BEAC projects 2.9% growth, slight decline in inflation.

The disclosure was made Monday, September 23. This was at the end of the third session of the BEAC Monetary Policy Committee. The session took place at BEAC headquarters in Yaounde.

In a statement issued at the end of the session, the Governor of BEAC, Yvon Sana Bangui, who is Chairperson of the MPC, indicated that inflation is on a slight but steady decline.

Besides inflation, Sana Bangui noted that the Sub-region has a comfortable position externally. 

On the macroeconomic and financial outlook for the current year, Sana Bangui in the release sanctioning Monday’s session detailed key indicators. 

Non-oil activities, he indicated, will maintain its positive contributions to growth. He put estimates from this sector at 3.5% compared to 2.9% in 2023.

The BEAC Governor talked of a gradual decline in inflationary pressures “to an annual average of 4.2%, compared with 5.6% in 2023”. He said there are projections of inflation to further decline to the expected average of 3% in 2025. 

Sana Bangui underscored that public finances will remain weak with “a budget balance, on a commitment basis, excluding grants, in deficit at -0.3%” of Gross Domestic Product in 2024 compared to -0.9% in 2023.

Another key aspect to define economic activities in the CEMAC sub region, he added, is “an increase in the current account surplus, including official donations, of 3.7% of GDP, compared 2.1% one year earlier”.

Within the same sub region, he mentioned “an increase in the money supply of 13.6%, compared to 9.1% in 2023”.

The BEAC Governor noted a “fall in foreign exchange reserves of 5. 0% to 6,539.0 billion FCFA at the end of 2024”. 

This, he noted in the release, amounts to external currency coverage of 69.2%, compared to 74.8% in December 2023. 

This, he detailed, covers imports of goods and services for 4.5 months whereas in 2023 it was at 4.8 months.

Global outlook

On the global front, the Monetary Policy Committee inferred from the International Monetary Fund, IMF, World Economic Outlook of July 2024 to put growth within the fringes of 3.3%. The projection, the MPC Board Chairperson said, is for 2024 and 2025.

Across the world, he said economic activities will be defined by central banks easing monetary policies. World trade and labour markets, he also explained, are expected to gain steam. 

This outlook, he asserted, will be playing out alongside geopolitical tensions not unconnected to the Russia-Ukraine war and conflicts in the Middle East.

Key rates unchanged

Given the positive outlook, the BEAC Governor said the MPC decided to maintain key interest rates. 

Among them are: the Tender Interest Rate which has been 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.

This article was first published in The Guardian Post issue No:3240 of Wednesday September 25, 2024