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International Monetary Fund. African Dept.
Despite a more favorable external environment, marked by the rebound in global growth, fast-increasing oil prices, and unprecedented Fund financial support, CEMAC is ending 2021 in a fragile external position. Net external reserves fell throughout 2021 to reach their lowest level in decades, and gross reserves are just above three months of imports of goods and services. The launch of a second phase of the regional strategy at the August 2021 CEMAC Heads of States summit saw renewed commitments to accelerate structural, transparency, and governance reforms. The resumption of program engagements with the Fund, combined with high oil prices and significant fiscal adjustments in 2022, should allow for a turnaround, and the build-up in external reserves is expected to resume in 2022. Risks include possible adverse pandemic developments, oil price volatility, possible fiscal slippages, shortfall in external financing, and security issues.
International Monetary Fund. African Dept.
Economic recovery is gaining momentum but remains fragile amid the on-going COVID-19 pandemic and Ukraine war’s ripple effects. Despite oil exports benefiting from high oil prices, the war’s impact on prices of food and other essentials weighs on households and businesses. Over the medium term, challenges from climate change and the global transition to low-carbon economies persist. In this context, steadfast reform implementation is needed to reduce fragility through job creation and higher incomes. Debt remains sustainable but is classified as “in distress” due to arrears; a financing assurances review was conducted. Debt vulnerabilities to negative oil price shocks remain. A three-year Extended Credit Facility (ECF) arrangement in the amount of SDR 324 million (200 percent of quota) was approved by the IMF Executive Board on January 21, 2022.
International Monetary Fund. African Dept.
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.
International Monetary Fund. African Dept.
A new wave of the COVID-19 pandemic is creating headwinds for the nascent economic recovery from the deep recession spurred by the pandemic’s onset and related oil price shocks. Over the medium term, reforms supporting improved governance, economic diversification, and resilience will help confront challenges from climate change, and the global transition to low-carbon economies—gradually resulting in improved incomes, job creation, inequality, and exit from fragility. In the near term, fiscal space to address these challenges is limited. Although debt sustainability was recently restored, large liquidity risks and vulnerabilities remain. Due to arrears and on-going negotiations with an external commercial creditor, debt is classified as “in distress”. The recent AIV consultation concluded on September 24, 2021.
International Monetary Fund. African Dept.
A new wave of the COVID-19 pandemic is creating headwinds for the nascent economic recovery from the deep recession spurred by the pandemic’s onset and related oil price shocks. Over the medium term, reforms supporting improved governance, economic diversification, and resilience will help confront challenges from climate change, and the global transition to low-carbon economies—gradually resulting in improved incomes, job creation, inequality, and exit from fragility. In the near term, fiscal space to address these challenges is limited. Although debt sustainability was recently restored, large liquidity risks and vulnerabilities remain. Due to arrears and on-going negotiations with an external commercial creditor, debt is classified as “in distress”. The recent AIV consultation concluded on September 24, 2021.