The Monetary Policy Committee (MPC) of the Bank of Central African States (BEAC) met on July 11 at its ordinary session and noted a gradual recovery in growth, as a consequence of the dynamism of the non- Petroleum resources at the subregional level.
The press release published at the end of the meeting points to a slight rebound in economic growth (+ 0.8%) in real terms, a mitigation of inflationary pressures with a rate of + 1.6% at the end of December last.
In the light of the updated economic, monetary and financial data for 2017, the MPC also notes a decrease in the deficit in the budgetary balance, base commitments, excluding grants, to -3.5% of gross domestic product (GDP), with a current account deficit of 7.9% of GDP, as well as a slight rise in the external coverage rate of the currency to 60.6%.
In terms of foreign exchange reserves, the Committee also noted their gradual replenishment, before encouraging further efforts, including the signing of aid agreements for economic recovery with the International Monetary Fund (IMF).
Based on these analyzes, and after examining the various factors influencing monetary and financial stability in the CEMAC zone, the MPC decided to reduce the penalty rate applied to banks and treasuries by 10% to 7% and to maintain unchanged the other major rates.
However, the BEAC communiqué does not provide details on the factors that contributed to the improvement of the indicators in the subregion. If the foreign currency hedging rate has improved, it should be noted that at the end of April 2017, total foreign exchange reserves were $ 4.5 billion, down slightly from $ 4.7 billion to the end of 2016. Data beyond this period could not be accessed.
The publication of economic performance in the first quarter of 2017 by some of the countries of the community shows a gap between the level of implementation of the budget and the provisions of the finance law of the current period. In Cameroon, for example, the shortfall in budgetary revenues over projections of the finance bill is CFAF 148.8 billion and an improvement in the budget deficit in this context was only achieved through a spending gap budget of CFAF 246.3 billion.
Finally, among other measures taken by the BEAC to consolidate foreign exchange reserves, it decided to limit the level of refinancing of government securities held by banks. This decision led to the erosion of banks’ liquidity and their ability to finance the sub-regional economy. All countries are affected, but the deterioration of the situation is even greater in countries like the Republic of Congo, Equatorial Guinea, Chad and Gabon, reveal sources close to the BEAC.