At 4th session: BEAC Monetary Policy Committee maintains key rates.

The decisions were arrived at December 12. This was during the fourth ordinary session of the Committee which held through videoconference. 

The Governor of the Bank of Central African States, BEAC, Abbas Mahamat Tolli, chaired the session.
It emerged from the meeting that despite global shocks that have resulted in a decline in economic activities, at the level of the CEMAC sub region, there are positives to guarantee stability and a bright future.
According to a release issued at the end of yesterday’s meeting,  in the midst of the uncertainties, the CEMAC sub region is comforted by  “favourable macroeconomic achievements, a comfortable external position and decline in inflation since the third quarter of 2023”. 
Beyond noting that the inflationary pressure is still around despite the decline, the Committee resolved to maintain different monetary rates in place.
Among them are: the tender interest rate was maintained at 5,000 percent; marginal lending rate at 6.75 percent. This is the minimum below which a bank is not permitted to lend money.
It also maintained the deposit rate at zero percent interest. The deposit rate is the interest financial institutions pay on cash deposit of account holders.
The compulsory reserve coefficients of 7.00% on sight liabilities and 4.50% on term liabilities was also maintained. This is the percentage of a bank’s deposit that must be kept as reserve.
The Committee also reviewed the strategy of handling liquidity and authorised BEAC to put bonds in the market for maturity period of between 14 and 28 days. 
The goal, the Committee said, is to absorb excess bank liquidity and monitor its evolution. The Committee also adopted a provisional outlined of its activities for 2024.

Macroeconomic, financial outlook
Speaking on behalf of the Committee, the Governor of BEAC, said within the perspective of macroeconomics and financial outlook, the sub region will record a decline in economic growth. 
This, he said, “would fall from 2.8 percent in 2022 and 2.3 percent in 2023 mainly burdened by a greater decline in oil sector of minus 27  percent in 2023, compared to minus 0.7 percent 2022”.
On the average, he said, inflation stood at 5.6 percent in 2023. Budget commitments in he said, dropped excluding donations to 1.7 percent of Gross Domestic Product, GDP, in 2023 compared to 2.4 percent of GDP in 2023.
The Governor also talked of a minus 0.2 percent in the current account balance and a 9.2 percent increase in money supply this year. This, he said, is different from 13.5 percent witnessed in 2022. 
The region, he also said, witnessed a decline of foreign exchange reserves worth 4.95 months of import of goods and services in 2022 compared to 4.12 in 2023.
The external currency coverage rate which was at 73.1 percent in 2022, he said stands at 71.1 percent in 2023.
Still within the sub region, the Committee talked of a “continued dynamism of operations on the primary market for bonds marked by an increase over one year in the outstanding amount of 17.4 percent to the tune of 6.027.2 billion FCFA at the end of September 2023 as well as the strength of the secondary market with 1.341 purchase sale transactions of bonds for a nominal amount of 3,142.4 billion FCFA”.

Why global slowdown?
Citing the International Monetary Fund, IMF, which put the growth rate for 2024 at 2.9 percent as at October this year compared to 3.0 percent in 2023 and 3.5 percent in 2022, the Committee said the global decline is linked to poor performance of the manufacturing sector in the developed world.
It also blamed the situation on China’s manufacturing industry witnessing drawbacks in addition to the tightening of monetary policies in advanced and emerging economies.

Need to diversify economies
Meanwhile, the BEAC Governor insisted on the need to further diversify economies of the CEMAC sub region to reduce over dependence on imports.  
A further diversification of economies, he also said, will limit the shocks suffered in relation to the international climate. Abbas Mahamat also called for the removal of speed breaks to trade among member countries to boost growth.
In relation to calls for an end to dependence of fossil fuels, the BEAC Governor also said there is need for CEMAC countries to start thinking in that direction.