise reform. With less external SAL-
type assistance at its disposal, the Government would most likely heed its
instinct to balance the budget through further cuts in expenditure, as it
demonstrated in 1986187 prior to discussing a stabilization program with
the IMF, which would continue the momentum of the current recession. These
factors would lower overall growth by one to two percent per annum over the
next decade, compared with the base case, and lead to a further decline of
about 15 percent in per capita consumption and income levels by the year
2000.
92. Export revenues would also be lower, less diversified and
more vulnerable to external shock. But the current account deficit would
not necessarily increase, in view of continued budget austerity and the
monetary discipline of the Franc Zone that strictly controls credit and
borrowing by the Government from the central bank. Reserves would become
increasingly negative, however, implying further drawings on the Operations
Account, and debt rescheduling would be required for more years than in the
base case scenario. Less debt would be outstanding, but it would be about
five percentage points higher as a percent of GDP than in the base case, as
would PPG debt service as a percent of exports. Debt service to the IBRD
- 33 -
would be lower in absolute terms, due to lover non-project disbursements,
but remain about the same as a percentage of exports and total PPG debt
service. Risk to the Bank would nevertheless be higher to the extent that
the country grows poorer.
93. There is an upside potential to be considered in the risk
analysis, however. This involves the discovery of new oil fields following
an improvement in exploration incentives. A modest assumption of finding
new oil reserves equivalent to 30 percent of the original fields currently
under production would accelerate GDP growth by one percent per annum and
export growth by five percent per annum in the second half of the 19909.
This would result in a level of GDP per capita 9 percent higher than in the
base case by the year 2000. Oil production would represent 13 percent of
total GDP, instead of falling to 5 percent as in the base case. Initially,
the current account deficit would be slightly higher as a result of
investment in oil production, but this would be fully financed by private
sources, and in the second half of the decade, the average current account
deficit would be only two percent of GDP instead of four percent. Lower
borrowing requirements and higher government reverues, which would increase
sharply starting in 1997, could reduce PPG debt outstanding by six
percentage points by the year 2000. The PPG debt service ratio could then
be much lower, 24 percent of exports versus 34 percent in the base case.
Finally, the increase in government revenues, if unspent, could yield
budget surpluses of two-three percent of GDP by the year 2000. The
Government would then be in a position to reduce its external debt in
absolute terms during the early part of the next century.
PART IV - THE PROPOSED LOAN
A. Loan History
94. The proposed loan was first discussed with the Government by
high-level Bank missions that visited Cameroon in August .987 and March
1988. The Government subsequently prepared an initial draft of its
Declaration of Development Str.tegy that was discussed by a Bank appraisal
mission in July 1988. Two subsequent missions visited Cameroon in November
1988 and February/March 1989. Negotiations were held in Washington, D.C.
in May 1989; the Cameroonian delegation was headed by H.E. Mme Elisabeth
Tankeu, Minister of Plan and Regional Development. Supplementary loan data
are provided in Annex III.
B. Loan Amount and Co-financing
95. The proposed loan would support an initial 18-24 month phase
of the Government's adjustment program. It would help finance the imports
needed for economic recovery and growth and would be equivalent to 7
percent of Cameroon's external capital requirements over the period July
1989 to June 1991. The domestic currency generated by the loan would
support the Government's overall budget and, in particular, support an
- 34 -
increase In key recurrent expenditures and the financial restructuring of
the public enterprise and banking sectors. The proposed loan of US$ 150
million equivalent vould be disbursed in three tranches of US$ 50 million
each, subsequent to satisfactory progress with implementation of the
program and of the specific actions described below.
96. The African Development Bank has participated in the three
technical missions to appraise and discuss this loan, and it is expected
that the AfDB would co-finance the proposed operation with a loan "
approximately VA 100 million equivalent to US$ 125 million. This 1o4n
would be on standard AfDB terms and would be disbursed in accordance with
AfDB procurement and disbursement procedures.
97. The Export-Import Bank of Japan has expressed strong
Interest in co-financing this operation with She Bank serving as
administrator in an amount to be determined folloming an upcoming
evaluation mission. In addition, other multilateral and bilateral donors
have expressed interest in providing non-project assistance to support the
Government's adjustment program. At this time, resources totalling US$ 150
million have been identified. This includes US$ 100 million of non-project
assistance already committed by France and expected to be disbursed during
the same period as this operation. Other potential sources of non-project
assistance include the European Community (STABEX funds), Csnada and
Germany.
C. IMonitorable Actions
Items for Negotiations
98. During negotiations it was agreed that prior to loan
effectiveness the Government would undertake the followings
(a) Import licence requirements for goods which are not subject
to quantitative import restrictions will be eliminated;
(b) Quantitative import restrictions for a first group of goods
will be removed;
(c) Price controls ('homologation pr4alable") will be eliminated
for most except for a limited number of basic goods and
services and a few goods remaining subject to quantitative
import restrictions; and
(d) The system for setting commercial margins for goods and
services which are no longer subject to quantitative import
restrictions or price controls will be removed.
99. Disbursement of the second tranche of US$50 million
equivalent, to be disbursed not earlier than March 31, 1990, is dependent
on satisfactory progress in carrying out the Structural Adjustment Program
- 35 -
and in particular on the following measures being taken in a manner
satisfactory to the Banks
(a) The Borrower has adopted its 'Loi des Finances' 1989/1990
reflecting the public investment program, the levels of non-wage
recurrent expenditures for the health, education and agriculture
sectors and for road maintenance, and the levels of resources
allocated to the restructuring of the banking and public
enterprise sectors, as determined iu agreement with the Bank.
(b) Progress has been achieved in the establishment and functioning of
a system to program and monitor the rolling four-year public
investment program.
(c) Progress has been achieved on measures to reform the public
enterprise sector, includings Ci) the signature of performance
contracts between the Government and key public enterprises,
namely SODECAO, HEVECAM, ONCPB, SONEL, SNEC, SOCAPALM and Office
C*realier; and (ii) the completion of aegotiations of performance
contracts between the Borrower and the following public
enterprisess CANIKR, REGIFERCAM, and SODECOTON.
(d) Action plans have been adopted to liquidate CAMBANK, BCD and
FONADER and to restructure key commercial banks, including SCB.
Ce) For the primary export crops, li) floor producer prices for
coffee, cotton and cocoa and price schedules (Cbar&mes') for
coffee and cocoa, for the crop season 1989-1990, have been
published at a level consistent with minimizing the risk of
requiring State support; and (ii) a system for sharing residual
marketing surpluses (export receipts, less producer prices and
marketing margins) has been established.
(f) Progress has been achieved in the implementation of measures to
liberalize trade and prices and to improve the incentive framework
for production and export, includings (i) the removal of
quantitative import restrictions (together with import license
requirements) for a second group of goodst (ii) the elimination of
price controls ('homolotation pr6alable') and of the system for
setting commercial margins for a second group of goods; (iii) the
revision of Law No. 80125 portant orientation de l'activit4
comuerciale permitting free access to trade at all stages of
distribution and eliminating monopoly privileges; (iv) the
promulgation of a revised Investment Code; and (v) the completion
of a study on export incentives.
(g) The Borrower has taken all steps within its power, both in
internally and externally, to provide adequate funding for the
esecution of the Program.
- 36 -
100. Disbursement of the third tranche of US$50 million
equivalent, not earlier than December 31, 1990, would be dependent on
continued satisfactory progress in carrying out the Structural Adjustment
Program and in particular on the following measures being taken in a manner
satisfactory to the Banks
(a) The Borrower has adopted its "Loi de Finances' 1990/1991
reflecting the public investment program, the levels of non-wage
recurrent expenditures for the health, education and agriculture
sectors and for road maintenance, and the levels of resources
allocated to the restructuring of the banking and public
enterprise sectors, as determined in agreement with the Bank.
(b) For the civil service: (i) the system of personnel benefits and
allowances (family, housing and travel allowances) has been
revised; (ii) decisions have been taken on organizational and
personnel structure plans for the ministries responsible for
finance, planning, civil service and industry and commerce; and
(iii) studies on organizational and personnel structure plans for
three other ministries have started.
(c) Further progress has been achieved on measures to reform the
public enterprise sector, including the signature of performance
contracts between the Government and selected public enterprises,
i.e., CAMAIR, MAETUR, MAGZI, REGIFERCAM, SODECOTON, CDC, SOTUC,
CRTZ and MIDENO, and action plans for other public enterprises
determined in agreement with the Bank have been prepared.
(d) Progress has been achieved in the restructuring of the banking
sector, includings ti) the implementation of the action plans to
liquidate CAMBANK, BCD and FONADER and to restructure SCB; (ii)
the adoption of an action plan to restructure SNI; and (iii) the
adoption of an action plan to restructure or liquidate BPPBC.
te) The role of the National Produce Marketing Board has been
redefined in order to permit the private sector to assume
progressively responsibilities for internal and external marketing
of export crops.
(f) The forestry tax regime has been modified and a revised Forestry
Code has been promulgated to promote rational exploitation and
long-term conservation of forestry resources.
(g) Further progress has been achieved in the implementation of
measures to liberalize trade and prices and improve the incentive
framework for production and export, including: (i) the removal
of remaining quantitative import restrictions (together with
import license requirements), except for a limited number of
strategic goods to be determined in agreement with the Bank,
following the results of a complementary study on said goods, for
a third group of goods; (ii) the eliminations of price controls
- 37 _
(ohomoloogation pr6alableg) and of the system for setting
commercial margins for a third group of goods; and (iii) the
promulgation of a revised labor Code reducing regulatory
constraints resulting in labor maket rigidity.
(h) The Borrower has taken all steps within its powers, both
internally and externally, to provide adequate funding for the
execution of the Program.
D. Program Management and Monitoring
101. The Interministerial Committee established by the President to
prepare and execute the structural adjustment program in collaboration with
the international financial institutions, notably the IMF, the Bank and the
African Development Bank willt
- supervise the formulation and execution of the Government's
economic policy and sectoral objectives;
coordinate the respective interventions of the various
government departments; and
3 ensure the follow up of the relevant action plans drawn up
by the Government.
The Interministerial Committee is chaired by the Secretary General of the
Presidency and includes the Ministers of Finance, Plan, Industrial
Development and Commerce, Agriculture, Civil Service and the National
Director of BrAC. It will meet whenever necessary but no less than once
every three months.
102. To assist the Interministerial Committee, the President also
established a technical committee responsible for finishing preparation of
the Declaration of Development Strategy and for monitoring implementation
of the adjustment program. The committee is headed by a full time senior
civil servant and includes high level, competent officials from key
ministries, most of whom already were part of the working committee
referred to above. The committee has proven extremely cooperative and
effective during the final appraisal and is considered an appropriate
instrument for the monitoring of the adjustment program. To further
enhance its role, the proposed economic management project will provide
logistical support.
103. Following the disbursement of each tranche of the proposed
loan, the Committee will submit to tIte Bank a report evaluating progress
made in implementation. This report will serve as a basis for the release
of the next tranche. The Committee will submit to the Bank a final report
on the program's implementation upon full disbursement of the loan.
- 38 -
B. Procurement, Disbursement and Auditing
104. Both private and public sector imports would be eligible for
financing and subject to simplified ICB procedures for amounts exceeding
US$ 5.0 million equivalent. For lesser amounts, (i) imports by private
entities would follow normal commercial practices; wherever possible bids
would be obtained from at least two countries eligible under Bank
guidelines; ,ii) imports by the public sector would be in accordance with
normal Government procedures which will be improved as part of the
structural adjustment program and bids would be obtained from at least
three suppliers. Imports would be verified by inspection agencies as part
of the Government's efforts to improve customs collections.
105. The loan will reimburse the foreign exchange cost of
eligible imports (excluding luxury goods and defense items). Disbursement
would be facilitated by the establishment of a US$ 20 million equivalent
Special Account in the central bank (BEAC). Bank financing of imports of
foodstuffs will be limited to an aggregate amount equivalent to no more
than US$ 30 million. The Ministry of Finance will be responsible for
collecting the supporting documentation (copies of the invoices and
evidence of shipment and of payment) and for preparing withdrawal
applications. Disbursements would be against Statement of Expenditures
(SOEs) for eligible contracts valued at US$ 5.0 million, or less. The
supporting documentation for these would be retained by the Ministry of
Finance and would be made available to Bank staff during supervision and
audited annually by independent auditors. The nature and origin of the
goods as well as the payment date would be indicated on the SOEs.
Expenditures for goods procured under invoices for US$ 20,000 equivalent or
less would not be eligible for financing out of the loan proceeds. All
other disbursements would be made against full documentation submitted to
the Bank. The minimum withdrawal application size vould be US$l million
equivalent. In order to enable the Government meet urgent foreign exchange
needs, the Bank would disburse up to 10 percent of the loan for eligible
imports which were paid for and entered the country after March 31, 1989.
An audit report, comforming to internationally accepted standards and
prepared by auditors aprpoved by the Bank, will be submitted within six
months after the close of each fiscal year.
PART IV - BANK GROUP OPERATIONS AND STRATEGY
Past Assistance Strategy
106. Bank and IDA commitments to Cameroon as of March 31, 1989
amounted to US$ 1,282 million equivalent, of which, US$ 494 million
remained undisbursed, and covered 52 projectst 25 in agriculture, 15 in
transportation, four in education, three in public utilities, one small-
medium scale enterprise project, two technical assistance projects and two
urban projects. Transport and agriculture account respectively for about
50 percent and 38 percent of these commitments. IYC had invested in 11
enterprises, with total net loan/equity comnitments of USS 20.6 million.
- 39 -
107. Until 1975, the Bank's investment strategy in Cameroon was
to support the Government's development efforts in three main directionss
(a) strengthening and extending the road and rail trunk systems and
improving the port of Doualat (b) raising agricultural output and exports;
and (c) improving education. Since 1975, however Bank lending has
diversified into forestry, small- and medium-scale industry, urban
development, telecoununications and a technical assistance project. In the
past year, the Bank has accommodated the country's difficult financial
situation by restructuring ongoing projects to cut out lower priority
expenditures and reduce the burden on the Government e budget. The main
objective, however, has been to help redefine sectoral priorities in light
of the current financial situation, and pursue a goal of comprehensive
economic reform. Discussions leading to the proposed SAL greatly
contributed in reaching basic understandings on a new course of action.
108. During past years, project implementation has been
exceptionally slow due to delays in project processing and cumbersome
procurement procedures. Fragmentation of responsibilities, lack of
coordination among various ministriesiagencies, and bottlenecks in the
central procurement agency have caused these delays. These problems have
worsened as a result of the country's financial problems, the Government's
lack of counterpart funds, and cost overruns caused by appreciation of the
CFAF vis-a-vis the US dollar. In recent months, however, a noticeable
speed-up in awarding contracts has occured, as a result of the Government's
reorganization of procurement responsibilities. Improved procedures are
expected as part of the adjustment program.
Lending Program
109. The centerpiece of Bank assistance to Cameroon over the next
few years should be structural and sectoral adjustment lending in support
of the Government's policy reforms, providing fast disbursing resources to
meet the economy's balance of payments financing needs. This would be
complimented with selected investment projects to support economic growth.
The adjustment being pursued by Cameroon will necessarily take a number of
years to accomplish. Accordingly, the first SAL, described in this report,
is likely to be followed by others that will assist the Government to
consolidate and build on the achievements of the first phase. The design
and implementation of action programs for the policy reforms would be
assisted through a proposed Economic Management Project which is being
processed in parallel with the SAL. Also, to respond to the legitimate
concerns of the Government as to the social impact that a number of the
reform measures included under the adjustment program will necessarily have
upon certain segments of the population, a proposed poverty alleviation and
participation project is currently being prepared.
110. In agriculture, the Bank lending strategy would support the
Government's objectives in assuring food security for a growing population,
and increasing export revenues. The proposed lending program would deepen
the policy dialogue initiated under the SAL program and finance investments
- 40 -
that would enhance the impact of the policy reforms. This includes a
recently approved livestock project to increase meat and milk production by
strengthening the role of the private sector In the provision of services
and improving the reduced role of the Government in the subsector. A
national extension and training project and a food security project would
enhance the role of mallholders in food production and marketing and
target assistance to disadvantaged groups, including women, to raise
incomes and improve their accessibility to food. A forestry environment
project would address the management and rational exploitation of
Cameroon's rich forestry resources, as well as conservation of the
ecosystem. An export promotion and diversification project would increase
traditional exports and diversify the export base through policy,
investment and institutional measures for increasing production and
promoting new products in new markets.
111. In transportation, priority must be given to improving the
efficiency of parastatals and to the maintenance of existing
infrastructure. New investments would be fully integrated with development
of the productive sectors such as forestry or agriculture. The lending
program includes a feeder roads project designed to ease the transport
constraint on production and marketing in the rural areas; and hybrid
sector project combining financial restructuration of transport
parastatals, sector policy improvements and a program of sector wide
expenditures for maintenance and rehabilitation of infrastructure as well
as selective capacity investments.
112. In the urban sector, the strategy aims to improve delivery
or urban services and transfer responsibility from central government to
municipalities and from the public to the private sector. This strategy
relies on a three-pronged approach of improving resource mobilization,
strengthening urban institutions and upgrading key infrastructure to
support the development of economic activities and improve the living and
working environment, in particular, in the poorest areas of cities. A
Second Urban Project was recently approved and a third is programmed in a
few years.
113. The Bank is encouraging the Government to formulate
pertinent and sustainable strategies in the human resources sector
(education/training and health) which could be supported by sector reform
operations.
PART VI - COLLABORATION WITH IMP AND OTHER DONORS
Relations with the IMF
114. The structural adjustment program has been developed in
close collaboration with the IMP and is consistent with continued
implementation of the existing Stand-by arrangement. The need to restore
non-wage recurrent expenditures in key sectors, maintain a minimum level of
government capital expenditures and provide in the budget for the
restructuring of the banking and public enterprise sectors has been
- 41 -
discussed with the Fund staff, and there is agreement in principle that
allowance for these features of the adjustment program will be incorporated
in future performance cirteria. Both institutions are keenly interested in
the reestablishment of a viable banking sector, and both see the need for a
significant increase in non-oil tax revenue over the medium-term.
Aid Coordination
115. Given Cameroon's fairly comfortable economic and financial
position ttrough 1985, concessionary aid flows have been negligible. On
the other hand, it had ready access to borrowing from commercial, bilateral
and multilateral sources. With the onset of the 1986 crisis, however, a
number of bilateral donors have agreed to soften substantially their
lending terms, in certain instances even extending IDA type conditions.
Much of the aid Cameroon has received to date was obtained on an ad hoc
basis and very little donor coordination took place. With the decision to
embark on a structural adjustment program, which entails a detailed review
of the public investment program and an assessment of ongoing and future
aid flows, the Government has become aware of a greater need for aid
coordination. The Government is thus considering the possibility of
holding a donors' meeting, either locally or as a Consultative Group, for
the purpose of coordinating future aid to ensure its use for high priority
projects and presenting a case for increasing the level of concessionality
in official lending to Cameroon. It is also looking towards the Bank to
approach additional donors, other than the African Development Bank, to
support the adjustment program. Indications are that Japan, Canada and
possibly the European Community and Germany will participate in this or
future SALs. The Bank has actively associated these donors as well as
France, which has already approved structural adjustment type financing to
Cameroon, with the preparation of the ongoing reform program. Now that the
Government has finalized its Declaration of Development Strategy, it plans
to present this document to the donor community as the basis for mobilizing
additional resources.
PART VII - RECOMMENDATION
116. I am satisfied that the proposed loan would comply with the
Articles of Agreement of the Bank and I recommend that the Executive
Directors approve the proposed loan
Barber B. Conable
President
by Moeen A. Qureshi
May 16, 1989
Washington, D.C.
- 42 - ANNEX
111-RAW-414, IMT04785L A0355 Page 1 of 7
196 Par emits Or as lAS
Kid-lW ftp.la.dm 001W) 10.9 om... FI.l. sa* u.1
A. htt...l Acmte Idlat
*wat. Sh1 8)twPrm Waron of Grow. Somaw t"A" edet 0). toCme"a low5 Prico"
iw v. us. sa 1wo 1967 too iwo itw aws 211141
Ona., Coom"et) Product e.g. 100.0 100.0 100.0 100.0 10O.0 100. 100.0 100.0 10.0 100.0 100.0
W"t ladrto TeamO 8.0 8.5 4.6 4.4 4.0 4.0 0.4 0.7
Aerileailura So.7 so.81 11.9 11.4 01.1 13.5 04.8 9199 01.1 20.4 81.1
&%&Aduf 20.81 18.6 219.9 40.6 00.0 $6.8 010.0 618.9 00.1 11.48 0.1
(at .816b wf.tctarlco) 9.8 10.0 T.9 14.7 14.0 18.9 2189 10.8 1.0. 14.6 181.61
(at whible Oil) .. . .3 18.7 17.0 16.9 17.1 17.5 18.0 0.0 51.1.
Smwima 47.0, 80.6 46.8 88.0, 87.4 86.8 14.61 811.0, 8.9 18.4 85.0
fta..uv al h... 06.9 8.81 8.1 -10.9 -7.5 -7.8 -11.9 -18.1 -18.9 4.5 43.4
Rivert.of on5 219.8 00.7 04.1 U8.0 20.6 99.0 99.T 81. 80.0 .99. 19.8
Iqaort of 0n 4.8 04.0 07.0 03.4 23.2 90.6 18.8 18.2 18.1 14.7 18.0
7.6.1 LT Imtuv.e 100.8 103.81 �01.1 00.4 13.8 13.4 68.8 84.9 00.1 91.8 94.6
Total Ow8wiU 00.0 68.4 84.8 80.6 74.2 7?. 1.0 7 4. .? 78. 17.4 78.7
Private Cansmmpgten 74.9 71.8 78.8 87. 13.2 08.1 84.0 68.9 64.8 68.7 611.61
Coatral Oaan....tA 18.0 1.6 6..7 10.1 10.0 14.0 11. 10.8 10.6 10.7 10.9
Gram. Comucti ba..tbmmt 1.3. 19.9 Is.9. 9. 10. 8. 18.81 18.6 10.9 11.0 14.1 14 9
M1A,4wt (lad. Puab.ffntr.) .. . . 20.1 U.JL 6.8 10.0 7.91 6.9 131.2 it.
Central nwoermut . . . 7.8 7.2 6.8 8.8 0.0 0.0 0.0 2.8
Cee.cilt to Iugrt MA.. . 1. 1.8 18.1 18.81 18.1 18.1 14.9 14.4
T*rmof Traile "mjatm.t .. . . .1 -7.8 -10.1 -13.4 -18.0 -18.9 48.8 -4.9
Gris, nswati lumeon, .. . . 0.9 12.7 01.9 68.6 84.0 88.1 91.7 16.1
Oram. Nabtim Zacome U. . . 0.8 67.6 84.4 00.0 13.8 68.8 68.0 91.8
Oroma Ibtices Predwua .. . . 8* 95.1 90.8 98.7 98.0 97.02 8. 96.8
Grove Ocasetc swing 13.0 18.6 18.7 80.2 310.51 10.9 11.8 10.1 11.0 14.81 18.4
NO fabtor ho...w -6.7 -7.6 40.0 48.4 -4.9 42.8 4.8 -2.0 42.8 4.7 .4.9
U"t Cu"aart Trseafow. 0.0 -1.8 -1.4 -0.4 -0.8 40.9 -1.1 4a.0 40.6 4.8 4.8
Grove SiAtiomal Swying 8.8 7.8 8.4 09.4 13.4 6.4 6.9 7.6 7.7 10.1 11.8
S. Nationi AeontS Ormth M I. (1) at, iwo C...tot A-lms
199878 1978140, 199046 1t8 1S67 19ow 1969 1990 19901-9 415-9000
are". Somatic Prduct e.g. 2.8 0.8 7.4 9.9 42.8 4.6 46.0 9.4 0.8 8.4
U". ladirect Tax". 04.7 99.0 -18.1 -.4. 18.5 7.6 4.8
Agriguitwor 4.6 5.0 1.9 6.1 8.4 0.8 1.0 8.0 8.9 4.6
Zodues6y 4.4 18.? 18.8 8.8 -.4. -9.9 -11.7 0.9 -0.4 2.1
(.98) Namcfeabaoriug) 8.4 6.0 18.0 8.7 -4.7 49.0 -18.0 4.0 8.0 4.0
(of which OIlI) 2... 04. 1. 4.1 -7.8 42.7 48.2 4.8. 4.0
Service. 0.0 9.0 4.1. 48.4 -13.8 -8.6 2.0 0.5 8.0
Esaorta of an 8.7 10.6 18.0 -0.1 -7.5 43.8 -1.0 -1.7 .4.6 40.4
luporteof on 8.8 6.9 8.9 6.1 -.9. -17.6 -17.9 9.8 0.8 0.0
Total Igmpwdit.ra. 0.8 6.7 4.0 18.0 43.0 -13.2 -10.2 8.9 8.4 4.0
Total Conmt1a. 1.5 8.0 8.8 18.0 0.9 -10.8 48.7 0.7 0.9 4.0
P,i..t. Casepleft ~ 1.0 8.8 9.7 17.8 -1.4 -7.8 -4.1 8.0 8.1 4.0
Central baawoot 8.2 4.6 7.7 8.6 12.9 -99.4 -.4. 0.9 1.7 8.8
Oram. DomaUe lavatom. 81.8. 11.8 7.1 2.4 -18.8 -19.1 40.7 12.4 6.5 4.5
Private (Intl. FA6. btr.) .. . .0.5 -13.7 4.1 -95.8 18.1 7.0 8.0
central bacramont .. . .8 -13.7 -80.8 -40.6 8.0 4.6 2.8
Gram. momati 1a ~ 1.0 8.6 7.9 1.8 -7.8 -10.0 46.0 8.9 8.8 4.1
Greas National lumenA 1.6 8.6 8.7 9.1 40.8 -9.9 -4.8 2.9 8.8 4.2
Oreas. Ntlomal Poodu" 9.0 9.0 6.1 10.5 -1.8 40.8 -4.7 1.8 2.1 8.85
Oram. Somatic Saving 8.8 218.2 04.1 46.6 -40.9 -4.7 -18.4 18.2 7.8 4.9
Nat Planter lacom 7.0 9.7 40.4 -10.7 40.4 -10.6 480.6 47.6 -18.8 45.8
et Corrast Transfere is.. 1. 14.6 74.4 7.8 -47.0 6.8 -1.7 -10.7
Ova.. Natiml 06,1mg ~~~~~~~-1.0 19.0 0414.8 -2 -. .0 5.4 7.9 6 .4
- 43 - ANNE I
OVImTm- 1. PZWLWS (00";M Fage 2 of 7
_ee.. PiG611 IW * �96t4119.
C. Prig dle.. CIW " I Aabmi Pr.l 1ewM Projectlion Grano tbe (Co p__)
w1o am a11 SW sam 1og. lw - am tvwa-ia 197.D 11s,0W IwV 154000
beamw Priem (193.10) 86.8 1.0 112.4 1.0 ;81o 1.- 1o 0.1 149. 7 .5 11.6 a.1 0.4 4.4
lIitit w DP0l~(1WO1tm 5A. 100. V6.8 96.9 07.9 96.1 11 191.0 7.4 10.8 7.8 0 0.4
&piolts bsj. Diter 8.4 10.0 1.7 ".a 7.7 to.e *.5
Defatiare, for MIctII vA:
D.rioslt.re ate,o 57.9 100.0, �00.8 10.8 4.2 35.2 5.9
lumd.atrie asrter 18.3 100.0 00.8 77.8 4.1 .0. 8.8
Servie tastor 82.9 100.0 1.9 106a 10.7 9.0 *Q
D. 061.. radiators (U p.m.) 195-7 1975.40 IWMO.- 1965.4 1905.85 415-990 aw aua am it
Ma all VP 42.5 8. 4.8
Dowletico 2.0 2.9 9.9 1.9 8.tere of Tot
Lat_ Fre 4.0 4.0 4.0 LAwr f1 lt
Orm Own. _am p.c. 4.8 0.0 1.1 Arealtrev 79.8
Privet. ama tie. P.o. -8.0 0.2 1.0 Iamtr 6.7
Seiam 14.0
Import el otellt Tout t100.0
Imperts (0.WG)jVP(a) 1.80 0.67 0.89 8.80 0.18 0.81
Grew f_elol n _Soviae .0.0o 0.06 0.80 1.01 0.24 0.10
Grow leme l 1ile 0.8 0.22 0.8 8.97 0.47 0.21
l13 (p _od avorum) 5.8 1.8 2.7 -11.6 5.7 4.2
o a ga -41.8 8.7 8.8
IL lt l Ammms (b1lame of at son Pelt.):
Astea Prel |iel. PVoj4Wtl*%.
1a3 a. 1Mm 196 sin tw1 IWO4 1961 to" 19O 1o"4 IO 20o
OrF.. Do.ti Proie MuP. am1 8am 5 28 W71 86W 8am 87m 8am 4011 4109 40
be1.4 tries Tax"e 145 111 n 151 lee to u M Ms M M4 M goe Su
Igriselterse 154 $94 95 VS4 WV g7m 1006 I=5 1 1195 117 1119 I=9
IaDeete 764 I4115 1886 184 18M I11112 1114, 1190 1168 17 119 1197 188
(Of a11iak 01040feeteriao) 61 M7 M7 so M 457 475 496 M9 89 Ws5 SW 611
(of ubla D) .. 7n 740 717 6 M7 6 81 4 48 414 Ws so
Swvice. 10;6 19 15 14 87 17 10 I3 1. 1869 146 141 178s
a m- , Golae. 45 -d3o -M 468 418 -M 417 -WO -87 408 4-M -37 -M
pait.* of US 894 18 16 9t 114o 118 18 101t8t u 1 M M on 4
7Sperta of an me s mneo MtT1 onee 61 tte M 1 S
Toft. Sexpeeditereeg am16 16 861 841 am6 am 844 8480 as" am6 am 468
Totel Consumption g 96 a1 SW a2 7o a1 on5 a9 am3 85 S1 8
Privet. CsAeetion 1961 gm 9m10 97 17 1115 .9 2441 gm Sn37 1782 30 S74
CmtWeI b.an rnmm M 482 94 86 485 M6 86 416 492 411 410 448 M7
cram DmetOc 1ave"t 497 730 79 84 8 70 418 4t M an W 7 80
Privet ClasS. P. _bt.) . 41 484 64 d 9 96 M see 8 406 438 468 6O4
cftrai brm t M 8le t 7 18 1 4 t11 19 1 1t in ine
-a_iAs to iteert M 18 974 o SW M an 1 Ot 4s 111 g19 tO
TWem of Trad AdJastet 47 4 -1 413 4n1 -M7 41 -488 -M -M -o 4- 44
ngtea Catiol ome 964 W86 41 am 1 8am0 3M 188O 84 a7m1 8046 4898
Cram S9oei am 9406 874 8606 86277 83 802 810 8911 8607 8404 1840 94 4
a n Oblel map,oit asi2 6749 4143 40 a4 am O6T a4 862 a8 am 86 474
Gron Dwetis Gee 418 15 W7 9 418 W 415 404 465 3 * 7 M66 754
St Pete (lame -M 4 -.us -14 -110 -78 -106 -1. -8 -181 -161 -us -15
" Coronet Transform. -19 -1 -9 46 -4 .9 - U 462 41 4 41 40
UP (bilI lam of carrw CM 15a" am 4N16 40 87611 07 a e 8m7 6746 8o" 46 46 86
W v.o. cages (thowemd CP) 418 M 84 8 816 U W811 8M S37 aS37 8
ANNEX I
UtTSL 13456 F~~age 3 of 7
A. VaSe... Volvo end PriemeAt Pool i.eer roJeto
Iwo aom i,s SW7 '6 1969w sm. smo sm4 iwo 11914 lowo
Cdt.. ~~~~ ~~~~ ~~~~ ~~107 100 1as 4 101 10 10 10 1in 11o 1in In 141
Coae. 00~~~~~~~~~~~~~s 10 so 1no 10 In 1to 110 II19 32 1in 110 3
Oth. twig. no10 94 as a0 00 a2 is 10 10 10 1to to
oil 7 10 1to 99 g0 a0 61 07 8 ad a2 a5 4
Nemte.tur. No10 10 in0 1311 141 146 in us3 16 171 1in 1
A!.mistuIe no10 a0 8 6 57 9 #I es so 76 P7 10
TotetNercb. awortw FM 10100, 0 90 94 92 90 00 7* 77 8 18 so
Nergohealee Export.
Vv.-Coerteet Oremoe (bl II oo 0K)
C .. 6a 110 112 a4 00 U 70 78 7, 61 a0 9 1831
C40010 74 107 05 as a as a of 71 73 00 10
M. fA6rie so 6 70 a6 67 78 60 M7 96 104 114 10
OilI 106 M 419 26 24 M0 21 190 1I" 177 M8 we9 15
Kemdatar.e 2 M9 46 41 45 05 83 54 a7 S1 s 78 110
AlwalItims .. 4 a0 1S a go 26 26 go 00 131 7 61
Tote! March. SON.t #M 575 110 772 5u 476 400 490 400 490 514 5a4 s8l 761
Merchandise Lsopero
. - V o i m~~~~--olm Jade 19010 * 40
Saw 0 6 102 219 211 16 1no 31561 14 14o 1 1in 10o
POL end Other O.w 4000, 100 SW7 M6 M2 119 30 1UN M2 100 1" 1in M6
ottim.rlxpere 1M 10o 10 00 66 as 71 i1 is 75 6 as
Other Cotmewe lood. as 1100, 121 mm 309 61 63 00 a a a SI 87
Iotegeedl.te 04.. . 100 li6 128 so 74 74 72 71 71 78 78 7
Cepitelt ods SOO16 a as 69 SI a6 64 ay as 78 P 9
Tote! Nort. lepart FMB .. 1 114 114 92 78 TY ?6 78 70 so 79 00
Nerd.ueiee jeperte
- V ele.- C err~----- ale .tar Priem. (billion. 0A)
Pk," Os~~~0 45 as s9 so 41 40 46 s9 so 7 87 84
ML oad otrbw rw 84 4 4 5 2 I 2 1 a 2 2 a a
Other Jeporte M5 46 6m2 491 018 00 054 862 869 8a1 425 446m
other Caeaeer 0oads 47 70 as 67 74 6a 64 64 U5 o7 70 74 9
Intermediae. Go.d. 19 218 21 246 1M 174 170 171 170 175 17 197 07
Capital Goaods 111 1 17 1S6. 127 1N0 115 1to 14 189 us 175n
Tofte Norob. mesrte FM 42 8a8 571 M 453 679 96 405 410 411 414 400 66
Country todiese
- P r i . e~~~~~~~-fc Indic". 1908
Nerdsmmdi.. Efxport. 100 70 so 46 46 49 6 a 61 U5 To 10
HereA Adl" Imeorbe 100 9 94 92 M910 M0 1no 10 10 l20 14a
H" Ch. To"e. of Ted. 100 72 8 80 47 4f, 66 M6 as so so as
S. Shmare of Toel X ow N C11) as eurreet prie.. C. O,oeth lilet. (5) at eOametee prlae
Aeteal Projections, Actual, ProJetoIGe
son iou iw11 io i9wo Lou 2uo 1966-78 1978-60 iwo-us 9iiiss-w iwo-os oS.GOa
Herceadwi.. Exports
Coffee 000 0.0 18.7 IS.0 17.8 1.8 2.6 .
coon. 19.6 9.7 18.6 14.8 216.6 5.7 2.6 8.0
Mt. Agr!. 6.8 19.1 20.2 26.7 0.9 4.9 5.8
Oil 00.1 66.6 831.3 80.0 19.6 -4.8 -10.8 -12.61
Nao.fetereeft 6.4 8.4 12.3 12.9 14.5 6.9 4.0 4.0
Alumielue 0.1 6.0 6.6 6.1 -10.4 6.6 6.0
Tote! Morth. Exprft FO 160.0 160.0 100.0 100.0 -2.2 43.6 -.
Herchm'.d!e Imports
Food .. .. 8. 6,6 0.2 7.8 5.1 7.1 49.9 .4.6
POL A 0Othr berw . 12.6 0.7 0.6 0.6 0.6 -2.6 2.8 8.0
Other Sweet. .. .. 6.9 00.6 91.8 91.9 94.2 -9.9 2.0 2.S
Othe Cenemer on"... . 10.9 38.7 181.8 18.4 14.8 46.6 0.0 0.6
?aoere.diet ande .. . 44.7 41.9 41.1 40.6 40.0 .4.6 .0.8 1.7
baiftel am"d .. . 0.5 85.1 00.4 83.0 83.7 .-18.8 8.8 4.0
Tot.! Metal, lepare Wi 100.0 100.0 100.0 100.0 -7.7 0.6 2.0
- 45 - ANNME I
U4%94W 60ll6S1 C_ - _MA= OP M1_ff Page 4 of 7
(1 ell Igim at Gorro" Fries)
jAme Pacluel 96a 6416
A. beerSI of bam" & we ON? 0854 0573 am?1 S 1 aS m 4 03
1. reiwAsed Om me) 141 Its lm 163 18E 586 151 1"a an6 116 1646I 0m
0. Nan-Factor G"Ieem 8W 41 on? 86 456 4061 418 4814 486 Go sn1 8 906
0
D. Ipwtm or bad. & on =a4 1i09 04 0SW am 196 SW6 on0 01418 gm4 810 on6 SW8
I. u.reSgmdle (6I6) 144 185 147 118 1464 an6 109 M81 184 186 1466 1me g1m
S. ".a-Fmetor ft"lo.. s90 a1" 9t 9ii so 13 89o 78 76 7 us Su s11
C. bm"* _lew. -M S" a -0 -s -s 0 -43 -a4 61 43 as 101
0
0. U.s Feeler lees.. -164 -518 -861 ~~~~~ ~~~-44 -486 49 -45 .86 -87 -my7 -5 -64 418
z _lU1.Fstswr uee 0 u t 9 8 46 UZ -1& -0 -t1 -as -0 a 4 6
0. FeelerberSew no9 2 616 81 as 46 81 0 as $60 an
lnt.erem "saw") 119 2" Sy us m 1ts sit 1 m 4t1 486 473 4t nS
0
6. Nw% Carrent Truawfere a -48 49 -106 -147 .74 40 -86 -a .73 448 - -16
5. Cerrat 5eelt 1n S 0 t1 96 1 1 t7 1 07 110 11 m 1n3
e. *whrerm, nt ace 1 1 a S a 8 8 a a 6 4 4 8
b. other cerIest troe. 0 1 1 91 50 1 10 103 W0 10 Su 11 148
0. CensuS pqvrnm in6 146 1i6 19 61 176 la 1as 191 166 06 Us so6
0
0. ar _ tU A~t blues. 465 85? -401 -1171 -0 -4 -89 -6 -0 -us -8 490 -0
a. LFn- erm Capital Ut2 w on 040 as 7 -U 7 -S an "a 6 8 a" 71
1. sfl..t iestmm. 1 01 0 81 84 SI 6 66 6 a 50 9? i8
2. 0911.1. Capital Oruet 0
8. I" LT Los" (we d.t) Tat. 810 to -69 77 100 -1t as 46 843 44 47 470
a. Olahoresmst. 86~~~~~~4 867 - 818 85 406 78 667 614 an 917 IOU 1466
b. semiotr 114 r s 487 46 481 412 486 48 40 8n 46" 665
4. Other LV .toflas (ma9) t
0
H. Tl Othr lIes. (aet) -15 -8 TO on 86 8 -11 t42 4O 1o 149 10 in
1. H" OhmrtTM ceeel -Us -#r w9 46 -144 as -11 -16 -16 6 as 66 6
2. Coartal fle" N.SIt.o U. G 0 0 0 0 0 4 1o -15 a 10 16e 78
S. Erroreadbl.Omieles 185 -18 165 -16 478 0 0 0 a 0 0 0 0
1. Global Helene. 145 as 11s -48 -81 -39 -01 -018 -119 o7 87 4 0
J. F}leemeluO
ceugs. toa U.t lint, -4148 -88 -2178 8a8 48 1we -78 -a8 -1i5 -or -87 -4 0
1. etCC.sdltfhr1maDr -17 0 0 0 0 10 06 0 47 -47 47 -4 0
S. DOe Manre etau. -in -6 -118 an 48 0 -98a -40 .4
Go o.1 -ue -ae9 -6a7 41 -0
Fuindnmi.l low (errsm.,.o
Arrears IS" 070 -60
Deatb nel ef *O t 814 e s
Oh Priucipatt 18? 01 019 111
shares of CP(Cutest CMA:
1. SIree Hene 40.1 10.6 0.0 -4.8 --.a -0.1 0.0 4;.4 4 .0 0.8 0.8 0.3 0.4
0. Tota Jtre fs3eow 5.6 8.4 .0. 0.0 1.0 1.0 2.6 8.0 8.4 3.4 8.6 8.5 5e.0
8. Ctierrt Asesst ble. 4.8 4.0 4.6 -0.8 4.8 4.9 -4.7 4.8 4.6 4.0 4.1 4.0 -4.8
4. LT Copftl Ullue (Ite 0) 6.0 0.6 0.8 1.6 1.6 0.1 0 4.4 4.7 4.4 4.0 4.1 8.7
3. U. Credit from e 3W 4.0 0.0 0.0 0.0 0.0 1.0 0.2 0.0 0.8 4. -S 4. 0.0 0.0
0.0
Nno -ru.e Ites. 0.0
CDP (ael Ilam of Car". 186) 7499.0 878 10177 1018 10265 1184 1191 1MM0 3285 IVa 1 lam186 198
Forelo. I Whue Rirs.:t
1. 1t1l. bper,..(W toPfficial) go06 -nts -4 451 -214 -180 -06 a3 50 84 84
0. Old (and ,r L.esdsprice) 0 0 0 0 0 0 0 0 0 0 0 0
8. arin bum.'... luel. Held is 066 -"ts -Us -66 -05 -166 -06 48 so 84 0
4. Gres. le. Si b.at. Isportt. 0.8 1.1 .6 4.9 -1.8 -1.8 40.8 4.1 0.0 0.8 0.3 0.0
CEdmaugo Helm (LOJIISSt
1. no. 0t. -Rt.S b05 471 a" 819 6 us us u u us 8ME us u
2. CtrU I f.24mte(11014 48 as a 100 0 4 OR 0 78 7o 03 -0 is
- 46 -
ANNEX I
uw,.u eisa41111 669c a o UI9& OM aPage 5 of 7
Mas. Ronn t1o - 1*014/1911
Asia., Prelidmrsuy PmJeRs,
A. O 10 1am iO 1ow 10 1 19t" 191 1999 i1 1994 19S 9000
1. *bi t Publicly Oar.LT 84 le 9 961 406 8o as of W6 786 749 790
O"Ielal Caeditr, 0 we 1" 41 s4o s Sys 746 8 so0 640 on Ws
ghitiI.t.1t 62 so as 116 92 106 8s 87 Su 87 Ot1 9 WS
of skieb 1* 4 U 6 a 7 8 t1 an i ls UR 2 211
of ableb ZA * 19 4 4 6 2 1 I 0 0 0 0 0 0
ta I176 I 9TSS 32 1o 117 14 849 8O m 4 U 4
privebo C.ditm. 814 92 40 40 187 1 10 11s 140 91 110 1 #0
Pollel
pineaisiel bibsi.
2. Priva Nihrntar. ur so t6 no 2is 148 so a 76 ye 1 166 2 111
S. ToUt LT 0ismvewto at 87 e 61 am 466 766 9 4 at 917 no 148
4. Drftr h.. 0 0 0 0 0 120 9a 0 0 0 0 0 0
aI NI S,riMn T Capital 0 -e 879 467 -144 8 -1s -16 -16 8 as 8 as
e. Tout loaf. D8 a tS 624 -179 97 " 406 0 on Wi O to in 196 14
B. R.eat
1. PiII. A Ambliel. O.t. LT 42 916 916 160 mJ 4 mS 8 so 8n 4n MS
0181.. Otrdium go a 84 16 in6 174 918 no soy 2 9 84 5
11steral.u 10 29 34 45 Oa 79 n 75 so so 12 141 2
--3 which d11111) 4 18 17 t 4 s8 89 46 1 so Ss 8 18
of ablcb ink 1 1 1 1 a 2 8 a a 8 4 4 6
SIIsu.t 18 Ss 8o0 S1 7 10 143 I4 17 U32 las s I"4
Prilvat Cr,diitm 84 Ss 76 61 91 97 U12 1la 114 in 101 le 139
Swa1lim 7 0 0 0 0 0 0 0 0 0 0 0 0
pia..iol 1bgbte 46 0 0 0 0 0 0 0 0 0 0 0 0
S. Pre t . LT 8 0 291 6 23S 386 387 as a so0 6 4 210
8. 1.tI LS A r 114 884 45T 42 41 472 4t6 440 412 an 415 W Su
4. 38 tNuvds.m _U 0 0 0 0 0 0 0 8 Sy 8 4 0
S. yet. zoo SW 11 854 48T 426 451 472 463 440 450 468 472 Sp 6s
C. I9.t
S. P11a to A PASOtgly Gar. L 14 1 12 1 26 S" 6 45 4 442 818
0181.1.1 Craditbor 41 11T 75 60 114 134 224 as an S 40 406 486
oltil brnIt 1i 97 84 47 60 69 72 92 114 in la 1 8T
of obih me is1 1s 25 Ss 46 8 68 61 n 7 o e4 U 11*7
dotkhM 1 2 2 2 2 2 2 2 2 2 2 2 1
*1 lsimb is aS 41 46 so 68 3m 1n 218 242 268 Sa 28
Privae tJCrditors as 8 81 8# is 26 84 ay7 ay t7 8a a 76
SpIiwa 8 0 0 0 0 0 0 0 0 0 0 0 0
Ftbiol Ibube u 0 0 0 0 0 0 0 0 0 0 0 0
2. Priv.t.n,41mar. U Is 194 m UO 94 s 44 42 48 81 so 46 106
8. teS l LTlret no 2J_ as go gn 80 ST 412 446 47 4" mS
4. VWvS.a.e Caru. 9 0 0 0 0 a 9 9 9 * 8 0 0
S. It.rmA co sur D 0 0 0 0 0 0 0 0 0 0 0 0
S. T1 l lawl. VW&Not W 12 99 2 255 ga Su 6 421 419 478 476 6s0
(SWtIM" an me" VW)
- 47 -ANN I
u.RarO 01:8186 Com- offal" C4M.r .wOm Page 6 of 7
(WO slil_m at Current Ptices)
1AIs Pinot, 1 11<4/lw.
Leteat Fret lsIes.~~~~~~~~~~ Frojectionss
0. Interest Debt (MO. 1*60 am 1. 107 low imS lo 1I am 1am low ii. Om
*. RAI le A Pibblyl Oar. LT gm am0 gm Us Om a 46 81" NW Om 679
0tft4t0l cntfl- 111111 a"t MD I$ = ss M a m O 4
lhltit..l 46 86 61 40 91U 6 8 186 * 91* 2851 4*6 805
af tabi 1o 9 Ua So 864 4a no 76 no 16 11D 1m 161
Of ..40b U 146 US 1 Su1 1 U U S 2US 1 914 US
Sll*a I ? VW on 18 114 WV gm a So SW am am 47t4
privtew Crdita S 11 4 4a8 4U 8o 6s 8 8n 7 4a7 461 o
S_Ilt. 141 0 0 0 0 0 0 0 0 0 0 0 0
Flmaale lalrkea 66o 0 0 0 a 0 0 0 0 0 0 0 0
S. Privat Ibm-ar. LT 1in a" No m Su 84 84J a0 47 14t
*. Total LIs-Ter 00 am g0 gm 16 00 84 41 wll 624 S7W 7 74? O"Cl
0 0 0 0 0 0 0 0 0 0 0 0 0
4. SF Crd1t i8 0 0 0 0 16 144 14 107 8o 2 -1 -
S. Uwr%-Tra Debt m7 0 0 0 0 0 0 0 0 0 0 0 0
6. Total Ueel * Al �1b 67 a1 gm g2s am Me 46 61 am 6746 70TM i9 "2
._ Ra_t ma SRbe
Usr. of Totil fFO tlC 0.1)
1. 1WD 7.4 10.6 11.1 18.8 1.6 21.7 IS.? 14.0 1.8 18.0 17.2 1. 16.8
2. 3S 7.1 12.8 11.8 10.0 0.8 6.6 8.8 4.4 *.8 3.8 8. 8.2 2.2
8. .US 14.8 U.S 0.4 U.S 11.8 10.8 10.0 16.1 16.8 2.8 Dm.6 91.8 66.7
4. ULTSLAT14M 66.7 86.4 66.1 66.0 81.6 7.1 10.8 30.1 1.9 .?4.7 66.6 86.9 84.6
sr. .9. Deb Or (S.14C.1)
1. US 7.2 11.8 14.1 17.2 10.7 19.0 14. 18.8 16.8 17.0 We. 10.4 91.4
2. US 0.7 1.2 1.0 0.e 0.6 0.6 O. 0.? 0. 0.7 0.7 0.6 0.6
S. 3ID0 7.0 18.8 18.1 U0.1 m.6 10.8 18.0 16.1 17.0 17.7 19.8 l.0 SS.0
4. WATLAIWAL 4.9 *.6 6.8 16.0 2.6 81.0 94.4 SS.1 66.8 66.4 61.1 18.0 66.6
Oebt t to Im/Immis 0.0 1.1 1.7 2.6 8.9 4.7 4.8 *.8 8. 6.0 8.8 7.2 7.1
F. _A-te-E t Rats (a)
1. Sblte a SblitDyar. U 1Us.7 62.7 60.1 112.8 1U.2 1U.8 2S..1 2U.8 Dm8.1 S.0 7.r0.o 1n.e 249.2
1. mm Darastee Privt. 0.6 10.0 10.0 27.8 24.2 1. 16.8 18.0 1.4 1.0 91.0 0.0 11.9
8. TWotl Les@ Tom 12.4 81.7 W.o 38.? M.4 seo. 11.4 12.1 26.8 a8.6 26.1 267.0 =S.I
4. DIr Credit/laparta 0.8 0.0 0.0 0.0 0.0 6.2 7.1 7.1 8.1 1.6 0.1 -0.1 -0.1
S. _hert-Torm Dabtlart 14.9 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
8. LT*D~ SoWjast 1.2 81.7 0.0 1.7 14.4 .6 S. 17.2 806.6 8.6 1A.1 667.8 13.1
0. ID00041P littos
1. puAle & lIl.l- Dea. LT 17.8 6.9 10.0 18.9 16.2 80.2 0.6 46.8 46.1 80.0 40.2 46.0 44.9
2. 1162m amI PrIvate 2.4 6.8 4.8 4.6 8.0 8.8 1.0 1.7 2.6 8.1 8.7 4.7 6.1
S. Total Lobe Tem 26.7 17.1 U.S S.8 26.1 86.6 66.4 46.0 66.0 8S.1 6.0 8.3 81.0
4. I CredItWP 0.1 0.0 0.0 0.0 0.0 1.0 1.2 1.2 0.0 0.6 0.0 0.0 0.0
S. shert-ers Debt/wP 8.6 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
6. LTUD4 IT m8.8 27.2 11.8 93.8 1.1 84.4 40.6 47.1 1.6 8.8 68.0 8.8 6t0.9
cm ep) 0 0.0 0.0 0.0 0.0 0.0 0.9 0.8 0.4 1.8 S.1 s.0 7.4
NI. Oebt Svl/Arts (a)
a. fbtI A Pab.Dear.LT beF.Rteeb 10.2 7.0 10.? 14.0 18.0 10.0 17.0 80.0 81.6 80.6 O.0 16.4 se.0
lb. PAIsI A PAI.Qvw.X ati _asch 10.2 7.9 10.7 14.9 1.0 0.8 1. 17.8 66.4 U4.4 84.1 J.7 *S.8
9. Prlvata Nm-Gamr. LT 2.0 U14.8 1. 1.2 14.6 22.6 6.0 6.4 4.0 s.7 4.2 8.1 9.0
go. Tor LT debt bef. Reads. 11.6 22.2 6.7? 8S.1 61.8 86.6 86.7 8?7.8 86.8 84.8 6.1 84.8 80.9
lb. Totl LT deb S. bs=*. 12.0 66.1 61.7 82.1 82.8 S .4 66.4 Ss.7 s1.1 38.0 #6.0 41.6 42.4
4. Dr' . 1.0 0.0 0.0 0.0 0.0 0.8 0.4 0.8 2.2 8.8 1.7 0.2 0.0
S. Mnterest cly en V Dabt 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
Go. Total (L:TtT tab.) d.re. 18.9 66.1 10.7 JS.1 .5 66.1 87.1 7.0 66.0 7.6 64.7 84.5 6.9
lb. Totl (.T+3U4 tlab.) ft.r_s 138. 6.1 10.7 1.1 s2.8 st1.7 22.6 24.2 26.4 41.8 40.0 41.9 42.4
Q(MIs00 .. 0.0 0.0 0.0 0.0 0.0 0.0 0.4 0.1 0.6 0.6 1.0 4.5
t. te I arde IRatIs (ati. Reedh.)
1. Total I
9. T.tal ats )
_ _sraad t_om I
_serts * _b leVas (i sll of us 14 1111 1 211M1634gm640 Sg Dm 2n1 gm a6 850
9- t 0- I- g I 0t- n1 m- 9 as- Ot O 0 11- ("X-' -)&
b% *51 sat sa *1 . usuI so w as so e u m Sw at
%4 99 OS LO C * dv v.e
0 0Pt 01 P"no 5u.m1o0
w o ~~~~~~~~~~~~~~~~~~~~~~~~~~~Os os n xo s
0 0 0 � 0 0 U sO U � w Ot ' t
a AB to Go t tG o 26 us GM m m 111 m At soIt ftl- * I t
Q~~~~~u et aus" a: oW ow mit oX<ttw C 'Ot *1
Ot at 01 W aOt at Ot Ot Os of Ot os OemOewat1a
O O OU O O OS Of OU OS O O OS OS WUUUi- t
Al a As a so n so so so 0 o o o04111 o X*
At a AS At At t0 At It 01 0 0 W UOOt4jW
0 G- -n 5 u- t _ o
oc *ew %MN
st- ~I t9 As au nn a
w * Om"
0 0 0 0 0 t- tt- t- It- 0 Ot- E A 1T U -1
- a- A - a- Oll- tt- - tt - 1O- US1 *A- in VW -uiaeuti aimes
* 0 o a Ts a ut Om 451 VW u on U of U.Iamug
9- 0- 41-- si Vl- OS- - l - fu1- 011- n1- U- Go- f4u- "No st.gWj *4
Oa at Go a 4 d@9190 Ogiginq
0 0 0 10- 9 - n - 0- 0 0- "P#- 9. Ml aS- *tu6l
9- 0- - It- - i It- Ag- M.- W- n- VW- SW- bo- I. i ttl mDaa_
5a Ml4 #8 OlS o M 90 M U oP ES oS t lt*S 1
on on3 1us as5 Oa 6 9.1 ES11 MS MS M0 E vw WL so *ShgpSuof m$*
at at at at at a1 I 11 � Its aL t se OS as oS
0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 de
* P P 9 0 ni n # OS U * 0 0 0 0 a111 m- _
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Om onS MS EM ES M " G u Om ES we 9 " S 41 MP S 95 M* v q P-eSa
U4 0 As a 039 4 al se to nS a a U Os "dies" _ot-U
#1 Sl 900 *9uES 59 019 ml Om 9 ES Es " s "ES 544 '
51 on M Mt En 0n OPt a" an gas UO E ES E JO Its
an IUS M v"0 ES A" "A 01 "M ES ES LS 06 US ANO on 9 M05 lO'S
- - - - O61 A6 /t ObM /S "MT4011UM - - - - - - UM - -N* - - --OM lm a
urn/is: ssea qe/ow /mi s/io: s/m esowlas/w: s/io: s/o: O/Us aSmi /Ls: s/ss 505 o/a
-49 -
AMIU 2
P1e 1 of 2
1988 SOCIAL INDICATOR DATA SHEET
CAMEROON
sf ertco 4 MO
0e"I
Iepwit Lowr aid U3Ps S'
INS 9175 -Retinmee wce oe
*Ota tW @PWO (tIO sq ur) 475.4 475.4 471.4
�gPicIltur 1 tX of total) 30.7 30.5 32.1
or PoR CAPITA (airiwit US$1 130 310 100 730 2.510
PPtLATIO AND VtTAL STATISTICS
Total ceoulatton (thiO) 5.825 7.429 10.927
Uraw DDoo. (S of totaI) 17 2? 4 38 64
Population growt rate%):
Total *a., :.2 2.5 2.0
urtan 7.2 7.5 4.2 3.2
Life xwOCt. at slrth tyrs) 40 5a so 59 67
Population proJections:
Po. In 2000 (thaw) 16.?02
Stationary ao. (thaw )0.7
Population density Per SQ km
of agriewltural lanG 40 s 0s 404 7t7
p. Struetur ():
-14 yEs 4 1 1 44 42 30
IS." yr. is 1s s0 Os $9
esand bOovo 4 4 4 3 1
Crde birth rate (pow thou) 40 4? 40 31 2?
Crue dath rate (pe thu) t0 17 13 10 0
Total fertility at, 1.3 0.3 0.5 4.7 2.1
infant w*t. rate (0e thou) t43 114 s . i 43
Child eath te pt ear thw) 34 23 10 11
Family plamuing:
oseeors. aunmwl (tlta) .. 0
Users ( of married woma) 3 3
VO. HIALit AM NUTEITIO
Inoex of, foo prouat ion per
capita (1579-8i a 100) l 1654 I0e 101
Per caita Susly of:
caleries (oer ay) 3.043 2.320 2.000 2.907 2.104
Proteins (9rms pep day) 4so 40 s'
Po. per phycan (thou) 20.7 13.7 .. 71.3
Po. pee tnwr. (tou) 5.0 13.? .. 0.5
Pop. pr hoita (thou) .. 0.4 .. .
Access to "a water
M of population): Total .. 20 36
Urean .. 31 4.
Rural .. 22 30
Population Growth Infant Mortalty Primtary School EnrWlment
ot oout . * eueltoo*_
M na u alp -.o p
-50-
AhUl 2
Pase 2 of 2
1988 SOCIAL INDICATOR DATA SHEET
CAMERCON
Rf erece aros (not)
Recat Lower eta Ups.* at*
1355 1575 Estimate nancme f4
LASO FORCE
Total Laser force (tlou) 2.$39 3.345 4.039
Fpanls ) 33 37 34 29 30
Aicultu ) 7 O 5 30
inwutry (2) * 7 6 15 30
Partiecpation rate (X):
Total *7 d4 40 37 37
fmle 59 57 53 5t 51
Fe-le 25 23 27 23 23
Age _epwny (2 * 90.6 a3. I ".7 62.7 71.$
Average also0 of huseho 10:
Total .. S
Urban .. 5
Rural .. 5
Percentage of OwellIngo with
*lec�ticity:
Total .. 6
trban .. 19
R.ural .. I
anrol iment rates:
Primary: Total 94 97 10T 104 105
Wal 114 10t 11 109 106
rFml is S? 97l 99 102
Seco.Wery: Total 5 Is 23 42 S7
-ale a 17 29 47 57
eple, 6 1 36 5
Pupil-Teachei ratio:
Primar-y 47 11 51 31 t
sewa .. 20 36 22 I6
Pupils reaing g (a ) - 13 57 72 65
-ie. mUTgOV. M POVERIT
lumrgV CenWt iOn pVW cap.
(kg of oil Wvalent) .. 0 14 1 1.212
Percentage of private I
recevao by:
Highest 10% of t efa. ..
Highest 20S
Lowet 20..
Lowest 40%
got. absolute poverty irnom
level (Us$ per capita):
Urban .. 238
Ra ab .. 105..
Lst. pop. below o o
poverty tneoe levl tX
Urban .. 1,
Rural .. 40
Passener ae/thi pop. 3.0 7.2
Newspape irculation
(per thousand population) 3.1 3.4 3.5 43.5 106.2
'EcSt Augut 1986
_NM .owwumm mule..
0co u gs _ u e e a _. _ 1__
m "Oamy a -Mr Vlmmas U ams tIPS m s a" .M SW me" meN ewm sea.. m. sa _tOSS
- 51 -
ANNEX III
Page 1 of 3
REPUBLIC OF CAMEROON
STRUCTURAL ADJUSTMENT LOAN
Supplementary Loan Data Sheet
Section It Timetable of Key Events
(a) Date of first presentation to Bank June 1988
(b) Appraisal mission July 1988
(c) Post-appraisal mission I November 1988
(d) Post-appraisal mission II February/March 1989
te) Completion of Negotiations May 1989
(f) Planned date of effectiveness July 1989
Section Ilt Special Bank Implementation Action
none
Section III: Special conditions
Rffectiveness Conditions
(a) Import license requirements for goods which are not subject to
quantitative import restrictions have been eliminated;
(b) Quantitative import restrictions for a first group of goods
determined in agreement with the Bank have been removed;
(c) Price controls (Ohomoloaation pr6alableO) for goods and services
have been eliminated except for a limited number of basic goods
and services and certain goods remaining subject to quantitative
import restrictions, as detersuined in agreement with the Bank;
and
(d) The system for setting comercial margins for goods and services
which are no longer subject to quantitative import restrictions
or price controls have been removed.
Disbursement of the Second Tranche of US$50 million equivalent, not earlier
than March 31, 1990, would be dependent on satisfactory progress in
carrying out the Structural Adjustment Program and in particular on the
following measures being taken in a manner satisfactory to the Banks
(a) The Borrower has adopted its 'Loi des Finances' 198911990
reflecting the public investment program, the levels of non-wage
recurrent expenditures for the health, education and agriculture
sectors and for road maintenance, and the levels of resources
allocated to the restructuring of the banking and public
enterprise sectors, as determined in agreement with the Bank.
- 52 -
ANNEX III
Page 2 of 3
(b) Progress has been achieved in the establishment and functioning
of a system to program and monitor the tolling four-year public
investment program.
(c) Progress has been achieved on measures to reform the public
enterprise (PR) sector, including: (i) the signature of
performance contracts between the Borrower and key PEs, namely
SODECAO, HEVECAM, ONCPB, SONEL, SNEC, SOCMPALM and Office
Cerealier; and (ii) the completion of negctiations of
performance contracts between the Borrower and the following
PEs: CAMAIR, REGIFERCAM, and SODECOTON.
(d) Action plans have been adopted to liquidate CAMBANK, BCD and
FONADER and to restructure key commercial banks, including SCB.
(e) For the primary export crops, (i) floor producer prices for
coffee, cotton and cocoa and price schedules ("bar6mes') for
coffee and cocoa, for the crop season 1989-1990, have been
published at a level consistent with minimizing the risk of
requiring State support; and (ii) a system for sharing residual
marketing surpluses (export receipts, less producer prices and
marketing margins) has been established.
Cf) Progress has been achieved in the implementation of measures to
liberalize trade and prices and to improve the incentive
framework for production and export, includings (i) the removal
of quantitative import restrictions (together with import
license requirements) for a second group of goods; (ii) the
elimination of price controls ("homologation prealable) and of
the system for setting commercial margins for a second group of
goods; (iii) the revision of Law No. 80/25 portant orientation
de l'activitd commerciale permitting free access to trade at all
stages and eliminating monopoly privileges; (iv) the
promlgation of a revised Investment Code; and (v) the
completion of a study on export incentives.
(g) The Borrower has taken all steps within its powers, both in
internally and externally, to provide adequate funding for the
execution of the Program.
Disbursement of the Third Tranche of US$50 million equivalent, not earlier
than December 31, 1990, would be dependent on continued satisfactory
progress in carrying out the Structural Adjustment Program and in
particular on the following measures being taken in a manner satisfactory
to the Bank:
(a) The Borrower has adopted its "Loi de Finances' 1990-1991
reflecting the public investment program, the levels of non-wage
recurrent expenditures for the health, education and agriculture
sectors and for road maintenance, and the levels of resources
allocated to the restructuring of the banking and public
enterprise sectors, as determined in agreement with the Bank.
- 53 -
ANNEX III
Page 3 of 3
(b) For the civil services (i) the system of personnel benefits and
allowances (family, housing and travel allowances) has been
revised; (ii) decisions have been taken on organizational and
personnel structure plans for the ministries responsible for
finance, planning, civil service and industry and commerce; and
(iii) studies on organizational and personnel structure plans
for three other ministries have started.
(c) Further progress has been achieved on measures to reform the
public enterprise (PE) sector, including the signature of
performance contracts between the Borrower and selected PEs,
i.e., CAMAIR, MAETUR, MAGZI, REGIFERCAM, SODECOTON, CDC. SOTUC,
CRTY and MIDENO, and action plans for other PEs determined in
agreement with the Bank have been prepared.
(d) Progress has been achieved in the restructuring of the banking
sector, including: (i) the implemeatation of the action plans
to liquidate CAMBANR, BCD and FONADER and to restructure SCB;
(ii) the adoption of an action plan to restructure SNI; and
(iii) the adoption of an action plan to restructure or liquidate
BPPBC.
(e) The role of the National Produce Marketing Board has been
redefined in order to permit the private sector to assume
progressively responsibilities for internal and external
marketing of export crops.
(f) The forestry tax regime has been modified and a revised Forestry
Code has been promulgated to promote rational exploitation and
long-term conservation of forestry resources.
(g) Further progress has been achieved in the implementation of
measures to liberalize trade and prices and improve the
incentive framework for production and export, including: (i)
the removal of remaining quantitative import restrictions
(together with import license requirements), except for a
limited number of strategic goods to be determined in agreement
with the Bank following the results of a complementary study on
said goods; (ii) the eliminations of price controls
('homologation prdalable*) and of the system for setting
commercial margins for a third group of goods; and (iii) the
promulgation of a revised labor Code reducing regulatory
constraints resulting in labor maket rigidity.
(h) The Borrower has taken all steps, within its powers, both
internally and externally, to provide adequate funding for the
execution of the Program.
- 54 -
Annex IV
STATUS OF BANK ROUP OPERTIONS IN CAMEROON
S VMMY STATEMENT OF LOANS AND CREDITS
AS OF MAROC 29 1989
Amount In USS millon
(le1 cancelltitons)
Loan or Fiscal Undis- Closing
Credit No. Year Borrower Purpose Bank IDA bured DOat
Credits
26 Creits close 248.22
C11lO0-CAM 1901 Camroon Technical Cooperatlon 10.00 .O 8 12/81^/6(R)
Total number Credit a 1 10.00 .06
Loons
28 Loans closed) 846.24
L20920-CAM 1982 Camroon Foreetry 7.00 1.95 12/81/86(3)
21000-CM 1982 Camroon Oil Palm/Rubber Cons 60.80 16590 06/80/88
121800-CAM 1982 Cmeroon Road. V 70.00 06/80/89(R)
-22500-CAM 1983 Cmeroon Port III 22.50 10.21 06/30/8)
24060-CAM 1904 Cameroon Western Province ROP 21.50 18.41 12/81/90
L24850-CAM 1985 Cameroon Hev em Rubber 8.80 2.60 06/80/00
126670-CAM 1985 Cuaaroom FSAR SI 25.50 21.76 12/81/01
L25840-CAN 1985 Cs3eroon Roads VI 126.00 99.09 06/80/91
126880-CAM 19086 Cameroom Educ. A Voc. Train. 80.10 24.71 06/80/98
L30160-CAM 1987 Cameroon Roads VI 20.00 08/80/9
L27660-CAM 1987 Causroon Agric. Resarch 17.80 16.66 06/80/63
129120-CAM 1988 Cvaroom Cocoa Rehab 108.00 108.00 21/81196
129900-CAM.1989 Comeroom Urban II 146.00 146.00 06/80/94
LU0140-CAU*1989 Cameroom Livestock Sector DeWv. 84.60 84.60 06/80/95
TOTAL number loans - 14 682.10 492.95
TOTAL ** 1,028.84 268.22
of which repaid 180.81 18.49
TOTAL hold by Bank A IDA *UE.U 1U7.1
Amount Sold 13.46
Of which repaid 8.45
TOTAL undisbursed 493.86
Notes:
* Not yet effective
so Total Approved, Repyments, and Outstanding balance represet both active and inactive Lesm
(R) Indicates form I ly revtIsd Closi ng Date.
The Signing, Effective and Closing dates ore based upon Loan Department official data
- 55 -
ANNA V
RXPMBLIC OF CAMEROON PEACE - t - ATHE
STATEMENT OF DEVELOPMENT STRATEGY
AND ECONOMIC RECOVERY
YAOMNE, MAY 1989
- 56 - ANNEX V
TAM OF CONTENTS
Pa
PART ONE s PRESENT SITUATION AND PROSPECTS 1
A. EXISTENCE OF THE CRISIS 1
a. Origin of the crisis 1
b. Impact of the crisis 2
i) Impact on macroeconomic aggregates 2
ii) Impact on the balance of payments 2
iii) Impact on public finances 3
iv) Impact on the monetary and banking situation 3
B. SECTORAL ANALYSIS 4
a. Rural Development 4
i) Agriculture 4
ii) Livestock and fisheries 5
iii) Forestry 5
b. Trade and Industry 6
c. Water and Sanitation, Power and Mining 7
i) Water and Sanitation 7
ii) Electricity 7
iii) Oil sector 8
d. Infrastructure and Services 8
C. MACROECONOMIC PROSPECTS 9
a. Growth prospects 9
b. Investment prospects 9
c. Balance of payments 10
d. External borrowing strategy 11
PART TWOs STABILIZATION, ADJUSTMENT, AND ECONOMIC 13
RECOVERY STRATEGY
Fundamental principles 13
Major components of the program 13
A. STABILIZATION OF PUBLIC FINANCES 14
a. Controlling Government expenditure 14
b. Restructuring of budgetary expenditure 16
c. Rationalization of the choice of public 16
investment projects
- 57 - ANNEX V
d. Restructuring and increase of revenue 17
e. Settlement of the Government's domestic arrears 19
B. RATIONALIZATION OF THE MANAGEMENT OF THE PUBLIC AND 19
PARAPUBLIC SECTOR
a. Reform of the Civil Service 19
b. Rehabilitation of public enterprises 21
i) Basic principles 21
ii) Measures taken 23
iii) Monitoring the implementation of the 24
rehabilitation measures
iv) Financial and technical rehabilitation 25
of public enterprises
C. REHABILITATION OF THE BANKING AND FINANCIAL SECTOR 26
D. RECOVERY OF ECONOMIC ACTIVITY 29
a. Rural Development 29
i) Food security 29
ii) Recovery and diversification of agricultural 30
expotts
iii) Pricing and marketing policies for 30
agricultural products
iv) Recovery of the forestry sector 32
v) Recovery of the livestock and fisheries 33
sector
vi) Financing the rural sector 35
b. Trade and Industry 35
i) Industrial strategy 36
ii) Liberalization of trade and prices 37
iii) Rationalization of fiscal incentives 38
iv) Reform of the institutional framework 38
c. Water, Power and Mining 39
i) Water and Sanitation 39
ii) Power 39
iii) Mining 40
d. Communications, transport, town-planning and 40
housing infrastructure
i) Roads 41
ii) Railway 41
-58- ANNE V
iii) Sea 41
iv) Air 42
v) Post and Telecommunications 42
vi) Urban planning and housing 42
vii) Urban and Inter-city transport 43
viii) Tourism 43
e. Human Resources 43
i) Educationltraining 44
ii) Health 44
E. INTEGRATON OF THE SOCIAL DIMENSIONS OF ADJUSTIENT 44
F. MONITORING OF THE STRUCTURAL ADJUSTMENT PROGRAM 46
a. The Interministerial Supervisory Council 46
b. The Technical Committee for the preparation and 47
follow-up of the Structural Adjustment Program
c. Financial and logistical support 47
CONCLUSION 48
-59- ANNEX V
This STATEMENT OF DEVELOPMENT STRATEGY presents an outline of the
critical situation of the Cameroonian economy and shows Government efforts
to preserve achievements of the past and to encourage the balanced
development of the country in the future.
- 60 - ANNEX V
PART (IE
PRESENT SITUATION AND PROSPECTS
The present situation is characterized by an acute economic crisis,
offering bleak economic prospects in the short and medium term in the
absence of an adjustment policy.
A. ENISTENCE OF THE CRISIS
Between 1980/81 and 1985186, the Cameroonian economy recorded a high
growth rate (nearly 8Z in real terms) due mainly to the development of the
oil sector. This performance resulted from high annual growth rates in
investment (72), exports (16?) and consumption (3.3?).
This trend followed a period of intense development efforts during
which the country's credibility and credit-worthiness abroad were
maintained while the economic indicators were nearly all favourable,
attesting to sustained development.
However, since 1986187, the economy has contracted considerably (2.8?
in 1986187 and 8.6? in 1987188 in real terms) and progre- tward improving
the welfare of the population and more effectively meeting _.d basic needs
has been compromised. This decline is likely to persist during the current
year.
a. Orisin of the crisis
The economic crisis which the country has been experiencing
Rince 1985186 has completely reversed the positive trends registered
-a.xtil then. This crisis is due essentially to the fall, on the world
market, of the prices of our major exports (oil, coffee and cocoa),
generating a decline in our terms of trade of nearly 45Z over the
last three years. Coupled with the depreciation of nearly 40? of the
US dollar vis-&-vis the CPA franc, the currency in which our main
export products are denominated, this led to a sharp fall in the
value of exported goods and services with adverse repercussions on
Goverment revenues and households and enterprise earnings.
On the domestic front, the deficits recorded by public and para-
public enterprises on account of their poor performance were financed
through resort to substantial financial assistance from public
zesources, comprisings
i) various subsidies;
ii) additional contribution to capital through the investment
budget;
iii) loan guarantees and assumption of debt service obligations by
the Government.
- 61- ANNEX V
Additionally, the inadequacy and limitations of certain policies that
were implemented until that time tended to aggravate the adverse effects of
the above factors on all sectors of the economy.
b. ItmPact of the crisis
i) Impact on macroeconomic aggregates
As a result of the poor performances of the oil, building
and public works sectors, gross domestic product in 1987/88 fell
by more than 112 in real terms from its level in 1985/86. This
led to a sharp contraction in all sectors of the economy
excluding agriculture (+ 4X).
Total investment decreased by 38Z over the last two years
(26Z for private investments as against 522 for public
investments) from 18.32 of the GDP in 1985/86 to 13.62 in
1987/88. Total consumption, on the other hand, fell by 92 over
the same period (private consumptiont 82 and public consumption:
112). This fall in domestic demand led to a 232 decline in the
volume of imports.
The general decline in economic activity also characterized
the 1988189 financial year. Based on preliminary macroeconomic
data, GDP is expected to fall by close to 52 in 1988/89, due
mainly to the projected sharp drop in industriil production as a
result of the continued reduction in investment expenditure and
oil production. The sharp reduction in public investment (422)
and consumption (72) expenditures, consistent with strict
budgetary discipline and control, as well as the fall in private
expenditure resulting from the decrease in economic activities
will contribute to a drop of close to 92 in overall domestic
demand. The reduction in aggregate demand is expected to result
in a decrease of about 162 in imports while the volume of
exports is also projected to fall short of its 1987/88 level.
ii) ImDact on the balance of payments
Despite the fall in imports, the sharp drop in export
earnings, due to the deterioration of the terms of trade, the
depreciation of the US dollar and the fall in the volume of oil
exports, led to a sha.-p decline in the trade surplus from 201
billion CFA francs in 1985/86 to only 45 billion in 1987/88.
At the same time, the deficit on service-related
transactions (260 billion CFA francs in 1987/88 as against 411
billion in 1985/86) remains substantial as a result of the
repatriation of company profits that were not re-invested, and
the payment of interest on external debts and other returns on
capital. Also, deficits resulting from transfer operations
became increasingly important (23 billion CPA francs in 1985/86,
40 billion in 1986/87 and 43 billion in 1987/88) due mostly to
the transfer by expatriates of savings from their salaries.
- 62 - ANNEX V
The above situation led to a continuous and considerable
current account deficit (232 billion CFA francs in 1985186, 373
billion in 1986187 and 257 billion in 1987188). Thus, during the
last three years, the current account balance registered an
average deficit of 7.42 of GDP as against a surplus of 4t of GDP
in 1984185.
Lastly, the combination of heavy reimbursements of public
and private loans and the reduction in new loans and foreign
investments account for the pronounced decline in the capital
account surplus which fell from 113 billion CFA francs in
1984/85 to 68 billion in 1987188 after reaching a minimum of
14,000 million in 1985186.
In the face of this critical situation, which led to a
substantial deficit in the overall balance of 218 billion CFA
francs in 1986187 and 94 billion in 1987188, the monetary
authorities had to draw down on foreign reserves and increase
their external liabilities.
iii) Impact on public finances
The decline in economic activities in general and the
shortfall in oil revenues in particular led to a drop in
budgetary revenues of 16S in 1986187 and 18S in 1987188.
This resulted in an unprecedented budget deficit of 508
billion CFA francs (11.82 of GDP) in 1986/87, which was reduced
to 214 billion (6.52 of GDP) in 1987/88 through substantial cuts
in public recurrent and investment expenditure. These deficits
were financed in large part through a significant accumulation
of domestic arrears (250 billion CFA francs in 1986/87 and 90
billion in 1987/88), greater reliance on drawings from the
Central Bank and Treasury correspondents, and an increase in the
postal and hospital debts by 40 billion CFA francs.
iv) Imact on the monetary and banking situation
The deterioration of the financial situation of 150 public
enterprises, in spite of the substantial subsidies granted to
ensure their survival, necessitated sizeable withdrawals from
their deposits in local banks. At the same time, financial
difficulties of the Government led to a substantial decline in
foreign reserves.
These two factors compounded the ban;ing system's liquidity
crisis.
This situation resulted in a decrease of about 12? in the
money supply between June 1986 and June 1988 in spite of an 82
increase in credits to the economy (1,019 billion CFA francs on
30 June 1988 as against 943 billion on 30 June 1986), and a
decline of net foreign assets by 164,000 million in two years
- 63 - ANNEX V
(falling from 128 billion CFA francs in June 1986 to - 36
billion in June 1988).
In addition to the withdrawal of public sector deposits,
the liquidity of the banking system was aggravated by:
i) massive transfers by foreign enterprises operating in
the country
i$) the under-capitalization of banks and the increasing
amount of bad debts (about 150 billion CFA francs)
iii) the absence of an appropriate mechanism for recycling
the savings generated by non-bank financial
institutions through the domestic banking system.
B. SECTORAL ANALYSIS
The economic crisis has affected the various sectors in different
ways and since, on the whole, the sectors operated without interaction,
they felt the effects of the crisis individually.
If adjustment and economic recovery measures are not implemented,
this situation could lead to further stagnation, decline of activities and
poor economic performance.
a. Rural Develooment
') Aariculture
Cameroon is endowed with a variety of natural resources,
some of which are unique. These resources are subjected to
enormous pressure and their gradual deterioration is
characterized, in particular, by the encroachment of the desert
in the North, the erosion and the dwindling of forest cover in
the West, and the degradation of the fauna and flora of the
dense tropical forests of the Centre and South. The protection
of these resources must become a priority in future development
efforts.
The agricultural sector was and remains the priority sector
of our development strategy.
Agriculture ensures the country's food self-sufficiency and
the livelihood for nearly 751 of the working population. The
sector also accounts for about 452 of foreign exchange earnings
and 152 of budgetary revenues. Moreover, it is the economic
activity with the greatest influence over the other sectors.
Cameroon's agriculture enjoys the advantages of a fertile
soil and a diversity of climate and crops. In spite of these
advantages, agricultural production is subject to serious
constraints due to the decline in world prices for the country's
- 64 - ANNEX V
major commodities and the depreciation of the currency in which
these exports are denomintated.
The aging of plantations and farmers themselves as well as
the massive rural-urban migration are among the major problems
facing this sector.
The important challenges in this sector in the short term
remain the maintenance and improvement of the productive
potential, including the efficiency of the marketing system for
the major agricultural products.
ii) Livestock and Fisheries
In the livestock and fisheries sub-sector, the flooding of
the market with fraudulently imported frozen products sold at
very low prices has seriously discouraged local initiatives.
This external factor, however, has only aggravated the already
existing problems such as the inadequacy of animal protection
facilities (vaccines and veterinary infrastructure), lack of
advisory services for livestock farmers, the scarcity of
financial resources and poor knowledge of this sub-sector.
iii) Forestry
The present situation is characterized by the availability
of substantial forestry resources, includings
- 20 million ha of forest;
- 300 available species, less than 15 of which are currently
being exploited;
- large quantities of high grade species found mostly in the
remote regions of the South and the East.
This potential is not, however, being exploited
effectively, thereby limiting the sub-sector's contribution to
economic development. The constraints facing the sector include:
- the absence of communications infrastructure in the South-
East and East of the country;
- the inadequacy of the capital available to exploiters,
especially Cameroonians;
- inadequate technical and managerial know-how resulting in
considerable waste;
- lack of standardization for processed timber;
- the existence of a rigid price system distorting market
signals;
- 65 - ANNEX V
- the absence of dynamic promotion for secondary species and
wood transformation facilities;
- the limited size of the local market, making timber-
processing an unprofitable venture.
b. Trade and Industry
An analysis of the performance of the industrial sector reveals
that the relative stability of this secondary sector was due mainly
to the substantial contribution of the oil sector.
Despite the substantial domestic demand generated by the oil
sector, the elaborate system of tariff and non-tariff protection
(quantitative restrictions, very high import duties, the Investment
Code, price control, etc.) did not produce favourable results for
industrial sector performance. On the contrary, the system led to
very high costs and prices to the detriment of competitiveness,
Government revenues and the consumer. The manufacturing sector
remained restricted to the domestic market and handicapped with
respect to exports.
ffore specifically, the strategy based on giving priority to
import substitution activities had only limited success because of:
i) the small size of the Cameroonian market and
ii) a highly protective system with uneven levels of protection as
between enterprises, which discouraged exports and made the
import of similar products very attractive.
The system of incentives causes numerous distortions:
- quantitative import restrictions prevented competition in price
or quality. The restrictions contributed to increased delays in
supplies and led to increased gains from the scarcity of
products, thus resulting in very high prices for the consumer;
- high import tariffs led to fiscal erosion which was contrary to
the initial objectives of protection. In addition, the rate
differential between substitutes or among products processed to
varying degrees did not allow for spontaneous, competitive
development of productive activities;
- the Investment Code, which requires long procedures and is based
on complex criteria, encouraged capital-intensive investments
ill-suited to the Cameroonian context where jobs could be
generated through small and medium scale enterprises (SMEs).
Exemption from payment of duty on imported goods discouraged
local production of intermediate products thus makinl, any
integration difficQlt;
- price regulation proved fairly rigid, thus reducing the need for
enterprises to adjust to market conditions in cost and quality.
- 66 - ANNEX V
The mechanism of fixed profit margins based on the cost price of
the product (local or imported) tended to give preference to
commerce over industry and contributed to inflation and downward
price rigidities;
- substantial variations in indirect taxation depending on the
nature, origin and destination of products led to considerable
distortions in competition;
- the proliferation of special, tailor-made benefits made possible
by the above instruments contributed to an inefficient
allocation of resources among sectors and resulted in a
significant loss of tax revenue;
- furthermore, the cost of labor in the industrial sector which
followed salary increases granted in the public sector now
represents a major obstacle to the competitiveness of Cameroon's
industrial activities;
- lastly, certain institutional and regulatory constraints weigh
heavily on the activities of enterprises, in particular due to
the absence of a company code, labour legislation, means of
financing and export facilities.
c. Water, Power and Minina
Cameroon has substantial mineral and energy resources which are
yet unexploited, except for oil and water.
I) Water and Sanitation
In the water and sanitation sector, the Government has made
considerable efforts in the rural areas. In the urban centres,
the numerous water supply projects undertaken are being operated
by the National Water Corporation (SNEC). But because of the
build-up of internal payment arrears (State, local councils,
private individuals), SNEC is experiencing some structural
financial difficulties; the study conducted with a view to its
rehabilitation has been completed.
ii) Electricity
The National Electricity Corporation (SONEL) is
experiencing structural financial problems because of the build-
up of internal payment arrears (State, local councils, and
private individuals), the unreliability of its information and
management system (customer management in particular) and the
imbalance between the objectives assigned to the enterprise and
the means placed at its disposal particularly through an
inadequate tariff structure. The broad outline of its
restructuring has been established.
- 67- ANNEX V
iii) Oil sector
The steep decline in operating revenues, caused by the fall
of oil prices on the world market and the drop in the value of
the U.S. dollar, has slowed down activities considerably.
Consequently, the mining area was reduced by 55 S between 1980
and 1986; i.e. from 40,000 km2 to 18,000 km2. During the same
period, the number of prospecting permits fell from 17 to 14 and
only three operators are currently prospecting. Investment in
prospecting declined from 30 billion CFAF in 1980 to less than 9
billion CFAF in 1985 and since then no new investment has been
made.
The inadequacy of the incentives provided for petroleum
exploration accounts for the decline in such investments.
d. Infrastructure and Services
Despite considerable Government efforts to develop communication
and urban infrastructure, the dominant trends show certain weaknesses
in these sectors; the root causes of the situation are as followst
- inadequate coordination of investments;
- maintenance problems;
- the multiplicity of actors involved in the same operation;
- the absence of a contract which clearly stipulates the relations
between the Government and parastatals of the sector;
- failure to control project costs; and lastly,
- the overstaffing of public enterprises.
The improvement of infrastructure remains a constant
preoccupation of the Government since it conditions all development
efforts; this especially applies to roads in the rural areas.
However, the construction and improvement of such roads is hampered
by their high investment costs, their failure to withstand local
conditions and by the difficulties encountered in maintaining them.
As concerns services, action should be envisaged rapidly to
reverse the deterioration in quality and quantity which has
characterized this sector since 1986/87.
- 68 - ANNEX V
C. MACRO-ECONOMC PROSPECTS
a. Growth Prosoects
For the past few years, oil production has been an important
factor in the development of the national economy. This sector
accounted, on the average, for nearly 152 of GDP and 35Z of export
earnings.
The projected annual drop in oil production of about 102 during
the next few years constitutes a serious impediment to economic
growth and balance of payments equilibrium. This decline in
production will correspond to an annual loss of about 12 in real GDP
and a cumulative loss of export earnings from oil of about 300
billion CFAF at constant prices by 1995. This prospect highlights the
need to develop new exports and to institute appropriate structural
measures for the agricultural, mining and industrial sectors.
To this end, the Government intends to reorient the country's
development strategy towards export promotion. In order to do so, it
will be necessary to restore agricultural productivity and to provide
a competitive environment conducive to private investment. In
particular, the gradual liberalization of the economy and the
revampire of the regulatory framework should bring about increased
productivity and a reduction of costs and prices.
Enhancing the competitiveness of the economy will also require
improvements in labor prtductivity and particular attention to
controlling labor costs, especially in the public sector.
In the context of this new development strategy, the GDP growth
rate could reach 32 per annum during the next five years. This
increase would be principally attributable to agriculture (42 per
annum) and to the manufacturing sector (62 per annum). With a slight
improvement in the terms of trade, per capita income could increase
by about 12 per annum.
b. Investment DrosDects
Faced with the expected stagnation of export earnings and the
need to eliminate the financial bottlenecks which impede economic
activities (Government arrears, banking sector rehabilitation), the
Government will reduce its recurrent expenditures in order to be able
to finance a minimum investment program and the cost of restructuring
the public entreprise sector, while maintaining external borrowing at
a sustainable level.
In line with the new emphasis on private sector development,
private investments will henceforth constitute the key determinants
of growth and efficiency. Public authorities will limit their action
to furnishing vital services and prov'ding the necessary
infrastructure for increasing the absorptive capacity of the economy.
- 69 - ANNEXV
As part of this strategy and during the next four years, the
Government intends to limit its capital expenditures to 200 billion
CFAF per annum. This amount takes into account the minimum investment
level necessary to revive economic activities, on the one hand, and
the extraordinary amounts needed to clear Government arrears (450
billion CPAF in total, including 100 billion in external arrears) and
to finance the Government's contribution to the financial
restructuring of public enterprises and banks (provisionally
estimated at 275 billion CFA francs).
The stagnation of public investments (200 billion CFA francs per
year) notwithstanding, the global volume of investments will increase
gradually to reach by 1995 its 1987 level, that is, nearly 152 of the
GDP after attaining 10.42 in 1989 and 11.72 in 1990, thanks to the
upsurge of private initiative and the implementation of an investment
program to rehabilitate public enterprises.
c. Balance of Dayments
In view of th. foreign exchange constraints which the
Cameroonian economy vill have to face during the next decade, action
will be centred on the promotion of exports while an effort will be
made to reduce imports to levels that will enable the country to
avoid excessive indebtedness.
Policies in the agriculture sector will aim to increase the
volume of non-traditional agricultural exports by 4 to 5 per annum
while reducing food imports considerably, and to ensure an increased
supply of inputs to local industries.
Similarly, the manufacturing sector will have to produce not
only for the domestic market but especially for export. Consequently,
an annual increase of 42 is expected in the export of manufactured
products.
Nevertheless, with rapidly increasing interest payments on
external debt, the negative balance for services and transfers will
lead to a deficit in the current account of the balance of payments
of about 125 to 140 billion CFA francs annually until 1992,
representing on the average 3.52 of GDP. After debt amortization and
a build-up of reserves, the country's gross external financing needs
will increase to about 300 billion CFA francs annually until 1992.
- 70 - ANNEX V
TAJLE 1
Balance of payments 1988/89-1991192
(billions of CFAF)
88/89 89190 90/91 91/92
Trade balance 90 66 99 195
Services and net transfers -215 -203 -234 -234
(including interest) (68) (71) (82) (94)
Current account -125 -137 -133 -138
Amortization 143 133 127 120
Other Capital Payments 33 15 15 15
Increase in reserves 1 21 20 19
Cross Capital Requirements 302 306 295 292
In spite of a substantial inflow of direct private external
investments, the coverage of most of these needs (to the tune of 90X) will
require gross borrowing from abroad of about 1,065 billion CFAF, including
one-third of this amount in the form of structural adjustment loans.
In the event that the funds mobilized fall start of the above
amount, the Government could initiate appropriate negotiations to
restructure its external debt.
The contracting of these loans will lead to a significant but
tolerable increase in the stock of public debt which will represent
nearly 36.2Z of GDP in 1992 while the ratio of public debt service to
exports will increase from the present 17? to about 28Z in 1992.
This radically new situation as compared to previous years when
debt service represented only 10? of exports calls for an extremely
prudent external debt policy.
d. External borrowina strateRm
In the years ahead, Cameroon will have to face relatively
substantial external financing needs which will step up its
indebtedness ratios. It is therefore necessary to outline the
principles of an external debt strategy which will make it possible
to minimize the debt servicing burden in the long term and limit
risks related to the fluctuations of interest rates, export earnings
and exchange rates.
- 71 - ANNEXV
As from 1989, Cameroon intends to make more extensive use of its
borrowing capacity vis-a-vis bilateral and uultilateral sources to
maintain a sound debt structure. The country will take advantage of
its current easy access to money markets to borrow on concessional
terms. In this context, the authorities will increasingly resort to
project loans with favorable conditions to finance highly profitable
economic projects; the Caisse Autonome d'Amortissement (CA) set up
for this purpose will have an important role to play.
As concerns new loans in particular, the country will try to
negotiate loans with the longest possible maturities.
Commitments and disbursements relating to public debt will be
limited to a level such that the ratio of debt service due on public
or publicly guaranteed debt to exports will not exceed 30S in the
long term.
Lastly, in order to limit the risks of exchange rate
fluctuations on debt-servicing, Cameroon will strive as much as
possible to borrow in the currencies of its exports.
-72 - ANNEX V
PART TWO
STABILIZATIONL ADJUSMET AND ECONOMIC RECOVERY STRA6EGY
Medium-term macro-economic projections indicate continuous
deterioration in the country's economic situation if efforts are not
deployed promptly toward stabilization and adjustments in costs and
structures vith a view to ensuring a more efficient and competitive
economic development.
Given this urgent need, the Government has adopted a set of measures
that has been implemented since 1987188. The purpose of the measures is,
inter alia, tot
- re-establish a positive growth rate in the medium term;
- improve the most essential social indicators as well as the living
conditions of Cameroonians.
Fundamental Drinc iDles
To ensure the success of such a strategy, three fundamental
principles must underline the various components of the program, namely:
- the gradual elimination of impediments to economic activity
(competitive and efficient market mechanism);
- the re-orientation of the role of the State to make it an
intermediary which facilitates private sector operations and
particularly SME's while minimizing its direct control over the
production and distribution network;
- reorientation of public services towards programs which improve the
well-being and productivity of Cameroonians while taking into account
the social dimensions of the adjustment.
Maior comnonents of the Drosram
The major components of the stabilization, adjustment and economic
recovery program are:
- stabilizing public finances in the medium term;
- improving the programming, budgeting and monitoring of public
investment programs taking into account recurrent expenditures and
finarsing terms;
- increasing productivity in the civil service;
- rationalizing the management of public enterprises;
- 73 - ANNEX V
- revitalizing and boosting the financial sector as well as technical
and financial cooperationt lastly,
- fostering institutional reforms necessary for the revival of economic
activity.
A. ST&IZATION OF PUBLIC EINANCES
All the measures taken or envisaged are aimed, in the medium term,
at:
- controlling Government expenditure,
- restructuring budgetary expenditure,
- rationalizing the choice of public investment projects,
- restructuring and increasing revenues,
- settling the Government's domestic arrears.
a. Controlling Government epDenditure
The Authorities have set up a unit responsible for drawing up
monthly economic indicators in order to monitor the overall situation
of public finances, including expenditures financed from external
loans.
Such indicators will reinforce further monitoring of budget
execution during the year and strengthen the analysis of the overall
impact of public finances on the economy. Starting in July 1989,
these indicators will be supplemented by quarterly reports on the
physical execution of priority investment projects.
Owing to the constant changes in the external environment, the
Government will, each year, starting in 1989190, prepare
macroeconomic projections which will serve as a guideline in
determining the overall budgetary allocations.
Projections for budgetary revenues and expenditures will be made
in the context of a rolling multi-annual macroeconomic framework
consistent with the policies espoused in the Statement of Development
Strategy.
In order to curtail public spending, the following measures have
already been takent
- reduction of expenditure on goods;
- rationalization of the use of telephones and the functioning of
imprests;
- 74 - ANNEX V
- sale of Government vehicles and reduction and/or elimination of
funds allocated for their maintenanceg
- review of the policy of free water, telephone and electricity;
- elimination of all unjustified expenses;
- promotion of a housing policy that fosters property ownership
and limits renting by the Government.
In the housing sector, the Government will adopt a rational
policy of promoting savings for house purchase, leasing-purchase and
loans to encourage private ownership of property. Also the management
of houses belonging to the Government will be privatized.
The 1987188 Finance Law was an initial step towards this
budgetary austerity. The overall budget for that financial year was
lower than the previous years by 18.82 (13? for recurrent expenditure
and 26.52 for investment). This trend continued in the 1988/89
Finance Law: 7.72 drop in the overall budget (6.3Z for recurrent
expenditure and 102 for investment). The global deficit was thus
reduced by 65.8? from 214,000 million CPA francs in 1987/88 to a
projected 73 billion in 1988/89.
To reduce personnel expenditures, the Government has:
- frozen salaries and suspended salary increases due upon
promotions;
- restructured the components of the remuneration of public and
para-public sector employees;
- reorganized the Civil Service, developed a system to control the
number of civil servants through Operation ANTILOPE (the
National Data and Logistic Processing of State Personnel), and
reduced the number of students in administrative training
schools;
- reduced Embassy staff and closed down Economic Missions abroad
that are costly and unprofitable;
- systematically retired persons who have reached the age limit
(Operation ANTILOPE);
- curtailed travel allowances through reduction of the mobility of
personnel in categories B, C and D.
As a result of these measures, the total wage bill was reduced
by 12? from 280 billion CPA francs in 1986/87 to 247 billion CPA
francs in 1988/89.
- 75 - ANNEX V
b. Restructuring of buduetarv exnenditure
The restructuring of budgetary expenditure will be aimed at
controlling the wage bill while permitting a better allocation of
expenditures which takes into account the financing needs of
essential services.
In order to reduce capital expenditures in the future, the
budget for the maintenance of public buildings will be determined
starting in 1989/90, as a function of their condition.
To ensure efficiency in the technical services most closely
involved in development, in particular, agricultural research ani
extension, primary and preventive health care, primary and secondary
education and road maintenance, the budgetary allocations for
expenditure on goods and services will be set at a level consistent
with the size of the personnel and the value of the existing capital
stock.
c. RationalLz_ation of the choice of nublic investment
Drolects
To improve the programming, budgeting and monitoring of public
investment and rationalize its financing, the Government has decided
to consolidate public investment projects financed from external
resources with those financed from the budget.
The Government will adopt a four-year rolling program for public
investments, each year, beginning with the 1988189 - 1992/93 period.
The program will be disseminated widely. The investments planned for
the first year of the program will be incorporated in the Annex to
the Finance Law and the projects will be broken down into their
domestic and external sources of financing.
Initially, the program will cover only Government investments.
Subsequently, it will be extended to include investments by public
enterprises which are financed through loans guaranteed or onlent by
the Government.
In keeping with these principles, the preparation of the first
four-year public investment program will lead to a reprogramming of
ongoing and new investments on the basis of the following criteria:
- priority to the maintenance of existing capital;
- priority to the gradual completion of ongoing projects beginning
with those that have reached an advanced stage and which are
economically, strategically and/or socially justified;
- investments consistent with development needs, Government
objectives and sectoral policies;
- priority to the economically most profitable projects;
- 76 - ANNEX V
- State withdrawal from activities vhich can be taken over by the
private sector or local communities.
The procedures and mechanisms for the preparation, selection and
programming of investment projects will be improved. An economic
appraisal will be made for each project costing at least 500 million
CPA francs and recurrent expenditures will be taken into account in
the selection of projects. Furthermore, a data sheet (fiche de
projet) will be drawn up for each project and a computerized unit for
projects will be set up. The execution of the investment budget,
irrespective of the source of financing will be strictly monitored.
Increased efficiency of public investments also requires
improvements in procedures covering procurement and monitoring of
public contracts by the Directorate General for Major Projects
(DGCT). Such improvement of procedures, which should result in
reducing project costs, will be brought through the standardization
of documents and methods, the training of personnel and the
adaptation of regulations.
d. Restructurinsz and increase of revenues
The restructuring and increase of revenues requires revitalizing
the fiscal machinery and enlarging the tax base.
Heasures already taken to increase Government revenues are:
- the setting up of special missions to collect customs, fiscal
and service revenues;
- reinforcement of mechanisms to control budgetary revenues and to
recover tax arrears;
- increase of the special tax on oil products and the tax on
alcohol, wines, beers and non-alcoholic beverages;
- the institution of a property tax;
- the ihcrease in registration and stamp duty fees and the minimum
payable company tax (152).
To raise the level of non-oil fiscal revenue to 171 of non-oil
GDP in the medium term, the Government plans to increase the above
ratio by 1S per year by providing Cameroon with fiscal and customs
instruments that are easy to administer and better adapted to its
economic situation. To that end, reforms will be made in the
following areas:
Customs duties and taxes
- support for the iview of the common external tariff applicable
to imports into UDEAC countries;
- 77- ANNEX V
- instit.ution of a minimum import tariff and reduction of the
maximum rates through adjustments in the supplementary tax;
- reduction of the volume of exemptions which currently affect a
large number of imports, and strengthening of customs control;
- application of the principle according to which Imports under
public tenders must be subject to the normal import duties and
taxes even if the contracts are financed from external
resources;
- subjection of imports by Embassies to quotas negotiated between
the Ministry of External Affairs and Heads of Diplomatic
Missions;
- implementation of the decision that all major imports must have
been certified by the exporting country.
Value added tax (VAS
The VAT will be introduced in 1991192 and will harmonize the
internal turnover tax with the import tax and replace, in particular,
the single tax and the internal tax on production.
Income tax
To address the present inadequacies of this tax, the following
measures are envisageds
- the setting up of a single registration system during the
1989190 financial year;
- the computerization of duties and taxes (Operation TRINITE will
soon be operational in Yacunde and will be extended to Douala in
1989190).
In the medium term, a study of all income taxes will be launched
in order to:
- simplify the income tax system;
- extend the tax base;
- tax different sources of income in a more equitable manner.
Registration
The introduction of the real estate tax in the 1988/iE budget is
a first step towards effective taxation of all landed property in
urban areas. Its scope of application is, however, limited by the
poor surveying methods. In order to revitalize this sector, the
Government will, under the second urban project, take all the steps
necessary for the survey to become quickly operational. This survey
will permit extending the scope of application of the real estate tax
-78- ANNEX V
and improve collection of registration fees and taxes on rental
income.
Other envisaged measures
- the launching of studies to determine the impact of the various
fiscal measures on production, consumption and revenues;
- introduction of a port and airport tax;
- improvement of the collection of service charges for public
services.
e. Settlement of the Government's domestic arrears
Concerned about resolving the liquidity crisis of the banking
system and fostering the revival of the private sector, the
Authorities have decided to clear, as quickly as possible, all
outstanding domestic arrears.
The claims preseated by the enterprises and evaluated by the ad-
hoc commission assisted by a foreign auditing firm will be repaid as
followst 100l before 31 December 1989 for those below 100 million CFA
francs; 15? cash and 85? in 14 semi-annual installments with a one-
year grace period and at the ordinary BEAC discount rate for the
rest.
Externally guaranteed commercial arrears will be handled either
through additional negotiations with the suppliers concerned or
within a multilateral framework.
Administrative arrears will be settled as follows:
- rent arrears: over a three-year period;
- salary arrearst over a five-year period;
- arrears owed to public entities will be consolidated over a ten-
year period;
- arrears due to public enterprises will be treated within the
framework of their restructuring and the modalities of
settlement defined in performance contracts.
Finally, a reque3t has been made to the French Government to
reschedule the postal and hospital debts.
B. RATIONALIZATION OF THE MANAGEMENT OF THE PUBLIC AND PAUA-PUBLIC
SECTOR
a. Reform of the Civil Service
The primary objective of this reform will be to redefine the
role of the State and to improve personnel management. This
- 79 - ANNEX V
objective, which will result in improved control of the wage bill,
will be achieved through
- a recruitment policy limiting entry into the Civil Service, in
particular, from vocational and administrative training schools;
- an early retirement scheme and the strict application of
retirement regulations;
- the consolidation of existing systems of payroll management;
- the curtailment of travel allowances, in particular, by reducing
the movement of personnel;
- the review of the policy of social benefits (family allowances,
housing allowances, Government houses, etc...);
- the review of the organizational structures of Ministries and
the setting up of Organization and Personnel Plans defining
clearly the roles of each Ministry, taking care to avoid
duplication of responsibilities. The review will define the
exact staffing needs of the Ministries and, where appropriate,
identify existence of overstaffing. This should, in turn, enable
the determination of operating budgets based on the mission and
identified needs of each Ministry;
- a policy of reduction of civil servants based, in particular, on
voluntary departures and redeployment in the private sector.
The second objective concerns increasing efficiency in the Civil
Service through:
- the review of the legal and statutory framework of the Civil
Service (general staff regulations, special rules and
regulations, etc...) to define a Civil Service policy based on
enhancing career development and on increasing the motivation
and duty consciousness of Government employees; and
particularlyt
an inventory of skilled personnel in the administration, by
level;
a new remuneration policy in the Civil Service which links
the review of salaries, subsidiary allowances and benefits
to the evaluation of individual performances;
the improvement and institutional reinforcement of
personnel management in the Ministry of Public Service,
Ministry of Finance and in the technical ministries:
administrative management (careers) and financial
management (salaries), and the strenghtening of
institutional relations between ministries;
- 80 - ANNEX V
a vocational and continuing education policy adapted to the
needs of the Civil Service.
A Civil Service Commission will be set up to ensure that the above-
mentioned objectives are achieved.
b. Rehabilitation of vublic enterurises
i) Basic principles
A commission for Public Enterprise Rehabilitation,
reporting to an interministerial committee and assisted by a
technical committee, has been operational for some time now. Its
mandate is tot
- Identify enterprises:
to be maintained in the Government's portfolio (public
utility or service enterprises and strategic enterprises);
to be privatized (enterprises which, though
potentially viable, need not be in the public domain);
to be liquidated.
- Define the reforms necessary to rationalize
macroeconomic policy and the institutional environment
so as to improve the performance of the rehabilitated
public enterprises;
- Propose a policy for Government equity investments;
- Analyze the monopoly right. and other privileges
enjoyed by each enterprise and recommend measures to
be taken.
Actions to be taken within the context of this public
enterprise rehabilitation program are in line with the following
considerations:
- encouragement of competition and reduction of
monopolies which may hamper the efficient allocation
of resources;
- the granting of maximum autonomy to public enterprises
so as to improve their management. The Government
should exercise its authority only by establishing
major sectoral guidelines and, a posteriori, by
evaluating results. However, decisions having
financial implications (investments, recruitment and
dismissal of staff, increase in equity capital and
loans) must receive the prior approval of the
supervisory authority;
- 81- ANNEX V
- review of the management of public enterprises so that
they can achieve their objectives in the most
efficient manner;
- systematic negotiation of agreements to onlend
obligations contracted by the Government on behalf of
public enterprises;
- establishment of a performance contract with each
enterprise remaining in the public portfolio.
Performance contracts mtst specify the respective
obligations of the Government and the enterprises,
including the objectives to be attained and
performance criteria. Each performance contract should
include a financing, investment, technical and
commercial management, personnel and organizational
plan for each enterprise with an implementation
schedule. The contracts should also specify the
Government's responsibilities, such as the settlement
of arrears, increases in capital, the payment of its
bills and reimbursement for work done for the
Government. They should also specify obligations that
may be delegated to enterprise management, such as the
streamlining of management, commitments relating to
financial restructuring, price fixing and the
recruitment and dismissal of personnel;
- economic and financial analysis of all investments
carried out by public enterprises, ensuring that each
enterprise can meet its debt service obligations.
These investments must be periodically reviewed as
part of the activities of the Monitoring Committee in
charge of supervising performance contracts;
- minimizing the social impact of public enterprise
restructuring by adopting compensatory and
reconversion measures;
- minimizing budgetary transfers to enterprises from
which the Government is divesting by:
abolishing Government subsidies and guarantees;
eliminating monopoly rights and tax exemptions
and privileges outside the provisions of the
Investment Code;
- provision of sufficient resources in the Government
budget to pay:
Government arrears to public enterprises;
arrears of public enterprises;
- 82 - ANNEX V
operating subsidies;
* severance pay
as specified in the performance contracts and in the
liquidation and privatization decisions.
ii) Measures taken
Among the 150 public enterprises in the Government's
portfolio, diagnostic studies were carried out on 75 (emergency
group). On this basis, decisions were taken to privatize 6
enterprises, to liquidate 12 others (5 have already been
dissolved), to rehabilitate 38 and to merge 4 enterprises into 2
entities. The decisions concerning 14 enterprises of the
financial and banking sector and the National Produce Marketing
Board (NPMB) shall be taken on 'e basis of individual audits
currently underway (cf. Banking Section).
Final reports on the restructuring plans of each enterprise
will be submitted to the Interministerial Committee upon their
completion.
A similar procedure (diagnosis, Interministerial Committee
decision, action plan, performance contract) will begin in 1989
for the remaining enterprises.
In order to avoid the recurrence of the problems which led
to the present situation, studies on the institutional and
macroeconomic environment were conducted. Laws and regulations
will be drafted in accordance with the conclusions of these
studies.
Among the measures envisaged in this context, the following
legislative or regulatory instruments concern directly the
public enterprise sectors
- regulations governing the activities and the organization
of public enterprises and entities;
- legislation on privatization;
- redrafting of the statutes for the public enterprises
retained in the public portfolio;
- drafting of performance contracts between the Government
and the enterprises retained in the public portfolio.
In addition, studies are underway to facilitate the
implementation of rehabilitation plans. These studies are aimed
at:
- defining the methods for the implementation of the
privatization program;
- 83 - ANNEX V
- defining a rational policy for Government equity
participation in enterprises;
- evaluating the social, human and financial consequences of
the program of public enterprise reorganization and
liquidation.
iii) Monitoring the imalementation of the rehabilitation
measures
The Commission for Public Enterprise Rehabilitation is
responsible for the follow-up and application of the decisions
taken by the Head of State. In this respect, its duties were
extended to include:
- the preparation of plans to restructure enterprises
retained in the public portfolio;
- the preparation of necessary accompanying measures;
- the monitoring of the implementation of plans and measures;
- the monitoring and implementation of the privatization and
liquidation program.
To ensure the sustainability of progress already achieved,
the Public Enterprise Commission should be transformed into a
permanent body and full-term staff should be attached to its
Technical Committee.
In addition, a Committee to monitor the implementation of
performance contracts, by entreprise, will be set up. It will
comprise:
- a representative of the supervisory Ministry;
- a representative of the Ministry of Plan and Regional
Development (MINPAT);
- a representative of the Ministry of Industrial and
Commercial Development (MINDIC);
- a representative of the Ministry of Finance (MINFI);
- the General Manager of the enterprise. He shall be
responsible for meeting the secretarial needs of the
Committee;
- the Technical Rehabilitaticn Committee.
Any person or legal entity may be invited to participate in
the deliberations of the Committee by virtue of his or its
competence.
- 84 - ANNEX V
The monitoring of the performance contract entails
assessing the implementation of the contract and overseeing its
periodic revision.
iv) Financial and technical rehabilitation of public
enterDrises
The principles which will guide financial and technical
rehabilitation of enterprises to be maintained in the
Government's portfolio are as followst
- the financial and technical rehabilitation will take into
account the liabilities of .he enterprises and their
working capital needs;
- arrears and overdrafts owed to local banks: rescheduling to
be negotiated by the parties under the auspices of the
Government;
- arrears owed to local suppliers: rescheduling of debts
owed to the major suppliers, immediate payment of debts
owed to small-scale suppliers;
- arrears owed to foreign banks and suppliers: rescheduling
negotiated by the Government, if possible, on a case-by-
case basis;
- arrears owed to other public enterprises, including CNPS:
rescheduling over a four year period;
- fiscal arrears: forgiven, on a case-by-case basis;
- assumption of medium and long-term debt service by the
Government: case-by-case examinat'on within the framework
of the performance contracts;
- the technical rehabilitation will be carried out on the
basis of a minimum investment programme.
At this stage of the public enterprise restructuring
process (May 1989), preliminary estimates of the cost of
rehabilitating enterprises remaining within the Government's
portfolio and included within the priority group amounts to CFAP
220 billion (not including the banking and financial sector),
including the social costs.
Donors will be contacted to mobihze financial resources
for the Government and the enterprises.
- 85 - ANNEX V
C. RIHABILITaTIOy OF THE BANRING AND FINANCIAL mTER
The Cameroonian banking system has been facing difficulties
for several years. Various deficiencies have been identified by
the Government, including:
- shortage of liquidity
- inadequacy of equity capital
- the magnitude of non-performing credits
- declining profitability
- weak management.
Given the vital importance of an effective banking system
for the success of the structural adjustment program, reforms
undertaken by the Government to redress the financial sector and
the banking system will comprise the following elements during
the time frame of the program:
(i) A plan of action to restructure the banking system,
includings
t he liquidation of distressed banks, including
CAMBANK, the Cameroon Development Bank (BCD) and
FONADER (the National Fund for Rural Development);
* consultation with the foreign partners in all jointly-
owned commercial banks for the preparation of plans
for their restructuring or liquidation;
* examinction of options for the restructuring of the
National Investment Corporation (SNI);
* setting up an appropriate structure to coordinate the
measures taken by the Government to restructure the
banking system;
* divestiture or gradual transfer to private
Cameroonians or foreigners of Govermment shares in
commercial banks, while redefining the conditions of
Government involvement in the management of these
banks;
* subjecting the setting up of new banks with Government
participation to in-depth feasibility studies that
would determine the prospects and conditions for their
future viable operation. In this context, the
establishment of the Agricultural Credit Bank and the
Industrial and Commercial Credit Bank of Cameroon will
be subjected to the determination of viable operating
conditions.
- 86 - ANNEX V
(Li) Emergency measures will be taken to relieve the liquidity
crisis of the banking system, including:
* the settlement of Government arrears vis-&-vis the
private sector;
* the abandonment of some deposits held by the
Government and public administrations in banking
institutions;
* the consolidation of some banking debts by BEAC.
On the basis of currently available data and information,
the cost of restructuring the banking system (including the
liquidation of some distressed banks) is estimated between 300
to 375 billion CPA francs.
The adoption and implementation of the restructuring plan
requires the joint efforts of the Government, the shareholders,
the BEAC and the multilateral and bilateral donors.
The financing of such a restructuring plan would have to
come from a combination of resources includings
* those listed in (ii) above as means for relieving the
banking liquidity crisis;
* contributions in fresh money;
* the eventual issuance of Treasury bonds.
The Government will initiate discussions with the BEAC with
a view to seeking the consolidation of outstanding banking debts
as well as exploring the possibility of other financial
assistance by BEAC toward banking restructuring.
(iii) In conjunction with BEAC, the Government will formulate
an action plan to reform the system of crop credits. This plan
will comprise, on the one hand, measures to settle the arrears
of the previous crop seasons, part of which would require
rescheduling by BEAC, and on the other hand, new measures to put
the financing of future campaigns on a sound footing. Tn
particular, the Government will ensure the strict application of
decisions taken by BEAC to limit bank financing of crop credit
to expected export revenues. Furthermore, the decision-making
authorities in BEAC will ensure the strict application of
rejulations governing the granting of discount facilities by
BEAC.
(iv) In agreement with BEAC, appropriate measures will be taken
to strengthen the inspection of banks by the monetary
authorities by reinforcing the BEAC inspection unit with that of
the Ministry of Finance. Furthermore, the supervisory
- 87- ANNEX V
authorities will ensure that the prudential basic banking ratios
(liquidity ratio, ratio of capital adequacy) vlll be strictly
monitored and enforced, following the restructuring of the
banking sector.
(v) Within the framework of prevailing banking regulations and
in conjunction with BEAC, selective banking policy reforms will
be formulated, including:
* the reduction of the range of deposit and lending
interest rates to make them more flexible and adapted;
* the gradual and selective widening of banking margins
as one of the means to ensure sufficient remuneration
for the banks;
* the adjustment ar interest rates to discourage capital
flight and to attract capital flows required to
promote the priority sectors of tte economy;
- the adaptation of tax regulations to the specificity
of banking and financial sector activities, including
measures to encourage the constitution of provisions
for bad debts. In this respect, studies will be
carried out on certain taxes levied on banking
transactions (tax on the distribution of credit,
internal turnover tax, tax on real estate income) with
a view to reducing or abolishing them;
the preparation and implementation of laws and
regulations to improve loan recovery by the banking
system.
(vi) Apart from the immediate measures outlined above and which
form part of the structural adjustment program, more in-depth
reforms of the financial and banking system will be envisaged.
In this respect, the Government will initiate a dialogue with
BEAC to prepare a program for reforms in the following areass
* gradual abolition of interest subsidies, beginning
with the merging of the preferential rediscount rate
with the normal rediscount rate;
* with the return to monetary equilibrium, the
abandonment of credit control in the form of
bank-by-bank credit ceilings;
* adjustment in the rediscount system by measures aimed
at encouraging medium- and long-term credit in
r.lation to short-term credit;
* establishment of a money market in Cameroon, following
appropriate studies. This money market should
gradually supplement the BEAC rediscount system and
- 88 - ANNX V
its interest rate should become the reference rate for
the banking system;
setting up, after undertaking studies, of a capital
market with the introduction of new financial
instruments (corporate securities, commercial paper,
bonds, Treasury bills, mutual funds, Investment Unit
Trust, etc.)
D. RECOVERY OF ECONOMIC ACTIVITY
The strategy to revive production has the following priority
objectives:
- increasing rural sector output by improving agricultural productivity
and harnessing the existing production potential;
- restructuring the industrial fabric and creating a competitive
incentives environment that would promote private initiative and
exports.
As the inevitable link between production and consumption,
coumunications and transport networks will be rehabilitated and better
maintained.
a. Rural Development
Within the context of preserving and managing our natural
resources to assure their sustainability, the objectives retained for
this sector concern:
- ensuring food security;
- promoting and diversifying exports;
- increasing revenue in rural areas.
To attain these objectives it will be necessary to:
- improve agricultural support services provided to the rural
population;
- maintain and upgrade assistance to traditional smallholders;
- promote the creation of medium sized farms;
- increase the productivity and value added of the agricultural
sector.
i) Food Security
Government action is geared towards:
- 89- ANNEX V
- improving and strengthening the necessary link between
production, processing, distribution and marketing by
reducing gradually the role of the public sector while
increasingly calling upon the private sector to set up
facilities for the storage, preservation and processing of
agricultural products. A program for the construction and
improvement of feeder roads is also underway for this
purpose;
- instituting an early warning system against drought and a
program for the mobilization of food products in case of
need;
- strengthening the system of gathering and processing
production and marketing data.
ii) Recovery and diversification of agricultural exports
Recovery and diversification of agricultural exports
requires improving farming techniques to increase productivity.
To this end, there is a need to bring yields to levels
which will ensure a minimum of profitability, to reinforce
applied research and disseminate findings, to increase the
timely use of fertilizers and pesticides and, finally, to pursue
the promotion of animal traction, motorization and
mechanization. As far as cocoa is concerned, emphasis will be
placed on regeneration and pest control. Regarding coffee,
improvements in arabica farming methods and in the quality of
the product will be the prime concern. Cotton production will be
increased by opening new plantations in the south. As for oil
palm and rubber, marginal plantations will be abandoned and new
ones created in high yield areas.
Studies are necessary to determine the possibility of
exporting non traditional products like vegetables and to
identify potential regional and sub-regional markets.
iii) Pricing and marketing volicies for agricultural oroducts
Prices of inputs
The policy is to eliminate fertilizer subsidies within a
period of 3 years, to reduce subsidies for phytosanitary
products by 5OZ within 5 years and to privatize their
distribution. This policy is already being implemented in the
case of fertilizers.
Producer 2rices
In view of the downward trend in world prices for primary
products, the Government will set up a pricing system which
takes into account world price fluctuations and incentives for
production so as to restore the financial balance for the crops
- 90 - ANNEX V
in question. In this regard, the Government will institute a
system of floor prices for the producer and strive to reduce
marketing costs as well as operating expenses of the National
Produce Marketing Board (ONCPBINPMB) and SODECOTON. A system
will be set up to share the surplus among the farmer, the
Government and the Stabilization Fund (managed by ONCPB) if the
sale price is higher than the cost price.
Marketing
The Government will gradually liberalize the internal and
external marketing of primary commodities with a view to
enhancing their competitiveness. To this end, the modalities for
granting licenses to exporters vill be revised in order to
increase marketing efficiency. On a case-by-case basis,
marketing monopolies, heretofore granted to certain exporters in
certain regions, vill be eliminated. The role of the National
Produce Marketing Board (NPMB) vill be redefined to permit the
private sector to progressively take charge of internal and
external marketing of export crops.
Taxation
- The export tax on primary products will be abolished. A
progressive taxation system will be a component of the
flexible pricing system;
- price equalization funds for rice, cooking oil and sugar
have already been set up. Their impact on local production
and retail prices vill be closely monitored.
Institutional susmort
Government objectives in this area are:
- strengthening of research and extension services, including
for livestock, mainly by setting up on-farm demonstrations
and reorganizing extension services at the national level.
The pilot phase of this action has already been started in
the North, East, South and North-West Provinces;
- according greater importance to cooperatives mainly by:
. granting them greater autonomy;
. clearly defining the intervention of Governmnt
services in cooperatives;
. reviewing legislation governing cooperatives;
- assisting village communities in the realization of small-
scale community projects;
-91 - ANNEX V
- strengthening the Chamber of Agriculture to enable it to
fully play its role in promoting agriculture! products; and
- improving the management of agro-industries to increase
profitability and redefining the role of development
agencies and other state enterprises (related work is
underway within the context of the Comission for Public
Enterprise Rehabilitation).
iv) Recovery of the Forestry Sector
The forestry sector has considerable medium and long term
potential. Like coffee and cocoa it is an important source of
foreign exchange. In this light, an action plan involving
institutional, legal, technical and commercial aspects has been
prepared within the framework of the Tropical Forest Action
Plan.
The objective of this plan is to institute a forestry
policy framework for the rational exploitation of timber and at
the same time to ensure the conservation of existing ecosystems
(flora and fauna).
This plan is supported bys
- the revision of the Forestry Code, notably ins
* granting longer term exploitation licenses based on
forest development plans through competitive bidding;
* introducing new forestry regulations concerning the
controlled exploitation of fragile ecological zones
and associating exploiters to forest protection
activities;
* reviewing taxes in the forestry sector and modifying
them to encourage the exploitation of secondary
species and the development of processing activity
within the country;
- the management of a national system for standardizing
processed wood;
- the management and the increase of Permanent State Forest
within the framework of the global development of rural
areas;
- the strengthening of the capacity of the Forestry
Department in the area of forest management by setting up a
planning and regulatory unit, and redefining its
attributions;
- the preparation of an infrastructure and transport support
plan with due attention to its environmental impact;
- 92 - ANNEX V
- the preservation of existing and future parks and reserves
by setting up buffer monest
- the implementation of a sylvicultural program in
concessionary leasing so as to promote the development and
exploitation of future crops;
- the pursuit of the on-going reforestation program and
intensification of applied forestry research activities;
- the rationalization of the exploitation of forest resources
within the framework of the natural resources management
policy (reforestation and regeneration);
- the establishment of national SMEs in the sector;
- the increased utilization of wood pulp in construction and
equipment projects (notably by the public sector).
v) Recovery of the Livestock and Fisheries Sector
* Livestock
Government intends tos
- Institute a policy that calls on livestock owners to
participate In their own development by gradually
transferring on to them most development expenses hitherto
borne by the State;
- encourage and promote private sector participation in the
supply of inputs and services;
- meet domestic protein requirements with domestic
production.
Specific areas in which Government intends to carry out
substantial policy reforms are as follows:
- Cost Recovery
The Government will set up mechanisms that will ensure cost
recovery for clinical services and vaccinations as well as
pharmaceutical products mainly by phasing out the distribution
of free veterinary products.
As concerns the prgservation of tse-tse fly-free zones,
Government will set up a financing system that will require
livestock farmers to participate either financially or in kind.
Such revenue will, as a matter of priority, be used to meet
the operating costs (excluding salaries) of livestock services.
The revenue thus collected will be paid either into a special
-93 - ANNEX V
treasury account opened for such purposes or into the livestock
development funds that already exist in each province.
- naveloping private yeterinary services
The Go-vernment will encourage the development of veterinary
services by the private sectoz. This should ease the work load
of Government services and stimulate the creation of jobs in the
private sector.
This policy will be implemented according to the following
guidelinest
- gradually providing private veterinary clinics exclusive
rights to furnish veterinary services and to distribute
veterinary products;
- when possible, subcontracting to private persons activities
that are public in nature such as vaccination, the
inspection of animal products, etc...
- Intensifyint protection proRrams
Government intends to intensify animal health protection
programs by emphasizing prevention in order to limit the
contraction and spread of animal diseases.
In this context, the range of vaccines manufactured by the
National Veterinary Laboratory (LAVANET) has to be broadened.
- Training and support services
Government action will be geared towardss
- providing special selected breeds and inputs to livestock
farmers;
- increasing the provision of technical advice to livestock
farmers.
- Institutional Supnort
The Veterinary Pharmaceutical Office will be reorganized in
order to improve gradually its performance and the quality of
the services it provides. The reorganization should enable it to
operate without state subsidies in two years time. Similarly,
the Livestock Development Corporation (SODEPA) will be
restructured in the framework of the reform of the para-public
sector.
* Fisheries
Government objectives in the area of fisheries is to
promote national fish production so as to reduce imports of fish
-94 - ANNEX V
products to the minimum. Government action in the various
related areas will be as followss
- In the area of industrial sea fishinis negotiating fishing
agreements with neighbouring countries with a view to
obtaining access for Cameroonian fishing vessels to their
more resource-rick territorial waters, and extending our
territorial waters in accordance with the new provisions of
the Convention on the Law of the Sea.
- In the area of small-scale fishinR (sea and inland):
providing small-scale fishermen with the necessary
financial means by making lines of credit available through
sc-nd financial institutions and organizing small-scale
fishermen into cooperatives to facilitate the provision of
extension advice. Furthermore, the system for preserving
and marketing fresh fish will be improved.
- In the area of fish farmina: fish farming stations will be
equipped for more intensive production of a large number
and variety of fry, while ensuring distribution to fish
farmers. The production and distribution of fish feed will
be pursued.
In the area of strenRthenina existinR structures, the
Development Authority for Small Craft Sea Fishing (MIDEPECAM)
will be restructured in order to increase its capacity and
efficiency to provide technical advice and access to loans. The
National Zootechnical and Veterinary Training Centre (fishery
section) in Foumban will also be reinforced in order to train a
sufficient number of technical and extension staff.
vi) Financina the Rural Sector
The Government intends to accelerate the opening of the
Agricultural Credit Bank of Cameroon whose management will
comply with the principles of sound bank management and whose
main objective will be to meet the financing needs of existing
farms and the newly created medium-scale farms. In the absence
of the Agricultural Credit Bank, lines of credit will be made
available by viable intermediaries for the financing of
agricultural, livestock and fishery ventures initiated by
private individuals.
Furthermore, special attention will be paid to the
development of savings and loans institutions for smallholders
and village communities.
b. Trade and Industry
The industrial and commercial development strategy aims at
promoting private sector initiative and competitiveness through more
neutral incentives and increased competition. The main objectives in
this area will therefore be to:
- 95 - MXV
neutral incentives and increased competition. The main objectives in
this area will therefore be to:
- progressively liberalize the economy to stimulate competition
and reduce domestic prices and costs;
- modernize the existing legal framework;
- eliminate existing distortions in incentives and harmonize
effective protection across sectors whi4e ensuring minimum
protectior. to local industries primarily through import tariffs.
To attain these objectives, the Government defined its strategy
around four major components:
- the industrial strategy;
- the liberalization of trade and prices;
- the rationalization of tax incentives;
- the reform of the institutional framework.
b. i) Industrial Strategsy
Confronted with tuhe limited integration of the industrial
sector, the inoperative nature of the present incentives system
and the inefficiency of banks as financial intermediaries for
industries, the Government intends to take the following
corrective measures in the near terms
- intensify the use of local raw materials;
- restructure industries, improve the quantitative and
qualitative performance of industrial public enterprises
through stricter performance contracts and coordinate
information necessary for the development of national
resources;
- revise the Investment Code with a view to simplifying it
and adapting it to the Government's economic policy
objectives. To this effect, eligibility to the benefits of
the Code will be non-discriminatory and open to all
investors, whether for new investments or extensions of
existing ones. Fiscal benefits will be based on performance
criteria such as value added, employment generation,
training and exports. Such benefits will be reduced over
time and granted over a limited, non-renewable period.
Customs duty exemptions will be granted only to industrial
equipment necessary for initial investments or extension
projects and for a very limited, non-renewable period.
-96 - ANNEX V
ii) Liberalization of trade and prices
Trade liberalization
Trade liberalization aims at:
- regularly supplying the domestic market vith domestically
produced and imported goods;
- promoting the export of both traditional commodities and
industrial products;
- stimulating competition on the domestic market and
enhancing the competitiveness of local industries at the
international level.
The adjustment measures include, iEter alias
- revision of the legislation governing comercial activity
to allow free access to all stages of trade, protect the
consumer and provide a regulatory framework against unfair
competition;
- gradual elimination of quantitative restrictions (QRs) on
Imports and their replacement by tariff protection which
takes into account local industrial production;
- streamlining of import procedures with the abolition of
import licenses for goods not included in the Programme
General des Echanges;
- anti-dumping legislation so as to counteract possible
negative impact of trade liberalization.
Price liberalization
Price liberalization is part of the series of reforms
designed to revamp investment incentives and promote freer
competition to the benefit of consumers at large.
The current system of price control and administered profit
margins will be substantially modified with the following steps:
- gradual liberalization of prices and profit margins of all
goods and services except for a limited number of essential
ones;
- elimination of control over profit margins for all goods
and services that are not subject to QRs or price controls
(homologation prdalablt.);
- updating of texts defining the components of the cost and
the profit margins for goods and services;
- 97 - ANNEK V
- simplification of price approval (homologation) procedures
and increased flexibility in price administration.
A monitoring system will be put in place to evaluate the
impact of trade liberalization on the economy as well as to
prevent and correct undesirable results.
iii) Rationalization of fiscal Incentives
The distorsions resulting from the system of indirect taxes
will be corrected through, in particular:
- the abolition of export taxes on all goods excluding
timber, pending the modification of forestry taxes;
- the introduction of a value-added tax (VAT) in replacement
of the turnover taxes on domestically produced goods and on
imports, the single tax (TU) and the interior tax on
production (TIP). This measure will be introduced in close
collaboration with the Customs and Economic Union of
Central Africa (UDEAC);
- the rationalization of import taxes including the
simplification of the rate structure, and the reduction of
the average rate and dispersion of duties.
Furthermore, the Government will continue to lend support
to the ongoing UDEAC reform of Common External Tariffs (CET).
The benefits granted under the Investment Code and
corporate taxation will also be rationalized.
iv) Reform of the institutional framework
To support the adjustment process, the institutiznal
environment for economic activities will be revamped.
Measures to be taken include:
- setting up an investment information and promotion agency;
- setting up an export promotion scheme on the basis of
studies to be undertaken;
- improving the performance and efficiency of assistance to
SME's and SMIs;
- amending labor regulations in order to reduce labor market
rigidities;
- establishing a Commercial Code and a Company Code with a
special emphases on laws and regulations governing
bankruptcy and inter-enterprise partnerships;
- 98 - ANNEX V
- designing a system of national standards and ultimately
setting up a National Standardization Institute.
c. Water. oower and minima
The recovery of these sectors depends largely on international
economic conditions and the growth of domestic consumption, vhence
the need to acquire adequate knowledge on all the relevant economic
and social parameters. The quality of technical staff and the mastery
of information are also important indicators of success in this
sector.
i) Water and Sanitation
Emphasis will be placed on improving the living conditions
and general health of the population - factors which are
indispensable to the country's economic an_. social development.
The Government intends to ptcsue its efforts to:
- provide towns with drinking water while ensuring that such
projects are profitable for the Cameroon National Water
Corporation, in accordance with the performance contract
signed between the Government and this enterprise;
- supply drinking water to rural areas by adopting technology
suited to the local culture and to the specific investment
and maintenance requirements of the region;
- revive activities in the sanitation sub-sector through
appropriate institutional and legal measures.
ii) Power
A National Power Plan which will define the Government's
medium and long term strategy is being drawn up.
In the area of electricity, the Government's objectives are
to:
- carry out a minimal program in the areas of production,
transportation and distribution of electricity with a view
to facilitating at minimum costs the expansion and
redeployment of industry, expanding coverage in towns
already electrified, developing agriculture and improving
living conditions in rural areas;
- adopt measures aimed at reaching a balance between the
objectives and the means put at the disposal of the
National Electricity Corporation (SONEL) through
appropriate tariff rates and a management system, as
defined in the performance contract;
- 99- AMES V
In the area of hydrocarbons, ths Government will promote
oil exploration activities by providing appropriate incentives,
redefining the oil policy and updating the Mining Law.
The National Gas Plau being drawn up will promote the
development of gas-related industries (ammonia, urea, methanol
and by-products, etc.). In addition, the Government intends to
pursue its policy of diversifying sources of energy, especially
by replacing firewood with cooking gL8.
iii) MSininj
The Gove nment's new mining concession policy wilL require
that exploitation rights be granted through tenders. This will
lead to the development and exploitation by the private sector
of the already discovered minerals reserves, in particular iron,
bauxite, rutile, tin and gold, while ensuring that the
Government earns royalties.
d. Commuications. trgnsport. urban nlanninm and housiaf
infrastructura
In order to put an end to the situation prevailing in this
sector, the following institutional measures vill be takent
- improvement in the programming and monitoring of projects;
- clear definition of each ministry's field of action and
responsibilitys for example, urban roads, feeder roads, etc.;
- giving priority to projects which are profitable and create
jobs;
- privatizing or rationalizing activities which are industrial or
commercial in nature (Post and Telecommunications, transport
enterprises, etc.);
- infrastructure cost recovery on similar bases for all types of
transport - Air, Road, Railway and sea - by making users bear
the recurrent costs of maintaining and renewing such transport
infrastructure;
- drawing up performance contracts between the Government and the
public enterprises retained in the public portfolio, including
the nature of investments and their financing, remuneration for
unprofitable public ser-ices that are imposed on the enterprise
and performance objectives, etc.;
- staff reduction and redeployment of extra staff in the other
productive activities of the sector: management of motor parks,
parcels and passenger services, urban and inter-city transport,
hire-purchase of vehicles, car maintenance and the manufacture
of spare parts.
-100 - ANNEX V
parcels and passenger services, urban and inter-city transport,
hire-purchase of vehicles, car maintenance and the manufacture
of spare parts.
i) Roads
Currently, roads handle 852 of passenger and freight
transport. The classified network of 33,000 km has only 3,500 km
of paved roads.
Action will be taken to reduce the already very high cost
of road construction and transport. It is also important to
allocate sufficient funds for road maintenance, including for
rural roads. In this respect, it will be advisable to:
- study the possibility of setting up a road fund;
- maintain the existing road network and determine potential
new road portions;
- promote SMEs in the public works sector which use local
materials, in particular through associating them to works
related to road maintenance;
- build new feeder roads.
V.) Railway
The National Railway Authorit; is facing serious financial
difficulties in part due to keen comj'etition from the other
major means of transport.
In the context of a performance contract, a rehabilitation
and reorganizatlon plan will be implemented in this sector in
order to increase the revenues of the enterprise and to enhance
its efficiency.
iii) Sea
The port rates charged by the National Ports Authority are
incompatible with the volume of investments undertaken. These
rates will be raised and updated on a regular basis, and their
structure will be adjusted to the services rendered by the
Authority.
In developing the country's ports, priority will be given
to the optimal use and possible improvement of the existing
facilities. The development or eventual building of new port
facilities in other parts of the country (Kribi, Limbe) will be
coordinated with the development of the mining, fisheries and
forestry sectors in these regions.
-101 - ANEK V
iv) Air
Over the last decade, the development of airport facilities
proceeded at a rapid pace without, however, benefitting from
careful planning. The activities in this sector will be
rationalized.
The recurrent costs of equipment and navigation will be
borne by users who wil' be called upon to contribute
significantly to the purchase of new equipment through
appropriate charges.
The maintenance and level of operation of the existing
facilities and the programming of new ones will be adapted to
the real needs in air traffic.
The magnitude of investments in airport facilities will be
commensurate with realistic air traffic estimates. P?i-ect
choices will also be governed by concerns to limit initial
investments and operating costs to levels compatible with
probable revenues.
The airports will be managed as commercial operations by
setting up one or more companies which have the skills required
for operating airport platforms. The Cameroon Airlines (CAMAIR)
will be restructured.
In order to minimize recurrent expenditures and increase
the profitability o- the sector, airports with little passenger
traffic will increasingly be served by 3rd class airline
comparties.
v) Post and Telecommiunications
The current management of this sector, incompatible with
its industrial and commercial nature, has been partly improved
by the adoption of a supplementary budget.
Management will be further improved by computerizing
operations and adjusting the level and structure of tariffs,
including international ones.
The number of post offices and telephone exchanges will be
increased on the basis of demand and the financial situation of
Post and Telecommunications services.
vi) Urban nlannini an- housinR
The major objectives of the urban planning and housing
policy are to stimulate public and private sector participation
in creating a proper environment for ha-mmonious social and
economic development. In this respect, the Government intends to
take the following measuress
- 102 - ANNX v
(a) improve the functioning of the real estate market and the
management of the State's properties by streamlining
administrative procedures, demarcating and identifying
public property and setting up a multi-purpose survey
system;
(b) reinforce the technical and financial means of
mun'.cipalities by adopting a plan of action aimed at
mobilizing local resources;
(c) encourage the private sector to play a greater role in
building houses and equipping lands by reorienting the
activities of the public enterprises in this eector
(Cameroon Real Estate Corporation (SIC), the Urban and
Rural Lands Development and Equipment Authority (HAKTUR),
Cameroon Housing Loans Fund).
vii) Urban and Inter-city Transport
The financial and physical asset situation of the Cameroon
Urban Transport Corporation is a very serious cause for concern.
A reorganization and rehabilitation program will be drawn up.
The private sector will be encouraged and organized to make a
greater contribution to inter-city and urban transport while
taking into account the protection of the rural environment.
viii) Tourism
Cameroon has large and diversified potential for tourism.
In order to activate this sector, which has so far been
inadequately exploited, the following measures will be takens
- improve the management and maintenance of national parks;
- reinforce the quality of national tourist products, in
particular by intensifying promotional activities;
- facilitate obtaining entry visas;
- develop reception and lodging facilities, in particular by
encouraging the private sector.
e. Human resources
The Government reaffirms its willingness to preserve what
Cameroon has achieved in the field of human resources and to
undertake the following:
- examine the structural and financial situation of the
education/training and health sectors;
- define the essential components of the Government's program in
accordance with the vital socio-economic objectives of the
country;
- 103 - ANNEX V
- propose a strategy which takes into account the resourees
required to achieve the country's vital objectives, on the one
hand, and the appropriate budgetary allocations and borrowing
policy on the other.
The above development strategy should help ensure that the
process of structural adjustment does not result in the deterioration
of the most essential social indicators.
i) Education/training
The main lines of action will be the followingt
- prevent any decline in the current school attendance rate
at the primary school level;
- gradually improve the intrinsic quality of teaching at all
levels;
- strengthen training activities which are closely linked to
the effective demand in the labor markets;
- review the objectives of higher education in the light of
the above and, within this context, revise the scholarship
award system in order to make it more efficient and better
adapted to the new socio-economic conditions.
ii) Health
The main lines of the strategy should:
- reflect priorities based on a re-exsmination of the
epidemiological situation and national objectives such as
the promotion of mother and child care and responsible
parenthood;
- promote preventive and primary health care in rural areas;
- improve the quality of health personnel through training
and re-training;
- in hospitals, emphasize measures designed to rationalize
the system, including the improvement of staff management
and output, and above all, the ability of hospitals to play
their role as referral institutions.
E. IMOUTUAtION OF THE SOCIAL DIMENSIONS OF ADJUSTMENT
The central objective of the Development Strategy adopted by the
Government is to reestablish sust.ainable growth with equity over the
medium-term. But growth is iot by itself a sufficient condition to reduce
povertv and to improve the living conditions of households. Therefore the
- 104 - ANNEX V
Government intends to implement, at the heart of its Structural Adjustment
Program, a Social Dimensions component with the following objectivess
(a) In the short- and medium-term, to protect the most
vulnerable groups of the population in the course of the
adjustment program, as well as groups that are directly
affected by adjustment measures;
(b) In the medium- and long-term, to promote the participation
of the poorest groups of the pcpulation in the economic
recovery process.
The implementation of this component hinges on the design and
implementation of five complementary action programs in the following
sectors: population and health, education and training, employment, role
of women, and institutional framework. In this context, the Government
intends to:
- define a new national population policy, and mobilize the
necessary resources to implement it;
- define a new national health policy, aimed in particular at
strengthening and broadening the national primary health
care program, including the introduction of a family
planning component, and implement the Bamako Initiative, in
particular an emergency program of acquisition and
distribution of basic supplies and essential drugs for the
primary health care system;
- reorient the national policy for education and human
resource mobilization, and design and implement the
corresponding reforms and operational strategies, in
particulars (i) acceleration and improvement of training of
trainers for technical schools; (ii) redynamisation of
professional training as a function of market needs; and
(iii) implementation of an emergency program of acquisition
of basic supplies for primary and technical schools;
- establish ptogram-budgets in all social sectors based on
planning by objective, including a core social expenditure
prog. *m for the poorest groups in the population;
- design and implement a series of actions aimed at promoting
self-creaced employment and the reinsertion into the
private sector of laid-off civil servants and public
enterprise employees, in particular through (i) technical
and financial support for the creation of micro-
enterprises; (ii) on-the-job training and short-cycle
professional training, and support the implementation of
these actions through setting up a fund for employment;
- design and imp__nent the reforms and operational strategies
corresponding to the national policy for the promotion of
women, including (i) the revitalization of the urban
- 105 - ANNMX v
women, including (i) the revitalization of the urban
structures of MINASCOF; (ii) a special support for women in
the framework of the micro-enterprise creation program; and
(iii) a program aimed at improving the productivity of
women in rural areas.
In order to achieve these objectives, the Government intends tot
- reinforce the planning and coordination of socio-economic
policy by (i) integrating distribution and employment
components in the design of macroeconomic strategies; '4.i)
reinforcing planning and coordination capacities of th.
Ministry of Plan, in particular for integrating human
resource strategies in the overall development strategy;
(iii) reinforcing planning and programming capacities in
all ministries in charge of the social dimensions of
adjustment, in particular for the design and implementation
of program-budgets;
- improve the follow-up of the evolution of socio-economic
conditions of the various population groups, through the
implementation of a permanent household survey, and through
the processing of available socio-economic statistics;
- reinforce the process of participation of grass-roots
organizations in socio-economic development, in particular
through the establishment of a fund for community
development.
P. MONITORING THE STRUCTURAL ADJUSTMENT PROGRAE
To guarantee the success of the Structural Adjustment Program (SAP),
the Govetnment has set up two structures: the Interministerial Council for
the Supervision of the Structural Adjustment Program and the Technical
Committee for the Preparation and Follow-up of this Program.
a. the Interministerial Supervisory Council
Under the authority of the Secretary-General of the Presidency
of the Republic, the Interministerial Supervisory Council is
responsible for implementing and supervising the implementation of
SAP with International Organizations. The Council deals with all
matters which relate directly or indirectly to programs negotiated
with the International Monetary Fund (IMP), the World Bank and the
African Development Bank.
To that end, the Council follows up the implementation of
government economic policy objectives and sectoral strategies. It
initiates the necessary studies and programs of action. It
coordinates the activities of various Ministries and follows up the
implementation of the Government's plans of action.
The Interministerial Supervisory Council works in close
collaboration with the Commission for Public Enterprise
- 106 - ANNEX V
Rehabilitation, set up earlier and also placed under the authority of
the Secretary-General of the Presidency.
b. The Technical Counittee for the Prenaration and Follow-up of SAP
The Technical Committee for the Preparation and Follow-up of SAP
is responsible for the technical preparation, supervision and follow-
up of SAP. It is also responsible for the supervision, preparation
and implementation of the Social Dimensions of Adjustment (SDA) and
the Economic Management Support (EMSP) projects. To that end, the
Committee works in collaboration with the competent government
services in preparing sectoral meetings. It is also responsible.for
preparing periodic supervision reports for submission to the
Interministerial Council for the supervision of SAP. Finally, the
Committee is in charge of establishing summary tables incorporating
the evolution of economic indicators.
The Technical Committee of SAP works in close collaboration rith
already existing structures such as the Technical Committee of the
Commission for Public Enterprise Rehabilitation, the Technical
Committee on Government arrears and the Technical Committee for the
Review of the Program with IMF.
c. Financial and Loidstical Support
The reforms the Government is carrying out require considerable
financial and logistical support.
As such, the Economic Management Support Project is intended to
back-up Government services more directly involved in the
preparation, implementation and follow-up of SAP.
The first phase of this project deals with the following areass
- the preparation and monitoring of the Public Investment Program;
- the reform of the national statistics system;
- the management of the debt; and
- the reform of the Civil Service.
Further.nore, this project will make it possible to finance SAP -
related studizs and projects identified in the course of implementing
reforms.
- 107- ANNEX V
CONCLUSION
In conclusion, stabilization, adjustment and revival are the basic
components of the Development Strategy the Government intends to iLplement
in the short and medium term.
To this end, the reform program adopted within the context of this
strategy aims especially at increasing production and expanding exports by
improving the economic climate and the ability of the national economy to
adjust to the international economic situation. Thus, particular attention
is paid to such areas as agricultural production, the industrial processing
of local raw materials, the development of infrastructures, the development
of entrepreneurial skills and human resources.
The forseeable impact of this vast program on the most vulnerable
population groups (and the poorest) has led the Government to introduce a
series of measures to take into account the social dimensions of the
adjustment process.
The financing of this Structural Adjustment Programme should be
quantitatively and qualitatively satisfactory over a sufficiently long
period, externally-generated funds being complemented by an increased
mobilization of internal resources.
Finally, it is important to emphasize that the conception and
implementation of these strict but hope-inspiring measures will be achieved
by maintaining the national consensus essential for the success of SAP. To
that effect, the Government intends to sensitize the people, businessmen
and the international community so that everyone may willingly and
knowingly participate in Cameroon's recovery effort.
PIMLtC FIEcI
mEuCTI5 ACOS TANS t-SPOSED LMAS CALES,M
I. PLAINUIN, PINRAMMIN AND UAW DOET
a. Strothmlng of the lik btwen - Properation _c er of sdl_-tern In January at each yer,
establishment of the Goemeat Wdget ueroscoaomle projectloe including the sarting In 1990
sad medlum-term m.crtecoemle prospects .Governmet's financial prorm, taking
lte asecont the expendituree fttnaed
by external resouree
b. Fuller analysts of the public sector's - Dete0 rination of dote neds Irch 1999
np4et on th economy, taking lat
account lnvstment, borroming and other - Sensitizatlon of public enterprises sut Septeber 1989
activities by pubile ente.prpl. setting up of a data-gathring system
- Production of quarterly summary uarterly starting In
miltoring tables January 1990
c. Strengthenins ot th projec planning - Preparation of projoct brieof, stoting Jul 1009 co
and budgeting cycle tOo _re more economIc Justification, sourc of
systetlo use of selection critera and financing, duration and lmplomwntation
more tloxible mediumter plnning plon
- Prepartion of a rolling four-yer Yearly In July
lnavetment pin cmatible with
available rourcs and debt and
development strategies
- Inclusion *s on *nnex te the Financ Yerly In July starting
Low of the Investments for the tirst In 1989
year of the four-year progr broken
down by project and by dooeetl� and
external reourc
a0
PUBLIC PUNCE
OBJECTI ACTIONS TAKEN PROPOSED MASURE CALENSR
d. lprovemt of monitoring of the Mo ntly emasry tables - Design and Implentabonof a system September 1906
execution of the Gove, newt budget In for th. quarterly moitornlg of the
the courset the yer financial and pbysical prors of *Il
invetment project
*. mprovemnt Of t1. mgemnt of the Establishment of the Crles - Effective strup of CM's activtiles July 1w9o
public debt Auto*m d'"Aorti ne (CM)
and appointment of Its Board
Charman ad Director Genral
f. Establishment of a sructre and Establishment an start-up of - Prepaation of andrdize doc March 1o0
adoptlon of Improved ontract award Direction doe Gran Travax for public procurement
procedre sled at reducln do C_mwon - DCTC
adeistrative delays and the resulting (DireCtror of major Works) - Establishment of a training progrem tor Starting Apr1i 100
Gosts the pireonnl Involved in procuremt
- Rbevoi of logslation regulating public Sepbember 1990
prour em t procdurens
It. RESTORATION OF EQUILIRIUM IN
BUEr ACCuWnS
a. Reorientation of current exponditure Adoption of recurrent - Incorporation of thes levols In the July 199
In order to reesbtabish equilbrlim non-ags, oxpendituree lovels 1989/90 budget
betwee the wage bill and expendituesx for the main econoice and
on goods and s rvics ocial servico, and for
Infrastructure maintenanc
See Control of *bg S1il
b. Settlement of significant armra Study of cross debts - Completion of study and devising of December 1909
*nd debt duo to public and betwon State and public plan for settlement of cros debte
private enterprise enterprim underway
- 110 - ANNEX VI
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- 111 - ~~~~ANNEIVI
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CIVIL SIESCE REFRMI
OBJECTIVE ACTIO TAKE POPOSEBD MASM CALESR
1. CONRL O WAGE SILL
- Freening of Wa/selaries and - ConolldtIon of payroll control system kcme 1969
of fIpaninel ffect of (AntI oIp)
prowetIon
- Effective tranfr of otpplication of Jw. 1960
- Redctlo, of hiring Anti lope to Payroll Directorte
- Purging of nonsletet - Periodic purging and updating of payroll Every two year starting
employee trze payroll In Jmno 1969
(Anti lope)
- Revision of eulation on early larcb 1960
- Reduction of embasy roirmt
peoonel end closing ot
nc botnl economic - Rvision Nd hnermo etlon of tVe arbch
trad dalegtions ttute of vocatlonal training schools
With a vies to limiting direc ac
- tict application of the to the Civil Soervi
ruiss vorn lrot ire1mt
- Revision ot family allowance syste Dee_r 1959
- Reducon of
allowancs for pereenal - Forsulation of a ne housing polly for Dcember 195
In categorl 9, C, and D publi employs.
- Reform of th. systm for travel aN Jun 1"9
movlng *Ilowance
- Forulatlon of a gawlI otrategy for September 1989
the orgintlon of aInistrils
1I
- 113E -I
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CIVL SRVICE REN
OJUCbtES ACTNS TAM PROPOSED l _ASURES CALDR
U. CIL SERVICE POLICY
Enhcam_ of the efficiency ot the Estails_nt of a Hlghr -Reie o the legal and pleatory
Clvii Servic, by Implementation of * Institute of Public framork of the Civil Services
NW perennl policy based o M_anagmet
enluatlon of ldividual performnc * Haoniation pof al nd n" 1990
eW improvemen et peonnel man"nt - Computeriation of certan special Staff Regulations
management functions
*Ssty and impleantetion of a new December 100
remuneratIon policy tq - on rvIeloo
et pay selso ellowenee bewnee
ead benefits In kind linked to
)mdividulo perormane
* Deinition of caree plane Deber 1o0n
* Estabi ont of a prcetion system Decmber 19D
based on caeer delopmet plane J
on better dfinition of preosMoonal
repesb I itice
- Inventory ot national e pititle by De_embr 1990
level (f le)
- Rwitaliation of the professional De-emer 10
training pogram conned with corer
devolopsmnta
o Trininl Intitutee,
5 Training program
*Planin of training abroad3
C-
cmIVL SERICE MP=
OBJE E ACTII M PTAMWAS Cl_R
- R.ft.r ad c.p.ta=tIon of pr omeI D.c_mb.w I9
Noi.mst (Payeoe$ I Dfstcr.ord NW
Traouy1, NIM, Poro_nel Dlroctorat
on of o0tow u1st.lr.l.)z
* Evllo. of pams bre aw
* SE.obItd1m. ot nan monal
el.aosh)ps b_tsog UDW/ CE
aSn tX. amor alma. itAn
*Trelansg of monepmw* sO
c-
PUBLIC ENTERPRISE REIFORM
OBJECTIVES ACTIONS TAKEN PROPOSED MEASURES CAR
a. Reductlon of th. coat of th s*etor for - Establishment of the Mission - Preperatlon of r.habtiltation piano and Under wny
pubile ftI _ or Pubile Enterprio draft prorm4nce contrats tor each
Rehabilitation enterprise
- Study of cross debt - Signature of perorman contracts September 1989
beten the Stat. end the OffIce
- lagnostic study of 76 Cor llor, SODECAO. HEVICAM. ONCPD,
enterprle constituting the SONEL. SEC. SOCAPALM
heavioet burden on pubile
tinancer (priority broup) - Completion of negotiation of Ocember 199
performance oontrect with donor
DOieloml to he tokens participation for CAVMA, MAETU
"at,U REOIFPIRCA SODECOTON, CDC,
10 to be liquidated SOWUC, CaT and MIDENO
o 0 to be privatized
o SC to be rehabilitated - Signture of performance ceontrects for April I19
the enterprie. It ind abovo
ENTERPRISES TO lr, L.4IDATED: 0'
AppointOmnt of liquidator - Appointment of tiquidators for MEAL and September 1969
for SODEBLE, SODENKAM, WAMA
MDen, CNaE
ENTERPRISES TO SE PRIVATIZED:
foemcement of a stdy on a Estabil Mnt of a loea frmew ork for Decomber 1989
privatisation strtoy privattiation
- Prepration of *ation plas for the March 1990
partial or compete set, of the six
entrprios to be privstize
- Preperatlon of an actlon plan and Decembr 169m
achedules for negotlotion of management
contract for certain enterprise
remlalng In tho Government'e portfolio
PUBLC EMTuPRIsE REUM
OJECTSm ACTIONS TAKEN PROPOSEG MEASMES CALEAR
ENIERRIES NU UDED DiN THE
PRIItm ROW;
- Preratlon of diagnle stdi for Doember 19
abo*t 60 entepises
- Claelticatlon by the lntrm lneriml March 1990
Coemi hee,
- Prepeatlon of rehab Ilttion pian Jun 1990
b. MInimiotlon of ocl lmpct C e t of a study o - Etablishment of compenery m re Janry 1090
the silsle hkmn aN a I lowanc")
fiasnelal i1pact of PE
restucturing plon Nd - Etablishment of retrelaing mosures or Jonuay 1790
liquidation step. denlned to provid. aIternative
souress of *mployent or lneogo
- Start of Implementation of the January q 9
measurs
c. Improvement of the porformn of REFORM OF THE LEGAL AND
enterprPs remaining In the Government INSTITUTIONAL ENVIRMT
portfolio
- Study of logpl and - Introduction of general regulatlons GOSmbo 1989
Institutional environment rgulating and oranising public sector
conernino Govrnmnt/publIc entorprisee ond stabilthment
enterprise relations
- Revision of statutes of enterprises March 190
- Start of a study on th retained In the Govprnment's portfolio
tormulotlon of a ratio"l
policy on govrnnt - Adoption of lgislatlon on govnme t Dosoer 1989
InvOstment in enterpries investment In nnterprieso
- 118 - AtV
a Ii I . 'ii
F1p . .
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FDWNCIAL A IMUIM SECTOR
OBJECMES ACTIONS TAKEN PROID WEAStES CALESR
*. estructuring of distresse banks to - CeopleOlon by consultonts - Appotmt .f Admimlstreteur September 13
resore their fInancial ad oprtitonal (CMS) of diagnotic study, Provlsolir for Cambnk*, SW and fOMAUME
viablityl liquIdatlon of others to contlaing cortain
stop thoir Ilssos .d ratimllse the rseosmdattlin on the banking - Prepration and adoptlon of liquidation Varcb 10
structure of the banking system system plIa for aboe thr banks
- Audit of ined banks - Prrtlon of rtrctWrlng plea for D_ember 1990
- Delisions takens
o to liquldate Canbank, BC - Joint prep ration with foreion peatoors Vsrch IO
an FOMAE sow adoption of restructuring pIln for
mixed beoks (lD, SIK, SUC. BICIC.
*t restrutre sow mie SWc.)
beks
- Joist prepartion with foreign perr December 130
of a plig for retncwtlrng or
liquidating mar
- Iple.eet.tiea of restructuring or O _cembr 190
l1quidatlIn ploa ftor beak
b. Resolving the liquidity erisio of the - Negotiatioe ad signature of - Signature of settlemet convntion September 16
bonking system protocols of agr et with with retasiing ensrp dito
the majority of the
overnwl 'a main creditors - Nsoialtioen with KAC for the March 1900
consolidatlon of sees banking dabt,
- Signature of stti n including arprars on crep credit
e9reaset In prog
- Initiation of egotaltlons with EAC to Jun 139
sxplore posslbilty of finanisl
assistance for bonking retrcturing
FINACIAL AM BADCIN SECTOR
OBJECTIMES ACTIOS TAtEN PROPOSED MEASIRES CALSOM
c. Rotor of th crop crdltsystem - Formultion oft comp_res1v financing Starting with O9/90
sob. covering each crop (fillonr), campaig
taking Into account EAC'c dwcision to
li1-t tUe provilson of crop credit to
oxpncte oxport receiptO
- eficit of tho U8/99 camp to be As the cmpelgn wind1 up
covered by:
* ONCP" on account of garateed
prodcer priee (coffee, coco)
* tho State on account of credits
guaranteed by It (cotton)
d. Strengthening of bonking control by - Strengthening of the KAC - Greater emphasis o reliability and Annul review starting
the supervisory authorities Inspection unit underway tilmilnss ot finaaciol reorting November 19W
*Ince LW?. More frequnt by the banks
Inepwetion vieits to priary 0
banks with collaboratlon of - Inteiication of controls a" Annul nriew starting
Finance Ministry Inspectors inspection missions by BEAC and Finance November IW
Mlnistry
- ntltutlon of a systm of ppropriatO Annal rewiw starting
penaties for iregolaritian or November I1U
violatlos
- Strict oppiletlon of bankling Following banking
prudentlil ratio (lqulidity and restrwcrlng
capital adeqacy)
- Systmatlizalon of Internal cheks Permnnt
organle by the primary bnoks
FDMCAL AD BAWIC0 SECTOR
OBECTIVES ACTtONS tAKS PROPOSED MEASURE CALENAR
*. Improwvemen of loat recovery - Streng1eirqg ad loplemai tion of To nitisto be.or.
logilativeo regulatory and Decembr 16S9
adinistrativo smer" to lmprovo bank
loen rcovory
f. Adaptation of tax system to - Studles with a view to elIateo1 or March t990
specific circumat.nces of the reduce certain txes applclabl, to
banking sector hokintg operations (DC, ICAIt IPCRN)
- Flocrl and adinistirntive ooeure to March 1090
facllitate provisions for bad debt
g. Improvement of proftabilitty of MLal terlol Decr of April - 4dual nd seloctlvo Incrase In Annual review starting
finncial Institutions to Incease 1909 setting nw banking banking *argln November 1990
their *sIf-finaning capability conditions
- Eventual liberaiortiton of intorent Annual revli starting
rates and banking margins taking Into November 1990
account fIonanlin nesd of the ecnomy
NEDZW AN LOW TERM
h. Prograsve eilminalton of credit - Consltations with BEAC, IF RD and No _vemr 1989
Ceillns ADS wth a view to gradual elilination
of ce dit cilings
1. Estabiishmet of a finatnil and mony - tn consltatlon with MACm, tMo BR Following tbh
mrket to deepen fitnnctal and ADB, review of studies on setting retructuriag of benks
Intermn diaton and provide a up of a money market In Cnmroon
suIpeentary source of fi ancing to
SEAC rediscounting - Initiatlon of a otudy on setting up a Following the
financiol market restructuring of banks
Ic
- 122 - . NEVI
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I I ; S
DUSR IAL AI COMMERCIAL hECThR
OBJCT1IVE3 ACTIONS TAKEN PRPO EDMAUJRES CALENMOA
1. IWIESTWM AND EXPORT PROMOTION
a. Promotion ot compe1ttve Industrial - Revlsion of the Investmst Cod. Do_embr 1090
tnvetet ?crdin n to the A stretgy
- Ell-leationoi expert taxOs on all July 1990
b. provemet of export lncetive. produ excqt lop Fina1c Low 10/
- Flmliation of torm of referceso d July 10W
ftilnno for sty of xport
lACIti vo and potential
- Formlation of an settee prorm on November 11
besic of the ebove stdy
II. LIBsUZATON OF TtADE AND PMICV
*. Proresslve eliminalon of quantitative Study on tho system of tariff - Ell-ination ot We for as inttial group Jun 16 (POE 09)
restrictlons on lipors and non-ri"f protection of product.
Establishment of a sebedule - Legislation elllmitng mport licene.1 Jun 169 (PME S9)
for p t Io110ntion tor product ot subject to ,ts
- Elblation of . tor a o group Febrry 10 (PE 00)
of poduct
- Supplementary sty on Ps for
strategic good. (ago-industry.
t0 etle.)
o Completion et study Now mber 10909
o tabiishmsnt of atlon plan January 10
- ElimInation of Va for * third group Jarury 1001 E 1001)
of products
MNUSTRAL AND COMMERCtAL SECTOR
OBJECTIVES ACTIONS TAMlE PROPOSED MWASURE CAUAR
b. Lliberaliation of prics and morgins Rodctlon of nue_er of - Limitaleti of price control to a vry Jun 19S9
produ or group of short list of good SW se"lce,
product. subjoct to prlor Including som goods subjc"t to On.
approval from 7 to 86 In
January 1989 - L.gloletion oliminating cytom of trade Jun 199
errln control for . l goodsb ad
EasIng of aproval procedurs services oCt sbjoct to Ps or WpwIorl
by dropping inelorial pric, approval
approval repiremn
- Libe rlistion op prels *nd margins Februry 190
Establishment op a schdedlo for a second group of gods to tandm
for libsraliatio. of prices with P elimination
and m*rgins on al1 goods an
s*rvlee e *x t for a short - Llbsr.liastlon ot prices and margin Januory 1991
llot of besic pods tor a third group of podstaneo m
wlth 4P elImInation
a. Prevention of possiblo wndelrblo - Institution of a statistical inttoring June 1198
offeets of trade liberallsatlon system of prices and eo p tltlon
- Artrrly review starting October SW
d. GunrAnt of free accoes to 1 stag oe f p- Revlion ot Law B0/26 o' cemsrlal Docember 1969
trod. activity
*. Guarante op free competition to Study of comptstition aN - PrweratIon of logslation rleltin March 1990
consmres odvantog rketing chanle conpton end ccpstltloan
- Rovision of Co_erelil Code (including
commrclal leae, leasing, Zet.)
o Start of work Ster 19
o Prlliolnry version Juns 1910
o Flnal toxt Mareh 1911
a Adoption Dosceber 1991
ND4USThIAL N COeCIAL SCTO
OBJECTrYE ACTIOS TAMEN PRWOSE lASWS CAUM
m.RnATINALATU ON OF TAX 1W.ENTWES
*. EsUb5ielut_t of a systa of tariff - Eetablishmmt throug the TCI of a July 1990
pr.tction with podrat. Vates and tiani Import tariff 1990/91 finr La
disperlon
- Reduction throuo the T of the Jy 1990
a1ms. OUIulVtIvo Import teriff rate 190 Finance La
- Support for rotom process un,ar oy In In prog
IeC rgoprding'EC nd indirect
teastion
b. Simpilflation aN heroolimtion of the - Abolition of the TCA, RU anWd TIP 1991/90
flal regim linked to lntrodwbion of VAT as pert
of Coemnity-wids t laotic CAC) A
IV. REWnATRY E_N S
a. Modarnixoston of legt framork Start of work on the drafting Prepertlon of Company Code
for businoes of Cempany Cods
o Prellmnatry wverlon Sept_er 198
o Adebtion ecembr IM9
- Legislation on enterprises In difficulty Decem r 19
- Legsltion on nternorprise Doc_er 199
partnerships (public and private)
- Legislation on internatlonal trade Jun 1990
dumping end arbitrage
b. Reducblon et regulatory restritions on Start of work - Rwision of labor logislation (Labor December 2990
1 0 , Cods) �
WART AND SICIIM
OBJECTIE ACTIONS TAXEN PROPOSE MEASU CALENiM
a. Impovmut of cost recovery - Raising of rod tome for beavy Financ Law (July 1M
vehicles end port and eirport txes
b. Ma1ntwenal of prqaet lnfratrucure Estb1ishment of Road - lnir"osng of budgetary appropriations Fl_nmc Low (July 19M
intenanco Dlrecorate In for roa _Intnrneo
ministry of PZlic Work
and Trnsport
c. I _provemot of P.rtor of a*r - Study on coaplotlon of YeounWl-.izion
sector by Incrmning the return on nw *Irport to limit lnysetiat
lnvetmnt eXPenditunre and miniise recurrent
coots
- ber stuly (rshabtllttton, July-Os log
flne.., orpnlstion aN magament)
of th, irport aed air navlation sector
- Study of creation of autonom airport Jan-June 10
_anaga t companles, and dlculon of U
stuy with partie concerrned
aF
C-
w~ sanw
AcTIVEC ACTIONS TAKE PROPOSED WME CAWrNA
t. uuRW,Mi OF DITUTMAL, PPWGIAL
N LEAL FRAI_ OF WN SECTOR
*. uptvemnt of 1ategotie of Cetion of a Coordinaion - Udrtaking of stuiIe on the econmic to accftlance wilt the
urbn opetlons with the economic Committe to sprvise the dvl.p.nt of th main regional cetoe calendr establised
development Of the caunry IeIpmetation of the urban under the %econd U1ban
strategy a coordilato the - Identficatio of priority Intveetnnt Project
work of the ditfernt parties with a vew, to strengthening the
tnolved ecoomic rolo of thee. centrs
- Properatlon of a rolling investmen
progna for the urA* Vector
b. Improvemsnt of esource mobilization Study underway for ilmpoving - Approval Nd - ipIentetion of the
VW strsogtsbning of mniclpelilties' amulelpl finne mobion plans cmed in the stuy
flncal technical capcitiet on municipal financ
Strtlig of a featbility
study on establishent of - Productlon of ltipupoe mpg sith a
a rel estate tax vies to stabililhing. tea cea otre
- Start of applicatio of recondlaonw
of study on rel estat tex
c. Improvemet of functioning of rel Ratlonalizatlon of land - Strenothning of capacity of Property
setate mrke *ad of managemnt of registration irectorete rtegdIng Isue and
Stat, larns registration of reel estate property
titles
UAmN SECTOR
OSECmES AMUCNS TAMP PRIPOIID MEASES UCA AR
- :nvontory and dellmitetion of State
lands
- Estabiltef_nt and impl_.entation of
meaurse to obtain the b_t return frow
d. Devlop_nt of rolo private oot.r Progreslive *lImination of - uajrnt.o sectr operator. _ccs to
and munlclp.lIti.o In Wte dav.lopmeet subsidies to pubilc the land e for their devloplm
an using constrcion enterprisee In the housing prog
and rel estate devlopmet
sectors - lEtablishment of rogutery
(spe.tficaloae) and financial (coot
recovry) mechanieams tht "Ould enabl-
the private setor and municipalitIes
to carry out developmnt opertion
- Esbilshment of mwecanlm deigne to
expnd CFC'o calletele to includ
mnlelpolitl. and privat operators
I C:
WATER, ERG AND MIN4 SECTORS
oJECTE ACTrIO TAKEN PROPOSER MEASRES CAWA
I. WATER AND SANITAnON
. Esure adqae drinking vater supply - R.hbbllltato.n Plan for SNEC - Signature of a performanee contrc September 1989
whle sfewe 3 SNEC's financial comoleted betwoee the Goverieat and SNEC
viab1ilty
- About 100 urbn contere - Adoption of lega t1t for application J ry 160
supplied with drinking watr of the wate lasa, Including a llWter
Code
- Nationnl Water Comittee
(OIlE) eob up - Draing up and apOlcattoi of a Wtr June 10
Sply Retor Plan
- Effoctlv strt up of the National Octobwr 1M
Water Comittee
b. Establishment of on deque ystem of - Drw u ot a Naoal Sanitation Plan J
enitatlon (ap a*nd rein watr)
- Study on the establ iamot of June 150
proprit structure for the
ManaaMAfnte operation aN finaneing of
eanlttion program
RURAL
Supply drinking wvter to viilloag Eotablishment of policy to eourage DOember Su9e
emuanitlte partiecpation by the rural population
In the construction, operation and
Maintenance of drinking water upply
fact I itine
- Studios aid t the *Otndardizatlon of Deember 169
eui_met and the adaptlotn of
technology to the *ocio-conoele
setting
Whm, EDwY Am VNO SCtORs
OSJECTZE ACTIONS TAM RPOSW MEASURE cLE
11. ENERGY AM THE EWVRMENT
a. Exploration and optimal utilization of
van oi nao l ery reour
* Enorgy planning - Drawi up of a - Restructuring of SOL to hmproe it. September lo9
Roabhllitation Plan for SON.L managemnt and bettor adapt Its
objectives to Its f lmeisf reuc
- Eiblisheot of n eoroy within the fracowork of a Performance
planing wnit Contract
- Complet Phas 1 of eney planning oesmber 1m
"t"
* Energy consrvatloe * Pel iminary tWdise on enrgy - Adoptlio of enrgy conservtlac eseras JanuI. 1A0
coneervtion
o Olwnerifteatios of nry souree - SUdies of rnw Nd ren_wble - Delopment of ne Nd r_eeable enorgy Jsnwry 190
enrgy ources Cbiopa, sources in *ae without triltlonal
deircel. solar ad wind) enery supplies
* Ioprvemet In the present OPL - Technle l/econote stdise of - Estbishment of sn Integrated Pt January 199t
distribution system so improvod systm of disrbutilo, network
dmWti ge distribution
b. N.ormwilotion an monitorlng of the - Rogulaltion m. oral studies, - stablishment of an effective June 19J0
eloctricIty sow petrolem producta monitoring struture
seubobore
c. PRvitalization of hydrocarbons soctor - Drawing up of a National Gas - Adoption of the Natlonal 0Ga Plan September 10M
Plan
- Updating of mining logialetion. December 1989
- Neotiation for resming redelnition of petroleum polki med
petrolu aeploration at offerlo Incenties to oxplorston*,
In particuler through Impro*40ee to
the toras offered to the petrole :
companies
VATER, ENERGY AND MINING SECTORS
OBJECTIVES ACTIONS TAKEN PROPOSED MEASURES CALENDAR
d. Normaization and monitoring almd at - Study of the establish_t of - Adoption of normti ve enviror nta DeC_ember 1989
environ mtal protection a pollution control laboratory standards
- Adoption of legislation on Industrial Jun. 1990
waste
tIX.MZNINO
a. Developmnt of solid mineral A4erves - Study on Iron and bauxite - Review of legol texto governing the March 1990
mIneo and on rehbilitation granting of oxploration permits and of
of the coasiofrite mIne ming conceelions for solid minerals
(Iron, bauxite, gold, rutilo)
- Setting up of pIlot gsod ard - Studies on facilltating certain mining November 1989
rutile prodvetlon anits operations (ehalk, gold, cobalt,
nickel, diamegd )
b. Upgrading of gological and mining - Partiol Inventory of national - Preparatlon of geological aps Juno 1990
Informxtion territory
lUNAR RESOURCES DEVELOPMENT
OBJECTIVES ACTIONS TAKEN PROPOSED MEASURES CALENDAR
a. Dofinition of nor Education-Training - Promigation of policy documents To be defined upon the
and Population-Hoalth poliies and completion of the SPA
oloboration of operational strategiss - Elaboration and a s esmnt of npprolaal mission
with greater emphiaeu on Improved strategies In the Education-Training scheduled for June 19M
quality with a vies to better respond and Health-Population areas
to the country's future developmnt
needs
b. Choice of investment. in accordance - Multi-year rolling invetsent progams July 1969
with the prioritieo set In the Health (budget-program framework)
and Education sector strategieo
c. Ensure the provision of basic services - Increasing budgetary allocation, for July 1989
in the Education and Health sectors basic equipment In these sectors (Finance Low)
- Improvement in cost recovwry To be defined upon the
emplotion of the SPA
approisal mission
scheduled for Juno 1989
z
z
c
SOCIAL DIMENSIONS OF ADJUSTMENT
08JECTIVES ACTIONS TAKEN PROP0OED MEASURES CALENDAR
a. Protection of vulneoable groups *nd Setting up of five working Establishing and implementing an To be defined upon the
assistance to redundant workers group s Health-Population- emergency program to provide basic completion of the SPA
offected by economic reforms measure" Soclal Security; Employment; material assistance and equipment to appraisal mission
Educatlon; Women in Devlocpment the health and eduetion sectors scheduled for June 1989
and Institutlonal Development
for the preparatlon and - Search for appropriato policies and
appraisal of the SDA project mesnures for the implementation of thc
new population policy
Establishment of an SOA Fund
to provide operational - Implomnting a rties of priority
support to the five working actions to enourag Income generating
groups activities and to assist the
reinsertion of redundant pubile and
Es tbi lemnt of a Project parostatal agents Into the private
Preparation Fne11tty to sector
finance studies and c_munity
lvel pilot projects
b. Supporting and strengthe"nng th - Deovlopment and Implementation of
partielpatlon of the poor In future strotegies to enhance the role of
groth Women In Development
- Establishing * Fund for Employmnt
and a Fund for Community Developmnt
c. Iproving the planning and coordination - Incooration of the ocial dimensions
of soclo- eonomic policy In the development of macro-economic
prognrms and strategies
- Improved monitoring of household living
conditlono and b sic tncie-economic
Indicators