IMF Executive Board Concludes Annual Discussions on CEMAC Countries’ Common Policies

Press Release No. 14/378
July 31, 2014

On July 25, 2014, the Executive Board of the International Monetary Fund (IMF) concluded the annual discussions on Common Policies of Member Countries with the Central African Economic and Monetary Community (CEMAC).1

Following a period of solid regional economic performance, the CEMAC’s economic activity 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 2.5percent. Anchored by the peg of the CFA franc to the euro, inflation decelerated to below 2 percent on average, below the regional convergence ceiling of 3 percent. In 2014, economic activity is expected to pick-up with regional real GDP growth projected at 5–5.5 percent, as oil production will recover. Inflation is expected to remain moderate owing to low food prices.

The continuation of expansionary fiscal policies and declining oil revenues turned the primary balance into a deficit for the first time since 2009 and the non-oil primary deficit reached 24.6 percent of Non-Oil GDP. Following debt relief and restructuring operations over the last years, the average public debt for the region has increased but remains low at around 23 percent of GDP, well below the 70 percent of GDP ceiling set by the regional surveillance framework for individual countries. The current account deficit widened to around 3 percent of GDP as oil exports declined and investment-related imports remained large. Foreign reserves decreased slightly but remained around US$17.5 billion, equivalent to 5.1 months of imports at end-2013.

Excessive liquidity makes monetary policy largely ineffective. The main monetary policy rate of the BEAC (Banque des Etats d’Afrique Centrale) is disconnected from lending rates, reflecting the ineffective interest rate channel while the shallow banking system and the underdeveloped financial markets induce weaknesses of both the credit and asset price channels. The growth of bank deposits slowed in 2013 but remained strong, while the growth of credit accelerated. Liquidity in the banking system decreased following a decline in foreign assets.

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 prolonged drop in oil and other commodity prices would have a significant impact on fiscal balances and the current account balance, and would require a larger and more abrupt reduction in public investment. In addition, in a context where an extremely difficult business climate severely limits private investment growth, the lack of reforms could weigh on the potential for medium-term growth. The regional institutions continue to face significant capacity constraints and should continue to be strengthened to coordinate the reform efforts and support regional growth. Finally, increased security risks in the region with the deepening of the crisis in the Central African Republic and the security challenges in Northern Cameroon could weigh on foreign direct investment (FDI) and growth.

Executive Board Assessment

Executive Directors welcomed the region’s solid short-term macroeconomic prospects supported by public investment and a recovery in oil production. They noted, however, that favorable medium-term prospects have significant downside risks from a potential oil price shock which could have a substantial impact on CEMAC’s fiscal and external current account balances. At the same time, substantial challenges remain, including high poverty, income inequality, and underemployment, especially among the youth.

Directors concurred that the current macroeconomic policy mix should be adjusted. They considered that the fiscal stance has become too expansionary in some countries. They also noted that the effectiveness of monetary policy is very limited due to weak transmission channels. Moreover, the level of external reserves remains adequate but widening current account deficits could become a source of concern. They urged national authorities to act in coordination with the regional central bank (BEAC) to improve the compliance with regional reserves repatriation rules.

Directors encouraged the authorities to adapt the regional fiscal surveillance framework to better ensure the stability and sustainability of policies. The convergence criteria on the fiscal deficit and on public debt should be revised to limit pro-cyclicality and ensure low risks of debt distress, while supporting prudent borrowing. Directors also stressed the need to expedite the reform of the monetary policy framework. Stronger efforts are needed to address the challenges of excess liquidity, inefficient liquidity management, and underdeveloped regional interbank and debt markets which make monetary policy largely ineffective and hamper financial sector development.

Directors welcomed the authorities’ efforts to strengthen the regional financial sector. They noted however that a stronger regulatory and supervisory framework is needed to ensure financial stability and support regional financial sector development. Over the medium term, the creation of credit registries and judicial system reforms will be essential to foster efficient credit growth. Directors considered that regional authorities should be cautious in considering the use of governments’ savings deposited at BEAC to finance infrastructure projects and should instead seek greater private sector participation in financing the development of the region. They also encouraged national and regional authorities to coordinate efforts to promote financial inclusion in the CEMAC.

Directors underscored that greater efforts are needed to foster regional integration, and boost competitiveness to address structural obstacles to inclusive growth. Improving the regional business environment is essential to promote private sector development and economic diversification. They considered that these efforts should be complemented with a faster implementation of regional institutions’ institutional reform. In particular, the institutional autonomy of BEAC should be strengthened and the capacities of the regional banking supervisor and the CEMAC Commission be enhanced.

The views expressed by Executive 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.

CEMAC: Selected Economic and Financial Indicators, 2010–15
  2010 2011 2012 2013 2014 2015
        Est. Proj. Proj.
  (Annual percent change)

National income and prices

GDP at constant prices

5.6 3.9 5.2 2.6 5.3 4.7


3.8 -2.2 -2.7 -7.1 3.2 1.8

Non-oil GDP 11

6.4 5.9 6.6 4.6 5.4 5.1

Consumer prices (period average)2

1.5 2.5 2.7 1.8 2.7 2.1

Consumer prices (end of period)2

2.1 4.3 3.1 2.3 2.7 2.6

Nominal effective exchange rate2

-4.0 1.1 -3.1 3.1

Real effective exchange rate2

-4.7 -0.9 -1.5 3.6
  (Annual changes in percent of beginning-of-the period broad money)

Money and credit

Net foreign assets

-4.6 16.9 9.5 -0.4

Net domestic assets

28.1 0.4 6.7 9.0

Broad money

21.7 18.0 16.6 6.4
  (Percent of GDP, unless otherwise indicated)

Gross national savings

30.5 33.0 30.4 28.3 28.7 27.3

Gross domestic investment

32.1 31.2 31.0 31.4 31.9 31.1

Of which: public

12.1 13.9 14.1 14.8 14.5 13.4

Government financial operations


Total revenue, excluding grants

24.9 27.9 27.9 26.8 26.1 25.9

Government expenditure

24.3 25.6 29.4 29.5 29.5 29.2

Primary basic fiscal balance3

3.1 5.6 2.0 2.3 1.4 1.6

Basic fiscal balance4

2.3 4.9 0.7 0.5 -0.1 0.2

Overall fiscal balance, excluding grants

0.1 2.0 -1.6 -2.7 -3.5 -3.4

-Primary balance

1.9 3.6 0.3 -0.4 -1.3 -1.3

Non-oil overall fiscal balance, excluding grants (percent of non-oil GDP)

-23.6 -26.2 -31.1 -27.9 -26.8 -24.4

Non-oil primary fiscal balance (percent of non-oil GDP)

-20.9 -23.7 -28.0 -24.6 -23.6 -21.5

External sector


Exports of goods and nonfactor services

51.2 55.5 55.1 51.3 49.3 46.3

Imports of goods and nonfactor services

44.4 43.8 43.5 43.4 42.2 41.6

Balance on goods and nonfactor services

6.7 11.7 11.6 7.9 7.2 4.7

Current account, including grants

-1.6 1.8 -0.6 -3.1 -3.2 -3.8

External public debt

12.3 12.4 14.2 16.8 17.2 18.4

Gross official reserves (end of period)

51.2 55.5 55.1 51.3 49.3 46.3

Millions of U.S. dollars

13,658 15,717 17,531 17,490 17,698 17,528

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

4.3 5.0 5.4 5.1 5.0 4.8

 percent of broad money

92.1 85.6 88.6 80.4

Memorandum items:


Nominal GDP (Billions of CFA francs)

36,863 42,407 45,445 45,727 48,273 49,827

CFA francs per U.S. dollar, average

495.3 471.9 510.5 494 479 471

Oil prices (US dollars per barrel)

79.0 104.0 105.0 104 104 98

Sources: IMF staff compilations.


1 For Equatorial Guinea, non-oil GDP includes output from hydrocarbon derivatives.

2 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 and interest payments.

4 Excluding grants and foreign-financed investment.

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 summing up can be found here: .


Media Relations
Phone: 202-623-7100