YAOUNDE, July 1 (Reuters) - Cameroon has cut some of its costly fuel subsidies, a move that will please international donors calling for reforms but has in the past been reversed due to the threat of protests against subsequent price rise.
Cameroon has for decades pumped oil and is a significant cocoa producer but analysts say the country’s potential has been stymied by a lack of reform and political stagnation under President Paul Biya, who has been in power since 1982.
The price of petrol and diesel on Tuesday rose by 14 and 15 percent, respectively, while a bottle of gas was up just over 8 percent, a government statement issued late on Monday said.
The International Monetary Fund has for years called for subsidies, which cost around $600 million a year, to be cut.
But recalling deadly protests over fuel prices in 2008 and neighbouring Nigeria’s failed bid to cut similar subsidies in 2012, Cameroon has repeatedly stalled the move.
The price of petrol at the pumps is now 650 CFA francs ($1.36) per litre and diesel prices have risen to 600 CFA francs, according to the statement.
The statement did not say how much the government would save from the move but said the subsidies cost 157 billion CFA francs in the first six months of this budget year.
In an effort to ease the impact of the rise in fuel prices, the government said it will start talks over increasing the minimum wage, among other measures.
The IMF said in May that Cameroon’s overall fiscal deficit for 2014 was forecast at 5.5 percent of GDP, mainly due to fuel subsidies and the expansion of a public investment programme.
The deficit was expected to reach 5.7 percent in 2015, according to the IMF.
“The cost of these subsidies remains elevated and crowds out other expenditure that could promote more inclusive growth,” the IMF said. “The mission advised the authorities to phase out these subsidies gradually and to replace them with targeted social programs.”
$1 = 478.9400 CFA francs Reporting by Anne Mireille Nzouankeu; Writing by David Lewis, editing by David Evans