When Cameroon’s parliament reconvenes on Wednesday, June 10, it will be presented a Rectified Finance Law which would be 11 per cent lower than the original 2020 Finance Law that was passed in November, 2019. The slash has been occasioned by the negative effects of the COVID -19 pandemic on national revenue.
This drop in revenue affects mostly the crude oil sector on which Cameroon heavily depends to finance its development efforts. The drop in the oil sector is expected to be between 40 per cent and 70 per cent, according to the National Hydrocarbons Corporation.
A decree to this effect was signed by President Paul Biya on June 3 and this would be presented for ratification during the June 10 National Assembly session.
In effect, the 2020 budget which stood at 4,951.7 billion FCFA (9.90 million dollars ) when it was passed in November last year will now stand at 4,409 billion FCFA (8,818 million dollars), a reduction of 542 billion FCFA (1,084 million dollars) in absolute value.
A related effect of the COVID -19 pandemic on the national budget is the creation of the Special National Solidarity Fund for the Fight Against the novel coronavirus and its Economic and Social Effects which would be furnished with 180 billion FCFA (360 million dollars).
This money would be raised through contributions by development partners as well as moral and fiscal persons.
The money contributed into this fund would be used in reinforcing the sanitary system, the reinforcement of research and production of local pharmaceutical products and reinforcement of resilience against the economic and social effects of COVID -19.
A corollary effect of the budgetary reduction would be a corresponding reduction in the initial allocations to the various ministries, including the Presidency of the Republic which initial budget would be reduced by 15 billion FCFA (30 million dollars), according to an unimpeachable source in the Ministry of Finance.
“The only public institutions that would not be affected by these budgetary cuts are the National Assembly, the Senate and the National Elections Commission which is currently preparing for the organisation of the first regional elections in the history of Cameroon which are slated to take place in October, this year,” the source told HumAngle in Yaounde on Monday.
In a related development, the International Monetary Fund (IMF) has announced that the coronavirus pandemic will negatively affect the annual growth index of Cameroon which was originally previewed at four per cent to -1.2 per cent.
“The growth of the public investment budget would see a drastic drop to -1.2 per cent, representing more than five per cent less than the pre-pandemic projection,” IMF stated.
“The pandemic has brought about a substantial deterioration in the world economic environment, reflecting a combination of global shocks in supply and demand. Besides other expected external shocks on Cameroon, the country is confronted by a rapid augmentation in the number of persons infected” by COVID -19, the fund explained.
The international finance institution stated that “the pandemic would occasion new perturbations in production factors both in capital and manpower in the country as well as a withdrawal of credit and economic losses resulting from deaths and the effects of negative confidence.”