Cameroon Boosts Energy Subsidies to 340 Billion CFA Francs, Defying IMF Reform Calls

Cameroon is set to increase its energy subsidy budget to 340 billion CFA francs in 2027, reversing years of cuts and keeping fuel and electricity prices under state support. The figure is 30 billion CFA francs higher than the 310 billion planned for 2026, according to the country’s 2027-2029 Medium-Term Economic and Budgetary Programming Document.

The move comes despite repeated calls from the International Monetary Fund for reform of fuel pricing. Energy subsidies will account for more than a quarter of total government transfers and subsidies, projected at 1,246.6 billion CFA francs in 2027. The increase is expected to continue in 2028 and 2029.

Cameroon had reduced fuel subsidies after the bill reached almost 1 trillion CFA francs in 2022. Petroleum subsidies fell to 640 billion CFA francs in 2023 and 263.3 billion in 2024. The 2025 finance law cut the provision to just 15 billion CFA francs. The new plan reflects pressure in the electricity sector, where low-voltage tariffs have been frozen since 2012, even as costs have risen.

The government is expected to compensate operators for part of the gap between costs and electricity sales, with payments estimated at 79 billion CFA francs in 2025 and 39 billion in 2026. For investors and lenders, the concern is that subsidies divert funds from infrastructure, health, education, and debt service, while exposing public finances to oil price swings.

Article source: allafrica.com | Image credit: Daba Finance