YAOUNDE (Reuters) – Cameroon’s President Paul Biya warned on Monday of “disastrous consequences” for the countries of the Economic and Monetary Community of Central Africa if urgent action is not taken to address their deteriorating net external reserves.
The member countries – Cameroon, Gabon, Chad, Equatorial Guinea, Central African Republic, and the Republic of Congo – share monetary policy and a currency with a common central bank.
Between them, they have struggled to emerge from the impact of the COVID pandemic and other external global shocks, leaving them short of foreign exchange or other assets to cover import bills and debt repayments.
They are also facing challenges domestically including a decline in oil production in five of the countries, prolonged civil conflict in Central African Republic and Cameroon, and a heavy debt burden in Gabon and default in Republic of Congo.
Biya called for more substantial actions to preserve the macroeconomic and financial stability of the region.
“According to recent data, our net external reserves have deteriorated considerably. This situation is preoccupying and calls for urgent action from us to inverse this trend,” Biya, said in his opening remarks at a summit of the leaders in Cameroon’s capital Yaounde.
“If nothing is done, according to various experts, we could face disastrous consequences for our countries and the subregion.”
He did not give any details of what the consequences might be or how they might be addressed, but any demands from international lenders to rein in spending by cutting subsidies or further trimming handouts could cause public discontent.
The International Monetary Fund, which is represented at the summit along with the World Bank and other partners, warned in June that the six nations needed decisive and coordinated actions to tackle fiscal and external imbalances.
The IMF cautioned that divergent economic performance and unchanged policies among the countries could threaten financial stability.
