Posted by Manal Fouad and Edouard Martin (IMF's Fiscal Affairs Department)
Cameroon's dialogue with the Fund on fiscal transparency issues goes far back. Hence, Cameroon was one of the two pilot countries to experiment with the fiscal module of Reports on the Observance of Standards and Codes (ROSC), when the Fund launched the initiative in 1999.
Eleven years later, a ROSC reassessment shows that Cameroon has made important strides to comply with the principles of the IMF Code of Good Practices on Fiscal Transparency. Such progress is the result of an active government engagement towards improving public financial management and transparency, which is now set as one of the objectives of the budgetary process. Consistent with this engagement, numerous reforms have been implemented to improve transparency, some with the help of development partners and with technical assistance from the IMF. For instance, Cameroon joined the Extractive Industries Transparency Initiative (EITI) in March 2005, creating in the process a platform for dialogue on public finance involving representatives of government, donors and lenders, and civil society. Also, a new budget system law, encompassing modern PFM techniques and generally in line with international good practices was promulgated in 2007; its provisions are expected to be fully in place by 2012. During its discussions in Yaoundé, the authors of the report met with the community of NGOs, journalists, and other stakeholders, who were outspoken and keenly interested in transparency issues and in working toward high standards for their country.
The ROSC reassessment finds that, like in many other countries, Cameroon’s legal and regulatory framework governing public finance is clear and sound, but its application departs from the requirements of the Code of Good Practices on Fiscal Transparency.
There are transparency areas where Cameroon fares comparatively well. For example:
· The entities making up the public sector are clearly defined in the law.
· In the field of tax policy and tax administration, rules and procedures are clear and a number of brochures and manuals are available to explain procedures.
· Budget preparation and execution follow basically sound principles.
· Quasi-fiscal activities are limited.
· Procurement rules meet international standards (although they are not strictly followed in practice).
· Budgetary information is generally available to the public, but ironically, most information is provided by non-governmental websites on a timelier basis.
But some remaining weaknesses need to be addressed. For example:
· Two fundamental weaknesses that hamper the budget process: first, the spending chain is somewhat fragmented, with recourse to parallel execution circuits to bypass what is seen as cumbersome procedures; second, there are weaknesses in the accounting system that prevent the preparation of reliable data on arrears and restes à payer.
· The integrity of the budget execution process is also weakened by the lack of proper external control function, as the Audit office lacks legal and material means, while the CONSUPE’s audits remain internal and with little follow up.
· There is no medium-term perspective to public finances, let alone a long-term perspective. This is a major flaw for a country with large development spending needs and declining oil reserves such as Cameroon.
The ROSC report also devotes an annex to the transparency in oil resource management. It concludes that transparency in managing oil revenue has improved significantly, but again, there are some gaps in implementation that depart from the provisions of the legal and regulatory frameworks. The procedures for awarding mining licenses and the financial obligations of oil companies are well established but leave a degree of discretion to the government. The role played by the national oil company (SNH) extends beyond that of most oil companies as its mandate stipulates that it will act as the government arm in all the oil sector’s dealings with the budget. This leaves the ministry of finance with little capacity to monitor and independently control the financial aspects of oil operations. And while this role is defined transparently, in practice, some of the operations SNH performs on behalf of the government, and the oil revenues financing these operations, are not always transparently reported on the government accounts. Finally, while SNH publishes its annual financial statements on its website, the report notes that there are no external audits of the company by a reputable firm.
A number of recommendations are made in the report to remedy the existing deficiencies in fiscal transparency. Many of them are straightforward, and a number are already in the 2007 law but need to be implemented. Others may have to take more time due to capacity constraints. The IMF’s Fiscal Affairs Department and the IMF’s Regional Technical Assistance Center (AFRITAC Central), continue to provide technical assistance to Cameroon in the PFM area to support the government in its efforts. These reforms will all prove very important as Cameroon has set itself ambitious objectives in public finance, including in the areas of decentralization and program-based budgeting for which sound and transparent PFM is a pre-requisite.
 CONSUPE is the French acronym (Contrôle Supérieur de l’État) for the Superior Government Oversight Board.
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