The 3rd edition of Finance Week officially kicked off on June 17th at the StarLand Hotel in Yaoundé, under the theme: “New Foreign Exchange Regulation and Economic Development in the CEMAC Area“. Experts in economy confirm that the gathering is relevant as it addresses issues related to the deficit of CEMAC countries at the level of reserve exchange.
Cameroon’s approach to covering the foreign exchange reserve deficit of other CEMAC countries is an impactful financial strategy which has both advantages and challenges. The biggest economy of the CEMAC region plays a critical role in supporting the foreign exchange reserves of the CEMAC region, contributing approximatively 49% annually. With about 40% of the region’s industrial base, Cameroon alone ensures a substantial portion of the imports for all CEMAC countries, reinforcing its economic leadership within the sub-region.
According to Dr Tumenta Kennedy, Cameroon’s move towards covering the foreign exchange deficit stems from the country’s economic strenght. “I believe that Cameroon’s strategy to help cover foreign exchange reserve deficit of other CEMAC country reflects its position as the largest economy in the region. For example, Cameroon contribute approximately 40% of CEMAC’s GDP and holds a significant share of the pool of foreign exchange reserve” he explained.
The senior economist believes that Cameroon covers the deficit because it wants to strenghten regional monetary stability. “If you look at the CEMAC region, some member states such as Equatorial Guinea, Chad, the Central African Republic, Congo are faced with foreign exchange shortages. It strains the entire monetary union. Therefore, by injecting reserve, Cameroon helps prevent a liquidity crisis and ensure the stability of the CFA franc and avoiding speculative pressure” he highlighted.
Covering the foreign exchange deficit is no longer sustainable. The senior economist prescribes a structural reforms in the CEMAC. “Countries like Gabon, Congo, Equatorial Guinea must diversify their economies and improve tax collections to reduce reliance on oil revenues. I believe that the BEAC should enforce stricter fiscal discipline and foreign exchange management policies” he advised.
Cameroon’s approach is strategic for regional stability, but experts say it requires careful management to avoid excessive strain on its own Economy.
