BCEAO releases $ 6 billion for West African economies

The BCEAO has just made a liquidity injection of 3350 billion FCFA ($ 6 billion) at a fixed rate of 2% in favor of several banks of the UMOA. A total of 87 financial institutions participated in the operation. The Central Bank of West African States (BCEAO) made a further injection of liquidity to its member countries last week. In total, 3350 billion FCFA ($ 6 billion) were disbursed by the institution.

During the auction on September 14, 87 banks in the sub-region obtained an injection of liquidity at a fixed rate of 2%. With more than 1000 billion FCFA ($ 1.8 billion), it is the Ivory Coast which obtained the most important financing, ie 31% of the funds injected.

It is followed by Senegal with more than 580 billion FCFA ($ 1 billion), Mali with 466 billion FCFA (835 million $), Benin with 434.5 billion FCFA (777 million $) and Burkina Faso with 318 billion FCFA. ($ 569 million). Niger with 241.6 billion FCFA ($ 432 million), Togo with 219 billion FCFA (…

"If we manage the rest well, the shock may remain temporary" (Bank of France)

The coronavirus crisis should drop French GDP by "at least 8%" this year depending on the duration of "act II" from deconfinement until full recovery, said the Governor of the Bank of France François Villeroy de Galhau, in an interview with the Sunday newspaper, in which he delivered his diagnosis on the state of the country. The coronavirus crisis should drop French GDP by "at least 8%" this year depending on the duration of "act II" from deconfinement until full recovery, said the Governor of the Bank of France François Villeroy de Galhau, in an interview with the Journal du dimanche. As a reminder, the government is currently counting on a fall of 8%.
 
"If we manage the rest well, the shock may remain temporary" (Bank of France)

"If we manage the rest well, the shock may remain temporary," he added, recalling that the International Monetary Fund (IMF) predicts that France could regain strong growth at + 4.5% next year. .

"We will not (...) suddenly move to a normal recovery" with the deconfinement from May 11, he anticipates: "It will be an act II, where we will have to grow at the same time health confidence and economic confidence, for entrepreneurs as well as for employees, "said François Villeroy de Galhau. Problem, nobody knows how long this stage will last. "We do not yet know the duration of Act II until the complete recovery," he said.

The protective role of the State should diminish

For him, the State "plays a role of major shock absorber", faced with the crisis: "The massive public intervention absorbed at least two thirds of the shock, and reduces all the more its impact for households and businesses ", he argued.

"Its protective role should diminish as the recovery in the various sectors," he says, "especially since, of course, this collective shock absorber will have to be paid in the future".




55 billion euros in requests for state-guaranteed loans

According to him, the banks have registered to date 290,000 requests for loans guaranteed by the state for an amount of 55 billion euros.

"The success is growing: we are at 20,000 additional requests per day. The beneficiaries of the guaranteed loans are mostly VSEs with less than 10 employees, who represent almost 90% of decisions and more than half of the amounts," said François Villeroy de Galhau.

To the question "do the banks play the game?", He assured that "overall, they are doing their job".

"In the future, it will be necessary to see if all the companies regain the financial capacity to repay their loan," added the governor of the Banque de France.
"We could consider, on a case-by-case basis, especially for the most durably affected sectors, that the deferral of tax and social charges become abandonments, or even imagine contributions in quasi-equity," he said: " But it will be pragmatic and selective because it is public money."

Public debt at 115% of GDP

"France will come out of this shock with a public debt increased by at least 15 points of GDP, to 115%. In the long term, it will be necessary to repay this money", insisted the governor. "We will have to aim for more efficient management, especially since the French do not wish to pay more taxes", he warned

Meanwhile, "it is too early to (...) say" if the 110 billion mobilized by the state to support the economy will be enough.

A revival of consumption is possible, given that many French people spend less than what they earn with confinement. This difference "should be tomorrow a store of purchases, and therefore of growth" provided they are "reassured in terms of health", according to him.




European stimulus fund

To accelerate the recovery, François Villeroy de Galhau recalled that one of the growth accelerators would go through European public investment programs.

"This would increase our production capacities and reconnect with our long-term priorities such as the fight against global warming (...). For the recovery, the principle of a recovery fund proposed by France is acted : will remain to determine its amount and its funding ".

The ECB can do more if necessary

While the European Central Bank (ECB) has already decided to bring € 4 trillion in cash this year to help the European economy cope, it could take further steps to ensure that inflation in the euro zone is in line with its mandate (...).

"For the future, with inflation remaining below our target of 2%, we should maintain very low rates and very abundant liquidity. And if more were needed to fulfill the mandate of price stability entrusted by treaties independently, so we will, "said the man, who is also a member of the ECB's governing council.