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Central Africa: The “yes, but…” answer of Cameroon’s Biya and his peers to the IMF

By Alain Faujas, Omer Mbadi
Posted on Friday, 27 August 2021 09:44

Cameroon President Paul Biya on 22 March 2018 (Lintao Zhang/Pool Photo via AP, File

The head of the IMF, Kristalina Georgieva, expressed her satisfaction after participating in the Extraordinary Virtual Summit of the Heads of State of the Communauté Économique des États de l'Afrique Centrale (CEMAC) on 18 August 2021. “I welcome the commitment of CEMAC heads of state to deep structural reforms to radically transform and diversify the region, continue to support regional institutions and reduce its dependence on commodities,” she said a few hours after the summit.

Broadly speaking, Georgieva got what she was looking for. “All participants expressed their support for the IMF’s proposed reforms. Everyone is in favour of having a second programme cycle with the Fund,” said a participant who wished to remain anonymous.

“Congratulations to #CEMAC leaders for a fruitful summit at a trying time for the region. It is vital to work together to fight the pandemic and advance reforms to overcome the challenges CEMAC countries face to secure a better future for their people,” said the head of the IMF in a message shared on social media.

But the battle is far from over, as some sticking points have emerged from behind the scenes. Due to difficulties in clarifying their relationships with oil companies, the Republic of Congo and Equatorial Guinea still have a long way to go before reaching a second agreement with the Bretton Woods institution, especially since they are still refusing to apply the higher criteria for accounting for non-performing loans in the banking sector, i.e., those for which the borrower no longer honours its repayments, which has been requested by the IMF.

Central African Republic’s (CAR) troubles

Other countries are puzzled by Chad, whose negotiations with Glencore are dragging on. “They don’t know where they stand with N’Djaména, as the reality of power is difficult to locate in the current regime,” said the source.

CAR is a dead weight in the community, offering little hope of growth.

New foreign-exchange regulations, which are continuing to spark outcry from oil companies, was also discussed. The IMF has aligned itself with the position of the Banque des États de l’Afrique Centrale (BEAC). The latter, eager to strengthen its foreign-exchange reserves, has demanded the full repatriation of profits from these companies in the region. “They keep pushing governments for dispensations, especially Congo and Gabon,” said the source.

In addition to the commitments to agree on second-generation IMF programmes, the IMF received a positive response to the lifting of the exceptional measures taken by the central bank and the banking regulator to limit the effects of the economic crisis, as stated in the final statement.

The BEAC has been asked by member states to reduce its weekly liquidity injections into the banking system and its public debt buyback programme slowly and carefully.

Tripartite review

While they welcome the increase in foreign-exchange reserves, which now cover more than three months of imports, the leaders of Cameroon, Gabon, Congo, Equatorial Guinea, the CAR and Chad called for a transfer to poor countries of a portion of Special Drawing Rights allocated to developed countries, of which a new round has just been decided by the IMF for $650bn.

They also want a replenishment of at least $100bn in International Development Association resources, which are held by the World Bank.

They hope to be among the beneficiaries so they can build on their admittedly slow recovery from last year’s recession, which was noted during the summit.

The improved economic environment will be reviewed by three parties (IMF, CEMAC and France) in the autumn, with a focus on the macroeconomic situation, the amount of reserves and the progress of negotiations for new programmes with the Fund.

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