Congress Moves To Block IMF Support For African Oil Fund Restrictions (2025)

Operating overseas can often elevated levels of risk for U.S. companies, and nowhere is this more a reality than for those in the oil and gas industry. From the EU to South America to Africa, U.S. often companies find themselves ripe targets for special actions from national and regional governments seeking onerous operational and reporting regulations and measures designed to extract a higher share of the proceeds from this extractive industry.

Targeting A Golden Goose

A current case in point involves an effort by the six member nations of the Central African Economic Monetary Community (CEMAC) and their efforts to enforce a 2018 law which they say enables them to take control of the foreign exchange of all companies operating in the region under the auspices of the International Monetary Fund (IMF). The six member countries – Gabon, Cameroon, Congo, Equatorial Guinea, Chad, and the Central African Republic – consider the oil and gas industry to be a major prize in this effort given that it has long served as something of a golden goose for the region, generating as much as 40% of its overall GDP.

The foreign exchange regulation was designed to shore up the common currency shared by CEMAC nations, and to bolster the foreign exchange reserves of the regional central bank (known as BEAC). Put in plain terms, the foreign exchange of the oil and gas sector, including U.S. companies, is to be used to finance the deficits of the six countries. With implementation scheduled to take place on May 1, some industry representatives appealed to the U.S. government to intervene in the situation.

Congressman Bill Huizenga (R-MI) and Congressman Dan Meuser of (R-TX) recently introduced a bill to withhold United States support for any action in the International Monetary Fund relating to CEMAX member states until a determination as to gross foreign exchange reserves is made. While U.S. industry players have welcomed this congressional intervention, concerns remain that the bill might not actually address an even bigger long-term issue.

If enforced, the unprecedented regulation could precluded companies from operating normally in the international markets and would likely decimate investment.

Certain accommodations for the sector were agreed between BEAC and the industry in 2021 after years of difficult negotiations, but the regulation still stands alone in its attempts to leverage the resources of the private sector to finance the activities of debtor countries. Even so, a report by Standard & Poor’s on the impact of the regulation has concluded that through 2050 the regulation will cause an $86 billion reduction in government revenue, a negative impact on company cashflows of $47 billion, a reduction in capital investment of $45 billion and a 15% decline in production.

But despite these concerning findings, the IMF has moved ahead, apparently motivated by a March 2025 report on the matter in which it warned that some CEMAC countries could face debt levels nearing 100% of GDP by 2029 unless corrective action is taken.

The regulation requires that essential funds for the completion of restoration and environmental protection works at the end of a project are, contrary to international practice, repatriated and held in accounts controlled by BEAC. Because these funds must be dedicated to these crucial works, they cannot be used by BEAC for the implementation of its monetary policies, or any of its treasury activities. The funds which are repatriated cannot be used to shore up the local currency, or in any way to support the activities of BEAC and therefore do not count as part of its foreign exchange reserves.

Yet, both BEAC and the member states continue to take the position that these restoration funds will be used to leverage their currency and will be used to prop up the local currency. This appears to be a transparent conflict with BEAC’s IMF obligations, but IMF has chosen not to act.

The Huizenga/Meuler bill states in part, "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.”

An IMF spokesperson told Reuters, "We are aware of the proposed U.S. legislation and will monitor any developments. Staff stands ready to assess the nature of restoration funds for oil sites once the authorities and extractive companies share their final agreement.”

A Larger Long-Term Issue

If all that isn’t concerning enough, a larger long-term issue remains unaddressed by both the IMF and the proposed bill. As part of the accommodations negotiated between CEMAC and the industry in 2021 it was agreed that the oil and gas sector had to be able to operate in international markets in the normal course. That included being able to make payments in real time, meeting obligations as they fell due and being able to move cash in the international markets in a friction free manner. These things were agreed and acted into law.

But, contrary to this agreement, BEAC insists it must grant prior approval to every payment made by any oil and gas company in the CEMAC region. The problem there is that BEAC’s approvals have been slow in coming, taking weeks or months to approve payments, including funds earmarked for major dividend payments.

As a result, the companies find their cash is trapped: Their foreign exchange is surrendered to BEAC, but the companies cannot then access their funds to meet their contractual obligations, pay their debt obligations, and pay dividends in a timely manner. It’s a situation that is contrary to long-time international norms, one that renders the conduct of ongoing business extremely problematic.

The Bottom Line

The system as currently structured rewards BEAC by artificially inflating its foreign exchange reserves by delaying payment approvals. It’s a “sticky money” incentive which IMF has thus far not sought to address. Moreover, the bill proposed by Congressmen Huizenga and Meuser would not deal with this larger long-term problem as it is currently drafted.

In the meantime, U.S. companies attempting to do business in the CEMAC region are left in the lurch with little incentive to target new capital investment there. Unless real action is taken soon by the IMF and/or congress to address this matter, the industry which has served as this region’s golden goose for decades could soon start running low on eggs.