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Central Africa – Economy: Heads of State say no to devaluation of the CFA Franc

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Written by Deckson N.

Gathered at an extraordinary summit in Yaounde on 23 December 2016, the leaders of the sub-region opted for structural adjustment policies.

The CFA Franc will not be devalued, at least for now. This was decided by the Heads of State of Central Africa. At the invitation of Paul Biya of Cameroon, the Equatorial Guinean Teodoro Obiang Nguema, the Congolese Denis Sassou Nguesso, the Chadian Idriss Deby, the Gabonese Ali Bongo and the Central African Faustin Archange Touadera had a concertation in the Cameroonian capital on Friday.

This extraordinary summit of the CEMAC (Economic and Monetary Community of Central Africa) was aimed at finding solutions in order to face the economic impasse that the countries of the subregion are going through. Before the assizes, several specialists had advocated the devaluation of the common currency.

This assumption was ruled out by the heads of state. The first resolution resulting from the final communique is unambiguous on this point. It makes it clear that Heads of State have “noted at the outset that the strengthening of macroeconomic stability does not require a readjustment of the current monetary parity, but rather internal and external adjustment efforts, accompanied by reforms Structural measures “.

Instead, they agreed on the implementation of structural adjustment policies. These include reducing the lifestyle of the state by compressing the workforce and lowering wages, raising taxes or supporting local production in order to encourage imports. That is what can be understood by reading resolutions 8, 9, 10 and 11.

8 – “Reiterated their commitment to vigorously pursue, at the level of each country, the budgetary adjustments necessary for a controlled, judicious and gradual rebalancing of their public finances“.

9 – “Agreed of the imperative need to conduct targeted budgetary policies on public expenditure in order to preserve social achievements in a context of extreme economic and financial fragility“.

10 – “Decided to commit to a gradual recovery of the budgetary balance of States and agreed to reduce the budget balance below 3% within a period of less than 05 years“.

11 – “Emphasized the importance of maintaining viable and sustainable debt, favoring concessional financing and promoting public-private partnerships for the implementation of infrastructure programs“.

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Deckson N.

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