Inflation in CEMAC Seen Under 3% for 2025, First Time Since 2022

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Business in Cameroon | Beac’s Monetary Policy Committee (MPC) expects inflation within the Cemac region to stand at 2.9% in 2025. This would be the first time since 2022 that the indicator falls below the 3% threshold set for the region.

BEAC Governor Yvon Sana Bangui shared the forecast during the usual post-meeting press conference, following the first 2025 MPC session held on March 24 in Malabo, Equatorial Guinea.

He explained that the improved outlook is tied to two main factors. First are the early results from import-substitution policies introduced in several CEMAC countries. These measures aim to reduce heavy reliance on imports, which BEAC says are responsible for around 80% of inflation in the region. Second is the impact of the tight monetary policy that BEAC began implementing at the end of 2021. That policy involved raising the cost of refinancing for commercial banks and tightening access to credit moves designed to curb the remaining 20% of inflation, which the bank attributes to monetary factors.

Comforted by these signs of improvement, the BEAC committee decided to cut its key interest rates, putting a pause on the strict monetary stance that has been in place since late 2021. This is the first time in nearly three years that BEAC has lowered its rates, after a long period of increases followed by stability.

Effective March 24, 2025, the main refinancing rate called the TIAO, which is the rate at which commercial banks borrow from BEAC is now set at 4.5%, down from 5%. The marginal lending facility rate, used for 24-hour loans from BEAC to commercial banks, has been lowered from 6.75% to 6%.

Monetary policy experts say that these cuts should make it easier for commercial banks to access funding from the central bank, which could lead to lower lending rates in the banking sector. That, in turn, would make credit more accessible for businesses and individuals. With this expected shift in the banking sector particularly in lending to businesses, which typically receive the bulk of loans in the CEMAC zone the BEAC committee is forecasting stronger economic growth in 2025.

Specifically, the region’s GDP is expected to grow by 2.9% in 2025, up from 2.6% in 2024. This growth will be driven by strong performance in non-oil sectors, which are projected to expand by 3.9% in 2025, compared to 3.1% the previous year.

On top of that, foreign exchange reserves across CEMAC are projected to rise by 4% in 2025, reaching CFA7,584.9 billion. That would cover 4.8 months of imports, compared to 4.6 months at the end of 2024. In terms of import coverage, this level would bring reserves back in line with where they stood in 2023, following a period of steady decline. Once again, the improvement is being credited to the early gains from import-substitution policies and to the repatriation of mine restoration funds. An agreement on the return of those funds is expected by April 30, 2025, between BEAC, CEMAC member states, and the mining companies operating in the region.

It’s worth noting that all of these encouraging forecasts come after three tough years for the region, marked by surging inflation, tight monetary conditions, a weakened banking sector, strained public finances in some countries, and falling reserves that sparked fears of a possible monetary adjustment.

This difficult stretch ultimately led to an emergency summit of CEMAC heads of state held in Yaoundé at the end of 2023. At that meeting, regional leaders adopted a recovery strategy aimed at pulling the community out of the crisis.

“All these recovery measures must be rolled out urgently,” said Cameroon’s President Paul Biya in his closing address at the Yaoundé summit. “In these especially challenging times, our regional community is an asset we must protect and strengthen. Only by standing together can we overcome the current hardships and build better economic and social prospects for our countries and our people.”