From Africa Recovery, Vol.13#2-3 (September 1999), page 32 (part of special feature on ECA conference "Financing for Development")

Cameroon: 'locked in a vicious circle'

Debt is currently the biggest obstacle to growth, Deputy Minister of the Economy and Finance Jean-Marie Gankou told Africa Recovery.

Cameroon has a positive trade balance, under 3 per cent inflation, and overall growth of around 5 per cent. But "all this is not enough. Our growth would be much more vigorous without the eternal problem of debt. Ordinary people would like to get concrete benefits from this growth. But for them, it is not yet tangible."

Debt service "takes the lion's share of our budget," he said. Of total budget receipts of some 60 bn CFA francs a month, civil service salaries are about 22-23 bn CFA francs and "[most of] the balance goes entirely into debt service. There are times when we have to dip into aid funds or take new loans in order to service our debt. That is precisely the vicious circle of debt, when you borrow to make debt payments. This mechanism has a multiplier effect such that we are locked in a vicious circle."

A recent rescheduling by the Paris Club reduced Cameroon's annual debt service from 418 bn to 318 bn CFA francs, giving the economy "some much-needed oxygen," but total debt was $9.5 bn at end-1996. A 1993 study by the UN Development Programme estimated that 40 per cent of Cameroonians were poor. A 1998 UNDP study found 51 per cent of Cameroonians in poverty. Only just emerging now from an economic crisis that started in the mid-1980s, Cameroon began structural adjustment in 1988, and had to cut public sector costs and reduce demand. "Demand management means shrinking purchasing power and other direct effects on the population's standard of living." Cameroon used to be classified as a middle-income country. "Everything is relative," Mr. Gankou observed.

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