Statement at the Conclusion of the 2014 Regional Consultation with CEMAC

Press Release No. 14/258
June 5, 2014

An International Monetary Fund (IMF) mission led by Mr. Joël Toujas-Bernaté visited Yaoundé during May 21-June 5, 2014, to conduct discussions on common policies for the member countries with the institutions of the Central African Monetary and Economic Community (CEMAC). The mission met with Mr. Abaga Nchama, Governor of the regional central bank (Banque des Etats de l’Afrique Centrale), and held discussions with Mr. Abbas Tolli, Secretary General of the Banking Commission (COBAC), Mr. Paul Tasong, CEMAC Commissioner and other senior officials. The mission also met with representatives of the private sector, civil society, academics and the donor community. Discussions focused on recent economic developments and key challenges for the region, including the optimal fiscal policy response to attenuate risks and boost growth, monetary policy reform to make it more effective, financial sector reforms to promote development and stability and measures to foster regional integration.

At the conclusion of the mission, Mr. Toujas-Bernaté, mission chief for the CEMAC, issued the following statement:

“Following a period of solid regional economic performance, economic growth in CEMAC decelerated in 2013. While growth in non-oil sectors continued to be largely driven by public investment plans in several member countries, oil production declined substantially, resulting in overall real GDP growth of around 2 ½ percent. Inflation decelerated to below 2 percent on average thanks to a decline in food prices. At the consolidated regional level, fiscal policy was expansionary and the primary balance turned into a deficit due to large expenditures. The external current account deficit widened to around 3 percent of GDP as oil exports declined while investment-related imports remained large.

“The outlook for the remainder of 2014 points to a pick-up in economic growth. Regional real GDP growth is projected at 5-5 ½ percent, as oil production will increase. Inflation is expected to remain below 3 percent. Fiscal balances would deteriorate further due to a slight decline in revenues while the external current account deficit would stabilize at last year’s level. The medium-term outlook is expected to remain solid with growth in non-oil sectors hovering between 5 and 6 percent. A projected decline in oil production in 2018-19 would however bring overall growth down.

Downside risks remain significant, as the region remains vulnerable to a decline in oil and other commodity prices and a protracted slowdown in its partner countries. A worsening in the security situation in some areas of the region could affect growth negatively, and a lack of structural reforms could limit the expected development of the private sector.

Policy discussions centered on how to deepen regional integration and promote sustainable and more inclusive growth in CEMAC.

“Fiscal policy has been largely procyclical. High oil revenues have supported large and much needed infrastructure investment spending but the buildup of fiscal buffers has remained uneven. The Member Countries, in coordination with the regional institutions, should better prepare for a possible temporary fall in oil prices by creating fiscal buffers to sustain development. More generally, they should focus on better management of non-renewable oil resources by delinking fiscal spending from the volatility of resource revenues and spur the broadening of non-oil revenues. They should also remain cautious in public debt build-up to minimize risks of debt distress in the medium to long term.

“The mission encourages the authorities to boost the efficiency of the monetary policy framework, including by redesigning BEAC’s instruments for liquidity management and its operations. In addition, to promote the development of the interbank money market, the mission encourages the authorities to accelerate reforms to reduce counterparty risks as well as improve the lending climate.

“Access to financial services in the CEMAC region is among the lowest in Africa while the soundness of the financial sector raises concerns as weaknesses in individual financial institutions need to be addressed. The mission encourages the authorities to strengthen banking sector regulation and enhance supervision. The development of the government securities market will be key to deepen the financial sector and provide adequate financing to governments, including for investment projects.

“The main medium-term challenges for the CEMAC region is to achieve higher, sustainable, and more inclusive growth, in order to create more jobs and accelerate poverty reduction. These objectives should be supported by a substantial improvement in the business climate and a deepening of regional integration. The mission discussed developing more efficient regional policies to ensure in particular better coordination of the national development plans and reforms. The BEAC and the CEMAC Commission have an important role to play in this regard, including through improving the coordination of fiscal policies, promoting initiatives to remove barriers to internal and external trade, implementing critical reforms in the financial sector and spurring business environment reforms. To play this role, regional institutions need to further strengthen their institutional capacity.”

“The IMF’s Executive Board is expected to discuss the report on the 2014 Regional Consultation on Common Policies for the Member Countries with the institutions of the CEMAC in July 2014. The mission would like to thank the authorities for their warm hospitality, excellent cooperation, and constructive dialogue.”


CEMAC: Selected Economic and Financial Indicators, 2011–2019  
 
  2011 2012 2013 2014 2015 2016 2017 2018 2019
      Est. Proj. Proj. Proj. Proj. Proj. Proj.
 
  (Annual percent change)

National income and prices

                   

GDP at constant prices

3.9 5.2 2.6 5.3 4.7 6.4 5.4 3.8 3.5

Oil GDP

-2.2 -2.7 -7.1 3.2 1.8 6.1 5.9 -3.3 -6.5

Non-oil GDP

5.9 6.6 4.6 5.4 5.1 6.4 5.7 5.3 5.3

Consumer prices (period average)1

2.5 2.7 1.8 2.7 2.1 2.1 2.0 2.0 2.0

Consumer prices (end of period)1

4.3 3.1 2.3 2.7 2.6 2.6 2.7 2.4 2.5

Nominal effective exchange rate1

1.1 -3.1 3.1

Real effective exchange rate1

-0.9 -1.5 3.6
  (Annual changes in percent of beginning-of-period broad money)

Money and credit

                   

Net foreign assets

16.9 9.5 -0.4

Net domestic assets

0.4 6.7 9.0

Broad money

18.0 16.6 6.4
  (Percent of GDP, unless otherwise indicated)

Gross national savings

33.0 30.4 28.3 28.7 27.3 26.3 24.7 23.4 22.3  

Gross domestic investment

31.2 31.0 31.4 31.9 31.1 29.7 27.4 26.5 26.0

Of which: public

13.9 14.1 14.8 14.5 13.4 11.8 10.6 9.8 9.4

Government financial operations

                 

Total revenue, excluding grants

27.9 27.9 26.8 26.1 25.9 25.3 24.8 24.1 23.1

Government expenditure

25.6 29.4 29.5 29.5 29.2 28.0 26.9 26.5 26.1

Overall primary fiscal balance

3.6 0.3 -0.4 -1.3 -1.3 -1.2 -0.7 -0.8 -1.4

Basic fiscal balance 2

4.9 0.7 0.5 -0.1 0.2 0.4 0.8 0.5 -0.2

Overall fiscal balance, excluding grants

2.0 -1.6 -2.7 -3.5 -3.4 -2.7 -2.2 -2.4 -3.0
  • Non-oil overall fiscal balance, excluding grants (percent of non-oil GDP)

-26.2 -31.1 -27.9 -26.8 -24.4 -21.7 -19.6 -17.7 -16.1

Total Public Debt

19.2 20.0 22.9 23.7 25.2 26.7 28.2 30.4 32.2

External sector

                 

Exports of goods and nonfactor services

55.5 55.1 51.3 49.3 46.3 45.1 43.9 41.2 38.3

Imports of goods and nonfactor services

43.8 43.5 43.4 42.2 41.6 40.2 38.5 37.1 36.0

Balance on goods and nonfactor services

11.7 11.6 7.9 7.2 4.7 4.9 5.4 4.2 2.3

Current account, including grants

1.8 -0.6 -3.1 -3.2 -3.8 -3.4 -2.7 -3.2 -3.7

External public debt

12.4 14.2 16.8 17.2 18.4 19.0 19.7 20.6 21.1

Gross official reserves (end of period)

                 

Millions of U.S. dollars

15,717 17,531 17,490 17,698 17,528 18,325 19,750 20,945 21,489

Months of imports of goods and services (less intra regional imports)

5.0 5.4 5.1 5.0 4.8 4.8 5.1 5.3 5.8

Percent of broad money

85.6 88.6 80.4

Memorandum items:

                 

Nominal GDP (Billions of CFA francs)

42,407 45,445 45,727 48,273 49,827 52,728 55,904 57,872 60,027  

CFA francs per U.S. dollar, average

471.9 510.5 494 479 471 465 458 452 445

Oil prices (US dollars per barrel)

104.0 105.0 104 104 98 93 90 88 87
 

Sources: IMF staff compilations.

                 

1 Using as weights the shares of member countries in CEMAC's GDP in purchasing power parity US dollar.

3 Excluding grants and foreign-financed investment.



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