In early September, the government of Cameroon reached agreement with the IMF on the country’s medium term economic programme. This continues the reform initiative that underpins the current budget.

The IMF suggests that Cameroon should reach completion point under the HIPC initiative and thus qualify for substantial debt relief in 2006.

The structural triggers were agreed in 2000 when the country reached the decision point (ie entry to the HIPC initiative). Nevertheless last year’s presidential election and poor fiscal control mean that business environment reforms are still at a relatively early stage.

Cameroon’s average growth rate of 7% during the 1970s and early 1980s was achieved in a time of strong commodity prices, which boosted earnings from coffee, cocoa, cotton and oil.

However in the mid ‘80s, the fixed nominal exchange rate (linked to the French franc) led to rising macroeconomic imbalances and loss of export competitiveness.

The oil sector in Cameroon is one of the oldest in Africa and is generally considered to be in long-term decline. Although accounting for only 4% of GDP, it makes up nearly half of exports by value.

However Cameroon does have a diversified base of non-oil commodities, certainly by comparison with other oil producing countries on the continent.

Declining oil receipts have led to a narrowing of the trade surplus in recent years although this has been arrested, for the moment, given high international oil prices.

Oil revenues account for an average of 27% of total domestic government revenue, a figure that has remained relatively stable for 6 years given the trade-off between declining production volumes and rising prices.

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