25 March 2019

Central Africa: Monetory Policy in CEMAC - BEAC Examines Situation

The Monetary Policy Committee (CPM) of the Bank of Central African States (BEAC) has held its first ordinary session for the year 2019. The meeting which centered on reviewing and forecasting the monetary policy of the central African sub-region took place at the BEAC country office in N'Djamena - Chad on Thursday March 21, 2019.

The meeting was chaired by Abbas Mahamat Tolli, Governor of BEAC and Statutory President of CPM. During the meeting, the Committee examined sub-regional and global macroeconomic perspectives for 2019. It noted that at the global level, economic growth will experience a slight decline with respect to the slow drop in growth rate of certain advanced and emerging economies.

CPM cited specifically the tightening of financial conditions, the reduction of aid and grants by some developed countries, the effects of the US-China trade war and the eventual exit of Britain from the European Union. At the sub-regional level, the Committee disclosed that countries in the sub-region experienced an increase in the price of crude oil, an increase in production in some countries and the boosting of the non-petroleum sector.

This unfolded simultaneously with the implementation of macroeconomic and structural reform programmes by member countries of the Central African Economic and Monetary Community. Going by the central bank's forecast, the growth rate in the sub-region this year will stand at 3.2 per cent, up from 1.7 per cent in 2018.

The inflation rate is expected to be maintained at 2.1 per cent, as was the case last year. CPM also predicts a budget surplus based on public expenditure; that is 0.9 per cent of the public investment budget, as against a deficit of 0.7 per cent of public investment budget in 2018. It is also estimated that the subregion's external current accounts will increase by 5 per cent of PIB, from 1.6 per cent of PIB in 2018.

Conscious of the macroeconomic perspective and having examined the monetary mar ket, the central bank decided to leave some rates unchanged: interest rate for tenders, 3.5 per cent; marginal lending rate, 6 per cent; deposit facility rate, 0 per cent; penalty rate for banks, 6.5 per cent; and reserve requirements, 7 per cent and 4.5 per cent for cash and term deposits respectively.

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