THE ECONOMIES
OF CENTRAL-AFRICA 2013
Stakes and cnailenjes of a green economy in Central Africa
h
UNITED NATIONS ECONOMIC COMMISSION FOR AFRICA
SUB-REGIONAL OFFICE FOR CENTRAL AFRICA
The Economies
OF CENTRAL AFRICA
2013
Stakes and challenges of a green economy
in Central Africa
ISBN: 978-9956-625-07-9
© United Nations Economic Commission for Africa, 2013
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ACKNOWLEDGEMENTS
This report has been drafted under the general supervision of EmileAhohe, Director ofthe ECA sub-regional Office for Central Africa (ECA-SRO/CA).
Mamadou Malick Bal coordinated the drafting team comprising Ghitu-I- Mundunge, Isidore Kahoui, ZhiyuanQian, Joseph Baricako, Lot Tcheeko, TidjaniChetima, Laurent d'Aronco, Abel Akara, Amy Toure and Pr. Maurice Tsalefac, consultant.
Members of the drafting team extend their gratitude to all colleagues of the ECA-SRO/CA for their cooperation. We are especially grateful to UNDP- Cameroon for its technical and financial contribution. In like manner we also wish to thank our colleagues of UNDP-Burundi, UNDP-Gabon, and the focal points of ECA-SRO/CA for their assistance.
Comments were made on the report by the group of experts who did the peer review on 7 February 2013. We wish to name:Mireille Etogo Messomo (University of Yaounde II), Francois Colin Nkoa (University of Yaounde II), Hubert Ngnodjom(Catholic University, Yaounde) and Marcel Opoumba (Sub-regional Institute of statistics and Applied economics).
Our hearty thanks are equally extended to the participants of the intergo vernmental committee of experts of central Africa meeting held in Libre ville, Gabon from 27 February to IMarch 2013, whose suggestions and observations enabled us to significantly improve on the quality of this re
port.
Lastly, we thank the team ofJePublie for editing, page setting and publishing this work, as well as the communication team of ECA-SRO/CA for des-
Despite a difficult global context, the macroeconomic performance of central Africa was good in 2012, recording a real GDP growth rate of 6.4 % as against 5.0 % in 2011. The buoyancy of mining and non-mining sector activities and of domestic demand sustained this trend and cushioned the effects of the global economic situation. However, as shown in previous editions of Economies of Central Africa, this sub region has, for the past ten years recorded sustained growth but has not been able to significantly improve social indicators. Meanwhile, this is asub region endowed with vast mineral, forestry, agricultural and environmental resources which, if exploited in a judicious and coordinated manner would fast-track its eco nomic and social development. The time has come to reorientate the agenda of countries of the sub region towards a strategy of economic change through industrialization founded on basic commodities and respectful of the environment.
Appropriately therefore, the theme of this edition of Economies of Central Africa is on the stakes and challenges of a green economy in Central Africa.The United Nations Economic Commission for Africa and the Afri can Union Commission define the green economy as a system that aims to improve human wellbeing, ensure social equity and to reduce environmental risks as well as ecological shortages. It is characterized by low carbon emis sions, the efficient utilization of resources and social inclusion.
We believe that central Africa is a choice zone for a green economy because of its vast resource potentialities. Thus, the transition towards a green economy will permit the sub region to identify and implement more ecological and socially responsible development options in order to meet the major challenges of the countries.
We therefore hope that the data, analysis and recommendations contained in this report will be useful to member Countries, intergovernmental orga nizations, researchers and other stakeholders in their efforts to strengthen the efficacy of development policies in central Africa.
EMILE AHOHE NASSOUR GUELENGDOUKSIA OUAIDOU
Director of ECA/SRO-CA Secretary General of ECCAS
PA Protected Area
ODA Official Development Assistance EPA Economic Partnership Agreement AFDB African Development Bank ILO International Labour Office
WB World Bank
BTP Building and Construction AFCON African Cup of Nations
CBD Convention on Biological Diversity
CC Climate Change
UNCCD United Nations Convention to Combat Desertification UNFCCC United Nations Framework Convention
on Climate Change
UNECA United Nations Economic Commission for Africa SRO/AC Sub Regional Office / Central Africa
REC Regional Economic Community
UNCTAD United Nations Conference on Trade and Development CICOS International Commission of Congo-Oubangui-Sangha
Basin
CO2 Carbon Dioxide
DFID UK Department for International Development PRSP Poverty Reduction Strategy Paper
ADF African Development Fund
FAO Food and Agriculture Organization
GHG Greenhouse Gas
FDI Foreign Direct Investment
HDI Human Development Index
OECD Organization for Economic Cooperation and Development
ILO International Labour Organization MDG Millennium Development Goal WHO World Health Organization WTO World Trade Organization NGO Non-governmental Organization UNO United Nations Organization
UNIDO United Nations Industrial Development Organization OPEC Organization of Petroleum Exporting Countries GDP Gross Domestic Product
LDC Least Developed Countries SME Small and Medium Enterprise SMI Small and Medium Industry GNP Gross National Product
UNEP United Nation Environmental Program PPP Purchasing Power Parity
HIPC Heavily Indebted Poor Country CAR Central African Republic
DRC Democratic Republic of the Congo REDD Reducing Emissions from Deforestation
and Forest Degradation
ICT Information and Communications Technologies
VAT Value Added Tax
AU African Union
EU European Union
IUCN International Union for Conservation of Nature UNCCC United Nations Convention on Climate Change UNICEF United Nations Children's Fund
UNESCO United Nations Educational Scientific and Cultural Organization
USD United States Dollar VAM Vale Added Manufacturing
socioeconomic dynamics, regional and international agendas
and green economy in central africa
The report on The Economies of central Africa is a periodic publication that the sub regional office for central Africa of the United Nations Econo mic Commission for Africa (ECA- SRO/CA) prepares and submits annually to the intergovernmental Committee of Experts (ICE). It provides an over view of the economic and social situation and analyses the major develop ment policies of the sub region. The aim ofthe report is to promote dialogue and the exchange of experiences in a bid to coordinating and harmonizing policies between member States, intergovernmental organizations and other development stakeholders. It also contains recommendations to identify op portunities and risks too, including improvements to be made on the deve lopment policies and programs of countries in the sub region.
The world financial and economic crisis highlighted the problems connected to central Africa's excessive dependence on basic commodities and external financial resources. Successive editions of the Economies of central Africa have since learned lessons from this crisis so as to reflect on the ways and means to achieve a real structural transformation of the sub region's economies. Thus, the 2010 edition of the Economies of central Africa focused on the mobilization of domestic resources and economic di versification. Pursuing the reflexion on the necessary diversification of the economies of thesub region in order to counter exogenous shocks, the 2011 edition chose the promotion of the industrial sector as a priority. Lastly, the 2012 edition was devoted to energy challenges in the sub region on account nftl,a rt^lvno imnnrt'iiicp nfpnpmv in thp industrial Hpvelnnment nrncess_
The Economies of Central Africa - 2013
These themes that complement each other contribute to the structural transformation process of central Africa.Nevertheless, in order to ensure movement towards a sustainable growth and long term human development track, these structural changes must of necessity take account of the envi ronmental component. Therefore, in accordance with the deliberations of the 28th session of the ICE held in February at Brazzaville, this edition, comprising three chapters focuses on the stakes and challenges of a green economy in central Africa.
After the overview, the 2013 edition of the Economies of central Africa in its first chapter examines the recent economic and social conditions in central Africa and gives the outlook for 2013. Chapter two gives an insight into the implementation of regional and international agendas with special focus on MDG7 relating to environmental sustainability. Chapter three is devoted to the thematic study on the stakes and challenges of a green eco nomy in central Africa. The objective is to raise awareness among govern ments of the sub region so that environmental sustainability is taken into account in policy formulation, planning and budget preparation. Lastly, the general conclusion of this report revisits the main lessons learnt from the various chapters in a bid to drafting recommendations that identify oppor tunities, and risks too, and bring improvements on development policies and programmes of countries in the sub region. It contains a series of re commendations that would permit a gradual transition of countries of the sub region towards a green economy.
With respect to methodology, we used qualitative and quantitative in formation gathered from several sources: national government services, central banks (including the Bank of Central African States) and national institutes of statistics. These primary sources of information were supple mented by secondary sources namely, available documents and reports of the Economic Intelligence Unit, the African Development Bank, the Inter national Monetary Fund, the World Bank, the United Nations Development Program and other agencies of the United Nations system. To better conduct the thematic study, the ECA-SRO/CA contacted the General Secretariat of ECCAS to gather data and documentation on the green economy, notably, the outcomes of the feasibility studies on the development of a green eco nomy in central Africa as contained in the roadmap adopted by ECCAS mi nisters in May 2012 at Brazzaville, as well as many other reports of
Macroeconomic data used in this report have been synthesized in the statistical annex. The annex providesa summary table for each country of the zone for the period 2004 to 2013 on forty-one macroeconomic variables.
The annex also contains tables providing aggregate data for ECCAS and CEMAC. It is worth noting that the end date for statistics in this report is 22 November 2012.
Recent economic and social conditions in central Africa and outlook for 2013
The macroeconomic performance of central Africa recorded an upturn in 2012 with a real GDP growth rate of 6.4 % as against 5.0 % in 2011, due to the buoyancy of activities in the mining and non-mining sectors. Howe ver, this good performance is hardly perceived through a significant impro vement in the welfare of the populations and more especially in the creation of enough jobs for the youth. In 2012, inflation continued to drop in all countries of the sub regionat a rate of 8.0% compared to 9.1% in 2011, due to the control of money supply in some countries. Regarding government finance management, it was characteri-
,._„.,, . . f. . The macroeconomic performance
zed in 2012 by an increase in fiscal re-
,, , „ , of central Africa is slow tn signifi- venues, notably by efforts to boost .
cantly improving the welfare of the non-mining sector revenues and greater& & populations and more especially in... . m . .. . creating sufficient jobs for the youth.
control of government expenditure. Fo reign trade however shows that the
good standing ofthe balance has not succeeded in offsetting the degradation of the current account balance. Forecasts for the sub region in 2013 are a bit mitigated. The main risks on these forecasts are linked to the global eco nomic situation, notably developments in the economic situation in the euro zone and in the United States.
The Economies of Central Africa - 2013
Implementation of regional and international agendas, including NEPAD and the MDGs:
ensuring environmental sustainability in central Africa
Two years to the 2015 deadline, progress made in achieving the MDGs is mitigated. Furthermore, there are great disparities from one country to another and from one goal to another. Regarding MDG7 on environmental 1 sustainability, the rich biodiversity of cen- Regarding MDG 7 on sustainableCT ° . , A,..tral Africa remains threatened by defores-■ *u * j L j *•
environment, the rich biodiversity . , „ , . _
, . , .-. . 41 . tation and forest degradation. The of central Africa remains threate- ...
_ii__i* * « _i* i depletion of forest cover and their degra-
ned by deforestation and forest K B
dearadation dation are a real threat to the environment
1 and therefore, to the means of subsistence
of the populations particularly in rural areas.
In terms of carbon dioxide emissions, very significant reductions of ozone layer depleting substances have always been recorded since 2000. As re gards biodiversity protection, land and marine protected areas have been increasing substantially, while the population having no access to safe drin king water and to basic sanitation services has continued to decline. With this in mind, the authorities should record the programs for adaptation to climate change as a priority in their development strategies.
Stakes and challenges of a green economy in Central Africa
The issue of the green economy is now at the center ofimportant stakes for the African continent and the sub-region of central Africa. It has been at the forefront increasingly for several years, as evidenced by the growing number of meetings or publications devoted to it. The green economy concept appears as a new paradigm to improve economic and social well- being, while ensuring that the production and consumption process does not endanger the environment. Seen in this light, it is compatible with the concept of sustainable development advocated by the United Nations for decades. But it also involves risks and challenges, especially for developing countries where economic development is becoming more and more de-
strengthen protectionist tendencies, to increaseconditionalities of interna tional financial cooperation and release new forces that would further exa cerbate global inequities.
The green economy is a development opportunity for central Africa.
Relying on promising sectors such as agro-forestry,renewable sources of energy, ecotourism and carbon, the sub region could create wealth and jobs while protecting the environment andthe balance of ecosystems.
This is why the sub-region should fast- track andsucceed in transitioning towards this new economic paradigm. It can rely
The green economy could create wealth and jobs while protecting
on it for its immense potential of therich- the environment andthe balance biodiversity, diversity of soils and rivers, ecosys ems.
as well as the perfect sunshine. But re
source potential alone is not enough to revolutionize the economies of cen tral Africa. There is need for a conducive human and physical environment.
The transition to this new economic model must cope with some legal, po litical and financial challenges.
The first challenge is political commitment. It must be accompanied by concrete acts whichresolutely settle these economies on the path to gree ning.
The second is institutional and legal. The sub regional bodies must have real powers to regulate economic activity on this scale, and to work towards the adoption of common standards with sufficient incentives for green pro duction and consumption. National representations of sub-regional bodies should be fully operational.
The third challenge is technological. States should develop all relevant partnerships with industrialized countries for transfer of appropriate tech nologies without which the transition to a green economy would remain mere imagination.Similarly, some endogenous technologies must be deve loped.
The fourth challenge is financial. States must release their financial contributions promptly for the functioning of sub- regional bodies and for the implementation of harmonized programs.
CHAPTER 1 RECENT ECONOMIC AND SOCIAL CONDITIONS IN CENTRAL AFRICA AND OUTLOOK FOR 2013
■ Introduction
This issue of the report on The Economies of central Africa has been pre pared within a global context marked by economic disruptions in advanced countries resulting from new setbacks and growing uncertainties. IMF pro jections for world growth in 2013 were reviewed downwards and stand now
at 3.6 % as against 4.1 % before. The uncertainty surrounding the global economic outlook is high and is due, inter alia, to the twofold risk of acute tightening of US fiscal policy and intensification of euro zone stress. Ac cording to the IMF, the latter continues to be a risk for global economic outlook. Although a serious crisis is less likely, the risks of a prolonged stagnation in the euro zone will increase if the reform embarked upon to improve the financial status of peripheral countries and banks is not main tained.
A more acute deterioration of the global economic situation could cause a marked decline of growth in central Africa1 whose economies are structu rally dependent on low value added export commodities and where the hea droom of public authorities is low, notably those of landlocked countries less endowed with natural resources.
1. The central African sub region refers to the ten member States of the Economic Community of Central African States (ECCAS): Angola, Burundi, Cameroon, Republic of Congo (Congo), Gabon, Equatorial Guinea, Central African Republic (CAR), Democratic Republic of the Congo (RDC), Sao Tome and
This chapter has three sections. Section one examines the major global trends. Section two analyses the recent sub regional and national economic trends. Section three deals with social conditions, with special focus on youth employment that remains a major concern in the sub region. The chapter leads to the economic outlook for 2013.
Section I - Global context
■ Global Economic trends in 2011 -2012 and outlook for 2013
Global economic activity remained weak in 2012, after a considerable slow down in 2011, in a context characterized by a lingering sovereign debt crisis in Europe and fiscal problems in several industrialized countries. Economic recovery in the United States was less robust than expected because of a major drought episode that hit nearly 60 % of the territory and the flooding caused by hurricane Sandy. The worsening crisis and the drop ofproduction in the euro zone impacted negatively on the confidence of enterprises and consumers worldwide.
I The increase of corporate invest-
The World real GDP growthrate , _, _, ....
■ ,. ■» «««. «,,,. ««™ ment slowed down, particularly in
declined from 3.8% in 2011 to 3.3% F ,,.
. the manufacturing sector. In addi-
I tion, household demand weakened.
Some austerity measures by the governments of the euro zone for the or derly debt restructuring of certain countries in difficulty, only strengthened the turmoil in financial markets and sparked up new concerns about a pos sible default payment of some major countries in the zone. Despite being affected by these developments, growth in emerging and developing coun tries remained at a relatively high level. Overall, the World real GDP grow thrate declined from 3.8% in 2011 to 3.3% in 2012.
Chapitre i
■ 2011
■ 2O12p
*2013p
Graph 1.1; Real GDP growth in some countries / regions of the world in 2011 and forecasts for 2012 and 2013 (in%)
Sourer ECASRO/CA data from the IMF and tha ADB (2012)
The pace of global trade continued to slow down from 5.9% in 2011 to 2.8% in 2012, reflecting the weakening of trade in durables and capital goods, as well as the lack of buoyancy in the high-tech sector.
After an increase in 2011, global inflation declined in 2012, given the sur plus production capacity in many developed countries, weak global de mand, and downward pressure on wages due to high unemployment and the drop in prices of raw materials.
■ 2011
■ 2O12p
*2013p
U,S. Euro:one Japan U.K. China India Brazil Russia Africa
GraDh 1.2: Inflation In tonw countries / regk>n» of tha world in 2011 and 2012and forecaata for 2013 (in%)
The slowdown in economic activity hampered the creation of jobs and unemployment stood at a high level in many countries. Globally, unem ployment remained above its pre-crisis level (about 6.2%) and is rapidly increasing in the euro zone. Conversely, the unemployment rate fell below the pre-crisis level in emerging and developing countries, but remained high in developed countries in 2012.
The global economy may pick up gradually as from 2013, thanks to the re duction of uncertainty about the effectiveness ofpolicy responses to the cri sis, pursuing accommodative monetary policies and gradual improvement _ . , . T. j of the financial situation especially in the The global economy may pick up
gradual* as from 2013, thanks to euro zone and in *e United States'World
the reduction of uncertainty. GDP growth rate should stand at 3.5% in 2013. However, economic recovery in 2013couldbe compromised in the event of a deepening Eurozone crisis and lack of responsiveness of the United States in the face of fiscal difficulties.
■ Situation in the major industrialized countries in 2011
and 2012 and Prospects for 2013
The difficulties faced by industrialized countries inresolving the problems caused by the global financial crisis of 2008-2009 continued to persist in 2011 and 2012. Economic growth declined in 2012 to 1.3%, against 1.6%
in 2011. In 2013, the positive effect of injecting liquidity into financial sta bility, production and employment observed in 2012 would be strengthened, and growth would fall to 1.4%. In conjunction with the decline in the prices of commodities, overall inflation would drop to 2.7% in 2011 to 1.9% in 2012 and 1.6% in 2013.
United States
In the United States, the GDP growth rate in real terms increased from 1.8%
Chapitre l
nature of the job market hindered private consumer spending, the growth of corporate investment ran out of steam somewhat, especially because of the partial termination of additional deductions for depreciation, while Go vernment spending declined following the phasing out of fiscal stimulus measures taken during the crisis. However, progress has been made in the balance sheet adjustment, and the situation has improved in the real estate market that has shown signs of stabilization, albeit at a low level. In addi tion, the financial situation has improved in almost all markets, while credit conditions eased or stabilized.
Inflation fell to 2% in 2012, against 3.1% in 2011, given the existence of substantial overcapacity. It would remain moderate due to lower prices of commodities and the persistence of underemployment, at a rate that would shrink to 1.8% in 2013.
The unemployment rate fell from 9% in 2011 to 8.2% in 2012, reflecting a one-time adjustment by better aligning employment and production and si gnificant rehiring of workers offsetting the spectacularly rapid decline in employment during the recession. With a moderate but steady improvement in employment, the unemployment rate is expected to decline further to stand at 8.1% in 2013. Underemployment, although declining, remains high.
Japan
In 2012, the economy benefited from reconstruction work begun after na tural disasters suffered by the archipelago. The growth rate rebounded from - 0.6% in 2011 to 2% in 2012. The effects ofthese factors, however, should fade and the growth rate would fall to 1.2% in 2013. The continued strong growth of business investment and a resumption of growth in exports, dri ven by the recovery in global demand, will obviously be the main drivers of growth.
In February 2012, the Bank of Japan issued a statement on its goal of price stability, which now consists in having an inflation rate of 1%. The easing of monetary policy announced in September 2012 should boost growth and facilitate the exit from deflation. However, further easing may be necessary to achieve faster the inflation target of 1%, and through better communica-
0.3% in 2011, inflation was close to zero in 2012 and is projected to be - 0.2% in 2013.
The unemployment rate dropped from 4.6% in 2011 to 4.5% in 2012 due to the recovery of activity in the manufacturing sector. It would fall to 4.4%
in 2013.
Euro zone
The euro zone was in recession in 2012, in conjunction with the decline of- marked activity in the countries of southern Europe confronted withserious financial difficulties and forced toimplementtight fiscal policies. The GDP growth rate fell from 1.4% in 2011 - 0.4 % in 2012. Measures taken at coun try level and in the entire euro zone would help improve the financial si tuation, especially in the countries of southern Europe, where an early economic recovery is expected. Consequently, the real GDP growth rate woulddrop to - 0.2 % in 2013.
Headline inflation dropped from 2.7% in 2011 to 2.3% in 2012, in the wake of the economic slowdown and due to the existence of significant output gaps. The inflation rate would decline to 1.6% in 2013.
Conditions in the labor market deteriorated and the unemployment rate rose from 10.2 % in 2011 to 11.2% in 2012. The situation is particularly critical in countries like Greece and Spain, where the ratio of unemployed in the labor force is 1 to 4 and where, more generally, almost half of young persons are unemployed. It is expected that the unemployment rate will be 11.5 % in 2013.
United Kingdom
In the UK, the financial sector has been hit hard by the global crisis and do mestic demand was based on fiscal consolidation in the private and public sectors. The GDP growth ratedeclined from 0.9% in 2011 to - 0.2% in 2012.
Measures have been taken by the Bank of England to encourage financial institutions to grant loans and to facilitate access to huge credit amounts.
Growth is expected to be 1% in 2013.
-- ri ■■^—>■■ ..^.~>-
Chapitre i
to be below the upper limit of the price stability target of the Bank of En gland (3%), 4. 5% in 2011 to 2.7% in 2012. It would continue to decline in 2013 to stand at 1.9%.
The unemployment rate rose only slightly, from 8% in 2011 to 8.1% in 2012, in conjunction with the gradual improvement in the labor market. It would remain at that level in 2013.
■ Situation in emerging countries in 2011 and 2012
and outlook for 2013Weak growth and uncertainty in the developed countries had a negative im pact on economic activity in emerging countries, with a drop in exports and capital flows mainly from the countries of j
„ . . , • , . A , Weak growth and uncertainty in the euro zone. Combined with internal "
, . , , the developed countries had a constraints of budget cuts and tighter len-
ding conditions, these developments led to a decline in theGDP growth rate from
6.3% in 2011 to 5.1% in 2012. The economy will grow to 5.5% in 2013.
economjc
actjvjty jp emergjng countries.
China
In China, the economy slowed from 9.3% in 2011 to 7.8% in 2012,due to a decline in public investment and a slowdown in external demand. Invest ment growth in particular has declined as a result of measures taken in 2011 to curb investments in real estate. In 2013, growth is expected to rebound thanks to the recovery in world trade. The activity should also enjoy acce lerated approvals of public projects in infrastructure and the resumption of growth in domestic demand, especially investment, due to the easing of the economic policy initiated in 2012. The rate of GDP growth would fall to 8.2% in 2013.
The inflation rate fell by 5.4% in 2011 to 3% in 2012, as a result of monetary tightening measures and credit policies to reduce the risk of overheating. It would remain at that level in 2013.
India
In 2012, activity in India suffered from the drop in business confidence due to the slow pace in approving new projects, absence ofVigorin structural re forms, policy interest rate increases to curb inflation and weaker external demand. Real GDP growth reached 4.5% in 2012 as against 7.9% in 2011.
Improving consumer confidence as a result of various reforms announced, the recovery of investment, the increase in external demand would increase it to 5.9% in 2013.
Inflation continued to weigh on real incomes in 2012, insofar as it grew from 8.9% in 2011 to 10.2% in 2012. It is expected that it would drop to 9.6% in 2013.
Brazil
Brazil's economic situation deteriorated in 2012, due to a weakinternational environment that weighed heavily on exports and prevented the recovery of investment. The increase in outstanding credit remained low throughout the year, mainly due to public banks. The GDP growth rate declined from 2.7 % in 2011 to 1% in 2012. Targeted tax measures introduced in 2012, the fiscal stimulus introduced by the Central Bank of Brazil (BCB ) from August 2012, the depreciation of the Brazilian real (BRL) and the gradual normalization of stocks should favorably impacteconomic activity in 2013.
Growth is expected at 3.5% in 2013.
In the wake of the slowdown in economic activity, inflation recorded a drop from 6.6% in 2011 to 5.2% in 2012. The reduction of taxes on electricity announced in September 2012 by the authorities should contain pressures on consumer prices.The inflation rate is expected to drop to 4.9% in 2013.
Chapitre i
Russia
Activity in Russia was less robust in 2012, affected as it was by the rising financial tensions in the euro zone and the risk aversion observed globally.
The growth rate was 3.6% in 2012 against 4.3% in 2011 and is expected to rise to 3.7% in 2013, thanks to strong domestic demand supported by high oil prices.
The inflation rate declined from 8.4% in 2011 to 5.1% in 2012 against a backdrop of tighter monetary policy. The increase in wages, the drought that affected the grain harvest and rising controlled prices ofpublic services are all factors that would exert an upward pressure on prices. The inflation rate willclimb to 6.6% in 2013.
Trends of commodities and foodstuffs
Having recovered in 2009-2010, commodity prices remained broadly stable in 2011, before beginning to climb again in 2012.
Oil prices continued to fall until the end of June 2012, as well as those of most non-ferrous and precious metals. As for agricultural products, only cocoa and soya fared better.
Price trends at the end of 2012 suggest a continued rise. Indeed, the geopo litical tensions in the Middle East, low inventory levels and adverse weather conditions in the U.S. and Asia could act in favour of a recovery in com modity markets.
Crude Oil - After a peak of 125 USD in March 2012, the price per barrel of Brent came under the symbolic threshold of 100 USD in June 2012, the growth rate of the Brent pricefell from 31.6% in 2011 to 1% in 2012.
Since September 2012, they are experiencing high volatility, fluctuating around 112 USD per barrel. Given current trends, prices should remain at a high level in 2013.
Cotton - In 2012, world cotton prices were marked by high volatility, first stabilizing at around $ 1 a pound in April, according to the Cotlook A Index, before gradually falling to be on average 84 U.S. cents per pound. Demand remained low, while production and stocks were on the rise.
Given the market conditions, forecasts indicate a decline in world cotton production of about 9% for the 2012-2013 season. World stocks might, in turn, increase by 11%, reaching a total of 15.2 million tonnes. An accumu lation of these stocks could push the market further down.
Coffee - The latest figures published by the International Coffee Organiza tion (ICO) indicate that global coffee consumption declined for the first time in ten years from 2011 to 2012. Coffee prices, particularly those of Arabica varieties, continue to decline since the beginning of the year. The market showed a downward trend since October 2011 and it was amplified from April 2012. Thus, throughout the coffee season (2011-2012), prices, all varieties included, fell more than 17 % compared to 2010-2011.
Cocoa - According to data from the International Cocoa Organization (ICCO), the average monthly price per ton increased from 2 264 USD in June 2012 to 2 350 USD in July 2 512 USD in August and 2 620 USD in September 2012.2
The 7.5% decline in production announced by ICCO in 2012 due to drought does not seem to be confirmed. In contrast, global production for the 2012- 2013 campaign could record an increase of approximately 3.3% over the previous year.
Wood -According to the 2011 annual report of the International Tropical Timber Organization (ITTO), the production of industrial tropical "logs"
1. PmHllitHrtC n" 1 ^8 ■ le hniierin Ap-k miitiprpunrpmiprps V trimestrp nnwmW "HW) /Anpn
Chapitrk i
dropped in 2009 and 2010 to 141.7 million cubic meters and 138.4 million cubic meters respectively (down from 145.6 million cubic meters in 2008).
As for prices, between 2009 and 2010, they show a return to relative stabi lity compared to some major commercial species ofprimary tropical timber products. Actual prices reached 520 USD per cubic meter in February 2011 to a peak of 340 USD per cubic meter recorded in 2010.3
Foodstuffs
According to estimates by the United Nations Food and Agriculture Orga nization (FAO), the index ofworld food prices fell by 7% in 2012 compared to 2011. The sharpest declines were sugar (17.1 %), dairy products (14.5%) and fats(10.7%). They are much smaller for cereals and meat (2.4% and 1.1% respectively). In terms of prospects for 2013, they show a general im provement in the supply, and demand would always remain strong.
Rice - Rice, like com and wheat, is one of the most consumed grains in the world. In 2011, world productionincreasedby 3% to 482.3 million tons in milled equivalent. Recent estimates indicate stable harvests for the 2012- 2013 campaign at 483.5 million tons in milled equivalent. As for world prices, they remained generally stable with slightvariations. The same trend is expected in 2013.
Wheat - Wheat prices have been falling since the peak in the second half of 2010 when the bushel was worth 9.93 USD on the Chicago Board of Trade (CBOT), compared to 6.20 USD in 2012. This trend is the result of global successive good harvests that have increased stocks. International prices are expected to average at levels lower than thoseof 2011-2012.
Sugar - According to FAO projections for 2011 -2012, global production of sugar is expected to increase by nearly 8 million tons, or 4.6% more than in 2010-2011.
C : I „, ,i....f..,.,;.,., A» >„ „,■*„„«„., ~,,,*,.-!;,.l,> ,!„<• *,„,-<■ KMH Intern a tint, a 1 Trnnif-al Til
For the second consecutive year, production is expected to exceed consump tion, with a surplus of about 5.4 million tons, thus contributing to replenish relatively low stocks. Quoted prices were 23.59 U.S. cents per pound in April 2012, 21.26 U.S. cents per pound in May, and only 20.28 U.S. cents per pound in June. This decline continued in the second half and the sugar price index in 2012 declined by 17.1% compared to 2011.
Section 2 - Recent economic conditions in central Africa and Prospects for 2013
■ Sub-regional overview
GDPIn 2012, the macroeconomic performance of central Africarecorded an in crease, with areal GDP growth rate of 6.4%. This good performance exceeds
1 by 1.4 points the level of2011 (5.0%) and
In 2012, the macroeconomic per- r- . .. , ■ ,
confirms recovery at the sub-regional formance of central Afncarecor- ,,„,,,,
, , . .„ , «^« level. Although the growth rate of central
ded an increase, with areal GDP & b
growth rate of 6.4%. Afrlca in 2012 was hi§her than the ave"
I rage of East Africa (1.5%) and southern
Africa (3.0%), it was lower than the average for West Africa (6.9%) and that of North Africa (15.1 %).4
4. The strong growth in North Africa in 2012 was due, among other things, to the post "Arab Spring"
recrtverv in Tunisia. Fuvnt anH I.ihva in nartir.niar Indeed IMF data «hnw a rerrird oirnvth rate r\f
Chapitre i
CifitrJl Aii.u w«t Aln Edit Afritj Southern Ainu North Afn Ainu
Graph 1 -3: Real GDP growfli rate in central Africa and other sub-regions of the continent from 2010 to2012fm%)
Source; ECA-SROCA/rom BEAC and «Fdaa (20(2).
The sub- regional growth results from the dynamism of the activities of ex- tractive(oil, mining) and non- extractive industries. It was mainly driven by the consolidation of growth in Angola (6.8% against 3.9% in 2011), Came roon (5.1% against 4.7% in 2011) and the Democratic Republic of Congo (DRC) (7.2 % against 6.9% in 2011). However, a decline in growthwas observed in Gabon (7.2% against 8.2% in 2011), Equatorial Guinea (5.3%
against 7.7% in 2011), Congo (4.3% against 5.8% in 2011) and Sao Tome and Principe (STP) (4.5 % against 4.9% in 2011).
On the supply side, growth in central Africa benefited from vibrant primary, secondary and tertiary sectors.
In the primary sector, "agriculture, animal husbandry, hunting and fishing"recorded a good performance. The improvement of activities in this sector resulted from the favorable development of food crops with the sup port of national authorities to farmers, coupled with good rainfall distribu tion in most countries. The work done in opening up production areas through the construction and maintenance of rural roads,especially in Ca meroon, Central African Republic (CAR) and Congo also contributed to
12010 12011 2012
Graph 1.4: Real GDP growth rate in countries of central Africa from 2010to2012(in%)
Source: ECASROfcA tromBEAC and IMF data (2012).
In addition, cash crops have benefited from policies including (i) extension of cultivated areas for cotton, coffee, bananas, cocoa; (ii) the modernization of farming techniques with the gradual introduction of tractors and other equipment, (iii) guidance to farmers and providing them with high-yield seeds and fertilizers. Lastly, forestry and logging with the allocation of new logging units (CAR, Congo and Gabon) have enhanced the growth of the primary sector.
Mining activities have stimulated sub-regional growth thanks to the increase recorded in crude oil production in almost all countries of central Africa.
For example, oil production in Angola reached 1.801 million barrels / day against 1.660 million barrels / day in 2011. Furthermore, increase incopper production in DRC, and diamonds in Central African Republic,boosted growth in this sector.
In the secondary sector,building and construction activities (BTP ) have boosted growth through various works funded through public investments, particularly in Angola, DRC and Congo.
Lastly, the tertiary sector performed well in all countries of the sub- region,due to vibrant activities in transport and telecommunications.
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With regard to demand, economic growth in 2012 was driven mainly by domestic demand in conjunction with huge investments in most countries of the sub region.
The graph below shows the economic weight of each country in the GDP of the sub region in 2012. Angola stands out, through petroleumproduction and the de velopment of other non-oil sectors as the engineaccounting for more than half of the
GDP of the zone, followed by Cameroon, Equatorial Guinea, Gabon and DRC. In addition, this graph shows the gap between exporters and non-net oil exporters. The contributions of CAR and Burundi are 1% each.
Economic growth in 2012 was dri ven mainly by domestic demand in conjunction with huge invest ments in most countries of the sub region.
Burundi ^ i _STFCAR
Graph 1.5: Eoonomt wetght of ECCAS courttm In GOP of ttw iuO-rtolon In 2012 Scww; eCASRQCAtvmaEACKKl IMfVota f»l».
Box 1.1: Central Africa in Focus
Area: 6 640 600 km3
Population in2012: 149.6 million inhabitants GDP per inhabitant in2012: 1 511 USD Real GDP growth rate in 2012: 6.4 % Inflation in 2012: 8%
Inflation and monetary situation
In 2012, price trends in central Africa were on the downside compared to 2011. The inflation rate stood at 8.0% against 9.1% in 2012. This trend is mainly the result of the control of the money supply in some countries, na mely DRC and Angola.
Graph 16: Inflation in Central Africa from 2010 to 2012 (in %) Source; ECASRQCA imm BEAC and IMF data (2012).
In the CEMAC zone which has a common monetary union comprising six countries, inflationary pressures remained high throughout the year 2012.
The inflation rate in CEMAC reached 3.5% onaverage annuallyin 2012, re presenting an increase from its 2011 level (2.7%), and above the community ceiling of 3%. This level of community inflationportrays an acceleration of consumer prices in Chad and CAR. Only Gabon recorded an average annual inflation rate of 2.5% in 2012, below the community ceiling of 3%.
The box below recalls the primary convergencecriteria of the multilateral surveillance mechanism of CEMAC.
The monetary situation of CEMAC member states on 31 December 2012 was marked by an increase in net foreign assets, credit to the economy and money supply.
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Box 1. 2: First rate Convergence criteria of CEMAC
Basic fiscal balance to GDP (standard> = 0) Average annual inflation (standard <3%)
Total outstanding debt to nominal GDP (standard <= 70%) No accumulation of domestic and external arrears
Source: CEMAC
Indeed, net foreign assets increased by 16.9% to 9 314.9 thousand million CFA francs at end December 2012. Credits to the economy increased by 22.4% to 5 635.4 thousand million CFA francsas at 31 December 2012, re flecting economic recovery in CEMAC countries. As a result, money supply increased by 20.9% to 10 419.1 thousand million as at end of December 2012 against 8 618.3 thousand million CFAF a year earlier, while the ex change cover rate stood at 100.2% at the end of December 2012 against 99.7% a year earlier.
Government finance
Government finance management in central Africa was characterized in 2012 by the increase of fiscal revenue in particular, through efforts to boost non-mining revenue and a better control of government expenditure.
l( u, ^
'2010 r20U 12012
Total fiscal revenue reached 81.4 billion USD (36% of GDP) in 2012 against 79.2 billion USD in 2011. This evolution is due primarily to in creases in non-oil revenue as a result of efforts by most countries of the sub-region in securing revenue through computerization, capacity building of customs and tax administrations, broadening the tax base and reforms of financialservices.
With regard to public expenditure in the The increase in capital expend- A. , . .^ ^ , A „_ r ...
, , entire sub-region, itstood at 75.5 billion ture refects the wil of the coun- TTnn . ^nt^ ,„„ ,ni „ ^^^,
, , A,. 4 , USD in 2012 (33.4% of GDP) against
tnes of central Africa to make °
68.6 billion USD (32.4% of GDP) a year public investments one of thedri-
vers of growth. earlier. They result from the increase in recurrent and capital expenditures. The increase in capital expenditure reflects the will of the countries of central Africa to make public investments one of thedrivers of growth.
All in all, the management of government finance in the sub-region has re sulted in a budget surplus based on commitments, excluding grants, equi valent to 4.5% of GDP in 2012 against 5.7% of GDP one year earlier. Graph 1.7 shows that the fiscal balances of most central African oil producing countries recorded a surplus.
This illustrates the weight of petrol in The weight of petrol in total reve- total revenues and raises the issue of de- nues and raises the issue of de- pendence on Ms mw material Gmph pendence on this raw material. , . ,. ... , t t, . A. . _
below highlights the relative weakness ol non-oil revenue despite efforts by natio nal authorities to increase the share of the latter in total revenue. Non-oil revenues in Cameroon are the highest in the sub-region and are a reflection of diversification and resource mobilizationefforts. In contrast to Chad, non- oil revenues have declined since the beginning of oil production in 2003.
They now represent less than half of total revenue. In Equatorial Guinea, non-oil revenues fluctuate around 10% of total revenue.
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Cijbon Chad
100a iocs aoo& 2007 100a 2009 joio ion ion
Graph 1.8: Trends in non-oil revenues of oil producing countries of
central Africa from 2003 to 2012 (in % of total revenue) Soun»: ECASRO/CA datm tromBEAC and IMF (2012)
Debt
The indebtedness level ofthe sub-region remains moderate. It is a reflection ofAfrican countries that have benefited from debt relief measures through HIPC and MDRI initiatives. With regard to the external public debt of CEMAC for example,trends in external
and budgetary accounts show an outstan ding external debt equivalent to 13.3% of GDP in 2012, an increase compared to
2011 (12.4% of GDP). Similarly, debt servicing ratios relative to fiscal re venues and debt service to exports rose slightly to 4.6% and 2.2% in 2012 against 4.2% and 2.1% 2011 respectively.
The indebtedness level of the sub-region remains moderate.
Debt sustainability
Debt sustainability is often defined as the ability of a country to meet its debt obligations without requiring debt relief or accumulating ar rears. To evaluate this type of debt sustainability, three majorinterna- tional methodologies have been developed:
- the analysis of debt relief for heavily indebted poor countries;
- the debt sustainability framework for middle-income countries - and
They are all involved in making projections for envisaged funding and economic variables over a maximum period of twenty years then use ratios comparing the debt stock, the present value or service to GDP, exports or fiscaf revenues, to assess the ability to pay.
The ratios of external debt to exports and debt to GDP are useful indi cators because they are indicative of trends in the borrowing and re payment of the country concerned. When the volume of public sector borrowing is substantial, the ratio of debt to revenue is particularly im portant to assess the repayment capacity of the country.
Debttre*K«shtiecoritadofd8btajBk*ic±lfy
Low MecSum
Present vdue of the debt in%
E-porii 100 150 200
GDP 3D
« 50
Revenues 200 250 300
Debt Service in % bqporis 15 20 25
Revenues 38 20 22
Source: IMF, Worid Bank
External sector
With regard to external trade, the current account balance for Central Africa accounted for 0.5 % of GDP in 2012, 1.5 percentage points lower than in 2011. Current account balances were in deficitin almost all countries of the sub region except for Angola and Gabon. This is mainly due to deterioration of the balance of services and revenue that are structural in most countries of the sub region. The deficit in revenue balance is generally related to the repatriation of profits by multinational companies, while that of services is in turn related to the evolution of expenditure on imports.
However, theforeign trade balance of the sub region improved to about 75 billion USD in 2012 (33.2% of GDP) against USD 70.3 billion a year ear lier. The good standing of the trade balance at sub-regional level was due to the risein prices and production of major raw materials exported by the sub-region. Thus, export earnings were valued at 133.3 billion USD (59%
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progressed to 58.3 billion USD (25.8% of GDP) in 2012 as against USD 55.3 billion a year earlier, as a result of the increase in imports of petroleum products and higher world prices, and the purchase of equipment for major public works projects in most countries.
Graph 1.10 clearly illustrates the divide between oil producing and non-oil producing countries, the former showing strong trade surpluses and the lat ter huge deficits.
Graph 1 .ft Current account balance (inducting official transfers) in central Africa from 2010 to 2012 (% of GOP) Source: ECA-SRO/CA fmm BEAC and IMF data <2012)
GranM 10- PvtAmsil traHo hsjfcanrein ronh-iJ Africa fmn 9H-in 4 OCIIO Of, M DIB\
The surplus in the capital and financial transactions account improved to stand at U.S. $ 8.8 billion (3.9% of GDP) in 2012 against 7.7 billion USD in 2011 (3.5% of GDP), due to the growth of foreign direct investments and private and public capital inflows.
Ultimately, the overall balance payments ofthe sub-region came out streng thened, with a surplus of over 13 billion USD (5.8% of GDP) in 2012 against 11.4 billion USD (5.4% of GDP) in 2011.
■ Situation at national level Angola
GDP - In 2012, the GDP growth rate rose to 6.8%, compared to 3.9% in 2011, in a context characterized by a high level of production and high prices in the oil sector. Regarding non-oil activities, the energy, trans port and construction sectors benefited from the implementation of public investment programs and the gradual clearance by the State of its arrears.
Oil sector growth was 8.5 % as against - 5.4% in 2011, while the non-oil sector stood at 6% compared to 9.5% one year earlier.
Short term forecasts for petroleum productionremain positive. However, economic growth would fall to 5 % in 2013 due to the decline in world oil prices.
Inflation and monetary situation - Inflationary pressures continued to drop gradually. The inflation rate actually declined from 13.5 % in 2011 to 10.8% in 2012, close to the target of 10.5 % set by the Monetary Policy Committee of the National Bank ofAngola (BNA) in October 2011. Under the effect of the structural measures taken by Angolan authorities, the de cline in world commodity prices and the relative stability of the exchange rate, Angola will return to a single-digit inflation rate of 8.6 % in 2013. The monetary policy orientationwould take into account budget execution and the price stability target.
The monetary situation was marked bymoney supply control in the broad sense, which increased from 15.3% in 2012 as against 33.5% in 2011.
Money supply growth is projected to increase to 39.5% in 2013.
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Government finance - In 2012, the budget surplus, based on commit ments, excluding grants, dropped to 10.5 % of GDP, against 12.6% in 2011.
The ratio of total budget revenue to GDP declinedfirom 48.8% in 2011 to 44.9% in 2012. Oil revenues accounted for 34.4% of GDP in 2012 against 39% of GDP in 2011, non-oil revenue in turn stood at 10.5 % of GDP against 9.8% the previous year. Total expenditure to GDP rose from 38.6%
to 38.8% over the same period, due toincreased spending on infrastructure and social services as well as on public services, defense, security and pu blic order in a context marked by the holding of legislative elections in Au gust. In October 2012, the government created a sovereign fund of an initial amount of 5 billion USD that would reduce the Angola's vulnerability vis- a -vis fluctuations in oil prices. It is expected that this fund be increased each year with the inclusion of the proceeds from the sale of 100,000 barrels / day, or about 3.5 billion USD. With the aim of improving transparency in the management of public accounts, the authorities are committed to take into account the quasi-fiscal activities of Sonangol in budget execution.
But, they exclude a short-term reduction of the fuel price subsidy as part of the policy against the high cost of living.
In connection with the downturn in world oil prices and the continued im plementation of the government infrastructure program, the budgetary ba lance would stand at 1.7% of GDP in 2013.
Debt - The structure ofpublic debt continued to improve in 2012, thanks to the creation of the Debt Management Unit (DMU). It should be observed that bilateral creditors such as China, Portugal and Brazil as well as multi lateral creditors hold one- third ofAngola's external debt, compared to more than half held by commercial banks. The ratio of public debt to GDP decli ned from 31.5% in 2011 to 28% in 2012. In 2013, a slight increase in the total volume of public debt to GDP is expected, but the consolidation of oil and non-oil revenue would maintain this debt ratio below 30% at 29.2%.
External Sector -The current account surplus, excluding official trans fers, fell to 8.7% of GDP in 2012, against 9% in 2011, mainly due to the increase in imports associated with capita! investments and widening ac count deficits in services and revenue induced by increased activity in the oil sector. The trade surplus fell from 42% of GDP in 2001 to 40.8% in 2012 in relation to the depreciationof trade terms by 4%. The deficit in the balance of services declined from 22.2% to 21.6% of GDP, as well as the deficit of revenue balance, which stood at 10.5% of GDP in 2012, compared to 10.8% in 2011. Lastly, the current transfers deficit fell slightly from 0.4%
of GDP in 2011 to 0.3% in 2012. The negative balance of the capital and financial transactions account increased from 0.4% of GDP in 2011 to 0.7%
in 2012, and ultimately, the surplus balance of the balance of payments of the State stood at 7.7% of GDP in 2012 against a surplus of 8.1% in 2011.
In 2013, the current account balance would decline to 4.1 % of GDP, reflec ting the continued decline in the trade balance surplus caused by huge im ports, while the overall balanceof payments is expected to settle at 2.5 % of GDP.
Burundi
GDP -According to IMF estimates, real GDP growth increased to 4.8%
in 2012 against 4.2% in 2011, 0.14 percentage points higher than in 2011.
This increase is attributable to the expansion of services and the secondary sector which benefited from significant foreign investments. However, agri cultural production was weaker than expected due to adecline in the pro duction of food crops because of poor weather.
From the supply side, the increase was mainly due to performance in the primary, secondary and tertiary sectors, which contributed positively to growth by 2.7 points, 1 point and 0.9 point respectively.
The positive contribution of the primary sector is due to the new actions in the agricultural sector to boost production. These include: (i) irrigation of the Great Plains, (ii) purchase of agricultural inputs, (iii) guidance and the productive capacity of farms, and (iv) rehabilitation and development of infrastructure, storageequipment and transport of inputs and outputs.
In the secondary sector, the production of the textile industry continued at
CHAPITRE 1
construction sector also made progress recording a 5% growth compared to 2011.
As for the tertiary sector, its positive contribution to growth is mainly attri butable to the "transport and communication" and "trade" branches that pro gressed to 8% and 4% respectively.
Forecasts indicate that the Burundi economy will record a growth rate of 6.6% in 2013. As was the case in 2012, this growth will be driven by all three economic sectors and the successful implementation of reforms in the coffee sector.
Inflation and monetary situation - The inflation rate stood at 19.6%
in 2012 against 9.7% in 2011. This significant increase is due to the sharp increase in prices of petroleum products, food and utilities. Meanwhile, fo recasts indicate that inflation will reach 6.4% in 2013, due to an expected improvement of harvests and a prudent monetary policy of the Central Bank.
The monetary situation has evolved in line with the growth and evolution of other macroeconomic sectors. Thus, money supply witnessed an average growth of 18.4 % in 2012 against 6.1% in 2011. The money supply cove rage rate on average stood at 33% of GDP in 2012.
The monetary policy in 2013 would be based on inflationary expectations.
To the extent that the recent rise in oil prices has affected domestic prices, it is likely that the Bank of the Republic of Burundi (BRB) will continue to tighten monetary policy. In this perspective, the forecast of money supply would fall to 16.1% in 2013.
Government finance - Efforts by the government in terms of govern ment finance in recent years have led to improved domestic resource mo bilization and control of budgetary expenditure. However, the overall deficit was higher than expected due to delays in budget support disbursements in 2011. As at the end of December 2012, the total budget deficit (based on commitments,excludinggrants)reached 17.6% of GDP compared with 20.3% in 2011.
External sector - The current account deficit, excluding official trans fers, experienced a slight decline in 2012, reaching 21.1% of GDP against 24.6% of GDP in 2011. This decline is the result of a slight drop in the trade deficit from 17.5 % of GDP in 2012 against 20.2% of GDP in 2011, despite the good performance recorded in the balance of services deficit which nar rowed to 8.1% of GDP in 2012 against 9.2% in 2011.
The improvement in the trade deficit is due to a slight increase in exports, which reached 5% of GDP in 2012 due to an increase in the production of coffee which is the main export product of Burundi. As for imports, they amounted to 22.4% of GDP in 2012 against 24.7% of GDP in 2011, down by 2.3% of GDP.
Regarding the revenuebalance, the deficit rose from 0.9% of GDP in 2011 to0.5%ofGDPin2012.
For its part, the surplus in the capital and financial transactions accountfell slightly to 11.3 % of GDP in 2012 against 18.7% of GDP in 2011.
In the final analysis, the overall balance of paymentsshowed a deficit of 0.3% of GDP in 2012 against 1.7% of GDP in 2011.
In 2013, it is expected that the current account (excluding official transfers) will show a deficit of 18.7% of GDP and an overall balance which will re main at the same level as in 2012.
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Cameroon
GDP- After a 4.7% growth in 2011, the growth rate of Cameroon was estimated at 5.1% in 2012. This reflects the dynamism of activities in trans port and telecommunications, food crop agriculture, the food industry, fo restry, construction and increasing energy supply. In addition, growth has also benefited from strong domestic demand through private consumption.
The consolidation of the recovery in economic activity during the year 2012 is expected to continue in 2013 with a more moderate growth of 4.1%, dri ven by the non-oil sector. The activity of the latter remains vigorous due to dynamic activities in conventionalsectors such as agriculture, construction and services.
Inflation and monetary situation - Inflation rate reached 3.0% in the year 2012 against 2.9% in 2011 due to the relatively high worldfood prices.It will remain at the same level in 2013.
At the end of December 2012, the monetary situation in Cameroon was- marked by an increase in net foreign assets, an increase in credits to the economy, a decline in net claims on the government and an increase in money supply. As a result, the exchange cover rate stood at 94.6% at end- December 2012 against 94.8% a year earlier. Monetary conditions should remain stable in 2013, with an exchange coverage rate of about 95%.
Government finance - The budget for the year 2012 was marked by the strengthening of tax revenue collection and increased capital expenditures.
Total budget revenues were estimated at 17.8% of GDP in 2012 against 17.1 % of GDP in 2011. This change stems from the simultaneous increase in oil and non-oil revenues accounting for 5.5% and 12.3% of GDP respec tively. The increase in oil revenues was due to an upturn in world crude oil prices coupled with the increase in oil production. The improvement in non- oil revenues, meanwhile, stems from increases in income taxes, taxes on goods and services and taxes on international trade.
Regarding total budgetary expenditures, they decreased slightly to stand at 18.1% of GDP in 2012 against 18.3% of GDP in 2011, due to the decline in recurrent expenditure, especially spending on subsidies and transfers, and interest payments on foreign debt. However, capital expenditures in-
based on commitments, excluding grants, was 1.2% of GDP in 2011,and fell to 0.3% of GDP in 2012.
Forecasts indicate that government finance management in 2013 would re sult in a surplus based on commitments, excluding grants, equivalent to 0.7
% of GDP, according to the communitystandard.
Debt - In terms of the external public debt, changes in external accounts and government finance have resulted in an improvement of debt ratios.
Thus, the debt service ratio to exports dropped to 2.5% in 2012 against 2.7%
in 2011. The debt service ratio to fiscal revenue fell to 3.5% in 2012 against 4% approximately a year earlier. Lastly, the outstanding external debt ratio to GDPstood at about 8 % in 2012 against 7.8% in 2011.
External sector - With regard to external trade, the current transactions deficit, excluding official transfers,worsened from 3% of GDP in 2011 to 4.3% of GDP in 2012,as a result of changes recorded inthe services and re venue balancedespite improvements in the trade balance and current trans fers.
The trade balance recorded a slight increase to 0.2 % of GDP in 2012 against a zero balance a year earlier, thanks to improvements in the terms of trade by 8.3 % of GDP on the one hand, and the effect of the increase in exports, mainly oil exports which reached 20.4 % of GDP against 19.9%
of GDP in 2011, on the other hand. Imports also increased and reached 20.1% of GDP in 2012 against 19.9% of GDP in 2011 due to the acquisition of goods. Moreover, the current transfers surplus increased to 0.9% of GDP in 2012 against 0.6% of GDP in 2011,thereby helping to mitigate thecurrent accountdeterioration.
The surplus in the capital and financial transactions account, which re presented 1.6% of GDP in 2011, increased in 2012 to 4.4 % of GDP,as a result of growth in direct long-term investmentsbetween resident subsidia ries of multinationals and their parent companies (trade credits and other financial transactions).
In total, Cameroon's balance of payments, recorded a surplus of 0.6%
of GDP in 2012 against a deficit of 1.2% of GDP in 2011.
Projections for 2013 show that the current account deficit is expected to de cline to 3.5% of GDP. The overall balance, in turn, should consolidate with
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Congo
GDP - Economic growth reached 4.3 % in 2012, a level lower than the 5.8%recorded in 2011 due to a slump in crude oil extraction activitiesleading to a drop in production. The slow growth was offset by changes in activities of the non-oil sector.
On the supply side, growth was driven by the secondary and tertiary sec tors, while the primary sector contributed negatively.
On the demand side, growth was driven by domestic demand, in conjunc tion with increases recorded by gross investments. The favorable growth of investment was driven by the continuation ofmajor public works for the construction of basic infrastructure within the framework of the so-called policy of "acceleratedmunicipalization." Total consumption contributed most to growth due to the increase of government payroll,and recruitments in the social sectors (health and education).
Macroeconomic prospects for 2013 suggest a slowdown in growthwhich will standat 2.1%, due weakening of the oil sector. The slowdown of the latter would, however, be mitigated by avibrant non-oil sector as a result ofbuoyant activities in construction, telecommunications and distribution.
Inflation and monetary situation - The year 2012 was marked by rising inflationary pressures. The inflation rate stood at 3.3% in 2012 against 2.2%
in 2011, thereby exceeding the community norm of 3%.
This trend is partly attributableto the impact of recurring problemsof the Congo-Ocean railway line, and to increased government spending. Infla tionary pressures are expected to drop in 2013, resulting in an average an nual inflation rate of 2.8%.
In the monetary field, the evolution of the main aggregates of Congo as at December 31,2012 was marked by an increase in net foreign assets, cre dits to the economy and money supply. As a result, the 102.2% the required reserve ratio at the end of December 2012 remained virtually unchanged since 2011. The monetary situation in Congo will be markedin2013 by ahedge ratio of 101.8% at end-December 2013 as against 102.2% in 2012.
Government finance - Regardinggovernment finance, the 2012 Finance Law wasprepared in a context marked by continuation of major public works.lt was amended in April 2012 to take account of expenditures incur red as a result of the March 2012 explosions in Brazzaville.
Total government revenue decreased to 42.4% of GDP in 2012, against 43.4% of GDP in 2011, because of a decline in oil production. However, non-oil revenue increased to 9.2% of GDP in 2012 compared to 8.7% a year earlier, thanks to improved tax collection measures.
Total government expenditure increased from 27.1 % of GDP in 2011 to 44.1% of GDP in 2012, mainly due toconstruction of basic infrastructure and reconstruction costs and compensation to victims of the March 2012 incidents mentioned above.
Ultimately, the management of government finance has resulted in a budget deficit, on a commitment basis, excluding grants, equivalent to 1.7%
of GDP in 2012 against a surplus of 16.4% of GDP a year earlier.
Forecasts indicate that management of government finance in 2013 would result in a reduction of the budget deficit, based on commitments, excluding grants, equivalent to 0.1 % of GDP.
Debt - Changes in external accounts and government finance have re sulted in an improvement ofoverall government debt ratios. Thus, the ratio of debt service relative to exports dropped to 0.9% in 2012 against 1.7% in 2011. Debt service to fiscal revenues fell to 1.7% in 2012 against 3.4% a year earlier . Finally, the outstanding external debt to GDP ratio stood at around 28.6 % in 2012 against 23.8% in 2011.
External Sector - In foreign trade, the current account deficit, excluding official transfers, worsened to hit 20.7% of GDP in 2012 against 10.5% of GDP a year earlier, due to counter performances recorded by the services and revenue balance.
The trade balance surplusfell to 35.6% of GDP in 2012 against 45.6%
of GDP in 2011, following the decline in exports combined with a rise in imports. Export earnings were down to 79.3 % of GDP in 2012 against 83.1% of GDP a year earlier due to lower sales of oil. Imports climbedto 43.7% of GDP in 2012 against 37.5% of GDP a year earlier as a result of reconstruction following the explosions in the Congolesecapital.
Chapitre i
to 35.3% of GDP against 35.8% of GDP in 2011,it increased in value, mainly due to increases in freight costs and insurance of importedgoods.The deficit in the revenue account climbed to 20.5% of GDP against 19.9% of GDP in 2011 ,due to repatriation of profits by multinational companies ope rating in the mining sector.
The surplus in the capital and financial account increased to 29.8% of GDP in 2012 against 22.2% of GDP a year earlier.
Ultimately, the balance of payments surplus stood at 8.2% of GDP against 11.2% of GDP in 2011. This surplus was used mainly to replenish official
reserves.
Forecasts for 2013 indicate a declinein the current account deficit, excluding grants,to 8 % of GDP and an increase in the balancepaymentssurplusto
13.4% of GDP.
Gabon
GDP - Economic growth stood at 7.2% in 2012, against 8.2% in 2011, in the context of maintaining high price levels of exported products. The oil sector growth rate was 1.3% against - 2.1% in 2011 , while that of the non-oil sector was 8.5 % against 10.7% in 2011.
On the supply side, the primary sector was marked by recovery of the
"forestry" sector and good performance of mining due to the optimization of old fields by oil companies. In the secondary sector, activities slowed in most industries, including the "construction " sector,due to the completion of most major infrastructure projects that hosted the 2012 African Cup of Nations. Lastly, the tertiary sector contributed significantly to growth due to the recovery of activity observed in the "governmentservices " sector.
On the demand side, net domestic demand boosted growth due to posi- tivetrends in consumption and private investments. The 2012AFCONhad a positive impact on employment and helped to boost private consumption, although public investments slowed down for major infrastructure projects.
Growth continued at a more moderate pace, reaching 2.9% in 2013, because of the decline in oil production and exports, and the downturn of world prices of the commodity, whose revenueaccounts for more than 60 % of
