The Managing Director of the IMF addressed policy issues in a speech to the Central African Economic and Monetary Community (CEMAC) published on 8 January 2016. The speech covered economic issues facing the Central African region including the slump in prices of oil and other commodities and the economic position of major trading partners.
The member countries of CEMAC are Cameroon, Central African Republic, Chad, Republic of Congo, Equatorial Guinea and Gabon. The objectives of CEMAC include economic and monetary integration and the ultimate objective is to establish a Central African Common Market.
Economic growth in the CEMAC region is estimated to have slowed to around 2% in 2015 although there are variations between member countries. Growth is expected to rise to around 3.5% in 2016 provided that sound policies are pursued. The IMF Managing Director suggested that the three policy priorities are to spend better, collect more and make the region work for the member countries.
In relation to collecting more revenue the domestic resources of members need to be mobilized more by taking action in relation to the non-oil revenue base. Non-oil revenue amounted to around 13% of GDP in the region in 2015 and there is scope to reach 17% of GDP which is the regional indicative level. This could be done by reducing the use of discretionary tax and customs exemptions which have the effect of undermining revenues and weakening governance.
The member countries of CEMAC could benefit from more intergovernmental cooperation on tax policy. Although tax Directives have been issued very few of these have been incorporated into national legislation or implemented in the member countries. There should be more commitment to implementation of the Directives.
Efforts to mobilize domestic resources could also focus on international tax issues affecting the tax base of extractive industries. One such issue is indirect, offshore transfers of interest on assets located in developing economies. Some CEMAC member countries are resource rich and measures to ensure appropriate taxation of asset transfers could help to avoid base erosion and profit shifting.
The IMF is prioritizing the issue of revenue-raising measures to meet the new Sustainable Development Goals for IMF members. The IMF has already provided technical assistance and training in this area to some CEMAC members, for example work on enhancing customs revenue administration in Chad and the Republic of Congo.