Oil’s 2014 price collapse drove CEMAC states into acute fiscal crisis.

Evidence

Another important but more recent episode in the history of the CFA franc confirmed that the French authorities continue to dictate the rules of the game. This sequence of events took place in the CEMAC area between 2014 and 2016. More precisely, it began in June 2014. At that time, the oil-producing countries of the region were experiencing the beginning of a new crisis: the price of black gold had collapsed by almost 50 per cent in six months. The effects of this collapse were manifold, as oil represented over three-quarters of regional exports and half of budgetary revenues in 2014. The CEMAC states were forced to cut investment and growth slowed sharply. In Equatorial Guinea, the growth rate even turned negative: –7.4 per cent in 2015, –9.9 per cent in 2016. The same applies to Chad. Between 2014 and 2016, regional GDP growth went from 4.9 to 1.7 per cent and the budget deficit rose from 1.8 per cent to 9 per cent of GDP. — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 233

Categorization

• SEED: Specific data on how a commodity shock hits a monetary union with a fixed exchange rate — usable for explaining oil-state fragility without monetary sovereignty.