Coming to Terms with Reality. Evaluation of the Belgian Debt Relief ...

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Annexes
We started out on this study by collecting generally available data on the economy and the
debt situation of Cameroon. Our mission to Yaoundé from November 29 to December 7,
2008 enabled us to gather additional information necessary for the present study. The
mission was organized with the collaboration of the Belgian Consul and the European
Commission Representation in Yaoundé. In the process of collecting information from the
Cameroonian authorities we met with the Minister of Finance and the Minister of
Economy and Planning, and with the Director of the Budget. For information on the HIPC
Initiative and the debt relief given by the bilateral and multilateral donors, we met with the
Permanent Secretary of the CCS/PPTE, the Director of the Debt Operations at the Caisse
Autonome d’Amortissement (CAA) and the Director of the National Institute of Statistics.
To understand the initiatives taken by the multilateral donors we met with representatives
of the International Monetary Fund, the World Bank, the African Development Bank and
the United Nations Development Program. Finally we met with representatives of France,
Germany and Canada, to obtain an understanding of the bilateral their views on and
participation in debt relief.
Our findings are presented as follows. Section 2 gives a general picture of Cameroon’s
economy and external debt during the period 1980-2000. In section 3 we describe the three
phases of HIPC Initiative at different points or periods of time (Decision Point, Interim
Period and Completion Point). In this section we also discuss the management of savings
on debt service made available through the HIPC Initiative as well as Multilateral Debt
Relief Initiative, and the French C2D initiative. In section 4 we analyze the efficiency of
the HIPC Initiative by considering the evolution of the debt stock and the debt service, the
arrears and the implementation of the conditions formulated at the Decision Point. The
effectiveness of the debt alleviation is analyzed in section 5. In this section we first
consider the evolution of the debt stock and debt service ratios and the question of the
additionality of the debt relief.
Subsequently we study the evolution of the balance of payments and of the fiscal situation.
We finish the section with an analysis of the governance indicators and of public and
private investment. In section 6 we study the impact of the HIPC and debt relief and
associated debt relief by bilateral and multilateral creditors on economic growth and on
poverty. Section 7 highlights the major challenges and risks for the country. Section 8
concludes.
Coming to Terms with Reality
2 Cameroon’s economy and debt during
the 1980-2000 period:
In this section we describe briefly the evolution of Cameroon’s economy over the period
preceding the year 2000 when Cameroon reached the Decision Point under the Enhanced
HIPC Initiative. We concentrate on the years 1980-2000.
2.1 From growth to regression and renewed progress.
Since its independence from France in May 1960 Cameroon has had a very stable political
regime. The first president, Ahmadou Ahidjo, ruled the country until November 1982 when
he resigned and was succeeded by the actual president, Paul Biya. After a multiparty system
was introduced in 1991 Paul Biya was elected in 1992 and was re-elected in 1997 and 2004.
Between 1970 and 1985 the economy was flourishing. The average annual growth rate over
this period was approximately 7.5%. As shown in figure 1 the growth rate exceeded 8% in
the early 80s. This performance was associated with sound fiscal and economic policies and
rising prices of oil and – at least in the 1970s – of other commodities.
Agriculture as well as industry and services contributed to this growth. Industry (including
oil) was the fastest growing sector with an annual average growth rate of 12.2% over the
period 1970-85 and more than 15% in the first half of the eighties. The growth rate of
agriculture was 4.2% over the years 1970-85, well above the growth of population (2.9%),
while that of services was almost 10%. As a result of the differences of sectoral growth
rates, the share of industry in GDP almost doubled, rising from 18.6% in 1970 to 36% in
1985, while the shares of agriculture and services declined respectively from 31% to
21.5% in 1985 and from 50% to 42.5%.
Figure 1 Annual growth rate of GDP (at constant prices) between 1980 and 2000:
8%
6%
4%
2%
0%
-2%
-4%
-6%
-8%
Percent 10%
-10%
Source: IFS
1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
GDP Vol Growth
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