Cameroon stagnating despite economic potential: IMF

By Tansa Musa YAOUNDE (Reuters) - Cameroon's economic growth will hit 5 percent next year, up from 4.8 percent in 2013, but expansion is masking potential economic instability and the lack of reform is stifling the country's potential, the IMF said. The Fund said that until structural problems are addressed, the oil and mineral rich nation will fall short of 80-year old President Paul Biya's target for the economy to achieve emerging market status over the next two decades. A modest crude producer in the Gulf of Guinea, Cameroon is also the world's fifth largest cocoa producer and the Central African region's bread basket, supplying food to Chad, Congo Republic, Gabon and Central African Republic. The International Monetary Fund said, however, that per capita real GDP and most social indicators have stagnated despite an abundant and diversified natural resource base. It said private sector development has also been constrained by insufficient electricity, inadequate public infrastructure, red tape, and high fuel subsidies. "Policy inertia is contributing to vulnerabilities and is a source of potential macroeconomic instability," the IMF said in the report published on Thursday. "Cameroon's ambition to become an emerging market economy by 2035 is unlikely to be achieved without an acceleration of growth," it said, adding that this will require addressing risks, public spending, and suppressing bottlenecks to boost the private sector. Cameroon's government was not immediately available to comment. If reforms are carried out, Cameroon's economic growth could climb to 5.5 percent in 2014 and hit 6.5 percent by 2018, but without reforms, it will hover around 5 percent in 2014 and 5.5 percent in 2018, IMF said. Among key reforms to be adopted, the IMF urged Cameroon to gradually reduce fuel subsidies and target the poor with social programs in order to free up resources for public investment. Cameroon and other countries in West and Central Africa are under pressure from donors to cut costly subsidies but governments fear the likely public backlash this would lead to. Retail fuel prices have been frozen since a protest in 2008. Biya, already one of Africa's longest-serving presidents, secured his sixth term in office in a 2011 election. The IMF also urged the government to clear arrears with national oil refinery SONARA, where unpaid subsidies have risen to represent 3.4 percent of GDP in 2012. The debt poses a medium risk of bankruptcy for the refinery and is a threat to the country's banking system, growth and energy supply, it added.