(Business in Cameroon) – The Cameroonian government’s decision to intensify the collection of personal income tax (IRPP) and the local development tax has sparked public outcry. Many critics argue that this move adds financial pressure on households already burdened by value-added tax (VAT) and persistent inflation. Inflation reached 7.3% in January 2023 and is expected to decrease to 5.4% in 2024, according to official forecasts.
Finance Minister Louis Paul Motaze faced tough choices. Like many low-income nations, Cameroon sought assistance from the International Monetary Fund (IMF) to navigate external economic shocks that have driven up import costs and strained foreign currency obligations.
In July 2021, Cameroon signed two agreements with the IMF totaling $689.5 million (CFA 432 billion). These agreements were extended in December 2023 with an additional $145.4 million (CFA 91.1 billion). In January 2024, another program secured $181.7 million (CFA 113.86 billion). However, these loans came with complex reform requirements.
An IMF report published in November 2024 revealed the difficult decisions faced by Cameroonian authorities. While moratoriums were occasionally granted, the conditions of the programs restricted fiscal flexibility. For example, the government is required to reduce reliance on debt. By March 2025, Cameroon must achieve a positive non-oil primary fiscal balance of CFA 95 billion. Moreover, access to new external loans is capped.
On the revenue side, non-oil tax revenues must surpass CFA 4,500 billion in 2025. These conditions leave the government with limited options. It must balance debt restrictions, clear arrears, and increase non-oil revenue. On December 15, 2024, Cameroon expects to learn if it will receive additional IMF funding.
Expanding the IRPP base could improve tax equity. According to the OECD, income tax accounted for just 6% of Cameroon’s total tax revenue in 2022, compared to 16% on average in sub-Saharan Africa. Until now, the tax burden primarily fell on formal sector workers, neglecting other potentially lucrative economic sectors.
On a positive note, 2025 may bring further declines in import prices due to improving global conditions and a 60% drop in maritime freight costs. Yet, prices are likely to remain higher than in the past. Meanwhile, the government must improve public services, including education, healthcare, and infrastructure, while addressing taxpayers’ growing demand for accountability in public spending.
