## 1caeea2025002-source-pdf

## Source details

**Canonical URL:** [1caeea2025002-source-pdf](https://www.imf.org/-/media/files/publications/cr/2025/english/1caeea2025002-source-pdf.pdf)

## Other formats

- [Markdown version](/-/media/files/publications/cr/2025/english/1caeea2025002-source-pdf.pdf.md)
- [Structured JSON version](/-/media/files/publications/cr/2025/english/1caeea2025002-source-pdf.pdf.json)

---

### Executive summary — context, risks, and scenarios
- CEMAC economy momentum in 2024: inflation eased but remained above the regional convergence criterion.
- External position weakened: current account deficit rose and reserve coverage stagnated.
- Preliminary fiscal outturns: fiscal position worsened due to large fiscal slippages.
- Extraordinary Conference of CEMAC Heads of State in December 2024 reaffirmed commitments to preserve fiscal sustainability, financial sector stability, and strengthen the external position.
- Baseline outlook:
  - External position expected to progressively weaken over the medium term.
  - Without stronger fiscal consolidation in some members, reserve coverage could fall below 4 months of prospective import by 2027 (assessed adequate level: 5 months).
- Resilient scenario:
  - Post-election economic plans aligned with HoS commitments and prospective IMF-supported arrangements could stabilize or increase reserve coverage and strengthen fiscal positions.
  - Baseline excludes these anticipated corrective actions pending full definition and implementation.
- Key uncertainties and risks: debt rollover, tightening financing conditions, sovereign debt distress.

### Recent developments and key statistics (selected)
- Growth (CEMAC, 2024):
  - Real GDP growth: approximately 3.3 percent.
  - Oil real GDP growth: 0.9 percent (up from -0.6 percent in 2023).
  - Non-oil real GDP growth: 3.6 percent (up from 2.7 percent in 2023).
  - Gabon non-oil GDP growth: 3.6 percent (from 1.7 percent in 2023).
  - Cameroon tertiary sector growth: 4.7 percent (up from 4.0 percent in 2023).
  - Equatorial Guinea oil production growth: approximately 2.8 percent (reversing ~15 percent decline in 2023).
- Inflation (December 2024):
  - Headline inflation: 4.2 percent y/y.
  - Food inflation (44 percent of the basket): 6.4 percent y/y, contributing 2.5 percentage points to headline inflation.
  - Transport cost inflation: 9.9 percent y/y, contributing 1.0 percentage point to headline inflation.
- External position and reserves (2024):
  - Current account deficit: 0.9 percent of GDP (vs 0.6 percent of GDP in 2023).
  - Reserve coverage: 4.3 months of prospective imports (assessed adequate level: 5 months).
  - Net Foreign Assets (NFA) 3-month average in December 2024: EUR 5.02 billion (just above the EUR 5 billion target endorsed in June 2024).
  - Early 2025 NFA increase drivers: Gabon issuance of a US$570 million Eurobond in February 2025; FX surrendered up 66.4 percent compared to same period in 2024.
- Monetary policy and liquidity:
  - BEAC policy rate (TIAO) cut by 50 basis points in March 2025 to 4.5 percent (previously 5 percent).
  - Staff recommendation: keep policy rate at 4.5 percent and maintain data-dependent stance.
  - Marginal lending facility rate reduced by 75 basis points to 6 percent; interest rate corridor narrowed to 150 basis points.
  - Average weekly central bank liquidity injections:
    - June 2024: approximately CFAF 40 billion.
    - December 2024: CFAF 200 billion.
    - Since start of 2025: CFAF 340 billion.
  - Marginal interest rate on injections: average around 5.1 percent in early 2025 (down from about 5.5 percent in December 2024).
  - Subscription rate on injections: nearly 108 percent on average (down from 118 percent in December 2024).
  - Recourse to marginal lending facility: about CFAF 943 billion at end-November 2024 (up from CFAF 708 billion in September 2024).
  - Average outstanding liquidity injections: CFAF 1,236 billion in November 2024 (up from CFAF 1,055 billion in September 2024).
  - Interbank market outstanding volume: about CFAF 619 billion in December 2024 (up from CFAF 558 billion in September 2024).
  - Average interbank interest rates: around 5.8 percent in December 2024.
- Fiscal developments (CEMAC, 2024):
  - Overall fiscal balance (including grants): swung from a 0.7 percent of GDP surplus in 2023 to a 1.5 percent of GDP deficit in 2024.
  - Drivers: 1.4 percentage point decrease in revenue and 0.9 percentage point increase in primary spending.
  - Non-oil primary fiscal deficit: widened from 7.3 percent of non-oil GDP in 2023 to approximately 7.6 percent in 2024.
    - Contribution to deterioration: Gabon -0.7 ppt; Congo -0.1 ppt.
    - Improvements: Cameroon and Chad contributed 0.3 ppt each.
  - Public debt ratio: preliminary data suggest broadly unchanged (no specific number provided in the summary).

### Debt market pressures, reprofilings, and public gross financing needs
- Government debt issuance remained sizeable in late 2024 and early 2025 amid high financing needs.
- Market indicators:
  - Average subscription rates for government securities fell to 43.5 percent by end-October 2024 (from 80.4 percent a year earlier).
  - Average yields: nearly 10 percent on government bonds (OTA) and nearly 7 percent on bills (BTA).
  - Failed auctions and payment incidents increased, notably in Chad, Congo, and Gabon.
- Reprofiling operations:
  - Congo reprofiling in October 2024 extended maturities and created a significant maturity peak in 2025.
  - Gabon reprofiling in March 2025:
    - Voluntary exchange of CFAF 204 billion of government securities, extending average maturities from 2–3 years to 6 years.
    - Securitization of bank claims (payment arrears) totaling CFAF 763 billion, with average maturities from 2 to 9 years.
  - Reprofiling effects on regional repayment schedule (CFAF billion):
    - Total debt repayments scheduled in 2025 fell from approximately CFAF 2,920 billion to CFAF 2,409 billion.
    - Repayment obligations rise in 2026 from CFAF 1,963 billion to CFAF 2,290 billion.
    - Repayment obligations rise in 2027 from CFAF 1,254 billion to CFAF 1,773 billion.
  - International market access remains costly: February 2025 Gabon Eurobond US$570 million, 3.5-year maturity at 12.7 percent yield.
  - Sovereign spreads for Cameroonian and Gabonese debt around 950 basis points in early June 2025.
- Public gross financing needs and debt servicing (staff estimates for 2025):
  - Public gross financing needs: around 9.1 percent of GDP in 2025 (about 17.9 percent of CEMAC public debt).
  - Debt servicing estimated at 9.7 percent of CEMAC GDP, including EUR 3.5 billion of external liabilities (excluding IMF).
  - Projected gross financing needs, 2025–30 (annual totals and ratios as reported):
    - Gross financing needs (CFAF billion): 7,173; 7,800; 8,088; 7,931; 9,143; 8,985
    - Gross financing needs (percent of CEMAC GDP): 9.1; 9.4; 9.2; 8.4; 9.1; 8.4
    - Gross financing needs (percent of CEMAC public debt): 17.9; 18.6; 18.5; 17.5; 19.4; 18.4
    - Debt services (CFAF billion): 7,339; 7,306; 7,678; 7,876; 8,963; 8,922
    - Interest (CFAF billion): 1,444; 1,435; 1,541; 1,615; 1,698; 1,818
    - Amortization due (CFAF billion): 5,895; 5,871; 6,137; 6,260; 7,265; 7,103
    - External liabilities (excl. IMF, EUR billion): 3.5; 3.0; 3.4; 3.4; 4.3; 4.1

### Banking system vulnerabilities and supervisory priorities
- Banks’ exposure to sovereign:
  - Total banks’ exposure (loans and securities) increased from 10 percent of total assets at end-2015 to about 30 percent at end-2024.
  - Several banks have exposure to CEMAC governments above 50 percent.
  - Surge in public sector credit raises crowding-out concerns for private sector lending.
- Financial soundness indicators (latest available correspond to end-2023; preliminary 2024 signals noted):
  - Capital adequacy declined from 14.6 percent to 11.8 percent of risk-weighted assets between 2022 and 2023.
  - Preliminary COBAC data suggest improvement in capital adequacy in 2024 due to restructuring and recapitalization.
  - 60 percent of banks had sufficient capital to comply with all prudential requirements at end-2024.
  - Nonperforming loans (NPL) were 15.7 percent at end-2023; recent data show signs of stabilization in 2024.
  - Short-term liquidity ratio was 176.4 percent as of end-2023, though COBAC’s metric may underestimate liquidity risk and several banks are below 100 percent.
  - Banks’ total assets grew by 11.6 percent year-on-year in 2023Q4; loan portfolio grew 8.3 percent annually in 2023Q4.
- Supervisory actions and reforms recommended:
  - Strengthen COBAC’s supervisory capacity and draft a comprehensive overhaul of CEMAC banking legislation.
  - Implement measures to mitigate sovereign-bank nexus risks; gradually enforce concentration limits and shift away from systematic zero-risk weights on government exposures.
  - Require undercapitalized banks to submit time-bound recapitalization plans; trigger resolution of non-viable banks.
  - Intensify on-site supervision, accelerate resolution procedures, and enhance AML/CFT supervision.

### Monetary policy stance, liquidity operations, and BEAC recommendations
- Staff recommendations:
  - Maintain data-dependent monetary policy stance and refrain from premature further loosening; keep policy rate unchanged at 4.5 percent.
  - Continue regular refinancing operations to mitigate liquidity pressures and support monetary transmission, while remaining vigilant on price and external stability.
  - Maintain efforts to reduce fragmentation within the banking system.
- BEAC actions and views:
  - TIAO reduced by 50 basis points in March 2025 to 4.5 percent; BEAC expects headline (and core) inflation to fall below 3 percent toward end-2025.
  - BEAC noted liquidity injections provided breathing room, but lower TIAO has not fully transmitted to the regional debt market.
  - BEAC will remain vigilant and ready to raise interest rates if risks to price stability increase.
- Liquidity management recommendations:
  - Maintain weekly liquidity injections at least at current TIAO level.
  - Conduct regular lending operations using fixed-rate full allotment procedure as appropriate.
  - Tighten conditionality for structurally liquidity-stressed banks and enforce reserve requirements without exemptions.
  - Adjust collateral haircuts to reflect underlying risks and apply differential haircuts.

### Net Foreign Assets (NFA), FX regulation, and NFA targets
- NFA outcomes and targets:
  - Average October–December 2024 NFA outturn: EUR 5.02 billion (EUR 0.02 billion above the EUR 5.0 billion target set in June 2024).
  - Average January–March 2025 NFA: EUR 5.97 billion (EUR 1.47 million above the target set for this date at EUR 4.5 billion).
  - Revised targets:
    - Three-month average of EUR 5.5 billion at end-June 2025.
    - Three-month average of EUR 5.75 billion at end-December 2025.
  - Staff projection: with consistent reform implementation and heightened FX compliance, NFA should improve in 2025H2, reaching a three-month average of EUR 5.75 billion at end-December 2025.
- FX regulation enforcement:
  - Intensify efforts to improve FX request processing and ensure complete, efficient, consistent, and predictable application of FX regulations.
  - Strengthen compliance monitoring in public and extractive sectors regarding FX repatriation and surrender requirements.
  - Only Chad shared extractive industry contracts (without amounts), limiting assessment of RES funds' impact on BEAC’s balance sheet.
- Drivers of recent NFA surge: US$500 million loan to Chad in November 2024; higher yield on BEAC’s reserves; good cocoa season in Cameroon (cocoa prices up about 60 percent between September and December 2024); Gabon Eurobond issuance.

### Outlook and projections (baseline and resilient)
- Real GDP growth:
  - Expected to decline to 2.6 percent in 2025 (2.9 percent non-oil), then gradually increase to reach 3.8 percent by 2030 (4.3 percent non-oil).
- Inflation:
  - Average inflation projected to decrease and settle at the regional convergence criterion of 3 percent in 2026.
- Non-hydrocarbon primary fiscal deficit:
  - Projected to improve from 5.6 percent of GDP in 2025 to 4.1 percent of GDP in 2030.
- Public debt stock:
  - Projected to fall from 52.3 percent of GDP in 2025 to 45.9 percent of GDP in 2030.
- Debt service-to-revenue ratio:
  - Projected to decrease from 56 percent to around 51 percent by 2030.
- Current account and reserves:
  - Current account deficit projected to deteriorate to 2.1 percent of GDP in 2025 and widen to around 3.1 percent of GDP by 2030.
  - Reserve coverage projected to fall below 4 months of prospective imports by 2028 and stabilize at 3.1 months of imports by 2030 (assessed adequate level: 5 months).
- Resilient scenario:
  - Post-election economic plans, HoS commitments, and prospective IMF-supported arrangements could stabilize or increase reserve coverage.
  - Under the resilient scenario, reserve coverage would stabilize around 4 months over the medium term.

### Downside risks and channels
- Fiscal/external imbalances: failure to maintain fiscal discipline could trigger higher deficits, arrears, inflationary pressures, and weakened buffers; general elections in four countries between 2025 and early 2026 heighten risk.
- Rollover and financing risks: reduced ODA, higher global interest rates, and term premia could widen external imbalances and intensify sovereign-bank feedback loops.
- Sovereign debt distress: potential defaults, restructurings, arrears, or prolonged austerity.
- Humanitarian/security risks: deterioration could weaken food security and human development indicators.
- Supervisory setbacks: delays in COBAC resourcing or upgrades increase likelihood of bank failures and fiscal costs.
- Sovereign-bank nexus: rising bank reliance on sovereigns amplifies interdependence and contagion risk.
- Extreme climate events and global macro uncertainty, including commodity price fluctuations.

### Policy recommendations and priorities (regional and national)
- Fiscal policy:
  - Implement strong corrective measures to address fiscal slippages and restore fiscal buffers.
  - Enhance non-hydrocarbon tax revenue collection and improve spending efficiency.
  - Implement renewed regional coordination strategy to address fiscal imbalances and safeguard external stability.
  - Improve cash management, accelerate Treasury Single Account (TSA) deployment, and diversify funding sources.
- Monetary policy:
  - Maintain data-dependent stance; staff recommended keeping the policy rate at 4.5 percent until inflation sustainably declines toward 3 percent and external risks subside.
  - Continue weekly refinancing to ease liquidity pressures while guarding BEAC’s balance sheet.
- Financial sector:
  - Strengthen COBAC’s supervisory capacity and overhaul CEMAC banking legislation.
  - Mitigate sovereign-bank nexus by limiting excessive bank exposure to government and developing a more liquid secondary market.
  - Strictly enforce regulations for non-compliant banks; require time-bound recapitalization plans; resolve non-viable banks.
  - Monitor digital payments and crypto-asset risks; develop regulatory framework consistent with FSB, IOSCO, BCBS, CPMI, and FATF standards.
- Regional governance:
  - Accelerate adoption of a sanction mechanism for surveillance rule breaches.
  - Advance prerequisites for enhanced compliance with regional convergence criteria, including updated triennial convergence plans and operational national surveillance units.
  - Develop common perspective on proposed multilateral stabilization fund (potentially funded by hydrocarbon windfalls).
- Data and staffing:
  - Address data quality and production gaps; recruit staff for BEAC and COBAC as committed (two-thirds of COBAC positions by December 2025; full staffing by end-June 2026).
  - Provide the IMF with regular financial and monetary statistics per Annex I data matrix timelines.

### Annex I — data matrix highlights (selected deliverables and timing)
- Financial markets data (government securities): BEAC — Monthly — Excel — 10 days after end of month.
- Net foreign assets: BEAC — Daily — Excel — 10 days after end of month; Monthly — Excel — 30 days after end of month.
- Weekly monetary policy operations report: BEAC — Monthly — Excel — 10 days after end of month.
- Quarterly bulletin on CEMAC government securities market: BEAC — Quarterly — PDF — 30 days after end of month.
- Financial stability review: BEAC — Yearly — PDF — October.

*Source: EXECUTIVE SUMMARY (CEMAC), IMF staff report and excerpts from the CEMAC regional chapter, June 13, 2025.*

### EXECUTIVE SUMMARY

### EXECUTIVE SUMMARY

### Context and risks
- The CEMAC economy gained some momentum in 2024, with inflation easing but remaining above the regional convergence criterion.
- The external position weakened further: the current account deficit rose and reserve coverage stagnated.
- Preliminary fiscal outturns point to a worsening fiscal position, reflecting large fiscal slippages.
- An extraordinary Conference of CEMAC Heads of State (HoS) in December 2024 reaffirmed political commitment to a coordinated regional strategy to preserve fiscal sustainability, financial sector stability, and strengthen CEMAC’s external position.
- Baseline outlook: the external position is expected to progressively weaken over the medium term. Without decisive corrective actions—i.e., stronger fiscal consolidation in some member countries—the reserve coverage could fall below 4 months of prospective import by 2027, well under the assessed adequate level (5 months).
- Resilient outlook: post-election economic plans aligned with HoS commitments and prospective IMF-supported arrangements could stabilize or increase reserve coverage and strengthen the fiscal position. The baseline excludes these anticipated corrective actions pending full definition and implementation.
- Key uncertainties and risks: debt rollover, tightening financing conditions, and sovereign debt distress.

### Recent developments and key statistics
- Real GDP growth (CEMAC, 2024): approximately 3.3 percent.
  - Oil real GDP growth (2024): 0.9 percent (up from -0.6 percent in 2023).
  - Non-oil real GDP growth (2024): 3.6 percent (up from 2.7 percent in 2023).
  - Gabon non-oil GDP growth (2024): rose from 1.7 percent in 2023 to 3.6 percent in 2024.
  - Cameroon tertiary sector growth: 4.7 percent in 2024 (up from 4.0 percent in 2023).
  - Equatorial Guinea oil production growth (2024): approximately 2.8 percent (reversing around a 15 percent decline in 2023).
- Inflation and components:
  - Headline inflation (December 2024): 4.2 percent y/y.
  - Food inflation (44 percent of the basket, December 2024): 6.4 percent y/y, contributing 2.5 percentage points to headline inflation.
  - Transport cost inflation (December 2024): 9.9 percent y/y, contributing 1.0 percentage point to headline inflation.
- External position and reserves:
  - Current account deficit (2024): 0.9 percent of GDP (vs 0.6 percent of GDP in 2023).
  - Reserve coverage (2024): 4.3 months of prospective imports (assessed adequate level: 5 months).
  - Net Foreign Assets (NFA): 3-month average of EUR 5.02 billion in December 2024, just above the EUR 5 billion target endorsed by the IMF Executive Board in June 2024.
  - NFA drivers: US$500 million loan to Chad in November 2024; higher yield on BEAC’s reserves; good cocoa season in Cameroon (cocoa prices up about 60 percent between September and December 2024).
  - Early 2025 NFA increase: Gabon issuance of a US$570 million Eurobond in February 2025 and FX surrendered up 66.4 percent compared to the same period in 2024.
- Monetary policy and liquidity:
  - BEAC policy rate (TIAO) cut by 50 basis points in March 2025 to 4.5 percent (previously 5 percent).
  - Staff recommendation: keep the policy rate unchanged at 4.5 percent and maintain a data-dependent stance, refraining from premature further loosening.
  - Marginal lending facility rate reduced by 75 basis points to 6 percent; interest rate corridor narrowed to 150 basis points from 175 basis points.
  - Central bank liquidity injections (average weekly):
    - June 2024: approximately CFAF 40 billion.
    - December 2024: CFAF 200 billion.
    - Since start of 2025: CFAF 340 billion.
  - Marginal interest rate on injections: average around 5.1 percent in early 2025 (down from about 5.5 percent in December 2024).
  - Subscription rate on injections: nearly 108 percent on average (down from 118 percent in December 2024).
  - Recourse to marginal lending facility: about CFAF 943 billion at end-November 2024 (up from CFAF 708 billion in September 2024).
  - Average outstanding liquidity injections: CFAF 1,236 billion in November 2024 (up from CFAF 1,055 billion in September 2024).
  - Interbank market: outstanding volume about CFAF 619 billion in December 2024 (up from CFAF 558 billion in September 2024).
  - Average interbank interest rates: around 5.8 percent in December 2024.
- Fiscal developments:
  - CEMAC overall fiscal balance (including grants): swung from a 0.7 percent of GDP surplus in 2023 to a 1.5 percent of GDP deficit in 2024.
  - Change drivers: 1.4 percentage point decrease in revenue and 0.9 percentage point increase in primary spending.
  - Non-oil primary fiscal deficit: widened from 7.3 percent of non-oil GDP in 2023 to approximately 7.6 percent in 2024.
    - Contribution to deterioration: Gabon -0.7 ppt of CEMAC’s non-oil primary balance; Congo -0.1 ppt.
    - Improvements: Cameroon and Chad contributed 0.3 ppt each to the non-oil balance.
  - Public debt ratio: preliminary data suggest broadly unchanged (no specific number provided in the summary).

### Outlook and scenarios
- Baseline:
  - External position expected to progressively weaken over the medium term.
  - Absent stronger fiscal consolidation in some members, reserve coverage could fall below 4 months of prospective import by 2027 (adequate level: 5 months).
- Resilient scenario:
  - Post-election economic plans aligned with HoS commitments and prospective IMF-supported arrangements could stabilize or increase reserve coverage and strengthen fiscal positions.
- Both outlooks subject to high uncertainty and elevated risks related to debt rollover and tightening financing conditions.

### Policy recommendations
- Fiscal policy:
  - Implement strong corrective measures to address persistent fiscal slippages and restore fiscal buffers.
  - All member states should continue efforts to enhance non-hydrocarbon tax revenue collection and improve spending efficiency.
  - Implement the renewed regional coordination strategy to address fiscal imbalances and safeguard external stability.
  - Prioritize measures to cope with tightening financing conditions: improve cash management, enhance regional coordination, and seek external support to reduce borrowing costs and diversify funding sources.
- Monetary policy:
  - Staff advised maintaining a data-dependent monetary policy stance and refraining from premature further loosening.
  - Recommended keeping the policy rate unchanged at 4.5 percent.
  - In the near term, BEAC should continue regular refinancing operations to mitigate growing liquidity pressures and ensure effective monetary transmission, while remaining vigilant about price and external stability.
  - BEAC should maintain efforts to address fragmentation within the banking system.
- Financial sector policy:
  - Strengthen COBAC’s supervisory capacity.
  - Draft a comprehensive overhaul of CEMAC banking legislation.
  - Implement decisive measures to mitigate risks associated with the sovereign-bank nexus.
  - Strictly enforce regulations for non-compliant banks.
  - Address liquidity-stressed institutions and avoid further delays in government-led bank recapitalization where necessary.
  - Trigger resolution of non-viable banks.
  - Monitor emerging risks from new digital payments.
- Regional strategy and governance:
  - Accelerate efforts to implement a robust sanction mechanism for surveillance rule breaches.
  - Advance prerequisites for enhancing compliance with regional convergence criteria.
  - Develop a common perspective among the CEMAC Commission, BEAC, and the PREF-CEMAC Secretariat on the proposed multilateral stabilization fund, potentially funded by hydrocarbon windfalls.
  - Address data quality issues to ensure accurate regional statistics, including financial and monetary statistics.

*Source: EXECUTIVE SUMMARY (CEMAC), IMF staff report, June 13, 2025.*

### 52.6 percent of GDP, but the risks of debt distress continue to be high (Text Table 2).

### 52.6 percent of GDP, but the risks of debt distress continue to be high (Text Table 2).

### Pressures in the regional government debt market
- Government debt issuance activity remained sizeable in late 2024 and early 2025, reflecting high financing needs.
- Average subscription rates for government securities fell to 43.5 percent by the end of October 2024, down from 80.4 percent a year earlier.
- Average yields reached nearly 10 percent on government bonds (OTA) and nearly 7 percent on bills (BTA).
- High discount rates (around 3 to 5 percent) were applied to new issuances in some countries, notably Chad, Congo, and Gabon.
- Failed government debt auctions increased, particularly in Chad, Congo, and Gabon.
- Payment incidents in the government securities market were related to administrative delays.
- CEMAC countries face a heavy debt repayment schedule in 2025–26; Congo has the largest repayment obligations and undertook a debt reprofiling operation in October 2024 that extended maturities and created a significant maturity peak in 2025.
- Gabon undertook a debt reprofiling operation in March 2025.
- International market access remains costly: in February 2025, Gabon issued a US$570 million Eurobond with a 3.5-year maturity at a 12.7 percent yield.
- Sovereign spreads for Cameroonian and Gabonese public debt in international markets hovered around 950 basis points in early June 2025.

### Impact of recent debt reprofiling operations (Congo and Gabon)
- Gabon’s March 2025 operation involved ten banks and included:
  - A voluntary exchange of CFAF 204 billion of government securities, extending average maturities from 2–3 years to 6 years.
  - Securitization of bank claims (payment arrears) totaling CFAF 763 billion, with average maturities ranging from 2 to 9 years.
- Reprofiling effects on regional repayment schedule (CFAF billion):
  - Total debt repayments scheduled in 2025 fell from approximately CFAF 2,920 billion to CFAF 2,409 billion.
  - Repayment obligations rise in 2026 from CFAF 1,963 billion to CFAF 2,290 billion.
  - Repayment obligations rise in 2027 from CFAF 1,254 billion to CFAF 1,773 billion.
- Potential balance-sheet effects:
  - Maturity extensions may exacerbate maturity mismatches on bank balance sheets and increase liquidity risk.
  - The securitization component could potentially reduce non-performing loans and lower associated loan-loss provisioning.
- Full quantification of the impact on securities holders (primarily banks) is not yet available.

### Banks’ exposure to the sovereign and financial system vulnerabilities
- Total banks’ exposure (loans and securities) increased from 10 percent of total assets at end-2015 to about 30 percent of total assets at end-2024.
- Several banks have exposure to CEMAC governments above 50 percent.
- Surge in public sector credit raises crowding-out concerns for private sector lending.
- Securities’ maturities lengthened from short-term treasury bills to long-term bonds, increasing maturity mismatch risk given predominance of sight deposits.
- Limited liquidity of government securities attributed to lack of a robust secondary market exacerbates risks.
- Financial soundness indicators (FSI) (latest available correspond to end-2023):
  - Capital adequacy declined from 14.6 percent to 11.8 percent of risk-weighted assets between 2022 and 2023.
  - Preliminary COBAC data suggest an improvement in capital adequacy in 2024 due to restructuring and recapitalization.
  - 60 percent of banks had sufficient capital to comply with all prudential requirements at end-2024.
  - Nonperforming loans (NPL) were 15.7 percent at end-2023; recent data show signs of stabilization in 2024.
  - Short-term liquidity ratio was 176.4 percent as of end-2023, though COBAC’s metric may underestimate liquidity risk and several banks are below 100 percent.
  - Banks’ total assets grew by 11.6 percent year-on-year in 2023Q4.
  - Banks’ loan portfolio grew annually by 8.3 percent during 2023Q4.

### Outlook and key projections (baseline and resilient scenarios)
- Real GDP growth:
  - Expected to decline slightly to 2.6 percent in 2025 (2.9 percent for the non-oil sector), then gradually increase to reach 3.8 percent by 2030 (4.3 percent for the non-oil sector).
- Inflation:
  - Average inflation is projected to decrease and settle at the regional convergence criterion of 3 percent in 2026.
- Non-hydrocarbon primary fiscal deficit:
  - Projected to improve from 5.6 percent of GDP in 2025 to 4.1 percent of GDP in 2030.
- Public debt stock:
  - Projected to fall from 52.3 percent of GDP in 2025 to 45.9 percent of GDP in 2030.
- Debt service-to-revenue ratio:
  - Projected to decrease from 56 percent to around 51 percent by 2030.
- Current account and reserves:
  - Current account deficit projected to deteriorate to 2.1 percent of GDP in 2025 and widen to around 3.1 percent of GDP by 2030.
  - Reserve coverage projected to fall below 4 months of prospective imports by 2028 and stabilize at 3.1 months of imports by 2030 (assessed adequate level: 5 months).
- Resilient scenario:
  - Post-election economic plans, HoS commitments, and prospective IMF-supported arrangements could stabilize or increase reserve coverage and strengthen the fiscal position.
  - Under the resilient scenario, reserve coverage would stabilize around 4 months over the medium term.

### Downside risks and channels
- Fiscal and external imbalances: Failure to maintain fiscal discipline and address slippages could trigger higher deficits, arrears accumulation, additional inflationary pressures, and weakened buffers. General elections in four CEMAC countries between 2025 and early 2026 pose risks of higher-than-planned deficits financed through arrears.
- Rollover risks and tighter financing conditions: Reduced ODA, higher-for-longer global interest rates, and term premia could widen external imbalances, intensify rollover risks, amplify sovereign-bank feedback loops, increase borrowing costs, and risk debt defaults.
- Sovereign debt distress: Deterioration in financial conditions could produce debt defaults, restructuring needs, arrears, or prolonged fiscal austerity.
- Humanitarian and security risks: Deterioration in security or USAID reductions could weaken food security infrastructure, increase humanitarian needs, and worsen human development indicators.
- Setbacks in banking supervision and regulation: Delays in increasing COBAC resources or upgrading supervisory frameworks would increase likelihood of bank failures, contagion, and fiscal costs.
- Sovereign-bank nexus: Growing reliance on bank resources amplifies interdependence; bank distress may force government intervention, escalating public debt and creating a feedback loop with regional contagion risks.
- Extreme climate events: Increased frequency/intensity of floods, droughts, and heatwaves would reduce crop yields, increase food insecurity and prices, cause economic losses, and exacerbate poverty.
- Global macroeconomic uncertainty: Commodity price fluctuations (including hydrocarbon prices) driven by global dynamics could further destabilize external and fiscal balances.

### Policy implications and priorities (implied by findings)
- Strengthen fiscal consolidation where feasible to reduce non-hydrocarbon primary deficits and improve debt sustainability.
- Implement and sustain reforms to rebuild fiscal and external buffers, including measures to enhance hydrocarbon revenue repatriation and compliance with FX regulations.
- Pursue IMF-supported arrangements to anchor medium-term fiscal plans and catalyze external financing.
- Enhance banking sector supervision and increase COBAC resources to reduce systemic risk and improve crisis-preparedness.
- Address sovereign-bank nexus vulnerabilities by limiting excessive bank exposure to government and developing a more liquid secondary market for government securities.
- Manage debt reprofiling carefully to mitigate bank maturity mismatches and liquidity risks while seeking to preserve financial stability.
- Develop contingency plans for election-related fiscal risks, and strengthen social safety nets to mitigate humanitarian impacts from shocks.

*Source: IMF staff estimates and regional authorities (excerpts from the CEMAC regional chapter).*

### 14.      In the long term, uncertainty on global demand for CEMAC commodity export and

### 14.      In the long term, uncertainty on global demand for CEMAC commodity export and 

### Long-term outlook and risks
- Uncertainty on global demand for CEMAC commodity export and increased reliance on electricity could result in lower hydrocarbon demand and prices.
- The ability to maintain current hydrocarbon production levels in CEMAC faces significant uncertainty in the medium and long term, mainly due to declining return on investment for future potential production sites.
- Lags in implementing structural reforms aiming at diversifying the economy would gradually dent long-term growth.

### Commodity price adverse scenario and external buffers
- An adverse shock to global commodity prices due to a sharp slowdown in global demand, coupled with the global transition to low-carbon economies, could lower demand for CEMAC exports, adversely affecting public finances, external stability, and social indicators.
- Adverse scenario: oil prices drop to $55/bbl in 2025 and throughout the forecast horizon.
- In that adverse scenario, reserve coverage would sharply fall to only 2.4   month of imports by 2030.

### Public gross financing needs and debt servicing (key statistics)
- Staff estimated CEMAC’s public gross financing needs at around 9.1 percent of GDP in 2025.
- This corresponds to about 17.9 percent of CEMAC public debt.
- Debt servicing is estimated at 9.7   percent of CEMAC GDP, including EUR 3.5   billion of CEMAC’s external liabilities (excluding IMF).
- Repayments of treasury bonds (OTA) and 52-week treasury bills (BTA) issued in 2024 are expected to peak in the last quarter of 2025 (about CFAF 1,200 billion).

- Projected Gross financing needs, 2025–30 (annual totals and ratios as reported)
  - Gross financing needs (CFAF billion): 7,173; 7,800; 8,088; 7,931; 9,143; 8,985
  - Gross financing needs (percent of CEMAC GDP): 9.1; 9.4; 9.2; 8.4; 9.1; 8.4
  - Gross financing needs (percent of CEMAC public debt): 17.9; 18.6; 18.5; 17.5; 19.4; 18.4
  - Primary deficit (CFAF billion): -500; 541; 9; -168; -89; -117
  - Float and change in arrears (CFAF billion): 333; 340; 391; 223; 269; 181
  - Debt services (CFAF billion): 7,339; 7,306; 7,678; 7,876; 8,963; 8,922
  - Interest (CFAF billion): 1,444; 1,435; 1,541; 1,615; 1,698; 1,818
  - Domestic interest (CFAF billion): 902; 956; 1,005; 1,066; 1,153; 1,265
  - External interest (CFAF billion): 542; 478; 537; 550; 545; 553
  - Amortization due (CFAF billion): 5,895; 5,871; 6,137; 6,260; 7,265; 7,103
  - Domestic (incl. IMF) amortization (CFAF billion): 4,132; 4,398; 4,450; 4,575; 4,978; 4,968
  - External (excl. IMF) amortization (CFAF billion): 1,762; 1,473; 1,687; 1,685; 2,287; 2,135
  - External liabilities (excl. IMF) (CFAF billion): 2,304; 1,951; 2,223; 2,235; 2,832; 2,688
  - External liabilities (excl. IMF, EUR billion): 3.5; 3.0; 3.4; 3.4; 4.3; 4.1
  - External liabilities (excl. IMF, percent of CEMAC GDP): 2.9; 2.3; 2.5; 2.4; 2.8; 2.5

### Policy discussions — recommended regional and national actions
- Overall mission advice
  - Gradually adjust fiscal stance to address fiscal and external imbalances and to rebuild buffers amid tightening financing conditions and liquidity strains.
  - BEAC should maintain its current monetary policy stance.
  - Accelerate structural reforms to increase long-term inclusive and diversified growth, strengthen financial stability, and build resilience to boom-and-bust cycles from hydrocarbon price volatility.

A. Coping with Elevated Tightening Financing Conditions
- Risks and required actions
  - Tightening financing conditions (global and domestic) are a significant risk; additional liquidity shortages and higher funding costs could become solvency issues.
  - Near- to short-term response primarily involves fiscal measures.
  - Regional institutions (BEAC, COBAC, and the CEMAC Commission) should coordinate to accelerate structural reforms and support national treasuries for cash management.

- BEAC-advised measures for national authorities
  - Continue pursuing fiscal consolidation and improve regional fiscal coordination; anchor fiscal policies regionally and over the medium term.
  - Prioritize strengthening cash management: develop improved cash flow forecasts, enhance coordination among revenue, spending, and debt units, accelerate Treasury Single Account (TSA) implementation.
  - Diversify funding sources to decrease borrowing costs and reduce overreliance on the regional debt market; improve comprehensive debt management and transparency, including recording all public debt and contingent liabilities.
  - Prioritize external support and seek concessional terms; Heads of State commitments to IMF-supported arrangements for all member countries recommended; continue close collaboration with the World Bank and pursue bilateral assistance with careful attention to terms.
  - Prepare, coordinate, and prioritize contingency measures tailored to evolving global and liquidity conditions; improve debt management capacity to implement operations managing debt risks and costs if stress materializes.

- BEAC views on financing pressures and capacity
  - BEAC concurred with assessment of tightening financing conditions and acute pressures in the regional debt market, while noting an expanded investor base.
  - BEAC acknowledged upcoming high amortization peaks and encouraged proactive debt management and early action.
  - BEAC emphasized current framework and tools—strong interactions with national treasuries—are sufficient to weather projected tensions and has initiated exploratory discussions for more solutions.
  - BEAC noted recent monetary loosening and flexible liquidity injections provided breathing room for the banking system but lower TIAO has not fully transmitted to the regional debt market.
  - Regional and national institutions would benefit from coordinated capacity building to improve cash management.

B. Strengthening Fiscal Sustainability and Rebuilding Buffers
- Fiscal strategy and revenue measures
  - Continue fiscal consolidation and eliminate fiscal slippages; anchor fiscal policy within a medium-term public debt framework using the non-hydrocarbon primary balance (NHPB) or the regional convergence criterion on the fiscal balance as operational targets.
  - Frontloaded fiscal adjustment recommended for credibility and to reduce borrowing costs, while protecting critical social programs and investment.
  - Bolster and diversify revenue streams to reduce reliance on hydrocarbon revenues; modernize tax policy and administration through e-procedures and mobile tax payment platforms.
  - Broaden the tax base by rationalizing tax incentives, enhancing progressivity of personal income taxation, improving governance for tax policy, and reinforcing taxing rights over multinational income.
  - Timely endorsement and swift implementation of new regional tax directives (tax procedure codes, income tax, tax expenditure management, customs procedures) and expeditious adoption of the new VAT directive by member states in collaboration with the CEMAC Commission.
  - Bolster tax administration capacity, including in international taxation, develop a comprehensive regional domestic revenue mobilization strategy, and address staffing constraints at the CEMAC Commission.

- Extractive sector tax compliance
  - Multi-pronged approach: standardized customs processing aligned with the CEMAC Extractive Industry Customs Procedures Guide; specialized tax administration units with third-party information and audit capacity; digitalization of tax and customs procedures; systematic information exchange among tax and customs administrations, ministries, and SOEs; strengthen risk analysis frameworks and targeted compliance plans; bolster transparency and control oversight in extractive industries including SOEs and suppliers.

- Public expenditure efficiency and SOE risk management
  - Phase out inefficient subsidies while establishing targeted social safety nets.
  - Eliminate unwarranted emergency/off-budget spending; rationalize wage bill, non-priority recurrent spending, and transfers to SOEs.
  - Strengthen monitoring of SOE fiscal risks via fiscal risk statements with SOE sections; address root causes of SOE vulnerabilities to reduce transfers.
  - Conduct or update Public Investment Management Assessments (PIMAs), potentially incorporate Climate Change Assessment module, and expedite implementation of PIMA recommendations.

- Debt management and arrears
  - Improve Medium-Term Debt Strategy (MTDS) to link borrowing with macroeconomic policy; as of May 2024, only Cameroon had published a full-fledged MTDS (2020, covering 2021–23).
  - Enhance debt transparency, especially non-guaranteed SOE debt; refrain from collateralized debt arrangements secured by natural resources.
  - Implement strategies to prevent and clear arrears: align expenditure commitments with cash flow and procurement plans; continuously track expenditures and include arrears stock in fiscal reports; record all expenditures in the Integrated Financial Management Information System at the liquidation stage.

- Treasury Single Account (TSA) deployment
  - Accelerate TSA deployment; BEAC should resolve technical issues hindering its IT platform, which remains non-operational in pilot countries Cameroon and Gabon.
  - Scheduled final testing phase is now expected to take place by end-December 2025.

C. Enhancing Monetary Policy Transmission and Vigilance over Price and External Stability
- Monetary policy stance and recommendations
  - Maintain a data-dependent monetary policy stance and refrain from premature further loosening.
  - Staff recommended keeping the policy rate unchanged at its current level (4.5 percent), noting March 2025 policy action diverged from prior recommendation.
  - Heightened risks and persistent liquidity pressures could warrant maintaining a slightly accommodative stance, but avoid further rate cuts until inflation is sustainably declining toward the regional convergence criterion of 3 percent and external stability risks subside.
  - Continued vigilance is warranted given uncertainty about inflation trends and weak reserve accumulation; upside inflation risks include planned reduction in fuel subsidies, potential second-round effects of past subsidy reforms, and volatile global commodity prices.
  - Resumption of main refinancing operations expected to ease liquidity pressures, but BEAC should monitor potential unintended consequences on the interbank market.

- Authorities’ views on monetary policy and recent actions
  - BEAC indicated the 50-basis point reduction in the TIAO was justified by improvements in price and external stability; it expects headline (and core) inflation to fall below the regional convergence criterion of 3 percent towards end-2025.
  - BEAC acknowledged reserve coverage improvements but uncertain whether structural.
  - BEAC places relatively small weight on external stability in its reaction function due to minimal policy rate impact on capital flows, imperfect capital mobility, and limited attractiveness.
  - The steeper cut to the marginal lending facility rate aimed to ease burdens on banks heavily reliant on BEAC financing.
  - BEAC stated easing monetary policy could reduce pressures in the regional debt market, though transmission is limited, and that the recent policy action is not the start of a rate-cutting cycle.
  - BEAC will remain vigilant and ready to raise interest rates if risks to price stability increase.
  - BEAC explained the recent increase in average interbank market interest rates—despite the rate cut—as primarily driven by a limited number of banks with a high counterparty risk premium.

*Source: IMF staff projections.*

### 29.      Staff underscored that the recent liquidity pressures within the CEMAC banking system

### Staff assessment of liquidity, supervision, and financial stability in the CEMAC banking system

### Liquidity pressures and monetary policy operations
- Recent liquidity pressures warrant the continued use of liquidity injection operations.
- Indicators of tightening monetary conditions:
  - Growing reliance on the marginal lending facility.
  - Increased demand at the main lending facility.
  - Sustained decline in excess liquidity.
- Staff recommendations for BEAC:
  - Maintain weekly liquidity injections, at least at the current level of the TIAO.
  - Persist in efforts to reduce fragmentation within the banking system to ensure effective monetary policy transmission.
  - Conduct regular lending operations using a fixed-rate full allotment procedure, based on market and macroeconomic conditions.
  - Encourage participation in the money market by the small number of inactive financial institutions.
- Authorities’ observations:
  - BEAC concurs that liquidity pressures are persistent and has increased liquidity injections above levels suggested by autonomous liquidity factors.
  - BEAC conducts fine-tuning operations and provides liquidity beyond main refinancing operation levels; strong marginal lending facility demand is largely from liquidity-stressed banks excluded from main refinancing.
  - Identified drivers of market pressures: high government credit demand, maturity extensions in the public regional debt market, challenges in attracting deposits, collateral selection by certain counterparties, and private-sector arrears (reflecting government-related arrears).
  - A small number of banks, primarily subsidiaries of foreign financial institutions, hold excess reserves and are not active in the money market.

### Engagement with liquidity-stressed banks and conditionality
- Staff concerns:
  - Slow progress in addressing liquidity-stressed banks risks structural dependency on BEAC support.
  - Prolonged reliance on BEAC increases the risk of structural dependency.
- Staff recommendations:
  - Tighten conditionality for structurally liquidity-stressed banks that absorb the bulk of BEAC refinancing, including requesting credible refinancing plans.
  - In cases of continued non-compliance, consider resolution procedures in cooperation with COBAC.
  - Apply stricter oversight and require credible, time-bound financing plans.
  - Recognize that resolving liquidity challenges depends on governments’ ability to secure sustainable financing to clear domestic arrears.
- Authorities’ actions:
  - BEAC requires six structurally liquidity-dependent banks to submit financing plans; five have submitted plans, three forwarded to COBAC per procedures.

### Mitigating BEAC balance-sheet risks and collateral framework
- Staff recommendations to protect BEAC’s balance sheet:
  - Adjust collateral haircuts to reflect underlying risks and apply the collateral framework in line with the principle of risk equivalence, including differential haircuts.
  - Enforce reserve requirements without exemptions.
  - Implement a funding plan framework for banks excessively reliant on BEAC refinancing.
  - Utilize the emergency liquidity assistance framework subject to strict conditionality and heightened supervisory oversight, if necessary.
  - Closely monitor repayments of past statutory advances and the stock of bonds purchased during the COVID-related bond purchase program (which began maturing in 2022Q2).
  - Monitor exposure to the regional development bank (BDEAC).
- Progress and observations:
  - Two countries (Chad and C. A. R.) have repaid principal on consolidated debt from past statutory advances, though with about ten days’ delay due to insufficient funds preventing automatic debit on the due date.
  - Upcoming repayments from other countries are scheduled on a quarterly basis throughout 2025 and should be closely monitored.
  - BEAC agreed to maintain its approach of adjusting haircuts and setting exposure limits by bank and/or country; the most recent haircut update was carried out in April 2025, incorporating recent sovereign rating and country risk changes.

### FX regulation enforcement and RES funds
- Staff recommendations on FX regulation enforcement:
  - Intensify efforts to improve efficiency of FX request processing by reducing technical delays and deploying additional resources.
  - Ensure complete, efficient, consistent, and predictable application of FX regulations aligned with international best practices.
  - Strengthen compliance monitoring within the public and extractive sectors regarding FX repatriation and surrender requirements.
  - Enhance BEAC’s capacity to map FX accounts held abroad by governments, SOEs, and other public entities, potentially with support from the Bank for International Settlements.
- Authorities’ views and actions:
  - Authorities credit enhanced FX regulation compliance with supporting reserve accumulation and maintaining the FX surrender rate above the 70 percent minimum.
  - Implementation of e-transfers, e-tracking, and SWIFT scope, and oversight of banks’ daily disclosures are proving beneficial.
  - BEAC established a hotline and recruited new staff to handle FX transfer requests within 48 hours and holds joint monthly meetings with banks and the extractive industry.
  - BEAC noted delays in some transfers often stem from non-compliant requests and initiating banks’ inadequate treatment.
  - On RES (funds for rehabilitation of oil and mining sites): negotiations on repatriation are nearly finalized; in the absence of a final agreement and clarity on expected future flows, staff cannot assess how RES funds will impact the region’s external position. Funds that are encumbered will not be classified as reserve assets.
  - Only Chad has shared extractive industry contracts (without amounts), limiting ability to assess impact on BEAC’s balance sheet.

### Staffing, data, and safeguards
- Staff concerns:
  - Need to address recruitment issues to ensure adequate human resources for BEAC’s mission, including improved data collection and management to enhance monetary policy analysis and communication.
  - Implementation of safeguards recommendations from the 2022 BEAC assessment and 2023 follow-up has been limited; recommendations included strengthening governance arrangements, onboarding new senior management and Board members, enhancing delegation frameworks, and resolving the staff recruitment freeze.
- Authorities’ actions:
  - BEAC initiated the hiring process for BEAC and COBAC (see section E); recruitment is expected to improve data availability, particularly high-frequency monthly and quarterly statistics, currently poor across the region.
- Timing notes:
  - The mission welcomed the recruitment call for BEAC and COBAC initiated in June 2025.

### Strengthening financial stability oversight, COBAC reforms, and supervisory actions
- Staff recommendations for coordinated action (national authorities, COBAC, BEAC):
  - Implement decisive and timely enforcement, including stringent sanctions or corrective supervisory measures against persistent non-compliant banks.
  - Strictly enforce BEAC’s refinancing policies for liquidity-stressed banks.
  - Undertake a comprehensive risk-based program of onsite supervision of bank credit portfolios, prioritizing systemically important banks, to assess classification and provisioning of non-performing exposures and identify potential capital shortfalls from inadequate loan-loss provisioning.
  - Accelerate development and implementation of a comprehensive domestic arrears’ clearance and prevention strategy to address high NPLs.
- COBAC-specific recommendations:
  - Require undercapitalized banks to submit detailed, time-bound, and verifiable medium-term recapitalization plans with robust NPL reduction strategies.
  - Ensure weak banks are promptly recapitalized or resolved through orderly exit strategies to minimize disruption and protect depositors.
  - Gradually enforce existing concentration limits on sovereign exposures, monitor sovereign risk concentrations, conduct regular stress testing, and implement targeted measures (e.g., additional capital charges) as needed.
  - Collaborate with BEAC to prevent primary dealers (predominantly banks) from absorbing the entirety of new sovereign issuances; develop a substantial non-bank investor base (pension funds, insurance companies).
  - Gradually shift away from the near-systematic practice of assigning zero-risk weight to government exposures by strictly applying the current regulatory framework.
- Legal and institutional reform timeline:
  - COBAC committed to complete a framework document outlining objectives of a reform to strengthen CEMAC’s supervision and resolution framework by end-2025.
  - That framework document will underpin a modern banking legislation proposal to be submitted for approval to the UMAC Ministerial Committee in 2026.
  - COBAC requested IMF technical assistance to support these reforms.
- Strategic priorities (COBAC strategic plan (2025-2029) alignment):
  - Continue implementing risk-based prudential and AML/CFT supervision.
  - Overhaul CEMAC banking legislation to bolster COBAC’s independence and strengthen the bank resolution framework.
  - Develop and implement robust stress testing methodologies.
  - Modernize regulatory framework by amending accounting standards to incorporate fair asset valuation, aligning with IFRS and other international best practices.
  - Accelerate progress towards adoption of Basel II/III standards.
  - Enhance risk management and bank governance.

### Market development, listing, and infrastructure
- Staff recommendations to deepen local-currency debt markets:
  - Accelerate development of a secondary debt market; a comprehensive local-currency bond market diagnostic could identify bottlenecks and guide a prioritized reform action plan.
  - BVMAC should intensify efforts to attract investor interest in 17 SOEs slated for listing (with only 2 currently listed); member countries are encouraged to promptly submit remaining SOEs for listing.
  - Expedite operationalization of the single central depository (implementation delayed at the end of 2024), ensuring strong governance structures to mitigate operational and financial stability risks, potentially with capacity-building support from development partners.

*CEMAC INTERNATIONAL MONETARY FUND*

### 48.      Staff encouraged BEAC, in coordination with other regional and national authorities, to

### 1caeea2025002-source-pdf - 48.      Staff encouraged BEAC, in coordination with other regional and national authorities, to

### Digital payments, crypto-assets, and CBDC considerations
- Staff recommendations and rationale:
  - Continue monitoring and managing risks associated with crypto-based digital payments and assets.
  - Regional supervisors (BEAC, COBAC, COSUMAF, GABAC) should advance work on developing a regulatory framework for crypto-related activities and strengthen coordination on the issuance of laws and regulations, in line with global standards and recommendations from FSB, IOSCO, BCBS, and CPMI.
  - Regulatory development should foster innovation and financial inclusion while safeguarding financial stability, protecting consumers, and ensuring compliance with FATF’s AML/CFT standards.
  - BEAC should diligently assess risks that crypto-based digital payments and assets could pose to its operations and monetary policy.
  - Intensify efforts to further unlock the financial inclusion potential of more established digital payment methods, such as electronic and mobile money.
- Developments and actions:
  - BEAC shared a legal opinion with the C.A.R authorities regarding the law permitting the tokenization of the country’s resource wealth with mandatory payment use of crypto assets, consistent with BEAC’s February 2025 Letter of Assurances.
  - BEAC indicated that a multidisciplinary working group (BEAC, COBAC, COSUMAF) responsible for developing the strategy on crypto-assets in the region will be appointed soon.
  - BEAC reiterated that IMF CD will help to explore the feasibility of introducing a central bank digital currency (CBDC).
  - BEAC confirmed that the internal legal assessment on the consistency of C.A.R.’s law (allowing the tokenization of its resource wealth and the exclusive use of crypto-assets for transactions) with regional legal and regulatory frameworks has been completed and shared with the C.A.R authorities.

### Authorities’ views and supervisory capacity (COBAC, BEAC, COSUMAF)
- Human resources and staffing commitments:
  - COBAC has communicated its staffing needs to BEAC, in line with commitments under the regional policy assurances, and intends to utilize these additional resources to enhance supervisory capabilities.
  - BEAC broadly concurred on need for adequate staffing and reiterated its commitment, as outlined in its Letter of Assurances, to provide COBAC with the corresponding staff headcount by end-June 2026.
  - BEAC remained firm in its commitment to providing the two-thirds of the resources requested by COBAC by the end of December 2025.
  - The General Secretariat (SG) of COBAC submitted its staffing needs to BEAC within the agreed timeframe of June 2025. BEAC launched the recruitment process to allocate SG COBAC with the two-thirds of required staff headcount by December 2025, aiming to fulfill total expressed staffing needs by end-June 2026.
- Data collection and financial statistics:
  - Acknowledged data collection hurdles from the new reporting system; banking data reporting has shown significant improvements since the previous review mission.
  - Technical hurdles preventing the production of FSI are nearing resolution, expected by early August 2025.
  - Staff emphasized that COBAC and BEAC should regularly report updated FSI and monetary and financial statistics to the IMF for dissemination.
- Risk-based supervision and AML/CFT focus:
  - COBAC is actively implementing its recently adopted risk-based supervision approach, prioritizing AML/CFT issues through focused on-site missions and a dedicated module within the new financial reporting system.
  - Close collaboration is maintained with national and regional bodies (GABAC, BEAC) to tackle strategic AML/CFT weaknesses identified in CEMAC member state evaluations.
- Weak banks and enforcement:
  - COBAC committed to resolving weak bank issues using all tools, including sanctions for non-compliance.
  - Emphasized need for synergy with national authorities for recapitalization and resolution of vulnerable institutions.
  - Urgent enforcement of regulations concerning concentration and sovereign risk exposure; dividend distribution should be restricted to banks fully compliant with all prudential requirements.
- Sovereign exposures:
  - Authorities concur with staff on sovereign exposure risk and initiated prudential measures.
  - A joint BEAC-COBAC working group established to strategize on reduction of sovereign overexposure in the banking sector; expected to begin work imminently.
  - COBAC independently formed a working group to propose new risk weighting rules for sovereign exposures.
  - Working groups expected to complete work by end-2025, with proposals to be presented at COBAC’s December 2025 session.
- Financial market regulation and market development:
  - COSUMAF agreed that diversifying the investor base would enhance financial market activity and support development of a secondary market for government securities.
  - Ongoing work with BVMAC to improve conditions for companies seeking listing on the stock exchange; financial education sessions for issuers and investors.
  - BEAC indicated the company responsible for managing the single central depository is expected to become operational in June 2025.

### Strengthening the regional surveillance framework
- Staff recommendations:
  - Commission should swiftly adopt a sanction mechanism for regional surveillance rule breaches and align it with international best practices.
  - Accelerate planned consultations with BEAC, BDEAC, COBAC, COSUMAF, and BVMAC.
  - Sanction mechanism should include a broader range of sanctions, such as pecuniary penalties or premiums on government securities, clarify scope and procedures for budgetary non-compliance, and provide escape clauses for exceptional circumstances.
- Priority prerequisites to enhance compliance with regional convergence criteria:
  - (i) Urge member countries to submit updated triennial convergence plans (a requirement under the draft sanction mechanism).
  - (ii) Ensure full operationalization of national multilateral surveillance units.
  - (iii) Adopt and implement comprehensive and credible national domestic arrears clearance and debt management strategies.
  - (iv) Ensure timely transposition of regional tax and PFM directives.
  - (v) Accelerate progress on the 2021–30 regional statistical program.
- Data quality and production challenges:
  - Regional data quality and production are significantly hampered by limited resources, leading to frequent data inconsistencies and extensive revisions.
  - Recurrent statistical issues include weak interagency coordination between BEAC and national statistical agencies on external sector statistics and continued poor track record in implementing CD recommendations due to inadequate staffing and resources in statistical agencies.
  - Recent upgrade of COBAC’s reporting system has at least temporarily deteriorated data quality and timeliness, although some progress has been observed.
- Commission’s capacity constraints and next steps:
  - CEMAC Commission welcomed staff recommendations and noted insufficient human resources hinder full mandate execution; key positions remain vacant due to funding constraints.
  - Commission committed to closer coordination with the UMAC Council of Ministers to finalize the sanction mechanism for rule violations; revised draft Additional Act (including IMF staff feedback, March 2024) is under consultation with regional institutions before submission to the UMAC Council of Ministers and subsequently to the Conference of HoS.
  - Next multilateral surveillance mission planned for 2025Q2.

### Monitoring of regional policy assurances and BEAC liquidity/NFA developments
- BEAC actions and monetary stance:
  - Central bank resumed weekly liquidity injections in June 2024 to alleviate increased volatility of liquidity in the banking system.
  - BEAC relaxed its monetary stance following continuous downward trend of inflation, despite inflation still being above the regional convergence criterion.
- FX regulation implementation and concerns:
  - Progress on implementation of the FX regulation has stalled; reported delays on FX requests and substantial volatility of the surrender effective rate in the past year.
  - BEAC will refrain from premature further loosening and continue monitoring compliance of the public and extractive sectors with FX regulations.
  - Member countries should ensure all public entities fully repatriate deposits held abroad.
- Net Foreign Assets (NFA) outcomes and targets:
  - Average October–December 2024 NFA outturn was EUR 5.02 billion, EUR 0.02 billion above the target set for this date at EUR 5.0 billion in June 2024.
  - Average January–March 2025 NFA level was EUR 5.97 billion, EUR 1.47 million above the target set for this date at EUR 4.5 billion.
  - The follow-up letter redefines the NFA target and outlines revised end-June and proposed new end-December 2025 targets:
    - Three-month average of EUR 5.5 billion at end-June 2025.
    - Three-month average of EUR 5.75 billion at end-December 2025.
  - Staff will assess whether the end-June 2025 target is met during the review scheduled for November 2025.
  - Targets account for projected external position weakening in 2025, seasonal end-of-year corrections, risks associated with lower oil exports, slow implementation of foreign-financed projects, and the assumption that only C.A.R. and Chad will be in an IMF-supported program after Cameroon’s program expires in July 2025.
  - Staff projections: with consistent and effective implementation of structural reforms and heightened compliance with FX regulation (including by public and oil sectors), NFA should improve in 2025H2, reaching a three-month average of EUR 5.75 billion at end-December 2025. Projection subject to heightened uncertainty from policy progress, oil market volatility, access to external funding, domestic macroeconomic and political risks, and IMF program negotiations.
- Drivers of recent NFA surge and vulnerabilities:
  - Recent surge in NFA partly due to one-off and seasonal factors should not mask vulnerabilities that may exacerbate NFA volatility.
  - NFA expected to decline with the end of the cocoa season in Cameroon, Chad’s use of its loan proceeds, and Gabon’s amortization of its maturing Eurobonds but slightly recover in the second half of the year.
  - Commodity price volatility, particularly declining oil prices, fiscal slippages, limited compliance in FX regulation by public and extractive sectors, and delays in FX transfers could halt further NFA accumulation.
  - Rising sovereign spreads in Cameroon and Gabon may lead to loss of market access, worsening the region’s funding squeeze.
- Country-specific NFA notes:
  - Chad's gross foreign assets rose from EUR 0.89 billion to EUR 1.51 billion between October and December 2024; partly due to a November 2024 USD 0.5 billion loan disbursement. Chad’s foreign assets declined since December 2024, reaching EUR 1.39 billion by March 2025.
  - Gabon issued USD 0.57 billion in bonds to partially repay the USD 0.41 billion outstanding balance of its USD 0.7 billion bond maturing in June 2025.
- Policy actions to strengthen external positions:
  - Member states expected to implement offsetting policy adjustments to structurally strengthen the external position, in line with political commitments reaffirmed at the extraordinary Heads of State Summit on December 16, 2024.
  - For countries without Fund-supported programs, decisive actions are warranted to rebuild fiscal and external buffers.
  - Staff stands ready to provide related CD support for a proposed multilateral stabilization fund, including alignment on feasibility and modalities; fund could be partially funded by oil windfalls.

### Staff appraisal: macro outlook, risks, and policy priorities
- 2024 outcomes and 2025 projection:
  - In 2024, CEMAC saw improved growth and moderating though still elevated inflation.
  - Progress on improving the external position remained limited due to a larger current account deficit and limited reserve accumulation.
  - FX reserves remained stable at around 4.3 months of import cover, though still below adequacy.
  - Projected decrease in GDP growth to 2.6 percent in 2025 is subject to considerable uncertainty amid the volatile global environment.
  - Medium-term growth of about 3.6 percent depends on implementing structural reforms to increase potential output (governance, anti-corruption, business climate, access to finance) and execution of the December 2024 Heads of State commitments.
- Key downside risks identified:
  - Delayed fiscal adjustments, lower commodity prices, tighter access to financing, political uncertainty in 2025 and early 2026, entrenched inflation, financial instability, slow reform progress, food insecurity, internal humanitarian and security conflicts, and devastating climate events.
- Fiscal policy and resilience recommendations:
  - Strengthen resilience and improve external position by addressing significant fiscal slippages and restoring fiscal prudence.
  - Swift fiscal consolidation across all countries is imperative, aligned with Heads of State commitments at the December 2024 extraordinary Summit.
  - Policy measures include: enhance non-oil tax revenue collection, improve spending efficiency, enhance debt management and rein in arrears, phase out inefficient subsidies, and establish targeted safety nets for vulnerable populations.
  - Strict adherence to these commitments expected to stabilize reserve coverage at around 4.0 months of prospective imports over the medium term (still below adequate level of 5 months).
  - Maintaining the status quo would likely lead to reserve coverage at around 3 months of prospective imports by 2030.

*Source: https://www.imf.org/-/media/files/publications/cr/2025/english/1caeea2025002-source-pdf.pdf*

### 62.      The CEMAC region continues to experience challenges in meeting its financing needs.

### The CEMAC region continues to experience challenges in meeting its financing needs.

### Financing challenges and immediate fiscal implications
- External financing has become increasingly uncertain and expensive, while availability of concessional terms is expected to diminish over the medium term.
- Access to domestic financing is increasingly challenging as the regional debt market, mainly relying on regional banks, seems to be approaching its absorption limit, and bank sovereign exposure already surpasses regulatory limits.
- Some member countries are resorting to domestic arrears to cope with liquidity tensions and some reprofiled (or envisage to reprofile) their regional debt portfolios to reduce the immediate liquidity burden and create fiscal space.
- Overcoming these interconnected challenges requires accelerating the structural agenda, with a particular focus on fiscal discipline and transparency, significant enhancements in cash and debt management, and improved governance.

### Monetary policy guidance for BEAC
- BEAC should maintain a data-dependent monetary policy and refrain from a premature further loosening.
- Recent policy action: BEAC’s 50-basis-point reduction in the policy rate to 4.5 percent, which diverged from staff’s previous advice.
- Staff view: the stance appears slightly accommodative but could be warranted given heightened risks to the outlook and unexpectedly persistent liquidity pressures in the banking system.
- Conditions for further rate cuts: BEAC should further reduce interest rates only if clear evidence emerges that inflation is sustainably receding toward the regional convergence criterion (3 percent) and risks to external stability have significantly diminished.
- Liquidity management: the central bank should continue its refinancing operations to alleviate liquidity pressures on banks.
- Prudential enforcement: BEAC, in collaboration with COBAC, must strictly enforce prudential regulations on concentration limits to prevent liquidity injections from exacerbating banks' sovereign risk exposure.
- Banking-sector actions: both institutions should address banking system segmentation by resolutely tackling weak banks, including demanding and scrutinizing refinancing plans from structurally liquidity-stressed banks and enhancing monitoring of their implementation and, in cooperation with COBAC, considering resolution for continued noncompliance.

### Preserving financial stability — priorities for national authorities and regional supervisors
- Recent provisional banking data suggest the banking sector strengthened, but pockets of vulnerabilities remain.
- Key priorities:
  - (i) urgently equipping the COBAC SG with sufficient human and financial resources;
  - (ii) implementing decisive measures to reduce risks associated with the sovereign-bank nexus;
  - (iii) overhauling the CEMAC banking legislation to bolster COBAC’s independence and strengthening the bank resolution framework;
  - (iv) strictly enforcing BEAC's refinancing policies for liquidity-stressed banks;
  - (v) conducting thorough assessments of non-performing exposures' classification and provisioning adequacy;
  - (vi) ensuring national governments recapitalize or resolve weak banks and rigorously applying sanctions or supervisory corrective actions when banks persistently violate prudential regulations; and
  - (vii) accelerating the implementation of a comprehensive national strategy for clearing and preventing domestic arrears.

### Strengthening regional surveillance and coordination
- The CEMAC Commission should urgently finalize and adopt the draft sanction mechanism for breaches of regional surveillance rules to bolster the framework's credibility and effectiveness.
- Accelerated coordination with regional institutions (BEAC, BDEAC, COBAC, COSUMAF, and BVMAC) is necessary to align the mechanism with international best practices.
- The Commission should actively encourage member states to submit their medium-term convergence plans.
- Prioritizing the advancement of key prerequisites for improved compliance with regional convergence criteria should remain a central focus.

### Emerging digital asset risks and supervisory response
- Effectively monitoring and managing the emerging risks of crypto-based digital payments and assets requires the development of a supervisory framework and capacity.
- Actions needed:
  - Regional supervisors must advance a regulatory framework for crypto-related activities and improve coordination on relevant legislation.
  - BEAC needs to diligently account for the risks of crypto-based digital payments and assets on its operations and monetary policy.
  - BEAC's exploration of digital payment methods should be based on a thorough cost-benefit analysis.

### BEAC NFA commitments and actions to meet targets
- BEAC commits to the updated policy assurances on NFA accumulation, to bring NFA to an average of EUR 5.5 billion in 2025Q2 and EUR 5.75 billion in 2025Q4.
- Context: The policy assurances on NFA provided in the February 2025 follow-up letter were met with significant margin for March 2025, prompting an upward revision of the 2025Q2 target and setting a higher target for 2025Q4.
- Required actions to meet NFA targets:
  - (i) member states must urgently implement corrective policy measures and continue advancing the structural reform agenda, and, consistent with the region’s highest-level political commitments, address macroeconomic imbalances and enhance external stability;
  - (ii) BEAC should intensify efforts to monitor and enforce repatriation and surrender requirements under the FX regulations across all sectors while ensuring smooth and efficient FX operations; and
  - (iii) BEAC should maintain a data-dependent monetary policy stance to safeguard both price and external stability.
- Additional dependencies: Building up FX reserves will also depend on timely disbursements of external financing.
- Political and donor engagement: adherence to high-level political commitments to the regional strategy and strengthened engagement with the Fund will be crucial to catalyzing donor support and reinforcing external stability.

*Source: IMF staff analysis (excerpts from content unit).*

### 68.      BEAC maintains the policy assurances on financial stability to enhance COBAC’s

### BEAC maintains the policy assurances on financial stability to enhance COBAC’s

### Policy assurances, COBAC staffing, and conditionality
- BEAC should provide SG COBAC with the necessary human resources corresponding to the expressed five-year staffing needs by June 2026.
- BEAC should fill two-thirds of the required positions by December 2025.
- SG COBAC should complete by December 2025 a framework document that will serve as the basis for preparing a modern banking law proposal, to be submitted for approval to the UMAC ministerial committee in 2026.
- Meeting the proposed policy assurances on the NFA and on the staffing of COBAC and the reform of the banking law are critical for securing the continuation or approval of new financial support under Fund-supported programs with CEMAC member countries.

### Real economy and growth projections
- Real GDP for CEMAC: projected to accelerate to 3.3 percent in 2024, from 2.2 percent in 2023.
- Country highlights in the 2024 acceleration: improvement especially in Equatorial Guinea, Cameroon and Chad; deteriorated outlook in Congo.
- Selected real GDP growth entries (2019–2025, annual change, in percent): CEMAC 2.6, -1.4, 1.5, 3.4, 2.4, 3.2, 3.3, 2.8, 2.6, 3.2, 3.4, 3.6, 3.6, 3.8 (table entries).

### Fiscal outcomes and projections
- Overall fiscal balance (CEMAC, percent of GDP): projected to deteriorate from -0.7 percent of GDP in 2023 to -1.5 percent of GDP in 2024.
- Drivers: lower hydrocarbon revenue and spending overruns in some member countries.
- Non-Oil Primary Fiscal Balance (including grants), 2022–25: shows large deficits; CEMAC non-oil primary fiscal balance (including grants) entries (2019–2030 tables) include: -6.8, -6.6, -6.8, -8.4, -7.3, -7.6, -7.6, -6.2, -6.2, -5.8, -5.4, -4.9, -4.7, -4.5 (percent of non-oil GDP).
- Government revenue (excluding grants, CEMAC): 16.3, 14.4, 14.6, 19.2, 18.7, 17.6, 17.4, 17.4, 17.1, 16.4, 16.5, 16.6, 16.5, 16.6 (percent of GDP) (Table 1).
- Government expenditure (including net lending, CEMAC): 17.3, 17.4, 16.5, 17.3, 18.5, 19.1, 19.6, 18.6, 19.1, 19.1, 19.1, 18.8, 18.8, 18.9 (percent of GDP) (Table 1).

### Public debt and fiscal consolidation
- Total public debt (CEMAC, percent of GDP): projected to decline to around 52.4 percent of GDP in 2023, and 523 percent of GDP in 2024 (text states "around 52.4 percent of GDP in 2023, and 523 percent of GDP in 2024"), with a downward trend in the medium term.
- Table 1 time series for Total public debt: 49.6, 57.9, 56.5, 51.0, 52.4, 50.9, 52.3, 49.3, 50.9, 50.5, 49.5, 48.3, 47.0, 45.9 (percent of GDP).

### External sector and reserves
- Current account balance (CEMAC): projected to slightly deteriorate from -0.6 percent of GDP in 2023 to -0.9 percent of GDP in 2024.
- Gross official reserves (end of period, Millions of U.S. dollars): 7,390; 7,779; 8,060; 11,064; 11,446; 11,319.4; 11,640; 12,310.9; 12,874; 12,331; 11,765; 11,167; 10,643; 10,459 (Table 1).
- Months of imports of goods and services (less intra regional imports): 4.0, 3.4, 3.3, 4.3, 4.3, 4.2, 4.3, 4.5, 4.7, 4.3, 4.0, 3.6, 3.3, 3.1 (Table 1).
- Current account (billions of CFA francs, selected): Current account balance entries include -468, -507, 232, 2,458, -457, -908, -688, -1,452, -1,670, -2,580, -2,560, -2,722, -3,021, -3,328 (Table 4a).

### Oil sector and medium-term outlook
- Oil price path: revised downward to $79 per barrel on average in 2024 in the latest WEO submission (vs. $80.6 per barrel in late 2023).
- Oil prices (Brent, U.S. dollars per barrel) table entries include: 61.44, 41.86, 69.28, 80.68, 80.67, 79.07, 79.26, 69.86, 66.96, 62.46, 62.76, 63.66, 64.36, 64.9 (annual entries).
- Oil production (thousands of barrels per day, Table 1): 905.7, 870.2, 786.8, 784.7, 777.0, 785.0, 776.6, 783.2, 777.0, 774.4, 774.7, 780.4, 784.2, 785.0 (annual).

### Monetary developments and BEAC operations
- BEAC resumed its weekly liquidity injections in 2024, but borrowing at the marginal lending facility remained elevated in 2024Q3, while excess liquidity declined.
- Broad money continued to expand in 2024, reflecting higher net foreign assets and credit to the private sector.
- Monetary aggregates (selected, annual change, in percent): Broad money 5.9, 11.1, 12.6, 13.5, 8.5, 7.4, 7.4, 7.2, 6.4, 6.8, 6.8, 6.9, 7.0, 7.1 (Table 1).
- Net foreign assets (percent of beginning-of-period broad money, Table 5): 1.4, -6.6, -5.1, 11.2, 0.4, 4.2, 6.9, 4.4, 3.9, -0.1, 0.0, 0.1, 0.6, 1.1.
- BEAC central bank net foreign assets (billions of CFA francs, Table 7): 2,730; 1,980; 1,420; 3,169; 3,238; 3,449; 3,655; 3,683; 3,553; 3,985; 4,056; 4,308; 4,191; 4,052; 3,924; 3,879; 4,035 (selected table entries).

### Financial sector and government securities
- Net issuances of government securities increased, driven by stronger issuances from Gabon and Congo.
- Governments’ deposits at the BEAC continued to moderate in 2024, partly reflecting lower oil fiscal revenues.
- Credit to the public and private sectors (percent of GDP, Table 5): credit to the public and private sectors series and credit to the private sector levels: 6,988; 6,994; 7,815; 8,550; 9,081; 10,982; 10,052; 10,287; 9,764; 8,488; 10,259; 10,150; 10,474; 11,461; 12,750; 14,334; 15,834 (billions of CFAF, Table 5).

### Convergence criteria and fiscal rules
- Reference fiscal balance requirement (post-2017): must exceed -1.5 percent of GDP (as defined in the note).
- Compliance indicators (Table 6): illustrate multiple violations across member countries on reference fiscal balance, public debt ceiling (≤ 70 percent of GDP), and inflation (≤ 3%) in recent years; number of countries violating varies by criterion and year in table entries.

*Source: IMF staff estimates and CEMAC authorities as presented in the supplied content.*

### 1. External financing needs

### 1. External financing needs

### Key figures from the financing summary table
- 1. External financing needs: 1 1855757765329367167567613934779219598818
- 2. Net IMF Financing: 572122249-12-40-88-45-67-85-155-71-71-141
- 3. Budget suport from other donors: 45129139182584525846631651164148212
  - World Bank: 12303118652249823010364138202
  - African development Bank: 22013456006018024001
  - European Union: 68340000000000
  - France: 1113591337290143744099
  - Other: 29009177731814326000
  - Note: Includes external financing from the BDEAC in CFAF.
- 4. Commercial borrowing: 5954560302000000127614740
- 5. Debt relief: 28610462400-10-100000
- 6. External arrears: -7-57-100-1-1-1-1-3000
- 7. Residual financing gap: -125243-175-28000000000
- Sources: Authorities' data; and IMF staff estimates and projections.
- Footnotes in table:
  - 1 After projected/targeted change in gross reserves.
  - 2 Refers to the projections of the IMF SR 24/193.
  - 3 Includes external financing from the BDEAC in CFAF.

### Macroeconomic developments and outlook
- Growth:
  - 2023: 2.4 percent (economic activity slowdown)
  - 2022: 3.4 percent
  - 2024: 3.3 percent (driven by hydrocarbon and tertiary sectors)
  - 2025 projection: 2.6 percent
- Inflation:
  - 2023: 5.6 percent
  - 2024 expected: 4.1 percent
  - 2025 projected: below regional standard of 3 percent
  - 2026 projected: 2.4 percent
  - 2027 projected: 2.0 percent
- Current account:
  - 2023: deficit of 0.6 percent of GDP
  - 2024: deficit of 0.9 percent of GDP (widened due to drop in oil prices)
- Debt and fiscal:
  - Debt-to-GDP ratio: 52.6 percent in both 2023 and 2024 (stable)
  - Ratio of debt interest to total budget revenue: 8.8 percent in 2023; nearly 10.6 percent in 2024
  - Budget deficit (commitment basis, excluding grants): 2023 surplus of 0.2 percent of GDP; 2024 deficit of 2.0 percent of GDP; expected 2025: -0.9 percent of GDP
  - Non-oil primary budget deficit: 8.2 percent of GDP in 2023; 8.5 percent of GDP in 2024

### External position, reserves, and liquidity management
- Gross reserves:
  - Increased by 12.9 percent between 2023 and 2024
  - Import coverage: around 4.3 months of imports of goods and services (maintained at 2023 level)
- Net foreign assets (NFA):
  - December 2024 three-month average: 5.02 billion euros (slightly exceeding regional target of 5 billion euros set in June 2024)
  - March 2025 three-month average: 5.97 billion euros (significantly exceeding regional target of 4.5 billion euros set in February 2025)
- Central bank liquidity injections:
  - Average weekly volume of BEAC injections by end-March 2025: about CFAF 230 billion
  - Average weekly volume at end-June 2024: around CFAF 141 billion
  - Average subscription rate for weekly operations: reached 105 percent in April 2025
- Monetary policy rates (March 2025 MPC):
  - Main policy rate (TIAO) reduced by 50 basis points to 4.5 percent
  - Marginal lending facility rate lowered by 75 basis points to 6 percent
- BEAC operational commitments:
  - Maintain appropriate orientation of monetary policy; refrain from further interest rate reductions absent sustained decline in inflation below 3 percent and mitigation of external stability risks
  - Maintain weekly refinancing operations; consider fixed-rate full-allotment procedure depending on market and macroeconomic conditions

### Regional assurances, targets, and definitions on NFAs
- Drivers of NFA growth since late November 2024: disbursements from external loans (Chad and Gabon), strong cocoa season in Cameroon, rising gold prices and returns on reserve investments, increased repatriations linked to strict foreign exchange regulations
- Revised NFA targets:
  - Three-month average target at end-June 2025: increase from 4.7 billion euros to 5.50 billion euros
  - New target for end-December 2025: 5.75 billion euros
- NFA definition for regional assurances:
  - BEAC's NFAs defined as value, in euros, of difference between BEAC's gross external assets and gross external liabilities, per monetary and balance of payments statistics manuals
  - Non-euro assets/liabilities converted into euros at BEAC exchange rates for the period concerned
  - Exclude pledged, encumbered, or otherwise burdened assets unless there is a corresponding external commitment
  - Assessment based on three-month average ending on the target date

### Foreign exchange regulations and repatriation efforts
- Improved compliance with foreign exchange regulations in 2024: better effective surrender rate and processing times
- BEAC commitments:
  - Full and transparent implementation of foreign exchange regulations
  - Strengthen cooperation with member states to ensure compliance by public and extractive sectors with repatriation and surrender obligations
  - Ongoing negotiations and progress on repatriation of site rehabilitation funds (RES funds); framework agreement template discussions continuing after April 30, 2025 deadline

### Public financial management and regional government securities market
- Treasury Single Accounts (TSAs) IT platform:
  - Technical issues delayed pilot phase launch in Cameroon and Gabon to fourth quarter of 2025
  - Implementation contingent on national authorities deciding to centralize Treasury and state entity accounts in BEAC books
- Regional government securities market size: estimated at CFAF 8,448.8 billion at end-April 2025
- Concentration of maturities in 2025 and 2026 noted as a risk
- Sovereign securities reprofiling operations:
  - Congo PNOT securities exchanges completed: FCFA 914.72 billion executed as of February 28, 2025
  - Gabon securities reprofiling: executed amount of 204 billion as of May 18, 2025; securitization of direct liabilities to banks for 763 billion FCFA as of same date
  - BEAC did not exchange securities from its portfolio under these programs

### Banking supervision, regulation, and sector vulnerabilities
- Banking sector fundamentals (provisional): improvement at end-2024 compared to end-2023, though pockets of vulnerability persist
- Recapitalization and share capital increases by some banks appear to strengthen aggregated net capital
- COBAC and BEAC supervisory commitments:
  - Continue implementing monetary and non-monetary sanctions per regulations
  - Review recovery plans for banks structurally dependent on BEAC refinancing and support restructuring
  - Monitor and control banks' exposure to sovereign risk, including phasing out systematic zero weights for new government securities issuances
  - Intensify on-site inspections, accelerate resolution procedures for undercapitalized banks, require credible recapitalization plans within a short time frame
  - Strengthen AML/CFT supervision and regulatory framework; gradually enforce sanctions
- Human resources:
  - BEAC to address COBAC understaffing; recruitment process begun to meet needs expressed by COBAC Secretariat
  - BEAC committed to meet COBAC staffing needs by end-June 2026 at the latest, aiming to fill two-thirds of positions by December 2025
  - Specific recruitment processes launched: auditors (February 2025) and mid-level managers (March 2025)

### Digital assets, CBDC, and regulatory coordination
- Regional monitoring of crypto-asset risks: focus on money laundering, terrorist financing, proliferation, financial integrity, governance, consumer protection, and AML/CFT compliance
- Examination of Law No. 23-010 of July 24, 2023 (Central African Republic) for compliance with community regulations
- Governor's Decision No. 069/GR/2025 of May 15, 2025: BEAC established a working group to study a central bank digital currency and crypto-asset regulation in consultation with COBAC, COSUMAF, GABAC, and GIMAC
- BEAC has requested IMF technical assistance for the study

### Regional surveillance, data sharing, and program monitoring
- Sanction mechanism for violations of multilateral surveillance rules: BEAC to strengthen collaboration with CEMAC Commission and PREF-CEMAC Permanent Secretariat to expedite adoption in 2025
- Data sharing commitments:
  - BEAC and COBAC to provide all economic and financial statistics included in the December 2023 letter of assurance to IMF staff
  - COBAC to provide IMF staff every six (6) months, and at least two (02) months before review missions, all necessary information to closely monitor banking system soundness
- Program monitoring:
  - BEAC to update competent bodies (Board of Directors, Ministerial Committee, PREF-CEMAC) regularly and work closely with IMF staff for macroeconomic consolidation
  - BEAC will notify and consult IMF staff in a timely manner on developments likely to affect CEMAC stability, by end-June and December 2025, and take corrective measures if required

*Source: 1caeea2025002-source-pdf - 1. External financing needs*

### Annex I.  Data Matrix to be Provided to IMF Staff

### Annex I.  Data Matrix to be Provided to IMF Staff

### Data to be Provided (institution, frequency, format, transmission)
- Financial markets data: Government securities (T-bills and bonds) — BEAC — Monthly — Excel — 10 days after the end of the month
- Monthly accounting statement — BEAC — Monthly — Excel — 30 days after the end of the month
- Inflation data — BEAC — Monthly — Excel — 60 days after the end of the month
- Monetary statistics — BEAC — Monthly — Excel — 60 days after the end of the month
- Outgoing transfers — BEAC — Monthly — Excel — 30 days after the end of the month
- Incoming transfers — BEAC — Monthly — Excel — 30 days after the end of the month
- Net foreign assets1 — BEAC — Daily — Excel — 10 days after the end of the month
- Net foreign assets — BEAC — Monthly — Excel — 30 days after the end of the month
- Refinancing and interbank operations — BEAC — Monthly — Excel — 10 days after the end of the month
- Banks’ reserves at the Central Bank — BEAC — Monthly — Excel — 10 days after the end of the month
- Weekly monetary policy operations report — BEAC — Monthly — Excel — 10 days after the end of the month
- Interbank data: volume and rates — BEAC — Monthly — Excel — 10 days after the end of the month
- Autonomous Factors of Banking Liquidity (AFBL) Data — BEAC — Monthly — Excel — 10 days after the end of the month
- Haircuts on sovereign securities applied by BEAC — BEAC — Quarterly — Excel — 30 days after the end of the month
- Quarterly bulletin on the CEMAC government securities market — BEAC — Quarterly — PDF — 30 days after the end of the month
- Financial stability review — BEAC — Yearly — PDF — October

- Footnote 1: "This data will be treated confidentially. It is understood that the data is provisional and cannot be used to assess the final net foreign asset position."

*Statement by Mr. N'Sonde, Executive Director for Member Countries of the Central African Economic and Monetary Community and Mr. Nguema-Affane, Senior Advisor to the Executive Director — June 26, 2025*

### Authorities' main commitments and priorities
- Pursue fiscal policies consistent with debt sustainability and sound external position of CEMAC.
- Strengthen the independence of the central bank (BEAC), the banking commission (COBAC) and other regional institutions.
- Take strong measures to reduce banks' over-exposure to the sovereign and further establish COBAC's credibility as banking supervisor.
- Ensure and reinforce effective, uniform, and predictable enforcement of the foreign exchange regulations.
- Accelerate structural reforms.
- Ensure transparency and reliability of fiscal, economic and financial data.
- Call for the Fund’s continued policy advice, technical assistance, and financial support as needed.

### I. Recent Developments and Prospects — Key findings and statistics
- Growth and inflation:
  - GDP growth in 2024: 3.3 percent (after a slowdown in 2023).
  - Inflation in 2024: 4.1 percent, down from 5.6 percent in 2023.
- External sector and reserves:
  - Current account deficit: 0.9 percent of GDP in 2024, up from 0.6 percent of GDP in 2023.
  - Gross reserves increased by 12.9 percent between 2023 and 2024.
  - Import coverage: around 4.3 months of imports of goods and services (maintained at 2023 level).
- Fiscal and debt:
  - Overall fiscal balance in 2024: -2.0 percent of GDP (turned negative from a surplus of 0.2 percent of GDP in 2023).
  - Region's debt-to-GDP ratio: 52.6 percent (stable between 2023 and 2024).
  - Ratio of debt interest to total budget revenue: rose from 8.8 percent in 2023 to nearly 10.6 percent in 2024.
- Banking sector:
  - Banks’ sovereign exposure remains elevated, raising concerns about crowding out private sector lending.
- Net Foreign Assets (NFAs):
  - Growth trajectory began in late November 2024.
  - March 2025 three-month average NFA: 5.97 billion euros (regional target set in February 2025 was 4.5 billion euros).
  - Drivers: disbursements from external loans (Chad and Gabon), significant increase in export proceed repatriations, particularly in the extractive sector ahead of the April 30, 2025 deadline to comply with foreign exchange regulations.
- Regional public debt market tensions:
  - Evidenced by lower subscription rates for public securities, increased average yields on bonds and treasury bills, and rise in sub-par auctions.
  - Concentration of maturities in 2025 and 2026 increases rollover risks.
  - Gabon undertook a securities reprofiling operation in March 2025; Republic of Congo did so in 2024.
- Monetary policy and liquidity:
  - BEAC eased monetary policy in March 2025 with a 50-basis-point reduction in the main policy rate (TIAO).
  - BEAC increased liquidity injections to meet growing liquidity demand and mitigate heightened volatility.
- Central bank reforms and digital currency work:
  - BEAC addressed technical issues delaying the IT system for Treasury Single Accounts (TSAs) in pilot countries Cameroon and Gabon.
  - May 2025: BEAC established a working group to study a central bank digital currency and the regulation of crypto-assets within CEMAC; BEAC requested IMF technical assistance.
- Regional assurances and staffing:
  - BEAC progressing on regional assurance on human resources to provide COBAC with an agreed number of staff by December 2025 (two recruitment drives launched in February 2025 and March 2025).
  - COBAC drafting a framework document to prepare a modern banking law proposal; COBAC requested IMF technical assistance.

### Outlook, scenarios, and risks
- Baseline projection:
  - GDP growth projected to slow to 2.6 percent in 2025, then accelerate to 3.8 percent by 2030.
  - Inflation projected to fall below the regional standard of 3 percent in 2026 and remain low thereafter.
- Fiscal projection:
  - Non-hydrocarbon primary fiscal deficit expected to fall by about 1.5 percentage points of GDP between 2025 and 2030.
- External position under scenarios:
  - No policy adjustment scenario: reserve import cover falling to 3.1 months of imports by 2030.
  - Scenario with greater external assistance and implementation of Heads of State commitments: reserve import cover would stabilize at about 4 months by 2030 (still below adequate level of 5 months).
- Downside risks:
  - Intensification of global trade tensions and resulting instability in financial and commodity markets.
  - Further tightening of financial conditions.
  - Climate-related events.
  - Delays in structural reform implementation.
  - Debt-related vulnerabilities at the sub-regional level.
  - Regional security and sociopolitical developments, potential humanitarian and security repercussions from neighboring-country crises.
  - Dependence on timely conclusion of reviews of ongoing Fund-supported programs and predictable disbursement of budget support from development partners amid nearly-saturated regional securities market, reduced access to international capital markets and declining official development assistance.

### II. Policies for 2025 and beyond

#### A. Monetary Policy and Liquidity Management — commitments and measures
- Maintain data-driven monetary policy and vigilance; refrain from any further policy rate reductions in the absence of:
  - a sustained decline in inflation below the regional convergence criterion of 3 percent, and
  - a clear mitigation of risks to external stability.
- Maintain weekly refinancing operations to ease liquidity pressures as needed.
- Consider conducting active liquidity injection operations through a fixed-rate full-allotment procedure, taking into account market and macroeconomic conditions, to strengthen monetary policy transmission.
- Pursue full and transparent implementation of the foreign exchange regulations and strengthen cooperation with member states to ensure repatriation and surrender of foreign currency by the public and extractive sector.
- Note on NFAs regional assurance revisions:
  - Three-month average target at end-June 2025 revised from 4.70 billion euros to 5.50 billion euros.
  - New target for end-December 2025 set at 5.75 billion euros.

#### B. Banking Supervision and Regulation — measures and reforms
- Provisional data indicate improvement in solvency and liquidity ratios of the CEMAC banking system.
- Recent recapitalization and share capital increases by some banks appear to strengthen aggregated capital adequacy ratio.
- COBAC enforcing sanctions (monetary and non-monetary) for non-compliance.
- BEAC and COBAC reviewing recovery plans of banks structurally dependent on BEAC refinancing and committed to supporting restructuring.
- Measures to reduce banks' sovereign exposure:
  - Phase out of systematic zero weights for new government securities issuances.
  - Secure support of countries to clear domestic payment arrears and avoid accumulation of new ones.
  - COBAC to ensure strict application of prudential regulations regarding concentration limits.
- Hiring of new auditors to intensify site inspections and accelerate resolution procedures for undercapitalized banks.
- COBAC to strengthen AML/CFT supervision and the regulatory framework and gradually enforce sanctions.
- States' role:
  - Support required to strengthen state-owned banks and implement comprehensive strategies for clearing domestic payment arrears together with submission to the CEMAC Commission.
  - Enhance public financial management to avoid resurgence of new payment arrears that threaten financial stability.

#### C. Multilateral Surveillance — reform actions
- CEMAC Commission to quickly organize consultations with community institutions (BEAC, BDEAC, BVMAC, COBAC, and COSUMAF) to finalize the revised draft of the new sanction mechanism for violations of multilateral surveillance rules with a view to enabling its adoption by the competent bodies in 2025.

*Source: Annex I. Data Matrix to be Provided to IMF Staff — 1caeea2025002-source-pdf*

---


_Source: https://www.imf.org/-/media/files/publications/cr/2025/english/1caeea2025002-source-pdf.pdf_