Central African Economic and Monetary Community: Common Policies in Support of Member Countries Reform Programs-Staff Report; and Statement by the Executive Director

The CEMAC economy gained some momentum in 2024, and inflation continued to ease while still above the regional converge criterion. The external position weakened further, with the current account deficit rising and the reserve coverage stagnating. Preliminary data on fiscal outturns suggest a worsening fiscal position, reflecting large fiscal slippages. An extraordinary Conference of CEMAC Heads of State (HoS) took place in December 2024. HoS reaffirmed their political commitment to a consistent and coordinated regional strategy to preserve fiscal sustainability, financial sector stability, and to strengthen CEMAC’s external position. Under the baseline, the external position is expected to progressively weaken over the medium term. Without decisive corrective actions—i.e., a stronger fiscal consolidation in some member countries—the reserve coverage could fall below 4 months of prospective import by 2027, far under the assessed adequate level (5 months). Post-election economic plans for a more sustainable policy mix, in line with HoS commitments and prospective IMF-supported arrangements, could steer the region towards a resilient outlook and stabilize (if not increase) the current reserve coverage, while strengthening the fiscal position. The baseline excludes these anticipated corrective actions pending their full definition, scope, and implementation plan. Both outlooks (baseline and resilient) are subject to high uncertainty and elevated risks, notably related to debt rollover, tightening financing conditions and sovereign debt distress.