CEMAC countries obliged to save 20% oil revenues

CEMAC countries will have to save 20 percent of their annual oil revenues to cushion shocks from low prices in the world market, said Paul Tasong, Commissioner in charge of economic and financial issues at the CEMAC Commission.

Tasong was speaking during the 8th edition of the CEMAC Day set aside by member countries in 2008 to celebrate integration, challenges and share information on happenings in the community.

In line with the theme, “Natural Resources; Stakes and Challenges,” Tasong said the Sub-Region faces a number of challenges at this moment because the budgets and economies to a large extent still depend on natural resources.

“Revenue from natural resources is good as it helps the economies to move forward, but, in the long term it has a downside because the revenue cycle breaks without warning,” said the CEMAC Commissioner.

In this light, he explained that revenue flows from natural resources is considered as unstable and volatile revenue, and to ensure that development cycles do not break, the manner of doing business has to be reviewed.

Against this backdrop, the CEMAC Commission is reforming the economies of the Sub-Region to withstand the various macro-economic shocks that it is experiencing now with the oil market.

According to Tasong, there are common criteria for member countries to respect and which serve to measure the economies of each country.

In relation to budget deficit, the CEMACcountries have been obliged to save 20 percent of their annual oil revenues for stormy days in order to have a good financial cushion in the event of low prices. This would provide countries with a fallback position to pursue infrastructure projects they started before things went bad.

However, Tasong argues that at the same time the countries are authorised to manage the budgets at a deficit which was not the case up to now.

“Using deficit as a tool for budgetary management means at the beginning of the year, countries frame their budgets knowing there is no revenue for the budget, that there is a gap and hunt to cover it,” Tasong explained.

He stated that the criterionof management of payment arrears different from debts by the definition of the CEMAC Commission has to be respected in that every commitment of the State should be settled within 90 days.

“Once the State commits itself to Small and Medium Size Enterprises,SMEs, or individuals, it should pay within 90 daysto ensure that SMEs stay in business.When they run out of business, they take with them employments as the biggest employers and the livelihood of families as family heads of many households work in these enterprises,” Tason argued.

Concerning inflation, Tasong said the criterion has not changed and inflation has to be checked at 3percent.

Meanwhile, the President of the CEMAC Commission in Cameroon, Pierre Moussa, attested to the dynamism of the community and the contribution of natural resources in the stabilisation of the climate.

The CEMAC Day was chaired by Charles Assimba Ongodo, Director of Cooperation and Regional Integration at the Ministry of the Economy, Planning and Regional Development.