(Business in Cameroon) - According to Standard & Poor's (S&P), CEMAC countries are currently negotiating an extension (that would not exceed 2 years) of the three-year programmes signed with the International Monetary Fund (IMF) that will expire this year.  

During a meeting with the press on November 8, 2019, on the sidelines of a session of the Monetary Policy Committee, the governor of the region’s central bank BEAC, Mahamat Abbas Tolli, indicated that the principle of extending current programmes or negotiating new programmes with the IMF had been accepted.

The subregion depends mainly on sales of crude oil on the international market for foreign exchange earnings. When the price of this commodity fell by more than 60% from 2015, the lack of fiscal discipline in the management of foreign exchange reserves weakened the external position, posing a risk of adjustment of the parity of the currency used in the zone (FCFA XAF).

Results

During a meeting in Yaoundé, Cameroon, in late 2016, CEMAC countries agreed to opt for structural adjustment of their economic and budgetary policies, with support from certain institutions, including the IMF. Equatorial Guinea and Congo have been slow to sign their programmes, which were not finalized until the second half of 2019.  

Experts’ analyses suggest that CEMAC needs these programmes with the IMF to restore its external financial balance. In a note published at the end of December 2019, Moody's even explained that in addition to maintaining the confidence of donors in the countries of the sub-region, these programmes bring a renewed stability to the external position.

S&P shares this view. The rating agency believes that one of the main successes of these programmes has been the replenishment of foreign exchange reserves. They stood at XAF4,284 billion at the end of August 2019, up 63% from their level in June 2017.

However, even with extensions of the programmes with the IMF, CEMAC will need more coherent economic governance to meet expectations for the well-being of its populations.

Idriss Linge