WAEMU : BCEAO maintains its policy rates unchanged

 

At its 3rd and final meeting of the Monetary Policy Committee (MPC) of the year 2020, held on December 2nd, the decision-making body of the Central Bank (BCEAO) decided to maintain unchanged its policy rates, namely the minimum interest rate for submitting to liquidity injection tenders and the interest rate of the marginal lending window. These two rates are therefore 2% and 4% respectively.

 

The maintenance of the policy rate levels in force since June 24th, 2020, which are the lowest in the history of the monetary issuing institution, is due to the uncertainty still hanging over the economic outlook of WAEMU as a result of the Covid-19 pandemic, which has caused an unprecedented slowdown in economic activity in the region.

 

 

However, the accommodative measures taken by BCEAO are beginning to bear fruit. Indeed, the WHC noted that the Union's GDP grew slightly by +0.6% in the third quarter of 2020, year on year, after a 2% fall a quarter earlier.

 

This development is particularly linked to "the lifting of mobility restrictions and the effects of the public support policies put in place".

 

The forecast for the rest of 2020 also remains optimistic with expected growth of +0.9% over the year as a whole.

 

With regard to the budgetary implementation of the Member States of the Union, there is a worsening of the budget deficit, which stood at 5.5% of GDP (3 742.1 billion CFA francs) at the end of September 2020, against 2.4% of GDP (1 576.3 billion CFA francs) at the end of September 2019.

 

This deterioration in the Union's budgetary balance is due to the negative impact of the pandemic on revenue, together with the response and recovery measures taken by the Member States in the context of combating the spread of the virus.

 

Finally, inflation recorded an increase of +2.9% in the third quarter of 2020, after an increase of 1.7% in the previous quarter. This acceleration in the rate of increase of the general price level is due to the disruptions of the distribution circuits caused by the health crisis, as well as the decrease of cereal production of the 2019-2020 crop year.