While inflation has exceeded 5% in 2023 in the Cemac zone and is significantly eroding the purchasing power of the population, the Bank of Central African States (BEAC) is trying to act to control the phenomenon. And for this, it is putting into action a new tool available in its portfolio since 2023.
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The objective is to break the phenomenon of excess liquidity in the area which has become structural and which contributes to inflation. While during the Covid-19 period, the BEAC had to inject liquidity, around 500 billion FCFA, today the situation is the opposite. Banks have idle cash “. They prefer to store or invest in long-term Treasury bonds, often for fear of losing their investments (uncontrolled projects, deleterious business climate, risk of unrest).
To combat this, the BEAC carried out in January a first issue of bonds intended for private banks so that they entrust 25 billion of their liquidity to the Central Bank. A first initiative with little follow-up, because only 9 billion were raised.
A new successful show
Following a new analysis of the situation, the BEAC repeated this operation at the beginning of May. But this time, the objective is almost achieved: of the 50 billion CFA francs targeted, 47 billion were able to be collected. Proof that the tool works according to a senior Bank executive.
This instrument adopted in 2023 provides for the issuance of bonds with a maturity of 14 to 28 days remunerated respectively at a rate of 2.5 and 3.5%. This instrument complements those already available to the BEAC such as that of adjusting key rates or the Central African Securities Exchange. Ultimately, the BEAC wishes to withdraw 150 billion FCFA via a series of issues in order to carry out its mission: ensuring monetary stability in the region.
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