- IMF Urges WAEMU Fiscal Discipline as Growth Hits 6.6% and Reserves Recover
The West African Economic and Monetary Union emerged as one of the world’s fastest-growing regions in 2025, with growth reaching 6.6 per cent, inflation falling sharply and external reserves recovering to comfortable levels, according to the International Monetary Fund.
The IMF Executive Board, which concluded its 2026 discussions on common policies for the WAEMU member countries, said the region had benefited from strong output growth, low inflation, narrower fiscal deficits and a sharp improvement in external buffers.
The Fund said inflation fell below the BCEAO’s target range from mid-2025, driven largely by transitory food price deflation, while the current account deficit narrowed significantly from 5.7 per cent of GDP in 2024 to 1.7 per cent in 2025.
The improvement in the external position was supported by elevated gold and cocoa prices, as well as rising hydrocarbon export volumes. Gross reserves rose sharply above adequate levels, reaching 7.8 months of prospective imports in February 2026.
The recovery gave the Central Bank of West African States room to ease monetary policy, with the BCEAO cutting policy rates by a cumulative 50 basis points since June 2025 as inflation moderated and reserves strengthened.
Fiscal indicators also improved. The IMF said the region’s fiscal deficit narrowed from 5.4 per cent of GDP in 2024 to 3.4 per cent in 2025, while public debt declined for the first time in more than a decade, falling from 68 per cent of GDP in 2024 to an estimated 65 per cent in 2025.
But the Fund warned that the recovery remains exposed to significant downside risks, including the Middle East conflict, high debt burdens, elevated sovereign financing needs, security challenges and climate shocks.
The IMF said WAEMU’s growth is projected to moderate to about 5.5 per cent in 2026, before stabilising around 6 per cent over the medium term. Inflation is also expected to return to the target range in 2026.
Despite the stronger outlook, the Fund warned that fiscal convergence to the regional deficit target of 3 per cent of GDP remains delayed in several countries, making sustained fiscal discipline a central policy priority.
Executive Directors called for credible and sustained fiscal consolidation anchored by the prompt adoption of the enhanced WAEMU Convergence Pact, warning that fiscal slippages could strain financing conditions and intensify risks linked to the close relationship between governments and banks.
That sovereign-bank nexus remains one of the main vulnerabilities in the region. The IMF said increased reliance on the regional debt market had pushed issuance volumes sharply higher in 2025, keeping banks’ exposure to sovereign debt elevated.
Although the banking system remains broadly solid, the Fund flagged persistently high non-performing loans, low provisioning, elevated sovereign exposures and pockets of vulnerability in some countries as continuing financial stability risks.
Directors said monetary policy should remain data-dependent and focused on maintaining price stability while safeguarding financial stability. They also urged the BCEAO to be ready to adjust its policy stance if conditions deteriorate.
The IMF further stressed that WAEMU’s long-term prosperity would depend on stronger regional solidarity, deeper economic integration and sustained inclusive growth. It welcomed the region’s 2030 Strategic Plan as a framework to support economic transformation, diversification, lower trade barriers and stronger regional value chains.
Strong growth, low inflation and reserves above adequate levels give the bloc a stronger starting point than many peers. But high debt, heavy government borrowing from regional markets, banking-sector vulnerabilities and exposure to security and climate shocks mean the region cannot afford policy complacency.
For West Africa, the lesson is that macroeconomic momentum must now be converted into durable resilience through fiscal discipline, stronger banks, deeper regional markets and reforms that reduce dependence on commodity cycles.
