For Cameroon, as for many other heavily indebted poor countries (HIPC), the cancellation of its multilateral debts last year marked a turning point in its history – and finally an opportunity to start anew. Much of the credit goes to Polycarpe Abah Abah, the country’s finance minister, who spearheaded efforts to restore fiscal balance, increase the transparency of the budget and restructure key state companies – allowing the West African country to qualify for HIPC debt relief.
As a result, Cameroon’s general government debt will decrease from 56% of GDP at the end of 2005 to 37.7% of GDP at the end of this year, cutting its crippling debt-service burden and freeing resources for much-awaited capital and social expenditure.
Building on his efforts so far, the minister’s top priorities will include eliminating waste and improving accounting transparency. Oil revenues, for instance, account for a quarter of the annual budget, and the country will publish its first report under the Extractive Industries Transparency Initiative next month. The next step towards budget transparency will be to publish quarterly spending reports and financial information on public enterprises.
The minister’s overriding goal is to seize the opportunity afforded by debt relief and raise spending on Cameroon’s poor. Basic services like sanitation, healthcare and education still elude half of its 17.3 million population. Income per capita is around $1,048 and, the IMF points out in its most recent country report, the population is waiting for “post-completion point dividends”. Thanks in large measure to Abah Abah’s commitment, the gains made in 2005 “bode well” for Cameroonians.
Abah Abah took office in a change of government at the end of 2004. His lacklustre predecessor left a budget deficit and a public sector plagued by corruption and waste. Abah Abah adhered strictly to the HIPC targets, shifting Cameroon’s budget balance from deficit to a surplus of 3% of GDP during 2005.
He also took on the task of readying key state firms for restructuring. The privatization of the national airline Camair is well underway, with four foreign companies short-listed in the on-going tender process. There are also detailed plans to privatize the national telecoms company Camtel and eliminate subsidies to the state oil refinery.
Earlier this year, Standard and Poor’s recognized these strengths and raised Cameroon’s sovereign credit rating to B- from CCC. The country was first rated in 2003 in an initiative by the United Nations Development Programme to help poor countries mobilize resources from private capital markets. —Maria Ahmed