IMF Executive Board Concludes Annual Discussions on CEMAC Common Policies and Common Policies in Support of Member Countries Reform Programs
IMF News, February 26, 2025
Source details
- Canonical URL
- IMF Executive Board Concludes Annual Discussions on CEMAC Common Policies and Common Policies in Support of Member Countries Reform Programs
Other formats
Bibliographic details
- Published: February 26, 2025
Overview and recent economic developments
- IMF Executive Board concluded annual discussions with the Central African Economic and Monetary Community (CEMAC) on February 24, 2025; Press Release No. 25/46 dated February 26, 2025.
- The CEMAC economy lost momentum in 2023 due to a contraction in hydrocarbon production.
- Key 2023–2024 indicators:
- Real GDP growth decelerated to 2.5 percent in 2023.
- Real GDP expanded by 3.2 percent in 2024, supported by a rebound in hydrocarbon output.
- FX reserves accumulation slowed and remained below adequate levels.
- Regional policy assurances on net foreign assets (NFA) for end-June 2024 (EUR 4.5 billion) were not met, falling short by EUR 4.43 billion.
- Preliminary data suggest end-December 2024 policy assurances on NFA are unlikely to have been met.
- Inflation remained persistently high at 4.3 percent in September 2024, exceeding the regional convergence criterion.
- Monetary and regional institutional actions:
- BEAC kept the policy rate unchanged at 5 percent at its September 2024 meeting.
- BEAC continued weekly liquidity injections through its main refinancing window to mitigate increased volatility of liquidity conditions.
- BEAC advanced enforcement of FX regulations and engaged with banks structurally dependent on BEAC refinancing to secure credible refinancing plans.
- The CEMAC Commission sustained regional surveillance consultations; PREF-CEMAC continued implementing the structural reforms action matrix.
Outlook and projections
- Near-term forecast:
- Real GDP growth projected to slow to 2.8 percent in 2025, primarily due to weaker oil output.
- Inflation projected to decline to 3.1 percent by end-2025, reflecting lagged effects of past policy tightening and lower global commodity prices.
- Medium-term projections (to 2029):
- Growth projected to strengthen to 3.6 percent by 2029, mainly owing to a rebound in the non-oil sector.
- Public debt projected to decline to 42 percent of GDP by 2029, down from 50.9 percent of GDP in 2024.
- Current account balance projected to deteriorate to -2.2 percent of GDP by 2029, from about -1.2 percent of GDP in 2024, driven mainly by lower hydrocarbon export receipts and production.
- Reserve coverage expected to stabilize at around 4.3 months of prospective imports in the medium term, slightly below staff’s adequacy metric for a resource-rich monetary union (5 months).
Risks and uncertainties
- Significant downside risks highlighted:
- Delays in addressing fiscal slippages.
- Declining commodity prices and weaker oil output.
- Tighter financial conditions and heightened political uncertainty amid a busy 2025 election calendar.
- Persistent inflation and financial instability.
- Slow progress on structural reforms.
- Food insecurity, domestic conflicts, and climate-related disruptions.
- Outlook trajectory depends on effective implementation of corrective measures consistent with the extraordinary Heads of State Summit commitments in December 2024 to address macroeconomic imbalances, strengthen regional institutions, and advance structural reforms.
Executive Board assessment — findings and policy recommendations
- Directors agreed with the staff appraisal, noting:
- Loss of economic momentum from contraction in hydrocarbon production and slower non-oil growth.
- Weakening external position, large fiscal imbalances, heightened stress in the regional debt market, and elevated uncertainty.
- Fiscal policy recommendations:
- Urged swift implementation of fiscal consolidation in line with December 2024 commitments.
- Emphasized enhancing non-oil tax revenues and improving expenditure efficiency, including completing energy subsidy reforms while ensuring targeted social safety nets for the most vulnerable.
- Called for strengthening public financial management, reinforcing debt management, and addressing arrears.
- Monetary and financial sector policy recommendations:
- BEAC should maintain a tightening monetary policy bias and only reduce interest rates if there is clear evidence of inflation converging toward the regional convergence criterion and diminishing risks to external stability.
- Given persistent tight liquidity conditions, BEAC should sustain liquidity providing operations while continuing efforts to address banking system fragmentation.
- Continued enforcement of FX regulations remains crucial.
- Financial stability and supervision:
- Stressed need for strong collective action from national and regional authorities to preserve financial stability.
- Recommended strengthening COBAC’s supervisory capacity, strict enforcement of regulations for noncompliance, resolute recapitalization or resolution of weak banks, ensuring banks adequately account for sovereign exposure, addressing new risks from digital payments and assets, and strengthening the AML/CFT framework.
- Regional surveillance and structural reforms:
- Reiterated the need to strengthen the regional surveillance framework and urged further efforts toward adoption of the draft sanction mechanism for breaches of regional surveillance rules.
- Stressed accelerating structural reforms to strengthen governance and regulation, human capital, climate adaptation, and regional trade and infrastructure to boost potential growth, economic diversification, and resilience.
Policy assurances and implementation
- Directors regretted that BEAC did not meet the authorities’ policy assurance on NFA for June 2024 and that the December 2024 target is unlikely to be met, as committed in June 2024.
- Directors assessed that authorities undertook and committed to sufficient corrective action during the December 2024 Heads of State meeting and endorsed the authorities’ policy assurance on NFA accumulation for end March 2025 and end June 2025 as committed in February 2025.
- Directors supported the new policy assurances on financial stability and emphasized that implementation of these assurances is critical for the success of Fund-supported programs with CEMAC member countries.
Source: IMF Press Release No. 25/46 (February 26, 2025).