Cameroon shaves 2010 budget by 2 pc

YAOUNDE (Reuters) - Cameroon said on Friday it was shaving two percent off its 2010 budget spending plans after the global financial crisis hit its domestic economy.
The oil-producing African state boosted its 2010 budget 11.4 percent over 2009 to 2.570 trillion CFA francs but has come under pressure from the IMF to reevaluate spending, with the Fund judging that oil production had been overstated.

But so far authorities had resisted the IMF advice as hard to implement, especially in relation to the state subsidies on food and fuel for a population dogged by widespread poverty.

"As a result of the negative impact of the crisis, the president of the republic has instructed us to take measures to ensure prudent, rigorous management of the state budget," Finance Minister Lazarre Essimi Menye said.

Essimi Menye told a news conference the state budget would be cut to 2.520 trillion francs, with the saving to be reinvested in long-term projects.

Economic growth is seen rising from 2 percent last year to around 2.6 percent this year and just over 3 percent in 2011, lagging the region as a whole and barely keeping pace with the annual rise in the population.

Cameroon's imports include everything from rice, wheat and crude oil to paper and pharmaceutical products.

The cost of many products is so high that the ordinary Cameroon cannot buy them, forcing the state to subsidise them.

As an example, he cited the price of petrol which has been subsidised to the tune of 90 billion CFA this year to make the price per litre within reach of the majority of the people.

Essimi Menye said Cameroon needed to develop its processing sector to add value to its exports including crude oil, timber, cocoa, coffee, rubber, aluminium and cotton.

He confirmed that the government is yet to issue Treasury Bonds to raise 200 billion CFA as provided for when the 2010 budget, but gave no precise timeframe on when that might happen.