On Wednesday 24th July, the Bank of Central African States (BEAC), held its second ordinary meeting of the year, in the boardroom at its headquarters in Yamena, where they looked at the various global and subregional macroeconomic forecasts.
On an international level, it is expected that global economic growth will slow in relation to the continuing trade tensions between the United States and China. All this, caused by a fall in business and consumer confidence; the fall in trade and investment, particularly between China and Europe, in addition to uncertainties surrounding Government actions in the majority of the main economies.
On a subregional level, the MPC reviewed the recent CEMAC economic and monetary situation, and the short term forecast.
Economic activity in member countries will continue to pick up, although at a slightly slower rate than that reported at the start of the year. Thus, the forecast for 2019 is: a growth rate of 3.0%, in place of the 3.2% initially forecast, in comparison with 1.6% in 2018; an increase in inflationary pressure, with a rate of inflation of 2,5%, in comparison with 2.1% in 2018; a fiscal balance surplus on a commitment basis, which would rise to 0.4% of GDP in 2019, against +0.1% of GDP in 2018; a drop in the current account balance of 3.4% of GDP in 2018 to 6; the 1% in 2019 is mainly due to an increase in imports in the petroleum sector; an expansion in the monetary supply of 8.2%, for a rate of external coverage of the currency that would be around 68.6% in 2019, in comparison with 61.4% in 2018.
Taking into account these macroeconomic forecasts and following an analysis based on the monetary market and risk factors that affect monetary stability, the MPC decided to maintain without changes:
-The rate of interest for bidding at 3.5%.
-The marginal lending facility rate at 6%.
-The marginal deposit rate at 0%.
-The penalty for banks at 8.3%.
The coefficients for reserve requirements are 7% and 4.5% respectively, for demand and term requirements.
In addition to the monetary policy decisions, the committee set the applicable discounts for short term private debt, loans granted to small national clients, small and medium-sized enterprises and individual entrepreneurs eligible as a guarantee for monetary policy operations.
They also defined the eligibility conditions for companies for signatories for the refinancing of the Central Bank in order to adopt the transaction framework for credit institutions depending on the refinancing of BEAC.
Source: Equatorial Guinea Press and Information Office