A RECOVERY DRIVEN BY GAS EXPORTS

The economy remains largely dependent on commodities for its exports (in 2021, 40% crude oil, 15% cocoa, and 14% wood), with gas contributing increasingly since 2018 (17% of exports). Exports of liquefied natural gas (LNG) through the floating terminal at Hilli Episeyo will rise to 1.4 million tonnes in 2022, then 3 million in 2026, compared with 1.2 million in 2021. All other things equal, net exports of goods and services are expected to remain stable (0.7% of GDP in 2021) in a scenario of slightly lower commodity prices affecting both exported and imported products. The depletion of many oil fields, the security threat to infrastructure, and corruption should, however, still constrain exports (21.6% of GDP in 2021). The financing of the reconstruction of the Sonara refinery, which was destroyed by fire at the beginning of June 2019, still needed to be completed in 2022 after negotiations with Russian parties failed. The reconstruction would help reduce the import bill for refined oil products.

The same chronic insecurity, coupled with moderate inflation and fuel and food shortages, threatens household consumption, which is still growing below pre-pandemic levels. The government has agreed to wage increases in the public sector and subsidies on essential goods. Supporting this critical part of the local economy (66.3% of GDP in 2021), and indirectly services (56.8% of GDP) and imports (20.9% of GDP) - especially food and refined hydrocarbons - is an imperative of domestic policy, for the stabilization of the social body.

In 2023, the Cameroonian authorities intend to pursue their 2020-2030 ten-year infrastructure development plan, with a majority of private and external financing (railways, extension of the deep-water port of Kribi by a Franco-Chinese consortium, Nachtigal hydroelectric dam planned for 2024). The level of investment should therefore remain stable in the medium term (21.6% of GDP).

Once the 2022 peak is overcome, inflation is expected to return to within reach of the 3% convergence target in the economic zone by 2023-2024. This price surge is explained by imported inflation linked to food (fertilizers, cereals, livestock inputs) and refined hydrocarbons. The pegging of the CFA franc to the euro, which is expected to appreciate - implying a rise in interest rates, weak household demand, and a fall in commodity prices should help to cool price pressures.

FISCAL CONSOLIDATION FOCUSING ON FUEL SUBSIDIES

The agreement reached with the IMF in the summer of 2021, including an extended credit facility of USD 689.5 million, is being progressively implemented by Yaoundé. It is mainly a component of broadening the tax base and increasing revenue (13.9% of GDP in 2021). The program runs from 2021 to 2024, and the first disbursements (293.2 million in February 2022) are on schedule. A reduction in fuel subsidies is planned for 2023 as the primary consolidation measure (from 3.7% of GDP in 2022 to 2.6% in 2023). With domestic agents holding one-third of the debt and China and multilateral holding the rest, public debt is expected to remain stable. The tax administration is experiencing difficulties in reducing the informal sector, and revenues remain low, raising the question of debt repayment in the event of a shock.

While remaining moderate, the current account deficit could widen slightly in 2023 due to the decline in hydrocarbon exports in value and volume. Net current transfers (~0.9% of GDP) have doubled in current dollar terms since 2012 without making the country dependent on public aid. Increased FDI and external borrowing from multilateral and bilateral partners should finance the current account imbalance.

POLITICAL IMPASSES AND SECURITY RESPONSE

The succession of 90-year-old Paul Biya could lead to a regime crisis. The presidential party won the last legislative elections in 2020, which were sealed off by fraud. Protests are suppressed, although the government is making some gestures. The Anglophone separatist rebellion continues to fight, accompanied by abuses from all sides. Faced with this uprising by the self-proclaimed Ambazonia, as well as Islamist groups on the Nigerian border and unrest in civil society, the military response is backed up with detailed proposals, such as the autonomy of the rebel province, subsidizing essential products in 2022 (fuel and food) in response to inflation, as well as the 'development of the Northern part of the National Triangle' subject to the subversion of Boko Haram and the Islamic State. However, it is unlikely that these measures will be enough to reduce tensions.

On the external front, Cameroon is looking to diversify its alliances, renewing its military cooperation with Russia through a five-year treaty in April 2022. Western countries remain significant partners. France wants to reaffirm its presence by influencing the granting of aid by the IMF and by a EUR 230 million loan from the French Development Agency in February 2022 for projects running until 2024.