A team from the International Monetary Fund (IMF), led by Mario de Zamaróczy, visited Libreville and Yaoundé during April 25–May 9, 2015 and held discussions with the institutions of the Central African Economic and Monetary Community (CEMAC) on common policies for member countries.[1]

At the conclusion of the mission, Mr. de Zamaróczy issued the following statement:

“After a period of solid growth, CEMAC has been severely hit by the twin shocks of lower oil prices and security issues. In a region where five out of six countries are net oil exporters, the dramatic fall in oil prices has had wide-ranging consequences. Regional economic growth slowed to 1.7 percent in 2015, as public investment fell and oil production leveled off. Continued low oil prices will contribute to keeping growth low in 2016 below 2 percent. Regional inflation remained subdued in 2015 and should stay below 3 percent in the medium term.

“The regional fiscal and current account deficits widened in 2015 and are expected to remain high in 2016. With the value of oil exports contracting by about one third, the regional fiscal and current account deficits increased to about 7 and 9 percent of GDP in 2015, respectively. Both deficits are projected to reach to 8 percent of GDP in 2016, as a result of continued low oil prices and high fiscal expenditure.

“In this context, policy discussions centered on an appropriate stance of common monetary policy and the proper regionally coordinated response of national policies.
 

“With increasingly difficult financing conditions in 2015, CEMAC members turned to BEAC, the regional central bank, to help finance their fiscal deficits. The resulting accommodative monetary policy led to a loss in reserves. Although reserve coverage remains adequate, the room for monetary expansion now appears to have reached its limits. To address the current challenging environment, fiscal consolidation is urgent to maintain macroeconomic stability. Such fiscal consolidation should build on the CEMAC convergence criteria and entail an adequate reprioritization of members’ ambitious public investment programs, as well as more emphasis on domestic revenue mobilization.

“To maintain medium-term sustainability in the region, the mission urged the national authorities to slow the pace of debt accumulation. Member countries are encouraged to give preference to concessional borrowing and domestic sources of financing to the extent possible.

“The mission noted that deeper regional ties would help CEMAC to weather negative shocks. It is therefore imperative to strengthen regional integration, develop intra-regional trade, and better integrate financial markets. To reduce the region’s dependence on oil, structural measures at the national and regional levels will be necessary to create an environment conducive to the private sector becoming the engine of growth.

“The financial sector has been resilient despite the difficult economic context. However, in light of current budgetary pressures, banks’ direct and indirect exposure to the public sector is a source of risk. An efficient micro-prudential framework should prevent the spreading of macro-financial risks: the mission noted that important progress in this area has been achieved, along the lines of earlier IMF recommendations. Looking forward, it will be important to develop an appropriate financial stability framework, based on robust financial and macroeconomic indicators.

“Regional efforts to promote financial inclusion are under way. These efforts should be intensified to facilitate access to financing for small and medium-size enterprises and households, and to put in place an adequate regulatory framework to support the development of new financial instruments, such as mobile banking.

“The IMF’s Executive Board is expected to discuss the report on the 2016 regional consultation in July 2016. The mission would like to thank the authorities for their warm hospitality, excellent cooperation, and constructive dialogue.”

[1] CEMAC countries include Cameroon, Central African Republic, Chad, Republic of Congo, Equatorial Guinea, and Gabon.