BEAC withdraws CFA63bn in a week to curb CEMAC inflation 0

The Bank of Central African States (BEAC) has successfully withdrawn a total of CFA63 billion from the banking system in two operations. This move is part of the central bank’s efforts to combat monetary inflation, which accounts for 20% of the inflation in the region.

The first withdrawal operation took place on March 28, when the central bank targeted CFA50 billion through the issuance of 14-day BEAC bonds at a 2.5% interest rate. However, it only managed to attract an offer of CFA15 billion, resulting in a relatively low demand coverage rate of just over 30%.

On April 2, BEAC launched another operation for CFA230 billion but only one bank participated, allowing the central bank to withdraw CFA48 billion at an interest rate of 1.25%. In total, the central bank managed to collect CFA63 billion from commercial banks in a week.

Let’s note that the escalation of liquidity withdrawals, including increasing the amounts sought by the BEAC and issuing BEAC bonds, are among the strategies employed by the CEMAC central bank to fight soaring inflation within the region. In addition to these measures, the BEAC has recently increased its key interest rates multiple times to slow down the refinancing pace of commercial banks and has suspended its liquidity injection operations into the banking system.

The central bank’s goal is to drain the banks and thus restrict economic agents’ access to credit. According to the BEAC, injecting significant financing into economic circuits contributes to inflation, especially in countries like those in the CEMAC region, where most goods and services are imported.

Source: Business in Cameroon