The Central African state of Cameroon has recommended a 16 percent surge in its 2013 budget, it was revealed on Monday.
Though this sounds quite risky given that the oil price could take any direction because of what is happening in Egypt, the Cameroon government seems quite confident about the direction the oil price will take.
The state is reportedly betting on the recovery of the waning crude oil production to fund this budget.
The central African state proposed a budget of 3.236 billion CFA francs ($6.3 million), up by 436 billion from the 2012 budget, as it boosts spending on infrastructure projects, including hydropower developments, Reuters reported.
“The government believes the increase (in the budget) is justified not only by the expected increase in revenues but by the financing requirements of these big projects,” according to a report in possession of the news agency.
The state said the budget, which needs to be approved by the legislature, assumed oil production would average nearly 79.000 barrels per day and sell at $96.60 a barrel.
It is understood that oil production in Cameroon is just over 60.000 bpd currently. This is marginally up from 2011 and about a third of peaks hit in the 1980s.
Maybe the Cameroon government has taken advice from its oil company, which has projected improved production from mature wells. This, along with new start-ups, would drive production up markedly.
The budget also proposed raising some 250 billion CFA ($494 million) from treasury bond issuance in 2013. This was lower than the 285 billion CFA that had been prearranged for 2012.
Cameroon’s so-called “infrastructure bonds” have been routinely oversubscribed. The budget draft assumes a pace of inflation of 2.1 percent.