(Business in Cameroon) - The CEMAC Commission, through the Permanent Secretariat of the CEMAC Economic and Financial Reforms Programme (Pref-Cemac), has just released its analysis of the economic and financial impacts of the Coronavirus crisis on the CEMAC region.
Based on macro-economic data available as of March 22, 2020, the Permanent Secretariat elaborated two scenarios.
The first "one assumes that the crisis would be transitory and quickly controlled, resulting in particular in a slight increase in the oil price to $39.1 per barrel (transitory scenario). The second scenario envisages a rapid and general spread of the crisis with, among other things. This scenario will lower the average price of oil to $20 per barrel in 2020 (pessimistic scenario)."
According to the Commission, in the event of a transitory Coronavirus crisis, economic growth in Cameroon will slightly fall moderately by 0.2% in 2020. For the remaining countries, the decrease will be respectively 0.1% for Congo, 0.5% for Gabon, 1.3% in Equatorial Guinea, 0.4% in Chad and 0% in CAR.
However, should the pessimistic scenario come to pass, Cameroon will record a whopping 3% drop in its growth. This is slightly better compared with the decrease in the growth of other countries of that community (-7.9% in CAR, -7.3% in Congo, -4.8% in Gabon, -8.9% in Equatorial Guinea and -4.9% in Chad).
"It must be recalled that if the CEMAC countries do not effectively combat the Covid-19 pandemic to limit its economic and financial impacts, the macroeconomic situation would become unsustainable," the Commission concludes.
The commission, therefore, made concrete proposals to stop the pandemic from becoming unsustainable.
The first set of proposals is to “build resilience and curb the spread of the Coronavirus pandemic," according to the commission.
It includes the implementation, over the March-May 2020 period, of the covid-19 Community response plan adopted in Douala on March 12, 2020. They also suggested that non-priority public expenditure be reallocated towards strengthening health systems. And finally, they also asked member countries to facilitate intra-Community trade, while strengthening health control measures on road corridors and borders.
The second set of proposals is aimed at "mitigating the macroeconomic effects of the Covid-19 crisis." This mainly involves the adoption, as soon as possible, of the Amending Finance Acts, "to align public finance management with updated and realistic budget revenue forecasts...". It also includes the elaboration of support measures for companies hit by the crisis and discussions with the main backers to reschedule the repayment of external debts.
Finally, to ensure the stability of the monetary and financial system, the CEMAC Commission suggests member countries should renew the current programmes with the IMF, continue the repatriation of public funds held abroad and align new oil and mining conventions with the new foreign exchange regulations. Also, they should provide liquidity to banks per external stability objectives, and monitor the quality of banks' loan portfolios. Authorities are also advised to offer incentives to banks so that they will restructure companies’ debt repayment schedules.
Brice R. Mbodiam