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Cameroon continues to sink into more trade deficit


Cameroon continues to dig deeper into its trade deficit, which raises major concerns regarding its balance of payments. Indeed, in 2021, the account balance (CA) of the country was -1.795 billion, or -3.959% of GDP. This means that Cameroon imported more goods and services than it exported, and it also had a net outflow of primary income (such as dividends and interest payments). The capital and financial account (CF) was also in deficit, at -$1.590 billion. This means that Cameroon invested more in foreign assets than foreign investors invested in Cameroonian assets.

The deficit in the CA and CF is a sign that Cameroon is not generating enough foreign exchange to meet its obligations. This can lead to a number of problems, such as a decline in the value of the Cameroonian franc, inflation, and a shortage of foreign goods and services.

There are a number of factors that contribute to Cameroon's balance of payments deficit. One factor is the country's high import bill. Cameroon imports a wide range of goods, including food, fuel, and manufactured products. The country's exports, on the other hand, are limited to a few commodities, such as oil, cocoa, and coffee.

Cameroon imports a wide range of goods, including food, fuel, and manufactured products. The country's exports, on the other hand, are limited to a few commodities, such as oil, cocoa, and coffee. This means that Cameroon is spending more money on imports than it is earning from exports.

Cameroon has a number of investment opportunities, but the country's political instability and poor infrastructure have discouraged foreign investors. This means that Cameroon is not getting the capital it needs to grow its exports and reduce its imports. Thus, the country has a low level of foreign investments.

Moreover, Cameroon’s productivity is low, which means that it takes more workers to produce a unit of output. This makes Cameroon's goods less competitive on the global market, which leads to lower exports.

And lastly, the Cameroonian franc also known as the CFA of Central Africa, is overvalued, which makes Cameroon's exports more expensive and its imports cheaper. This makes it more difficult for Cameroonian exporters to compete in the global market.

The government of Cameroon is aware of the problems posed by the balance of payments deficit. The government has implemented a number of measures to address the deficit, such as reducing imports, promoting exports, and attracting foreign investment. However, these measures have had limited success so far.

These measures have not been very successful because government spending and government deficits are also very large. So long as the Cameroonian government will continue to increase its spending and budget deficit, the balance of payments will also remain large and unbalanced.

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