The fixed exchange regime will continue to anchor the region’s macroeconomic policy. Supported by public investment and commodity exports, economic growth will remain robust, but below the sub-Saharan Africa (SSA) average. The foremost near-term risk is a decline in commodity prices, especially for oil. Also, rising global food and oil prices could lead to further inflation and possibly to demands for higher wages.
Ensuring fiscal and external sustainability: The union’s real effective exchange rate, current account, and reserves are broadly consistent with external stability, but a downside risk over the longer term stems from noncompliance with rules for repatriating export receipts to the Bank of Central African States (BEAC). To ensure fiscal and external sustainability, public investment needs to be embedded in a realistic multiyear investment plan and the related annual budgets cast within a credible medium-term macroeconomic framework.
Fostering stronger non-oil growth: High rates of poverty will need to be addressed by promoting and diversifying non-oil growth. The priorities should be to refocus public investment on key infrastructure that will relieve major bottlenecks; pursue reforms in health and education sectors, which would enhance labor productivity and generate employment; and improve the business climate by strengthening governance and streamlining administrative procedures.
Reforming the financial sector: To safeguard financial sector stability, the prudential and regulatory framework should be reformed expeditiously and problems of systemically important weak banks resolved without delay. Institutional reforms to facilitate access to financial services should focus on
improving the operations of land and commercial registries; streamlining the procedures for recording and enforcing guarantees; and strengthening creditor rights enforcement by improving the governance of the relevant courts.
improving the operations of land and commercial registries; streamlining the procedures for recording and enforcing guarantees; and strengthening creditor rights enforcement by improving the governance of the relevant courts.
Published:November 23, 2011.Series:Country Report No. 11/329. Central African Economic and Monetary Community: Staff Report on Common Policies of Member Countries; Public Information Notice on the Executive Board Discussion; and Statement by the Executive Director for the Central African Economic and Monetary Community
