The Bank of Central African States (BEAC) provides explanations on the new exchange regulations for nationals of the Economic and Monetary Community of Central Africa (CEMAC).
Meeting on 4 July 2019 in Douala as part of the dual session of the Ministerial Committee of the Central African Monetary Union (UMAC) and the Council of Ministers of the Central African Economic Union (UEAC), the CEMAC countries have commented on the new exchange regulations which has been the object of reprobation by the business community, in this case the Union of Central African Employers (UNIPACE). Explaining the reforms under way, BEAC Governor Abbas Mahamat Toli said that this is a process that should have taken place over the last seven years, had it not been for “the laxity of the Central Bank”. A reform that focuses mainly on the assignment of the role of administration of exchange regulations to the Central Bank; the formalization of the obligation to sell and retrocede foreign currencies to the BEAC; the obligation to indicate or justify the origin of funds for carrying out foreign exchange transactions; the possibility of opening escrow, guarantee and similar accounts in foreign currency in the books of the Central Bank for the coverage of commitments entered into by States and legal persons; the inclusion of safeguard measures in the event of a crisis affecting CEMAC’s external accounts, as well as the relaxation of sanctions and the formalization of procedures for the recording of offenses and the application of sanctions.
An example of the scope of this reform reveals that “between January and May 2019, the increase in remittances of currencies is 127% ranging from 771 billion FCFA to 1 376 billion FCFA, against 605 billion FCFA in May 2018 “said the Governor. In addition, the operations account experienced a strong increase of 32%, from 2552 billion FCFA at 31 December 2017 to 3 360 billion FCFA at the end of 2018, and at the end of May 2019 to 3457 billion FCFA. According to the Central Bank, since its entry into force on 1 March 2019, some issues related to the application of certain provisions of the new exchange regulations of the CEMAC deserve special attention.
These include the issue of resident currency accounts, issues related to manual exchange, obstacles to change induced by reforms and the issue of oil and mining companies. Spectrum of devaluation With regard to the issue of resident currency accounts, the implementation of the new exchange regulations is intended to facilitate the monitoring of transactions for which foreign exchange regulations have conceded, as of 1 March 2019, a transitional period of six months to regularize unduly open accounts. It appears that “at the end of May, 37 files were received and examined by the BEAC including 21 files of regularization and 16 files of request of opening of account. More than 95% of transactions listed as requiring a foreign currency account for their realization can be made without problem from the financial system of CEMAC, “insisted Abbas Mahamat Toli. The creation of a Central Unit for transfer studies and the monitoring of exchange regulations has brought improvements that give convincing results characterized by a very sharp reduction in the time required for transfers. Thus, “the processing time of transfer files to the central services which was on average 20 days has risen to one day,” said the Governor, stressing that “all these developments augur the external sustainability of our currency and the ‘removal of the humiliating specter of solitary devaluation in our subregion’.
In any case, it appears that the rejections of transfer requests by the Central Bank between January and April 2019, which represent 37% of the claims made, were rejected “for the holding by the originator credit institutions of external assets deemed sufficient to have had to be used to execute these transfers themselves without resorting to pre-financing by the Central Bank. In addition, the commercial banks are accused of opening foreign currency accounts without BEAC authorization, while the Central Bank insists on the authorizations required for imports of foreign banknotes. Measures that would include the fight against money laundering and the financing of terrorism.
