On behalf of the CEMAC authorities, we would like to thank the Executive Board, Management, and staff for the continued support to CEMACmemberstates and regional institutions in the implementation of the regional strategy to strengthen internal and external stability of the currency union.
As the regional economy recovers from the pandemic, the authorities are particularly grateful for the strong Fund support provided to the region during the health crisis, which has been critical to mitigate its human, social and economic impact in the region after
inflation expectations. The liquidity management framework should revert to its pre-crisis focus on the autonomous factors of banking liquidity, and normal liquidity operations should be restricted to liquid and solvent banks. In the event of a deviation from the revised NFA accumulation targets that is not minor or temporary, BEAC and the CEMACmemberstates should stand ready to identify and adopt necessary additional corrective actions, including a further tightening of monetary policy by BEAC if needed. BEAC and COBAC should also address banks with structural
While improving, CEMAC’s economic situation remains fragile. Growth picked up slightly but remains well below potential. Governments’ fiscal consolidation efforts, along with BEAC’s tighter monetary policy and stricter enforcement of foreign exchange regulations, have contributed to a significant reduction in the region’s fiscal and external imbalances. All CEMAC countries are committed to macroeconomic policies agreed with IMF staff to support the economic recovery and financial sustainability of each country and of the region. The regional central bank and banking supervisor continue to implement policies in support of the IMF-supported programs with CEMAC members. However, fiscal slippages in some countries contributed to the underperformance of international reserve accumulation in early 2018. Looking ahead, a further improvement in the economic and financial situation is projected, assuming full implementation of policy commitments by CEMAC member states and regional institutions. This outlook remains subject to substantial risks from possible weaker program implementation, lower oil prices, and insufficient external financing.
March 2018, in steady progress.
Outlook and Risks
8. The outlook has somewhat improved with the upward revision of oil price projections, which should help to restore the fiscal and external sustainability of the region . This outlook will critically depend on the full implementation of policy commitments by CEMACmemberstates, including continued tightening of fiscal policies and adequate support by regional institutions, notably a sufficiently tight monetary policy stance and enforcement of foreign exchange regulation. It assumes that the additional oil
This Selected Issues paper looks at some Central African Economic and Monetary Community (CEMAC) specific regional dimensions of a possible strategy to enhance governance, which would support specific reforms in this area at the country level. The paper describes the specific dimensions of governance covered in the note. The paper also analyzes governance and corruption in the areas of public financial management, anti-money laundering, and the link between the oil sector and public resources. The CEMAC regional institutions will have to play a central role to lead progress in these areas, and support member countries’ own efforts. Due to such actions result in giving a coherent framework to actions conducted at the country level, the synergic dimension can spur a virtuous circle, key to earn the benefit of an economic and monetary union. The success of the regional strategy that CEMAC member countries and regional institutions are implementing to exit the severe crisis they are facing depends critically on creating the conditions for laying the ground for a diversified economy, within a well-functioning regional market and an environment that provides opportunities for all and where public resources are geared to most productive use.
CEMAC ended 2021 in a fragile external position, with gross reserves at only 2.7 months of prospective imports and net foreign assets (NFA) at their lowest level in decades, despite the availability of Fund financing, the SDR allocation, and monetary policy tightening. The terms of trade shock this year is expected to be broadly positive for CEMAC. This more favorable outlook is, however, subject to heightened external uncertainties associated with the fallout from the war in Ukraine (notably global inflation pressure, global growth uncertainties, and high oil price volatility), faster-than-anticipated global financial tightening, possible emergence of new COVID strains and risks from cryptoassets. Current high oil prices, if sustained, will help rebuild fiscal and external buffers, provided fiscal policies remain prudent. Shielding vulnerable populations from soaring energy and food prices adds to the complexity of navigating this uncertain environment, given CEMAC’s already limited policy options.
transactions (private companies working for oil) or commercial financing (leading to the prior commitment of oil exporters to repay their debt through credits provided by large foreign financial institutions). This complicates the challenge of reconciliation, as part of some transactions may be in the form of barter.
As a result, CEMACmemberstates must be proactive in ensuring good governance in such a complex sector; the CEMAC legislation provides solid ground on which to build progress ( Box 5.1 ):
The first task is to ensure that customs are and remain at the