CI-NEWS

BEAC fears financial situation may worsen.

2020-07-13

No: 511

BEAC fears financial situation may worsen.

The Bank of Central African States, BEAC, has urged all CEMAC member states to adhere to the palliative measures it proposed in March 2020.

The warning was raised last week during a meeting of the Monetary Policy Committee of the Bank of Central African States, BEAC.

Chairing the virtual meeting, Abbas Mahamat Tolli said they have had a perception of the macroeconomic situation of the Region, barely three months into the Covid-19 said they have had a perception of the macroeconomic situation of the Region, barely three months into the Covid-19 pandemic.

The bank observed that the pandemic has continued to impact global economies as well as that of the Sub Region. Its Monetary Policy Committee has corroborated the International Monetary Fund report that growth rates are expected to shrink by 3.2 per cent, worse than the projections made in April, when the pandemic just hit the Sub Region.

BEAC reiterates that the impact could continue to be higher in the Central African Economic and Monetary Community due to its chronic dependence on oil revenues.

The committee observed that, not only have oil prices slumped in the world market, but the global demand too has witnessed a drastic drop. In the first semester of 2020, production dropped as countries imposed lockdowns to hold down on the spread of the virus. In March, there were rumours of a possible devaluation but the bank cleared the air, stating that the foreign exchange reserves were still sufficient enough to sustain the region. As at now, the foreign exchange reserves stand at 5.7 months of total importation.

Last week, the IMF observed that the crisis represents a significant hit to the livelihoods of some of the world’s most vulnerable households, and will push per capita incomes back to where they were several years ago. This view has been corroborated by BEAC, saying recommended palliative measures must be followed. “However, it is worth noting that the measures have been respected for a greater part, by most countries,” the bank observed. It also praised the different nations for the health response as well as the economic support measures pursued.

To further guarantee a safer future for the economy, the bank says it will be imposing 3.25 per cent, as the interest rate on foreign exchange. It adds that rigorous steps will also be taken to upgrade the obligatory reserves to seven per cent, up from the looming 4.5 per cent.

Culled from Cameroon Insider

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BEAC fears financial situation may worsen.