Lessons from Experience with Ex-ante Poverty Impact Assessments of Macroeconomic Policies in Cameroon. Samuel Fambon FSEG University of Yaounde II Cameroon.
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Lessons from Experience with Ex-ante Poverty Impact Assessments of Macroeconomic Policies in Cameroon
FSEG University of Yaounde II
NEWS RULES FOR GLOBAL FINANCE NEWS RULES FOR GLOBAL FINANCEINTERNATIONAL WORKSHOP ON“Experiences with Ex-ante Poverty Impact Assessments of Macroeconomic Policies in Bangladesh, Cameroon, Ghana, the Philippines, and Nepal”Washington, 13-16 March 2005
. This study aims to analyze the various constraints presently associated with the implementation of methodologies for an ex-ante evaluation of macroeconomic policy impacts on poverty in Cameroon. A better understanding of these constraints could result not only in a better estimation of these impacts, but also in the formulation of more efficient poverty reduction policies.
. The specific objectives of the study are the following:
- to carry out a brief review of the methodologies presently used in the ex-ante evaluation of macroeconomic policy impacts,
. Methodology: To attain the objectives, we used descriptive analysis, interviews, and a review of the major studies relating to this theme.
2. The Cameroon Economy
2.1 Brief Review of the Socio-economic Situation in Cameroon
- This crisis was brought about by internal (poor management of the economy which led to the overvaluation of the CFAF real exchange rate during more than one decade preceding the devaluation of the CFA franc in 1994,etc…) as well as external factors (fall in the prices of primary products (especially oil) and the depreciation of the US dollar, high level of external debt service.).
- the “successful” implementation of adjustment measures, and particularly the implementation of the ESAF program, and the adoption of an Interim Poverty Reduction Strategy Paper (I-PRSP) in August 2000 allowed Cameroon to implement a second three-year economic and financial program supported by the IMF in the context of the Poverty Reduction and Growth Facility (PRGF), covering the October 2000-September 2003 period .
- Tables 2 and 3 show the evolution of monetary Poverty and Inequality Profile in Cameroon during 1996-2001 period.
- the present economic policies of Cameroonian Government are presented in the PRSP and are the following:
- the promotion of a stable macroeconomic framework;
- the improvement of the institutional framework, administrative management, and governance. Priority sectors in this poverty reduction strategy are the educational sector, the health sector, and basic infrastructures.
3. Methods used in the ex-ante evaluation of macroeconomic policy impacts on poverty
- Some of these models have recently been built to help in the design of poverty reduction policies, and to provide a greater ownership of the poverty reduction strategy process to governments of developing countries, while other were not initially constructed to analyze macroeconomic policy impacts on poverty.
- Some models we presented in this paper are the following:
* The Financial Programming Model (FPM), which is a dynamic monetarist framework developed by the IMF in the early 50’s. Actually, it remains at the center of the domestic analysis on which IMF conditionalities are based (for example, Poverty Reduction and Growth Facility (PRGF) reports).
- This model was implemented by the World Bank since 1973, and a variant of this financing gap model is used by more than 90 percent of World Bank country economists to make projections of growth and the financing gap.
- However, at the structural level, the RMSM-(X) model is unable to capture distributive policy impacts. The labor market, poverty, and income distribution concerns are not incorporated into the model.
. The RMSM-X (+LP) Model: To compensate for the drawbacks of the RMSM-X model and establish a link between the microeconomic and macroeconomic variables, in addition to growth and poverty reduction strategies, the World Bank has developed a RMSM-X version called the RMSM-X(+LP) model.
- This model is basically a macroeconomic module of the standard RMSM-X combined with two modules related to poverty and social indicators (i.e. health and education). It helps analyze the impact of macroeconomic shocks on
poverty through a poverty equation which links the incidence of poverty with the inflation rate, the living standard, the rate of economic growth, the degree of trade openness, public spending on education and health, and income inequality.
. The SIPAE Model which is Cameroon’s macro-econometric framing model, constructed with the aim:
- The integrated macroeconomic model for poverty analysis (IMMPA) developed by the World Bank is a more elaborate computable general equilibrium model based on a framework which put emphasis on the role of labor market segmentation, the role of informal sector employment in the transmission of policies and exogenous shocks on the poor, and the adverse effect of external indebtness on private investment incentives.
. Strictly speaking, there exist no institution with the mandate and resources for analyzing and modelling the ex ante impact of macroeconomic policies on poverty in Cameroon.
. Considering the manner in which international organizations and donors have helped relieve capacity constraints in the analysis and modelling of the ex-ante macroeconomic policy impacts on poverty in Cameroon, we may note that the UNDP and the World Bank have been of great assistance regarding the development of capacities and the utilization of tools for analysis