This paper highlights Central African Economic and Monetary Community’s (CEMAC) common policies in support of member countries reform programs. CEMAC benefited from favorable hydrocarbon prices in 2022. Economic recovery firmed up and the external position strengthened, with external reserves building up faster in recent months, although still below adequate levels. Monetary policy was tightened to stem rising inflation, and fiscal positions improved owing to higher oil revenues. However, underlying non-oil fiscal positions deteriorated, highlighting the necessity of accelerating reforms and tackling recent fiscal slippages, to help save part of the oil windfalls and bring polices back in line with IMF-supported program objectives and IMF staff advice. The report recommends standing ready to tighten monetary policy further; mop up excess liquidity; and resolve pending challenges to a complete, transparent, and consistent implementation of the foreign exchange regulations. It also suggests accelerating governance and productivity-enhancing structural and regulatory reforms; broaden the tax base beyond the hydrocarbon sector; and deepen regional trade integration.
This paper presents Central African Economic and Monetary Community’s (CEMAC) IMF Staff report on Common Policies of Member Countries and Common Policies in Support of Member Countries Reform Programs. The positive terms-of-trade shock amidst the fallout from Russia’s war in Ukraine has broadly benefited CEMAC, reinforcing its external position and gradual post-pandemic recovery. Regional authorities tightened monetary policy and normalized prudential regulation in 2022, while continuing to advance the reform agenda. Global inflation pressures have passed through to domestic prices, putting pressure on real incomes. Rebuilding buffers and sustaining a recovery that protects the most vulnerable will require stricter adherence to budget and reform plans consistent with IMF-supported programs and policy advice; this will ensure that part of the oil windfall is saved. Implementation of these policies in current favorable conditions is critical to strengthening resilience in the face of rising risks, including most notably to food security, debt vulnerabilities, and tightening of global financial conditions. A prudent management of the oil windfall and faster progress on deep structural and governance reforms are pivotal for laying the foundations for a more diversified, inclusive, and sustainable growth.