The CEMAC’s recovery gained momentum in 2022, supported by higher hydrocarbon prices. The external position strengthened, with a rapid foreign reserve build-up, though still below adequate levels. The recent weakening in external buffers will require more forceful action to tighten liquidity conditions, greater compliance of member countries with foreign exchange regulations and stronger fiscal discipline. Underlying non-oil fiscal positions, however, also deteriorated, stressing the need for accelerating structural reforms, addressing recent fiscal slippages, and bringing polices back in line with Fund-supported program objectives and staff advice. This will be critical to strengthen the region’s resilience to hydrocarbon prices volatility, financial instability, entrenched inflation, tighter financial conditions, food insecurity, domestic conflicts and insecurity, and climate-related events.

This Selected Issues paper looks at some Central African Economic and Monetary Community (CEMAC) specific regional dimensions of a possible strategy to enhance governance, which would support specific reforms in this area at the country level. The paper describes the specific dimensions of governance covered in the note. The paper also analyzes governance and corruption in the areas of public financial management, anti-money laundering, and the link between the oil sector and public resources. The CEMAC regional institutions will have to play a central role to lead progress in these areas, and support member countries’ own efforts. Due to such actions result in giving a coherent framework to actions conducted at the country level, the synergic dimension can spur a virtuous circle, key to earn the benefit of an economic and monetary union. The success of the regional strategy that CEMAC member countries and regional institutions are implementing to exit the severe crisis they are facing depends critically on creating the conditions for laying the ground for a diversified economy, within a well-functioning regional market and an environment that provides opportunities for all and where public resources are geared to most productive use.

This paper examines common policies supporting reform programs in member countries of the Central African Economic and Monetary Community. The sharp decline in oil prices has profoundly impaired the region’s external and fiscal balances. Oil export proceeds and budget oil revenues have plummeted between 2014 and 2016. Several measures have been taken or are planned by the Bank of Central African States (BEAC) to support countries’ adjustment programs and help re-build reserves. BEAC has started to tighten the monetary policy stance with a first increase in its policy rate. The BEAC will also gradually eliminate its statutory advances to member countries, and will ensure implementation of strict limits aimed at restricting bank refinancing using government securities as collateral.

The regional strategy has helped stabilize the regional economic position thanks to large fiscal consolidation efforts, a tighter monetary policy, and external financial assistance. The external position improved, and external reserves picked up. However, the region remains dependent on oil revenues, with little progress in economic diversification, under-performing budget non-oil revenues and weaknesses in the financial sector. The policy assurances included in BEAC’s letter of December 2018 were implemented as planned and the CEMAC authorities reiterated their full commitment to the strategy and their readiness to implement additional corrective measures if needed. Progress was made towards new IMF-supported program in Congo and Equatorial Guinea.

This paper highlights annual discussions on Central African Economic and Monetary Community’s (CEMAC) Common Policies in Support of Member Countries Reform Programs. 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. The outlook for 2019 and beyond foresees further improvement in regional reserves assuming CEMAC countries remain committed to their program objectives and new programs with Cameroon, Central African Republic and Equatorial Guinea could start around end-2019.

This paper discusses common policies of the member countries of the Central African Economic and Monetary Community (CEMAC). Medium-term prospects for CEMAC are uncertain. Despite their recent stabilization, oil prices are projected to remain well below pre-shock levels in the medium term. In addition, oil production is projected to start falling after 2017. The Executive Directors have encouraged the authorities to accelerate the reform of the monetary policy framework to improve transmission channels and better manage systemic liquidity. They have also stressed the importance of full compliance with the pooling of foreign exchange earnings with the regional central bank, and called for stepped-up efforts to implement outstanding safeguards recommendations.

Regional growth weakened in 2013 due to a fall in oil production in most countries. GDP growth is expected to pick-up in 2014 due to the recovery of oil production and the continuation of the implementation of public investment plans in most of CEMAC countries. Despite large spending of oil wealth during the last years, poverty, income inequality and unemployment remain high. The business climate is one of the most challenging in Africa. The region’s most pressing challenge is to implement structural reforms to promote sustainable and inclusive growth while adopting macro policies to preserve financial stability, ensure an efficient use of oil revenues and increase resilience to shocks.