Modernising public finances II

Project details

Title: Modernising public finances II
Commissioned by: German Federal Ministry for Economic Cooperation and Development (BMZ)
Country: Cameroon
Lead executing agency: Ministère des Finances
Overall term: 2017 to 2020

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Context

As a low- to medium-income country, Cameroon is struggling to overcome considerable obstacles to development. According to the World Bank, Cameroon’s average per-capita income in 2017 was USD 3,359, making it one of the poorest countries in the world.

Cameroon’s Vision 2035 and its national development strategy are designed to improve the situation of the population. They focus on growth, employment and good governance, and cross-cutting issues include combating poverty and fostering gender equality.

These goals are currently being achieved through a reform of public finances, the introduction of results-oriented budgeting and strict coordination of planning, programming, budgeting and evaluation. For this to be successful, instruments and procedures must be introduced that ensure that budget planning, preparation and implementation are coordinated. It is also important that tax revenues are being increased. This calls for action not only by the government but also by the private sector and Cameroon’s technical and financial partners.

Up to now, the Government of Cameroon has not succeeded in implementing the national development strategy to a sufficient extent through its national budget. Budget estimates are being adjusted, contrary to the specified plans, but are not being documented and justified in a transparent manner. Tax revenues are low: they amounted to 13.1 per cent of gross domestic product (GDP) in 2017, according to data from the International Monetary Fund (IMF). Only 110,000 people in Cameroon regularly pay taxes out of a population of around 24 million.

Objective

The system of public finances is more performant.

Approach

This project aims to improve the performance of the system of public finances. It is helping to ensure that the priorities of the national development strategy are better reflected in the programme budgets, that the implementation of these is monitored, and that deviations are documented transparently. Advisory services are provided as part of two fields of activity.

The project advises the Ministry of Finance, the Ministry of Economy and two sectoral ministries. The aim is to better coordinate long- and medium term financial planning and improve the controlling function of its expenditure. Gender equality is being promoted by means of gender analyses and the preparation of gender-sensitive programme budgets. The German consulting company AMBERO is supporting the project in this area.

The project is advising the Directorate General of Taxation (Direction Générale des Impôts, DGI) on the development and implementation of a strategy that will result in more people meeting their tax obligations. This relates particularly to the processes for company audits and the risk-based selection of cases for these controls. This process is facilitated by the FUSION IT system, which compares tax and customs data.

Another objective is that the tax administration in Cameroon is able to better implement its modernisation plan. In this regard, advice is being provided to the tax administration on the monitoring and evaluation of project implementation of projects and on strategic issues relating to the measures contained in the modernisation plan.

Results

In 2017, the performance of the Cameroonian tax administration was evaluated on the basis of TADAT (Tax Administration Diagnostic Assessment Tool). On the donor side, Germany was the lead partner for this evaluation. Since the evaluation was well prepared and implemented, the US Treasury decided to engange in a programme of technical cooperation with the Cameroonian tax authority.

As part of the collaboration between the tax and customs authorities that is being supported through the FUSION IT platform, a cross checking of data from the last two years (2016,2017) revealed thousands of importers known to the customs authority that the tax authority were not aware of and that had not paid taxes for long periods. As a result, potential additional tax revenues of around 12 million euros were identified that could be collected by the government.

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