{
  "title": "A Common Cause for Sustainable Growth and Stability in Central Africa",
  "publication": "IMF Blog, August 1, 2017",
  "sourceUrl": "https://www.imf.org/en/blogs/articles/2017/08/01/a-common-cause-for-sustainable-growth-and-stability-in-central-africa",
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  "summary": "Six countries in the Central African Economic and Monetary Community: Gabon, Cameroon, Chad, the Central African Republic, the Republic of Congo, and Equatorial Guinea.",
  "sections": [
    {
      "heading": "Expenditure, context, and shocks",
      "content": "- Six countries in the Central African Economic and Monetary Community: Gabon, Cameroon, Chad, the Central African Republic, the Republic of Congo, and Equatorial Guinea.\n- Share a common currency—the CFA franc—pegged to the euro, and a common central bank that holds the region’s pool of foreign exchange reserves.\n- Oil accounts for about 60 percent of the region’s exports.\n- Oil price collapse in 2014 cut government revenues from oil exports in half between 2014 and 2016.\n- Current account deficit widened from 3.9 percent of GDP in 2014 to 9.3 percent in 2016.\n- Public debt rose from 29 percent of GDP in 2014 to 47 percent of GDP in 2016, despite some cuts in public spending.\n- By end-2016, foreign exchange reserves had dropped by US$10 billion, reaching the equivalent of about two months of imports.\n- Security threats compounded economic difficulties: Boko Haram in the Lake Chad region and civil conflict in the Central African Republic."
    },
    {
      "heading": "Regional strategy and the united front",
      "content": "- Summit in Yaoundé: leaders decided to preserve the current exchange rate peg and take coordinated actions to address collective problems.\n- Overall reform emphasis on four areas:\n  - Raise non-oil revenues through fiscal reforms, better prioritize expenditures, and strengthen transparency and efficiency of public spending.\n  - Protect social spending and introduce new social protection programs to ease the impact on the poor.\n  - Strengthen the financial sector to promote stability and inclusion.\n  - Improve the business environment and promote economic diversification away from overreliance on oil.\n- Rationale: coordinated implementation across countries is critical to prevent free rider problems and enable regional recovery."
    },
    {
      "heading": "IMF support: financing, policy advice, and technical assistance",
      "content": "- IMF actions:\n  - Approved new Fund-supported programs for Gabon, Cameroon, and Chad, and an increase in funding for the Central African Republic.\n  - Discussions ongoing with the Republic of Congo and Equatorial Guinea.\n- Financing:\n  - Provided in conjunction with other development partners to allow a more gradual correction of imbalances and more time to implement reforms.\n- Three critical areas of policy advice and technical assistance:\n  - Policy coordination among countries and with regional institutions:\n    - Consistent implementation of reform programs to prevent free rider problems.\n    - Regional central bank commitment to support country programs and raise interest rates as needed to help rebuild external reserves and support the exchange rate peg.\n    - Strengthen the financial sector, including enhancing the bank supervision framework and its implementation.\n  - Growth-friendly and inclusive fiscal reforms:\n    - Mitigate effects of spending cuts by improving efficiency of public spending and protecting the poor.\n    - Emphasize fair distribution of fiscal adjustment to increase public support for reforms.\n  - Combating corruption and increasing transparency in public resource use:\n    - Corruption is a significant drain on scarce public resources and a drag on growth.\n    - Encourage concrete steps such as joining the Extractive Industries Transparency Initiative to support disclosure of commodity revenue information.\n- Final note: ultimate success depends on how well countries implement reforms and respond to future shocks; the IMF stands ready to support their efforts."
    },
    {
      "heading": "Key features of country programs",
      "content": "- Cameroon:\n  - Maintain sustainability of public debt by aligning borrowing plans with capacity to execute investment projects and prioritizing infrastructure projects that will contribute to the development of the country.\n  - Increase non-oil revenue by broadening the coverage of the land tax and rationalizing tax exemptions.\n  - Support private-sector led growth by addressing high non-performing loans and resolving insolvent banks, and removing administrative obstacles to private sector development.\n  - Target 3.5 percent of GDP for spending for health and education, and expand the coverage of social protection programs.\n\n- Gabon:\n  - Contain public spending to stabilize public debt and place it on a downward path over the medium term.\n  - Increase transparency and efficiency of public spending through public finance management reforms, including improving the process for public purchases to ensure better value for money.\n  - Protect critical social programs from fiscal adjustment by ensuring they remain adequately funded, maintain financial stability, and adopt policies to foster economic diversification.\n  - Simplify procedures and reduce the time it takes to start a business, deal with construction permits, register property, pay taxes, and enforce contracts to support private sector investment and job creation.\n\n- Chad:\n  - Reestablish debt sustainability by restructuring external commercial debt.\n  - Boost non-oil revenue mobilization, improve public financial management, and pursue economic diversification efforts, while strengthening the stability of the banking sector.\n  - Reallocate resources to public investment, clearance of domestic arrears, and social spending, including a target to gradually increase the latter starting in 2017, to reach 4.2 percent of GDP.\n\n- Central African Republic:\n  - Accelerate payments of domestic arrears and increase social expenditure to support social cohesion and growth.\n  - Raise domestic revenues by almost 3 percent of GDP by 2020 to create room in the budget for social services and critical infrastructure projects.\n  - Improve transparency and efficiency of public spending through regular publication of budget execution reports.\n\nSource: A Common Cause for Sustainable Growth and Stability in Central Africa, Abebe Aemro Selassie, August 1, 2017.\n\n---\n\n Content in this bundle\n\n- Uma Causa Comum para o Crescimento Sustentável e a Estabilidade na África Central\n  - Uma Causa Comum para o Crescimento Sustentável e a Estabilidade na África Central (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Uma Causa Comum para o Crescimento Sustentável e a Estabilidade na África Central (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\n References\n\n- https://www.imf.org/wp-content/uploads/2017/07/BLOG-1024x600-CAMEROON-Bafut-women-with-crops-Heiner-HeineimageBrokerNewscom.ibpremium494795.jpg\n- Gabon\n- Cameroon\n- Chad\n- Central African Republic\n- Republic of Congo\n- Equatorial Guinea\n- Corruption\n\nSource: https://www.imf.org/en/blogs/articles/2017/08/01/a-common-cause-for-sustainable-growth-and-stability-in-central-africa"
    }
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    "Authors: Abebe Aemro Selassie",
    "Published: August 1, 2017",
    "Six countries in the Central African Economic and Monetary Community: Gabon, Cameroon, Chad, the Central African Republic, the Republic of Congo, and Equatorial Guinea.",
    "Share a common currency—the CFA franc—pegged to the euro, and a common central bank that holds the region’s pool of foreign exchange reserves.",
    "Oil accounts for about 60 percent of the region’s exports.",
    "Oil price collapse in 2014 cut government revenues from oil exports in half between 2014 and 2016.",
    "Current account deficit widened from 3.9 percent of GDP in 2014 to 9.3 percent in 2016.",
    "Public debt rose from 29 percent of GDP in 2014 to 47 percent of GDP in 2016, despite some cuts in public spending.",
    "By end-2016, foreign exchange reserves had dropped by US$10 billion, reaching the equivalent of about two months of imports.",
    "Security threats compounded economic difficulties: Boko Haram in the Lake Chad region and civil conflict in the Central African Republic.",
    "Summit in Yaoundé: leaders decided to preserve the current exchange rate peg and take coordinated actions to address collective problems.",
    "Overall reform emphasis on four areas:",
    "Rationale: coordinated implementation across countries is critical to prevent free rider problems and enable regional recovery.",
    "IMF actions:",
    "Financing:",
    "Three critical areas of policy advice and technical assistance:",
    "Final note: ultimate success depends on how well countries implement reforms and respond to future shocks; the IMF stands ready to support their efforts.",
    "Cameroon:",
    "Gabon:",
    "Chad:",
    "Central African Republic:",
    "**Uma Causa Comum para o Crescimento Sustentável e a Estabilidade na África Central**",
    "[https://www.imf.org/wp-content/uploads/2017/07/BLOG-1024x600-CAMEROON-Bafut-women-with-crops-Heiner-Heine_imageBroker_Newscom.ibpremium494795.jpg](https://www.imf.org/wp-content/uploads/2017/07/BLOG-1024x600-CAMEROON-Bafut-women-with-crops-Heiner-Heine_imageBroker_Newscom.ibpremium494795.jpg)",
    "[Gabon](http://www.imf.org/external/country/GAB/index.htm)",
    "[Cameroon](http://www.imf.org/external/country/CMR/index.htm)",
    "[Chad](http://www.imf.org/external/country/TCD/index.htm)",
    "[Central African Republic](http://www.imf.org/external/country/CAF/index.htm)",
    "[Republic of Congo](http://www.imf.org/external/country/COG/index.htm)",
    "[Equatorial Guinea](http://www.imf.org/external/country/GNQ/index.htm)",
    "[Corruption](https://blogs.imf.org/2017/05/18/beheading-the-hydra-how-the-imf-fights-corruption/)"
  ],
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