The International Monetary Fund (IMF) has approved the disbursement of 226 million US dollars to Cameroon to help it deal with the economic fallout of coronavirus.
The support under the Rapid Credit Facility (RCF) will help to support the authorities’ efforts in addressing Cameroon’s urgent balance of payment needs stemming from the COVID-19 pandemic and the terms of trade shocks from the sharp fall in oil prices.
The IMF also approved Cameroon government’s request for an extension of the Extended Credit Facility (ECF) arrangement, due to expire on June 25, 2020, to September 30, 2020 with a rephasing of access.
According to the IMF a significant deterioration of the macroeconomic outlook and weakening of fiscal situation in Cameroon, driven by the drop of revenue in combination with additional direct health and social expenditures, urgent external and fiscal financing needs have emerged.
The support will help to fill immediate external needs and preserve fiscal space for essential COVID-19-related health expenditure. It is also expected to help catalyze additional donor support.
Cameroon has recorded 2,077 coronavirus cases with 64 deaths. Number of recoveries stand at 953.
“Cameroon is facing serious challenges from the twin Covid-19 pandemic and terms of trade shocks. Weak global demand, depressed commodity prices, and domestic containment measures weigh on the outlook, and are causing significant adverse economic and social effects. The shocks have given rise to substantial fiscal pressures and an urgent balance of payments need,” Mr. Mitsuhiro Furusawa, Deputy Managing Director and Acting Chair of the IMF said.
“The authorities are taking decisive actions to limit the spread of the virus and its economic and social impact. They have implemented strong crisis containment and mitigation measures and are scaling up spending to bolster their health response. Additional measures currently under consideration will provide support to vulnerable households and firms.”
“Given the sudden and pressing nature of the shocks, accommodative fiscal and monetary policies are warranted to mitigate the human and economic impact of the outbreak. However, the authorities remain committed to their reform agenda under the ECF arrangement. They plan to undertake adjustments to return to the fiscal consolidation path once the crisis abates to safeguard debt sustainability and ensure a strong recovery.”
“IMF emergency financing under the RCF will support the government’s efforts to mitigate the impact of the twin shocks. Additional assistance from development partners will be critical to fill the remaining financing need. Strict budgetary controls and transparency will be needed to ensure that the assistance under the RCF meets its intended objectives.”