Latest news with #CEMAC
Business Insider
4 days ago
- Business
- Business Insider
12 African countries account for about 65% of blocked aviation funds
The IATA report which listed fifteen nations, showed that twelve African countries account for about 65% ($846 million) of the total blocked airline funds currently withheld from repatriation and stands at $1.3 billion. According to the IATA report, Asian and African countries collectively owe a total of $1.163 billion in blocked airline funds. This figure includes the XAF Zone nations—primarily the countries within the Central African Economic and Monetary Community (CEMAC)—as well as other key African economies such as Mozambique, Algeria, Angola, Eritrea, Zimbabwe, and Ethiopia. The blocked funds, which represent revenues earned by international airlines operating in these countries, remain inaccessible due to government-imposed foreign exchange restrictions or delayed currency conversion. As a result, airlines face mounting financial pressure, often forcing them to scale back operations, reduce flight frequencies, or suspend routes altogether, decisions that ultimately hurt connectivity, tourism, and trade. The continued inability of carriers to repatriate earnings raises serious concerns among stakeholders and industry leaders, who warn that prolonged inaccessibility may further destabilize the sector and deter future investment. African countries top debtors' list As negotiations continue, attention remains focused on African markets, where the majority of blocked funds are trapped, posing a serious threat to the financial health of the aviation industry both on the continent and globally. Notably, Mozambique has risen to the top of the debtors list, withholding $205 million from airlines—an increase from $127 million reported in October 2024. Rank Country Amount (USD Million) 1 Mozambique 205 2 XAF Zone* 191 3 Algeria 178 4 Lebanon 142 5 Bangladesh 92 6 Angola 84 7 Pakistan 83 8 Eritrea 76 9 Zimbabwe 68 10 Ethiopia 44 Total 1,163 The XAF Zone which includes Cameroon, Central African Republic, Chad, Congo, Equatorial Guinea, and Gabon accounted for $191 million of the blocked aviation funds. Despite the overall concerning trend, there have been notable signs of progress. Some countries previously listed among IATA's top debtors have made strides in clearing outstanding amounts and facilitating the repatriation of airline revenues. IATA also highlighted a significant recent improvement in Bolivia, which has fully cleared its backlog of $42 million that was outstanding as of the end of October 2024. Nigeria, once one of the largest contributors to blocked aviation funds, also stands out as a positive example of progress. In June last year, IATA confirmed that Nigeria had cleared $831 million in trapped funds owed to foreign airlines. Sustained debt, a challenge for airlines - IATA IATA Director General Willie Walsh described the lingering blocked funds as a major challenge for airlines operating in affected regions. He emphasized that economies and jobs depend on international connectivity, which becomes difficult to sustain when revenue repatriation is delayed or denied. ' Ensuring the timely repatriation of revenues is vital for airlines to cover dollar-denominated expenses and maintain their operations. Delays and denials violate bilateral agreements and increase exchange rate risks. Reliable access to revenues is critical for any business—particularly airlines which operate on very thin margins,' Walsh noted.
Business Insider
4 days ago
- Business
- Business Insider
12 African countries account for about 72.7% of blocked aviation debt
The IATA report further showed that, among these fifteen nations, twelve African countries account for approximately 72.7% of the blocked airline funds currently withheld from repatriation. According to the IATA report, African countries collectively owe a total of USD 846 million in blocked airline funds. This figure includes the XAF Zone nations—primarily the countries within the Central African Economic and Monetary Community (CEMAC)—as well as other key African economies such as Mozambique, Algeria, Angola, Eritrea, Zimbabwe, and Ethiopia. The blocked funds, which represent revenues earned by international airlines operating in these countries, remain inaccessible due to government-imposed foreign exchange restrictions or delayed currency conversion. As a result, airlines face mounting financial pressure, often forcing them to scale back operations, reduce flight frequencies, or suspend routes altogether, decisions that ultimately hurt connectivity, tourism, and trade. The continued inability of carriers to repatriate earnings raises serious concerns among stakeholders and industry leaders, who warn that prolonged inaccessibility may further destabilize the sector and deter future investment. African countries top debtors' list As negotiations continue, attention remains focused on African markets, where the majority of blocked funds are trapped, posing a serious threat to the financial health of the aviation industry both on the continent and globally. Notably, Mozambique has risen to the top of the debtors list, withholding $205 million from airlines—an increase from $127 million reported in October 2024. Rank Country Amount (USD Million) 1 Mozambique 205 2 XAF Zone* 191 3 Algeria 178 4 Lebanon 142 5 Bangladesh 92 6 Angola 84 7 Pakistan 83 8 Eritrea 76 9 Zimbabwe 68 10 Ethiopia 44 Total 1,163 The XAF Zone which includes Cameroon, Central African Republic, Chad, Congo, Equatorial Guinea, and Gabon accounted for $191 million of the blocked aviation funds. Despite the overall concerning trend, there have been notable signs of progress. Some countries previously listed among IATA's top debtors have made strides in clearing outstanding amounts and facilitating the repatriation of airline revenues. IATA also highlighted a significant recent improvement in Bolivia, which has fully cleared its backlog of $42 million that was outstanding as of the end of October 2024. Nigeria, once one of the largest contributors to blocked aviation funds, also stands out as a positive example of progress. In June last year, IATA confirmed that Nigeria had cleared $831 million in trapped funds owed to foreign airlines. Sustained debt, a challenge for airlines - IATA IATA Director General Willie Walsh described the lingering blocked funds as a major challenge for airlines operating in affected regions. He emphasized that economies and jobs depend on international connectivity, which becomes difficult to sustain when revenue repatriation is delayed or denied. ' Ensuring the timely repatriation of revenues is vital for airlines to cover dollar-denominated expenses and maintain their operations. Delays and denials violate bilateral agreements and increase exchange rate risks. Reliable access to revenues is critical for any business—particularly airlines which operate on very thin margins,' Walsh noted.
Reuters
22-04-2025
- Business
- Reuters
Central Africa's new FX initiative falls short of target, oil industry sources say
Summary Companies CEMAC region targets $5 bln-$10 bln to boost reserves Oil companies seen paying significantly less Investment into oil-producing region set to decline April 22 (Reuters) - Six Central African nations expecting a foreign exchange windfall of billions of dollars from environmental restoration funds set aside by oil firms may in fact see less than $500 million by an April 30 deadline, two oil industry sources close to the talks told Reuters. Rules governing these restoration funds, mostly held in foreign banks, were introduced in 2018 by the Bank of Central African States (BEAC), the central bank for Cameroon, Gabon, Chad, Equatorial Guinea, Central African Republic and Republic of Congo. Make sense of the latest ESG trends affecting companies and governments with the Reuters Sustainable Switch newsletter. Sign up here. The aim is to have the funds held in accounts controlled by BEAC to help buttress the six countries' depleted hard-currency reserves and help address their economic fragility. Despite progress in overcoming their differences, however, the oil companies and regional central bank authorities remain at odds ahead of a looming compliance cut-off date and threats of immediate penalties from May 1. The companies affected say for example that the environmental funds are ring-fenced and, based on International Monetary Fund (IMF) guidelines, the countries cannot count them as either gross or net reserves. Currently, the money paid into environmental escrow accounts are staggered, with deposits increasing as projects move towards ending production, a third company official said. Some projects in the oil-producing Central African region have made no deposits because they are at an early stage and haven't yet established restoration funds, the official added, suggesting governments may have miscalculated the amounts due from these projects. Companies operating across Central Africa, which include Kosmos Energy (KOS.N), opens new tab, Chevron (CVX.N), opens new tab, Vaalco Energy (EGY.N), opens new tab, TotalEnergies ( opens new tab, did not respond to requests for comment. Privately held French operator Perenco, however, said this month that it was in negotiations with regional stakeholders to reach an agreement before the deadline and was already complying with all regulations. One industry source said: "According to our estimates the value might be less than $500 million at the beginning of May, maybe rising to $1 billion over the next decade." That $500 million is around one-tenth of what the six Central African Economic and Monetary Community (CEMAC) states are seeking to strengthen their fragile economies. Another senior industry source briefed on the matter said the aggregated company figures may range between $350 million to $400 million. Reuters was unable to independently verify the amounts. All company and industry sources did not want to be identified due to the sensitivity of the ongoing discussions. Gabon, which went to the polls this month following a coup in 2023, said in January that funds from the region's Oil Site Rehabilitation Fund (RES) could rake in from 3 to 6 trillion CFA francs, or about $5 billion to $10 billion. The six CEMAC states - Cameroon, Gabon, Chad, Equatorial Guinea, Central African Republic and Republic of Congo - use a shared currency and have BEAC setting their monetary policy. Neither they nor BEAC immediately replied to requests for comments. INVESTMENT SEEN PLUNGING Discussions are deadlocked over several core issues, including BEAC's refusal to waive its sovereign immunity of execution right, meaning court decisions against it are unenforceable. That is a major sticking point, according to the sources. The standoff between foreign investors and Central African monetary authorities has also caught the eye of Republican lawmakers in the United States. In March two members of Congress introduced a bill critical of CEMAC's stance and threatened to block IMF support for countries in the region. The IMF, a top regional creditor, said it was aware of the legislation and was monitoring developments. It plans to visit the region after its annual Washington spring meetings, a spokesperson said. Last month, S&P Global Insights said it expected the region to lose an estimated $45 billion in investment by 2050, marking a 54% decline from the baseline, if the new FX rule is implemented, illustrating CEMAC's precarious position. A fourth industry source told Reuters their company would not be going ahead with investments unless there is a positive outcome to these issues.
Russia Today
10-04-2025
- Business
- Russia Today
US lawmakers seeking to block IMF aid to Central Africa
US lawmakers have introduced legislation to block International Monetary Fund (IMF) support for certain Central African countries in protest of a controversial regulation imposed by local fiscal regulators on foreign oil companies. The Bank of Central African States (BEAC) requires international oil companies (IOCs) to deposit environmental restoration funds – estimated between $5 billion to $10 billion – into accounts controlled by the regional bank. The funds, intended for post-production environmental cleanup, are currently held in foreign banks. The BEAC's directive seeks to bolster the foreign reserves of the six Central African Economic and Monetary Community (CEMAC) members – Cameroon, Gabon, Chad, Equatorial Guinea, Central African Republic, and the Republic of Congo – whose economies have struggled to recover following the Covid-19 pandemic. The IMF-backed regulation was approved during an emergency summit in December and will be enforced starting on May 1, with penalties of up to 150% of the restoration funds for non-compliance. READ MORE: IMF discounts Trump tariff recession threat However, critics, including Republican Representatives Bill Huizenga and Dan Meuser, who sponsored the legislation (the Central African Exploitation and Manipulation of American Companies Act, or CEMAC Act), claim that the BEAC policy threatens billions of dollars in American oil and gas investments in the region. The proposed bill, introduced late last month, would prevent the US Treasury from endorsing IMF proposals involving CEMAC member states until the global monetary agency has 'publicly clarified that any funds provided to BEAC … for site rehabilitation are ineligible to count towards gross foreign exchange reserves.' '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 lawmakers said. READ MORE: A land of mass graves and mercenaries – Can this genocide be stopped? 'The IMF would be responsible for the loss of investment that the CEMAC region would face if a foreign exchange regulation that mandates extractive industry companies repatriate restoration funds for site rehabilitation to the BEAC is enacted,' Huizenga and Meuser stated. An IMF spokesperson confirmed to Reuters on Wednesday that the organization is aware of the draft US legislation. 'Staff stands ready to assess the nature of restoration funds for oil sites once the authorities and extractive companies share their final agreement,' the spokesperson reportedly said. Privately owned French oil company Perenco has also told the outlet that it is in talks with the regional authorities to reach an agreement ahead of the April 30 deadline.
Yahoo
09-04-2025
- Business
- Yahoo
US lawmakers move to block IMF Central Africa support over oil fund dispute
By Bate Felix and Wendell Roelf DAKAR (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, Chevron, Kosmos Energy and Vaalco Energy 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.
