Press Release No. 13/274

Press Release: Statement at the Conclusion of the 2013 Regional Consultation on Common Policies for the Member Countries of the Central African Monetary and Economic Community (CEMAC)

July 23, 2013

An International Monetary Fund (IMF) mission visited Yaoundé during July 10-23, 2013, to conduct discussions on Common Policies for the Member Countries with the institutions of the CEMAC. The mission met with M. Abaga Nchama, Governor of the BEAC (Banque des Etats de l’Afrique Centrale), and held discussions with M. Tahir Hamid Nguilin, Vice Governor of the BEAC, M. Ngassiki, Secretary General of the BEAC, M. Abbas Tolli, Secretary General of the COBAC (Commission Bancaire de l’Afrique centrale), M. Paul Tasong, CEMAC Commissioner and other senior officials. The mission also met with representatives of the private sector, civil society and the donor community. Discussions focused on recent economic developments and key challenges for the region, including the optimal fiscal policy response to attenuate risks and boost growth, financial sector reforms to promote development and stability and measures to foster regional integration.

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

“Recent regional economic performance in CEMAC has been solid, largely driven by public investment plans in several member countries. In 2012, region-wide growth accelerated to 5.2 percent, driven by public investment while inflation has remained in check, albeit slightly above the CEMAC regional convergence criterion of 3 percent. At the consolidated regional level, fiscal policy was expansionary and the primary balance deteriorated due to large expenditures.

“The outlook for the remainder of 2013 points to a slowdown in economic growth. Regional real GDP growth is projected between 3 and 3 ½ percent, due to an anticipated scaling-down of public investment in Equatorial Guinea. The medium-term outlook is expected to remain solid with growth at around 4.0 percent on average for the 2013-2018 period. Inflation is expected to remain at about 3 percent by end-2013. Fiscal balances would improve somewhat.

“However, downside risks remain significant, as the region remains vulnerable to a decline in oil and other commodity prices, and a protracted slowdown in its partner countries.

“Policy discussions centered on the question of how to deepen regional integration and promote sustainable growth in CEMAC. Key issues discussed in each of the policy areas included the following:

• Fiscal policy: So far fiscal policy has been largely procyclical. High oil revenues have supported large and much needed infrastructure investment spending but the buildup of fiscal buffers has remained uneven. The Member Countries, in coordination with the regional institutions, should prepare for a possible temporary fall in oil prices by creating buffers to sustain development. More generally they should focus on better management of non-renewable oil resources by delinking fiscal spending from the volatility of resource revenues.
• Financial sector policies: Access to financial services in the CEMAC region is among the lowest in Africa while the soundness of the financial sector raises concerns as weaknesses in individual institutions need to be addressed. The mission encourages the authorities to strengthen banking sector regulation and enhance supervision.
• Monetary policy: the mission encourages the authorities to improve the efficiency of the monetary policy framework including by redesigning the BEAC’s instruments for liquidity management and its operations. In addition, to promote the development of the interbank money market, the mission encourages the authorities to accelerate reforms to reduce counterparty risks as well as improve the lending climate.
• The main medium-term challenges for the CEMAC region is to move to higher, sustainable, and inclusive growth, in order to raise living standards, create more jobs, and accelerate poverty reduction. The mission considers that these objectives should be supported by a deepening of regional integration. The mission discussed developing more efficient regional policies to ensure in particular better coordination of the national development plans. The BEAC and the CEMAC commission have an important role to play in this regard, including through enhancing regional monetary policy, improving the coordination of fiscal policies, promoting initiatives to remove barriers to internal and external trade, and further implementing of critical reforms in the financial sector. It is therefore paramount to further strengthen their institutional capacity. Improving the business climate in the region is also essential to higher medium-term growth.”

“The IMF’s Executive Board is expected to examine the report on the 2013 Regional Consultation on Common Policies for the Member Countries with the institutions of the CEMAC in October 2013. The mission would like to thank the authorities for their warm hospitality, good cooperation, and constructive dialogue.”