CI-NEWS

Easing Covid-19: BEAC lowers tender and lending rates.

2020-04-05

No: 479

Easing Covid-19: BEAC lowers tender and lending rates.

The Bank of Central African States (BEAC) has lowered tender and lending rates as part of easing measures to facilitate crusade against COVID-19.

The measures were announced at a videoconference organised by members of the BEAC Monetary Policy Committee on 27 March 2020 to find solutions to the coronavirus crisis affecting the world, including the CEMAC region.

According to the official release published at the end of the videoconference, BEAC has triggered some levers to favour the financing of member states and commercial banks of the region. In turn, those states and banks will have to support the companies whose activities have been affected by the health crisis.

First, BEAC lowered two of its key rates. The tender rate was lowered by 25 basis points (from 3.5 to 3.25%) while the marginal lending rate went from 6 to 5%.

Also, the various types of collaterals admitted by the central bank as a guarantee for refinancing operations have been extended. Coupled with the lowered key rates, that extension provides more flexible latitude to commercial banks during their search for liquidity in the money market.

Those banks will use the liquidity to fund CEMAC economies by granting credits to companies and individuals at adjusted rates, BEAC hopes.

XAF500 billion of liquidity to be injected in the banking system

Last week, it was announced that the central bank would suspend its liquidity-absorbing operations. During this videoconference, it has been decided that more liquidity will be injected into the CEMAC banking system. In that regard, the volume of liquidity injected in the banking system will be increased from XAF240 billion to XAF500 billion. This volume could be revised upward if needed, the monetary policy committee indicates.

Let’s note that banks are not the only beneficiaries of the easing measures decided by the committee. To member countries, the central bank promises to ease the conditions for the issuance of public securities on the BEAC market that has become an important tool for countries’ funding needs, since 2015, after the drop in oil prices and some members’ large public deficit.

BEAC also plans to negotiate with competent authorities to obtain a one-year rescheduling of the repayment of the Central Bank's consolidated credits to the States. This measure will loosen the debt stranglehold on the treasury of CEMAC countries, which will thus have more liquidity to fund the crusade against the Coronavirus.

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Easing Covid-19: BEAC lowers tender and lending rates.