If the COVID-19 pandemic is rapidly controlled, its negative effects on the budgets of member states of the Central African Economic and Monetary Community, known as CEMAC, will record a deficit of 0.9 per cent of the 2020 public investment budgets of the bloc, according to a report.
The CEMAC countries are Cameroon, Central African Republic CAR) Chad, Democratic Republic of Congo, Gabon and Equatorial Guinea.
According to a new report by the Bank of Central African States, popularly known as BEAC, “This deterioration of public finances would result from both the drop in budgetary revenue which would register a -0.5 point of the public investment budget, and an augmentation related to public expenditure (+0.9 point of the public investment budget).
It stated that lost petroleum revenue would hit 992.5 billion CFA (1.6 billion dollars).
“As to non-petroleum revenue, this would see a feeble reduction in absolute value, in connection with the slowdown in non-petroleum activities and the incapacity of the enterprises seriously hit by the COVID-19 crisis to honour their fiscal obligations,” the report stated.
It added that there would be a marked increase in expenditure on health-related issues and support for the sectors seriously impacted by the pandemic in all the countries.
This would be at the detriment of other public expenditures notably those related to recurrent functional operations, transfers and subventions as well as public investments, the report added.
Taking into consideration the weakness of the budgetary reserves of the CEMAC countries, the additional budgetary deficits which stand at 1.8 per cent of the public investment budgets, would be financed by an increasing resort to banking and monetary resources, in short external indebtedness, it stated.
The report noted that the level of indebtedness of the CEMAC countries would increase and indebtedness profiles of the countries deteriorate, given the fact that as at the end of 2019, only one CEMAC country, CAR, was classified by the International Monetary Fund as having a moderate indebtedness risk.
Two others, Cameroon and Chad, were classified as having a high risk of indebtedness and the Democratic Republic of Congo was classified as being excessively indebted, the report added.