Via IMF (Den Internationale Valutafond)

IMF Executive Board Concludes Annual Discussions on CEMAC Common Policies, and Common Policies in Support of Member Countries Reform Programs

December 18, 2019

  • Tighter macroeconomic and financial policies helped to avert a deeper crisis, and gross external reserves increased more rapidly in recent months, also helped by a stronger implementation of CEMAC foreign exchange regulations.
  • Reforms to support a more diversified and inclusive growth, including by improving governance and the business climate, should gain momentum to make current efforts to buttress the external position of the region sustainable.

On December 13, 2019, the IMF Executive Board concluded the annual
discussions with the Central African Economic and Monetary Community
(CEMAC) on Common Policies of Member Countries and Common Policies in
Support of Member Countries Reform Programs.


CEMAC’s economic and financial situation has improved but remains fragile.
Economic activity has remained well below pre-crisis levels. Non-oil growth
slowed down to below 2 percent in 2018, reflecting the effect of fiscal
consolidation, the legacy of domestic arrears and a volatile security
situation in some regions. Overall regional growth was slightly higher at
2.5 percent, supported by an increase in the oil sector. In 2019, overall
regional growth would remain at the same level, with a slight pick-up in
non-oil growth offsetting a slowdown in oil production growth.

Tighter policies helped to reduce external imbalances and external reserves
increased more rapidly during the first half of 2019. The external current
account and the overall balance of payments deficits in 2019 would remain
at their improved levels of 2018 (of 2.5 and 0.4 percent of GDP,
respectively), reflecting stable oil exports, a moderate increase in
imports, and overall stable capital flows. With the impact of stricter
implementation of the foreign exchange regulations on private flows and
repatriation of banks’ foreign assets, in addition to continued external
budget support and some debt relief, the increase in external reserves was
stronger than projected in the first half of 2019. As a result, the June
2019 objective for regional net foreign assets was exceeded by more than
€800 million.

The medium-term outlook foresees further improvement in regional reserves,
assuming CEMAC countries remain committed to their program objectives, and
new programs with Equatorial Guinea and CAR start soon. Overall growth is
projected to increase to 3.5 percent in 2020, mainly driven by the non-oil
sector which would be supported by the implementation of the governments’
strategies to clear arrears. Oil sector growth would remain stable in 2020
before declining in following years along past trends. Beyond 2020, non-oil
growth is projected to increase gradually, as reforms to improve governance
and the business climate are assumed to slowly take hold. Inflation is
projected to stay at around 2.5 percent over the medium term, below the
regional convergence criterion, as monetary policy would remain
appropriately tight.

Further fiscal consolidation efforts, mainly based on expected enhancement
in non-oil revenue collection, would reduce the regional non-oil budget
deficit by an additional 1 percentage point of non-oil GDP in 2020, which
would then continue to decline gradually thereafter. Overall, the public
debt-to-GDP ratio is expected to decline further to 47 percent of GDP in
2020 and to less than 40 percent by 2023. The external current account
deficit would slightly worsen to 2.8 percent of GDP in 2020, as oil exports
receipts would slightly decline, and imports of goods and services would
pick up along with non-oil GDP growth. Stronger enforcement of foreign
exchange regulations and already granted debt relief should improve the
capital account. As a result, regional NFAs are projected to increase
steadily over the medium term and reserves would reach the equivalent of 5
months of imports of goods and services by 2022.

Executive Board Assessment


Executive Directors considered that the CEMAC is at a crossroad to
consolidate the progress achieved by the regional strategy and put
adjustment efforts on a sustainable path. They recognized that tighter
macroeconomic and financial policies helped stabilize economic conditions
and avert a deeper crisis and increase gross external reserves, which
recently exceeded previous projections. However, Directors stressed that
downside risks remain substantial and that stronger efforts are needed to
support more diversified and inclusive growth, including structural reforms
to enhance governance, improve the business climate, and spur social

Directors urged national authorities to strictly adhere to their respective
IMF‑supported program objectives, which will be key to secure domestic and
external stability. They considered that the composition of fiscal
consolidation efforts will need to be rebalanced by increasing non‑oil
domestic revenue, in order to preserve social spending and public
investment. Implementing well‑managed government arrears repayment plans
will also be central to supporting the private sector and improving banks’
balance sheets.

Directors considered that BEAC’s monetary policy stance has remained
appropriately tight and stressed that BEAC should stand ready to tighten if
external pressures emerge. Directors encouraged BEAC to aim at more rapid
absorption of the currently large excess liquidity in the banking sector to
enhance monetary policy transmission. They also welcomed steps to deal with
banks that excessively rely on the BEAC for their liquidity needs.
Directors stressed that BEAC should avoid any new financing agreement with

Directors welcomed BEAC’s effort to ensure a smoother yet effective
implementation of the foreign exchange regulations. More support from
national authorities is needed to ensure compliance by all public entities
and further progress can be achieved to speed‑up execution of forex
transactions. Directors also encouraged BEAC to continue the dialogue with
oil and mining companies to effectively enforce the regulations while
taking account of their specificities as necessary.

Directors encouraged the COBAC to implement a more risk‑based supervision.
They welcomed the adoption of the new sanction mechanism to improve
regulatory compliance but noted that the process to resolve problem banks
remains slow. Directors encouraged COBAC to support efforts to reduce
currently very high non‑performing loans, including following repayments of
government arrears. Directors stressed the need to reinforce COBAC’s
capacity, especially staffing levels.

Directors underlined the importance of more ambitious and effective
structural measures to support higher and more inclusive growth in non‑oil
sectors and greater diversification. These should address long‑standing
constraints stemming from weak governance, a poor business environment
hampering investment, an under‑developed financial sector, and pervasive
non‑tariff barriers to regional trade. Enhanced transparency and
accountability in the management of public resources, together with better
AML/CFT supervision, will be critical. More effective measures are also
needed to promote faster convergence, including strengthening CEMAC’s
multilateral surveillance framework.

Directors noted that BEAC has implemented the policy commitments in the
June 2019 Follow‑up Letter of Policy Support, especially the assurance on
NFA accumulation, which exceeded the targeted level. They further noted the
policy commitments and endorsed the updated policy assurance outlined in
the December 2019 follow up Letter from the BEAC Governor on achieving the
projected end‑December 2019 and end‑June 2020 NFA accumulation based on
BEAC’s commitment to implement an adequately tight monetary policy together
with commitments by member states to implement adjustment policies in the
context of IMF‑supported programs. Directors emphasized that implementation
of this policy assurance continues to be critical for the success of
IMF‑supported programs with CEMAC member countries.

The views expressed by Directors today will form part of the Article IV
consultation discussions on individual members of the CEMAC that take place
until the next Board discussion of CEMAC common policies.


1 Under Article IV of the IMF’s Articles of Agreement, the IMF
holds bilateral discussions with members, usually every year. In
the context of these bilateral Article IV consultation discussion,
staff hold separate annual discussions with the regional
institutions responsible for common policies in four currency
unions – the Euro Area, the Eastern Caribbean Currency Union, the
Central African Economic and Monetary Union, and the West African
Economic and Monetary Union. For each of the currency unions, staff
teams visit the regional institutions responsible for common
policies in the currency union, collects economic and financial
information, and discusses with officials the currency union’s
economic developments and policies. On return to headquarters, the
staff prepares a report, which forms the basis of discussion by the
Executive Board. Both staff’s discussions with the regional
institutions and the Board discussion of the annual staff report
will be considered an integral part of the Article IV consultation
with each member.


At the conclusion of the discussion, the Managing Director, as
Chairman of the Board, summarizes the views of Executive Directors,
and this summary is transmitted to the country’s authorities. An
explanation of any qualifiers used in summings up can be found

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