Economic crisis of Cameroon
Encyclopedia
The Cameroonian economic crisis was a downturn in the economy of Cameroon
from the mid-1980s to the early 2000s. The crisis resulted in rising prices in Cameroon
, trade deficits
, and loss of government revenue. The government of Cameroon acknowledged the crisis in 1987. Outside observers and critics blamed poor government stewardship of the economy. The government instead placed the blame on the fall of the prices of export commodities, particularly a steep drop in the price of petroleum
. President Paul Biya
announced that "all our export commodities fell at the same time."
Cameroon's trade partners, particularly France
, Germany
, and the United States
, offered to help the country, but Cameroon balked at their condition that the country follow strict cost-cutting suggestions laid out by the International Monetary Fund
(IMF). Instead, Cameroon formulated its own plan. Civil servants
lost access to subsidised
electricity, housing, and telephones; parts of the government's vehicle fleet were sold; older civil servants were forced into retirement; the official working schedule was changed; economic missions in foreign embassies from Cameroon were closed; and state and parastatal enterprises were privatised
. The 1987–1988 budget reduced government spending by 18%, the first time in the country's history that the budget decreased.
The measures met with international approval, but violent crime
rose as a result. Cameroon's plan also failed to rein in corruption
. By October 1988, the intended effect was less than had been hoped, and Cameroon agreed to an IMF aid package worth $150 million and accepted a structural adjustment
program (SAP) loan from the World Bank
. The African Development Bank
, France, Germany, and the United Kingdom
loaned the government further funds. Cameroon has since focused on paying off its international debt and further restricting public salaries and pay rises to civil servants. Its economy had mostly recovered by the early 2000s.
Economy of Cameroon
For a quarter-century following independence, Cameroon was one of the most prosperous countries in Africa. The drop in commodity prices for its principal exports —petroleum, cocoa, coffee, and cotton — in the mid-1980s, combined with an overvalued currency and economic mismanagement,...
from the mid-1980s to the early 2000s. The crisis resulted in rising prices in Cameroon
Cameroon
Cameroon, officially the Republic of Cameroon , is a country in west Central Africa. It is bordered by Nigeria to the west; Chad to the northeast; the Central African Republic to the east; and Equatorial Guinea, Gabon, and the Republic of the Congo to the south. Cameroon's coastline lies on the...
, trade deficits
Balance of trade
The balance of trade is the difference between the monetary value of exports and imports of output in an economy over a certain period. It is the relationship between a nation's imports and exports...
, and loss of government revenue. The government of Cameroon acknowledged the crisis in 1987. Outside observers and critics blamed poor government stewardship of the economy. The government instead placed the blame on the fall of the prices of export commodities, particularly a steep drop in the price of petroleum
Petroleum
Petroleum or crude oil is a naturally occurring, flammable liquid consisting of a complex mixture of hydrocarbons of various molecular weights and other liquid organic compounds, that are found in geologic formations beneath the Earth's surface. Petroleum is recovered mostly through oil drilling...
. President Paul Biya
Paul Biya
Paul Biya is a Cameroonian politician who has been the President of Cameroon since 6 November 1982. A native of Cameroon's south, Biya rose rapidly as a bureaucrat under President Ahmadou Ahidjo in the 1960s, serving as Secretary-General of the Presidency from 1968 to 1975 and then as Prime...
announced that "all our export commodities fell at the same time."
Cameroon's trade partners, particularly France
France
The French Republic , The French Republic , The French Republic , (commonly known as France , is a unitary semi-presidential republic in Western Europe with several overseas territories and islands located on other continents and in the Indian, Pacific, and Atlantic oceans. Metropolitan France...
, Germany
Germany
Germany , officially the Federal Republic of Germany , is a federal parliamentary republic in Europe. The country consists of 16 states while the capital and largest city is Berlin. Germany covers an area of 357,021 km2 and has a largely temperate seasonal climate...
, and the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
, offered to help the country, but Cameroon balked at their condition that the country follow strict cost-cutting suggestions laid out by the International Monetary Fund
International Monetary Fund
The International Monetary Fund is an organization of 187 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world...
(IMF). Instead, Cameroon formulated its own plan. Civil servants
Civil service
The term civil service has two distinct meanings:* A branch of governmental service in which individuals are employed on the basis of professional merit as proven by competitive examinations....
lost access to subsidised
Subsidy
A subsidy is an assistance paid to a business or economic sector. Most subsidies are made by the government to producers or distributors in an industry to prevent the decline of that industry or an increase in the prices of its products or simply to encourage it to hire more labor A subsidy (also...
electricity, housing, and telephones; parts of the government's vehicle fleet were sold; older civil servants were forced into retirement; the official working schedule was changed; economic missions in foreign embassies from Cameroon were closed; and state and parastatal enterprises were privatised
Privatization
Privatization is the incidence or process of transferring ownership of a business, enterprise, agency or public service from the public sector to the private sector or to private non-profit organizations...
. The 1987–1988 budget reduced government spending by 18%, the first time in the country's history that the budget decreased.
The measures met with international approval, but violent crime
Violent crime
A violent crime or crime of violence is a crime in which the offender uses or threatens to use violent force upon the victim. This entails both crimes in which the violent act is the objective, such as murder, as well as crimes in which violence is the means to an end, such as robbery. Violent...
rose as a result. Cameroon's plan also failed to rein in corruption
Political corruption
Political corruption is the use of legislated powers by government officials for illegitimate private gain. Misuse of government power for other purposes, such as repression of political opponents and general police brutality, is not considered political corruption. Neither are illegal acts by...
. By October 1988, the intended effect was less than had been hoped, and Cameroon agreed to an IMF aid package worth $150 million and accepted a structural adjustment
Structural adjustment
Structural adjustments are the policies implemented by the International Monetary Fund and the World Bank in developing countries. These policy changes are conditions for getting new loans from the International Monetary Fund or World Bank, or for obtaining lower interest rates on existing loans...
program (SAP) loan from the World Bank
World Bank Group
The World Bank Group is a family of five international organizations that makes leveraged loans, generally to poor countries.The Bank came into formal existence on 27 December 1945 following international ratification of the Bretton Woods agreements, which emerged from the United Nations Monetary...
. The African Development Bank
African Development Bank
The African Development Bank Group is a development bank established in 1964 with the intention of promoting economic and social development in Africa...
, France, Germany, and the United Kingdom
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
loaned the government further funds. Cameroon has since focused on paying off its international debt and further restricting public salaries and pay rises to civil servants. Its economy had mostly recovered by the early 2000s.