CEMAC: outstanding BEAC bonds up by more than USD 85 million in three months

According to data recently published by the Bank of Central African States (BEAC), between April and July 2024, the outstanding amount of its Bonds increased from 26.9 billion FCFA (42.7 million USD) to 81 billion of FCFA (128.6 million USD). Which represents an increase of 201% in relative value and 54.1 billion FCFA (approximately 85 million USD).

On analysis, this performance reflects the desire of the central bank to tighten monetary conditions and limit the growth of the money supply by fighting against inflation (20%) of monetary origin which affects the six countries (Cameroon, Central African Republic, Congo, Gabon, Equatorial Guinea and Chad) of the Central African Economic and Monetary Community (CEMAC). Through this tightening of its monetary policy developed in an international context marked by a rise in interest rates and an appreciation of the American dollar, the BEAC also wanted to absorb part of the banking liquidity in order to reduce pressure on prices and preserve the stability of the CFA franc.

However, in view of the results, CEMAC credit institutions were reluctant to subscribe massively to these BEAC Bond issues. This reflects a reluctance that financial analysts explain by “the decline in the profitability of market operations and the fear of seeing the margins of commercial banks reduce”.

But nothing seems lost. Indeed, underline our sources, “the effectiveness of this monetary policy is based on the evolution of the economic situation in CEMAC and the decisions taken by the BEAC in the coming months. If the increase in BEAC Bond issues manages to control inflation and preserve financial stability, it could be sustained.”