Information service of the Pontifical Mission Societies since 1927
Rome (Agenzia Fides)- The sharp rise of the Euro compared with the dollar is causing concern among governments of the CFA franc area, a currency which is tied to the European common currency. The stronger the euro, the less competitive the exports of these countries which use the dollar as exchange currency.
Today 13 September the Dollar/Euro exchange registered a new record reaching (9.15am Greenwich time) 1.397 dollar for one euro.
The countries most affected by a stronger euro are Ivory Coast, Cameroon, Niger, Senegal and Togo. The only advantage is less expenses for purchasing hydrocarbons, paid in dollars. However oil exporting countries expect income to decrease if this weak exchange rate of the dollar continues.
“If the dollar continues to fall this will mean serious consequences for the 2007 budget, because the country was relying on circa 700 billion CFA francs in oil revenues” Isaac Tomba, professor at the Faculty Economy at Yaounde University in Cameroon told the Cameroon Tribune. “If nothing changes petroleum revenues will reach at the most 464 billion CFA francs with a deficit of 300 billion compared to expectations”.
Cameroon's economy depends to a greater part on exports of cacao, coffee, bananas, cotton, timber, and on royalties from the pipeline which carries Chad's oil across Cameroon territory to the Atlantic coast.
The CFA franc is used by 14 African countries Benin, Burkina Faso, Cameroon, Chad, Congo Brazzaville, Ivory Coast, Gabon, Equatorial, Guinea Guinea-Bissau, Mali, Niger, Senegal, Central African Republic and Togo, all former French colonies, except for Equatorial Guinea, former Spanish colony and Guinea-Bissau, former Portuguese colony.
The CFA franc was created in December 1945 as the French African Colonies franc. The name was changed to French African Community franc in 1958, and today indicates the Financial Community of Africa franc in the case of the West Africa Economic and Monetary Union, and Financial Cooperation franc for the Central Africa Economic and Monetary Union.
The CFA franc used to maintain a set exchange rate with the French currency. With the introduction of the Euro a set exchange rate 1 Euro equal to 655,957 CFA francs was established. To obviate this situation African economy experts propose to tie the CFA franc to a currency “basket” dollar, euro, yen, swiss franc, sterling, but to do so it is necessary to have the consensus of France, the Central European Bank and the West African Central Bank. (L.M.) (Agenzia Fides 13/9/2007 righe 36 parole 433)
