VZCZCXRO5871
RR RUEHBZ RUEHDU RUEHGI RUEHJO RUEHMA RUEHMR RUEHPA RUEHRN RUEHTRO
DE RUEHYD #0999/01 2890629
ZNR UUUUU ZZH
R 150629Z OCT 08
FM AMEMBASSY YAOUNDE
TO RUEHC/SECSTATE WASHDC 9316
INFO RUEHZO/AFRICAN UNION COLLECTIVE 0223
RHMFISS/HQ USAFRICOM STUTTGART GE
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS SECTION 01 OF 02 YAOUNDE 000999 
 
SIPDIS 
SENSITIVE 
 
STATE ALSO FOR AF/C AND AF/EPS 
 
E.O. 12958: N/A 
TAGS: ECON EFIN ETRD KCOR CM
SUBJECT: CAMEROON: MONEY, MONEY EVERYWHERE, BUT HOW'S IT BEING 
SPENT? 
 
¶1.  (SBU)  Summary.  Despite pressing development needs and years of 
programs 
to improve government spending and budget execution, the Government 
of 
Cameroon continues to fall short of targets for badly-needed public 
 
investment.  Over the first six months of 2008, the GRC's total 
receipts ($2.2 
billion) and expenditures ($2 billion) were higher than the same 
periods in 
2007, but fell short of FY08 targets.  The GRC reaped the benefits 
of high 
world oil prices and improved management in the Department of 
Customs, but 
continued to splurge on questionable costs and underspend on 
investment.  End 
summary. 
 
¶2.  (U)  On October 1, Cameroon's Ministry of Finance (MINFI) 
publicly 
released data on the GRC's budget performance through the first half 
of the 
2008 fiscal year, which runs January 1 to December 31.  The FY08 
budget is 
driven by the 2008 Finance Law, passed in December 2007, which 
called for a 
balanced budget of 2.3 trillion CFA ($4.6 billion), a slight (1.1%) 
increase 
over FY07.  A September 23 Presidential Decree (issued without being 
presented 
to the National Assembly) retroactively legitimated a number of 
mid-year 
revisions (especially government measures taken in response to the 
February 
riots). 
 
Money, Money Everywhere... 
-------------------------- 
 
¶3.  (U)  The GRC took in 1.1 trillion CFA ($2.2 billion) in the 
first half of 
2008, a 25 percent increase over the same period in the previous 
year.  Non- 
oil receipts rose 8 percent (to $1.4 billion), but the bulk of the 
increase 
came from oil receipts, which rose more than 75 percent, from $464 
million to 
$812 million, on the back of higher world prices (and despite a 
slight 
reduction in Cameroon's production). 
 
¶4.  (U)  Customs receipts rose 13 percent to 208 billion CFA ($416 
million) in 
the first semester, an increase all the more notable in light of the 
customs 
exonerations granted in April as part of the GRC's response to 
public 
frustration with rising commodity prices (which erupted into social 
unrest in 
February).  The GRC credits the "good administration of the customs 
service" 
and an increase in economic activity for the strong showing. 
 
¶5. (U)  Cameroon received 61 billion CFA ($122 million) in foreign 
aid in the 
first six months of 2008, a 45 percent increase over first semester 
¶2007.  Of 
this amount, $62 million was grants and $60 million was project 
loans. 
 
...But Not a Dollar to Spend 
---------------------------- 
 
¶6.  (U)  During the same period, the GRC spent 982 billion CFA ($2 
billion), 
which is 20 percent higher than the previous year but still only 90 
percent of 
projected spending.  The public service payroll rose 32 percent to 
$526 
million, largely due to the across-the-board salary raise (which 
took effect 
in April) granted as part of the GRC's stimulus program in the wake 
of the 
February unrest, and to the recruitment of new officials in the 
police and 
education ministries.  The burden of the public wage bill as a 
percentage of 
 
YAOUNDE 00000999  002 OF 002 
 
 
the total budget remained relatively unchanged, however, at 31 
percent. Taken 
as a whole, the GRC continued to underspend its budget on goods and 
services, 
with an outlay of only $446 million, 94 percent of what had been 
budgeted. 
Embassy contacts with international financial institutions 
indicated, however, 
that the GRC is overspending its domestic resources (which come with 
little 
oversight) and underspending resources from international sources 
(like the 
French C2D assistance program). 
 
¶7.  (U)  The $348 million windfall in petroleum receipts was largely 
expended 
to subsidize domestic fuel consumption, costing the GRC more about 
$300 
million in the first half of 2008. 
 
¶8.  (U)  The IMF has repeatedly chastised the GRC for its perennial 
poor 
execution of the investment budget, a problem that persisted in 
¶2008.  The GRC 
spent $440 million of its investment budget, which is 64% higher 
than the 2007 
figure, but still short (at 88 percent) of the program target.  The 
special 
accounts established as part of the Highly Indebted Poor Country 
(HIPC) 
Initiative fared worse; spending from the HIPC accounts, which is 
supposed to 
address priority sectors, stood at $47 million, far short of the $70 
million 
targeted. 
 
¶9.  (SBU)  Also noteworthy are some expenses not mentioned in the 
data, but 
obtained by Post through other sources.  The GRC has failed to keep 
up with 
payments (intended to stabilize domestic oil prices) to SONARA, the 
national 
oil refinery, accumulating a $70 million debt that will need to be 
repaid in 
the second semester of FY08.  (This debt climbs to $140 million when 
the 
military's unpaid fuel bill is included.)  The GRC purchased the 
"Dja," a 
Boeing 767-300 that had been leased to the now defunct CAMAIR 
national airways 
by Ansett Worldwide, for a reported price of $70 million (to be 
tallied on the 
second semester budget table). 
 
Comment: Cameroon's Financial Paradox 
-------------------------------------- 
 
¶10.  (SBU)  There is an almost universal assumption here that 
Cameroon has 
failed to develop because it is poor.  The data tell a different 
story Q that 
the Cameroon government has ample money but is not spending it 
effectively.  A 
90% budget execution rate might be acceptable in a context where the 
need for 
development was not so urgent.  Additionally, Cameroon has failed to 
draw down 
funds made available through the Global Fund, the World Bank, the 
HIPC 
process, various development agencies and, for more than 7 years 
running, even 
its own budget.  The money it spends rapidly (e.g., for the Dja) is 
sadly not 
oriented towards the nation's pressing priorities (e.g., for medical 
 
supplies).  Cameroon's budget problems epitomize a broader reality: 
good 
governance, not money, is the missing ingredient for Cameroon's 
development. 
 
Fox.