IMF Executive Board Concludes Annual Discussions on CEMAC Common Policies, and Common Policies in Support of Member Countries Reform Programs

Staff Report on the Common Policies in Support of Member Countries Reform Programs-Press Release, Staff Report, and Statement by the Executive Director


Staff Report on the Common Policies in Support of Member Countries Reform Programs-Press Release, Staff Report, and Statement by the Executive Director

  • Tighter macroeconomic and financial policies helped to avert a deeper crisis, and gross external reserves increased more rapidly in recent months, also helped by a stronger implementation of CEMAC foreign exchange regulations.

  • Reforms to support a more diversified and inclusive growth, including by improving governance and the business climate, should gain momentum to make current efforts to buttress the external position of the region sustainable.

On December 13, 2019, the IMF Executive Board concluded the annual discussions with the Central African Economic and Monetary Community (CEMAC) on Common Policies of Member Countries and Common Policies in Support of Member Countries Reform Programs.1

CEMAC s economic and financial situation has improved but remains fragile. Economic activity has remained well below pre-crisis levels. Non-oil growth slowed down to below 2 percent in 2018, reflecting the effect of fiscal consolidation, the legacy of domestic arrears and a volatile security situation in some regions. Overall regional growth was slightly higher at 2.5 percent, supported by an increase in the oil sector. In 2019, overall regional growth would remain at the same level, with a slight pick-up in non-oil growth offsetting a slowdown in oil production growth.

Tighter policies helped to reduce external imbalances and external reserves increased more rapidly during the first half of 2019. The external current account and the overall balance of payments deficits in 2019 would remain at their improved levels of 2018 (of 2.5 and 0.4 percent of GDP, respectively), reflecting stable oil exports, a moderate increase in imports, and overall stable capital flows. With the impact of stricter implementation of the foreign exchange regulations on private flows and repatriation of banks’ foreign assets, in addition to continued external budget support and some debt relief, the increase in external reserves was stronger than projected in the first half of 2019. As a result, the June 2019 objective for regional net foreign assets was exceeded by more than €800 million.

The medium-term outlook foresees further improvement in regional reserves, assuming CEMAC countries remain committed to their program objectives, and new programs with Equatorial Guinea and CAR start soon. Overall growth is projected to increase to 3.5 percent in 2020, mainly driven by the non-oil sector which would be supported by the implementation of the governments’ strategies to clear arrears. Oil sector growth would remain stable in 2020 before declining in following years along past trends. Beyond 2020, non-oil growth is projected to increase gradually, as reforms to improve governance and the business climate are assumed to slowly take hold. Inflation is projected to stay at around 2.5 percent over the medium term, below the regional convergence criterion, as monetary policy would remain appropriately tight.

Further fiscal consolidation efforts, mainly based on expected enhancement in non-oil revenue collection, would reduce the regional non-oil budget deficit by an additional 1 percentage point of non-oil GDP in 2020, which would then continue to decline gradually thereafter. Overall, the public debt-to-GDP ratio is expected to decline further to 47 percent of GDP in 2020 and to less than 40 percent by 2023. The external current account deficit would slightly worsen to 2.8 percent of GDP in 2020, as oil exports receipts would slightly decline, and imports of goods and services would pick up along with non-oil GDP growth. Stronger enforcement of foreign exchange regulations and already granted debt relief should improve the capital account. As a result, regional NFAs are projected to increase steadily over the medium term and reserves would reach the equivalent of 5 months of imports of goods and services by 2022.

Executive Board Assessment2

Executive Directors considered that the CEMAC is at a crossroad to consolidate the progress achieved by the regional strategy and put adjustment efforts on a sustainable path. They recognized that tighter macroeconomic and financial policies helped stabilize economic conditions and avert a deeper crisis and increase gross external reserves, which recently exceeded previous projections. However, Directors stressed that downside risks remain substantial and that stronger efforts are needed to support more diversified and inclusive growth, including structural reforms to enhance governance, improve the business climate, and spur social development.

Directors urged national authorities to strictly adhere to their respective IMF-supported program objectives, which will be key to secure domestic and external stability. They considered that the composition of fiscal consolidation efforts will need to be rebalanced by increasing non-oil domestic revenue, in order to preserve social spending and public investment. Implementing well-managed government arrears repayment plans will also be central to supporting the private sector and improving banks’ balance sheets.

Directors considered that BEAC’s monetary policy stance has remained appropriately tight and stressed that BEAC should stand ready to tighten if external pressures emerge. Directors encouraged BEAC to aim at more rapid absorption of the currently large excess liquidity in the banking sector to enhance monetary policy transmission. They also welcomed steps to deal with banks that excessively rely on the BEAC for their liquidity needs. Directors stressed that BEAC should avoid any new financing agreement with BDEAC.

Directors welcomed BEAC’s effort to ensure a smoother yet effective implementation of the foreign exchange regulations. More support from national authorities is needed to ensure compliance by all public entities and further progress can be achieved to speed-up execution of forex transactions. Directors also encouraged BEAC to continue the dialogue with oil and mining companies to effectively enforce the regulations while taking account of their specificities as necessary.

Directors encouraged the COBAC to implement a more risk-based supervision. They welcomed the adoption of the new sanction mechanism to improve regulatory compliance but noted that the process to resolve problem banks remains slow. Directors encouraged COBAC to support efforts to reduce currently very high non-performing loans, including following repayments of government arrears. Directors stressed the need to reinforce COBAC’s capacity, especially staffing levels.

Directors underlined the importance of more ambitious and effective structural measures to support higher and more inclusive growth in non-oil sectors and greater diversification. These should address long-standing constraints stemming from weak governance, a poor business environment hampering investment, an under-developed financial sector, and pervasive non-tariff barriers to regional trade. Enhanced transparency and accountability in the management of public resources, together with better AML/CFT supervision, will be critical. More effective measures are also needed to promote faster convergence, including strengthening CEMAC’s multilateral surveillance framework.

Directors noted that BEAC has implemented the policy commitments in the June 2019 Follow-up Letter of Policy Support, especially the assurance on NFA accumulation, which exceeded the targeted level. They further noted the policy commitments and endorsed the updated policy assurance outlined in the December 2019 follow up Letter from the BEAC Governor on achieving the projected end-December 2019 and end-June 2020 NFA accumulation based on BEAC’s commitment to implement an adequately tight monetary policy together with commitments by member states to implement adjustment policies in the context of IMF-supported programs. Directors emphasized that implementation of this policy assurance continues to be critical for the success of IMF-supported programs with CEMAC member countries.

The views expressed by Directors today will form part of the Article IV consultation discussions on individual members of the CEMAC that take place until the next Board discussion of CEMAC common policies.


Under Article IV of the IMF’s Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. In the context of these bilateral Article IV consultation discussion, staff hold separate annual discussions with the regional institutions responsible for common policies in four currency unions – the Euro Area, the Eastern Caribbean Currency Union, the Central African Economic and Monetary Union, and the West African Economic and Monetary Union. For each of the currency unions, staff teams visit the regional institutions responsible for common policies in the currency union, collects economic and financial information, and discusses with officials the currency union’s economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis of discussion by the Executive Board. Both staffs discussions with the regional institutions and the Board discussion of the annual staff report will be considered an integral part of the Article IV consultation with each member.


At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country’s authorities. An explanation of any qualifiers used in summings up can be found here: