financial flows between Cameroon and the rest of the world. It also emphasizes inter- and intra-sectoral flows of funds and the accumulation process to shed more light on the structure of the Cameroonian economy and to allow for ex-ante simulations of growth and income effects of increased public investment and recurrent expenditures.

# **III. An IMMPA-Based Financial SAM for the Cameroonian Economy**

Cameroon’s financial SAM draws on the prototype IMMPA framework and can be viewed as a combination of the flow-of-funds (FOF) and social accounting matrix (SAM) approaches to macroeconomics.<sup>25</sup> It is comprehensive and provides details of the real-financial transactions and flows that occurred between economic agents during 1995/1996 fiscal year.<sup>26</sup> These transactions and flows are in current prices. They are underpinned by 59 accounts summarized into nine key macroeconomic aggregate accounts: changes in assets and liabilities, capital accounts of economic agents, exports and imports, offers and demands for composite goods, production for domestic markets, sectors of production, current accounts of economic agents, and production factors. This structure of accounts draws on the IMMPA’s scheme, particularly the production sectors and household groups. Annex II provides the details of the Financial Social Accounting Matrix.

Cameroon’s financial SAM departs from past tradition where social accounting matrices focused exclusively on the real side of the economy (Pyatt and Round [1990], Easterly [1989]). It covers the real and financial variables of the economy. Its upper left corner (accounts 1-36) concerns real variables, while its lower left and right corner (accounts 37-59) concern the financial variables and flows between agents. The linkages between the real and financial aspects of the economy are provided by public and private savings shown as a diagonal matrix in the lower left-hand part of the financial SAM. The savings are presented in the form of flows in the capital accounts and changes in assets and liabilities accounts of economic agents. Savings may be viewed as equivalent to changes in net worth, where net worth includes both physical capital and net financial assets.

The rows of this financial SAM account for the income (resources), and the columns account for expenditures (uses) by economic agents. Reading across the row of the current accounts of the public sector (row 14), we get public value added, indirect taxes (consumption and production taxes, imports and exports) minus subsidies, and direct taxes from the private sector, transfers from the rest of the world, and other transfers from the Central Bank to the Government. Altogether, the sum across row 14 provides the aggregate current account of the public sector or the total resources that accrued to the public accounts during 1995-1996. These resources are estimated at US$1.67 billion, representing about 18% of GDP. Taxes (direct and indirect) account for over 65% of the total, of which direct taxes raised from individual income represent about 10%. These resources from direct taxes are lower than taxes levied on imports and exports, which altogether accounts for over 15% of aggregate revenues. Though relatively low, this contribution of direct taxes to fiscal revenues in the

> 25 The FOF methodology emphasizes the equality of sources and uses of funds distinguished between current and capital accounts.

> 26 The real part of the SAM was constructed using _Supply and Use Table, Integrated Economic Accounts_ and other miscellaneous data from the Cameroon’s Department of Statistics and National Account (DSCN [1997, 1998, 1999]); while financial data were mainly obtained from documents published by the Central Bank of Central Africa’s countries (BEAC [1997], COBAC [1995, 1996]).

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