In an Ordinance signed on 4 June 2018, the President of the Republic of Cameroon amended and supplemented certain provisions of the Finance Law 2018 and effectively repealed the Ordinance of 9 April 2018 creating budget chapters and opening credits on behalf of the Constitutional Council and the Ministry of Decentralization and Local Development. Cameroon’s new budget is set at 4689.5 billion CFA francs.
The President of the Republic of Cameroon Paul Biya has signed, as authorized by the Constitution, an Ordinance on June 4, 2018 amending and supplementing certain provisions of the Cameroon Finance Law for the 2018 fiscal year. It devotes an increase in the State budget from 4513.5 billion CFA Francs to 4689.5 billion CFA Francs, an increase in absolute value of 176 billion CFA Francs and 3.9% in relative value.
The reasons for the budgetary upturn
This increase is mainly due to the rise in world oil prices, whose weighted sales hypotheses in the 2018 Finance Law forecast stood at 41 US dollars, is the main cause of this improvement. The price of a barrel of oil is now around 64 US dollars. This leads to an increase in oil revenues of 82 billion CFA francs over the initial forecast.
The performance of the tax administration in collecting non-oil revenues should also be taken into account in this upturn. Actual tax revenues at the end of 2017 were higher than estimated at the time of budget preparation and used as the basis for tax revenue projections in 2018. Taking this good performance into account as a basis for forecasting increases tax revenues by CFAF 67 billion. The tax burden will thus rise from 13.1% of GDP in 2017 to 13.4% in 2018.
In addition, at the level of financing, fluctuations in the dollar exchange rate and the risk linked to the possible non-disbursement of budget support from the African Development Bank (ADB) expected in 2018 of an amount of 118 billion CFA francs impact the level of expected budget support. However, the disbursement in 2018 of AfDB budget support planned in 2017, up to the same amount, will offset the undisbursed support in 2018. All things that place the level of budgetary support from 2018 at 334 billion CFA Francs against an initial forecast of 347 billion CFA Francs.
Moreover, additional resources from bank financing in the order of CFAF 40 billion are also expected, thanks to the return to the Treasury of the balances of closed funds.
Redistribution of resources
The additional resources thus generated will be directed towards a certain number of priority expenditures. These include a provision of 77 billion to cover expenditure related to fuel price support at the pump in order to preserve the purchasing power of the poor.
In the same spirit, the setting up of a provision of 20 billion CFA Francs to support the price of electricity. Moreover, the strengthening of the provision of support to the defence and security forces by an increase of 32 billion CFA francs and an upward adjustment of 18 billion CFA francs in expenditure related to the organization of the forthcoming elections.