BEAC Governor says institution guiding CEMAC countries on resilience, growth path.

Mahamat Tolli gave the assurances at a press conference which he granted at the BEAC headquarters in Yaounde yesterday. The Governor was facing the press after the first ordinary session of BEAC’s Monetary Policy Committee, MPC, for 2023. He faced the press in his capacity of statutory Chairman of the MPC.

He told reporters that despite global instability not unconnected to the war in Ukraine and COVID-19, BEAC will continue to adjust monetary policies to ensure that the economies of CEMAC countries remain resilient and attractive to investors.

After examining recent economic developments and macroeconomic mutations across the world and the CEMAC Sub-region, Mahamat Tolli, in a release that sanctioned the meeting, noted that inflation is expected to ease out within the course of 2023.

He noted in the release that: “The International Monetary Fund's January 2023 World Economic Outlook projects growth to fall from 6.2 percent in 2021 to 2.9 percent in 2023, before rising to 3.1 percent in 2024”.

The Governor assured that “...inflationary pressures are expected to ease gradually throughout 2023 in most economies, under the combined effect of tighter monetary policies and lower energy and food prices”.

Sub-region with single digit inflation

At point of comfort for CEMAC economies, the Governor said, is a single digit inflation rate. This, he said, is unique given that global challenges have pushed inflation elsewhere to two digits.

He explained that CEMAC member countries have continued to subsidize petroleum products despite recent reductions that have resulted to a rise in prices. Work, he said, will continue to protect the purchasing power of consumers and minimise turbulence.

Non-oil sector driving economic recovery

Admitting the general hike in prices the world over, Mahamat Tolli, said economic activities in the Sub-region are on a path of recovery.

At the Sub-regional level, Mahamat Tolli, indicated in the release at the end of the session, such a prediction is based on “economic growth of 2.7 percent in 2023 after 2.9 percent in 2022, driven mainly by the dynamism of the non-oil sector; an increase in the annual average inflation rate to 6.4 percent in 2023, with in particular a strong contribution from the food and non-alcoholic beverages”.

The release that sanctioned the session also underscored “a decline in the overall fiscal balance surplus, including grants, from 2.5 percent of GDP in 2022 to 1.9 percent one year later, and in the current account surplus, which would fall to 0.9 percent of GDP in 2023 from 7.4 percent in 2022”.

These statistics, the committee said, would contribute to keeping the Sub-region on the path of growth.

A strong rise in foreign exchange reserves are among the guiding factors that left the committee confident about the Sub-region staying out of murky waters. 

The committee, the Governor observed in yesterday’s release, took note that “the money supply and credit to the economy would increase by 9.9% and 10.01% respectively. The currency's external coverage rate would be 77.0 percent, compared to 73.1 percent in December 2022, and foreign exchange reserves would cover 4.9 months of imports of goods and services in 2023, compared with 3.9 in 2022”.

Interbank transactions on the rise

Another indicator of good economic tidings for CEMAC countries, the MPC noted, is an increase so far in 2023 of interbank transactions.

BEAC’s Monetary Policy Committee noted “a continued increase in transactions with an average monthly outstanding amount of 472. 9 billion FCFA in January 2023, after 372.9 billion FCFA in October 2022”

Between January 2022 and January 2023, BEAC’s Monetary Policy Committee disclosed that treasury bonds rose by 12.8%, representing 5,314.7 billion FCFA.

The committee further highlighted “a more dynamic secondary market for treasury bonds with the amount held by institutions and other investors comprising 17.3 percent as at January 2023, compared to 10.6 percent in 2022.

Further anticipating inflation to remain at 6.4 percent by December 2023, above the European Union, EU standard of 3 percent, the Monetary Policy Committee made certain short term adjustments to assure the “internal stability of the currency” in the Sub-region.

Major decisions taken

The MPC raised the interest rates for treasury bonds from 4.5 percent to 5.00% percent. It moved the Marginal Lending Facility Rate from 6.25 percent to 6.75 percent.

The committee however maintained the deposit facility rate at zero percent. The obligatory reserve ratio was also maintained at 7.00 percent on liabilities in demand among others. To note that member countries of the CEMAC Sub-region with a population of at least 60 million are Cameroon, Central African Republic, CAR, Gabon, Congo Brazzaville, Equatorial Guinea and Chad.