US lawmakers move to block IMF Central Africa support over oil fund dispute

Reuters

09-04-2025

DAKAR, April 9 (Reuters) - U.S. lawmakers have introduced legislation that could block International Monetary Fund (IMF) support for some Central African countries, in an effort to guard billions of dollars that oil companies must set aside for environmental restoration.
The bill highlights a standoff between foreign investors on one side, and Central African monetary authorities trying to enforce tighter capital controls on extractive industries to shore up depleted reserves on the other.
Introduced by U.S. Republican Representatives Bill Huizenga and Dan Meuser, the bill targets new regulations imposed by the Bank of Central African States (BEAC), the regional central bank, that require international oil companies (IOCs) to deposit the environmental restoration funds into BEAC-controlled accounts.
The funds, estimated at between 3 and 6 trillion CFA francs (approximately $5 billion to $10 billion) and currently held in foreign banks, have been set aside by IOCs operating in the region for future environmental clean-up once production ends.
Central African Economic and Monetary Community (CEMAC) member states want the funds moved to regional institutions to bolster their economies and foreign currency holdings.
The move, backed by the IMF and approved during an emergency summit of CEMAC heads of state in Yaounde in December 2024, is seen by regional governments as a critical step in addressing economic fragility.
According to BEAC's March 2025 monetary policy report, the implementation is expected to take effect from May 1, in line with the summit's resolutions, with penalties of up to 150% of the restoration funds for non-compliance.
BEAC has also suggested raising rates for repatriation to the region of other funds, including for extractive companies' operational spending, currently set at 35%.
Perenco, a privately-held French oil company with significant operations across the region, said it was in negotiations with regional stakeholders to reach an agreement before the April 30 deadline.
"Perenco is already complying with the 35% repatriation of funds' rule, and all regulations currently in place," a spokesperson said.
Other oil companies in the region did not respond to requests for comments.
In Equatorial Guinea, the finance ministry has met major operators Marathon Oil (MRO.MX), opens new tab, Chevron (CVX.N), opens new tab, Kosmos Energy (KOS.N), opens new tab and Vaalco Energy (EGY.N), opens new tab to discuss the issue, said one source.
DETERIORATING RESERVES
The six CEMAC members - Cameroon, Gabon, Chad, Equatorial Guinea, Central African Republic, and Republic of Congo - share monetary policy, a currency, and the common BEAC central bank.
They have struggled to emerge from the COVID-19 pandemic and other global shocks, leaving them short of foreign exchange reserves to cover imports and debt.
Cameroon's President Paul Biya warned during the summit in December of "disastrous consequences" for the countries if urgent action was not taken to address their deteriorating net external reserves.
Critics, including the bill's sponsors, argue that the BEAC mandate risks undermining billions of dollars in U.S. oil and gas investments across Central Africa.
"By refusing to clarify that these restoration funds will not count towards gross foreign exchange reserves, the IMF has misled the CEMAC member states and directly put tens of billions of dollars of IOCs investment in the region at risk," the bill said.
The bill said the funds are contractually restricted and designated for future environmental rehabilitation, and therefore should not be "readily available" or "controlled by monetary authorities to count towards foreign exchange reserves.
Under the proposed legislation, the U.S. Treasury would be barred from supporting any IMF proposals involving CEMAC countries until the IMF publicly confirms such funds cannot be classified as gross foreign exchange reserves.
The move could bar further approvals of IMF financial support for some countries in the region that rely heavily on the fund's support, such as Cameroon and the Republic of Congo.
The IMF did not immediately respond to questions on the bill's implications.
In a March report, the IMF highlighted serious concerns about the CEMAC region's economy, warning that without corrective action some countries could face debt levels nearing 100% of GDP and dwindling reserves by 2029.
This could worsen liquidity issues and threaten the region's financial stability and repayment capacity, it said.