West Africa central bank open to more rate cuts

By Anna Willard

AIX-EN-PROVENCE, France (Reuters) - West Africa's BCEAO central bank is open to further interest rate cuts and other steps to help stimulate the economy, governor Philippe Henri Dacoury-Tabley said on Saturday.

The central bank trimmed its benchmark interest rate to 4.25 percent from 4.75 percent on June 11. But the International Monetary Fund said on Friday it had room for further cuts.

"It is not for the IMF that I cut interest rates. I cut interest rates according to the situation that we have in our countries," he said in an interview.

"If despite everything we've done, the situation doesn't improve. We will act, cut interest rates or take other measures, we're ready to do everything to help the banking sector play its role in restarting growth."

The central bank has also reduced reserve requirements for banks to help stimulate credit provision.

West Africa's CFA currency zone comprises Benin, Burkina Faso, Ivory Coast, Guinea-Bissau, Mali, Niger, Senegal and Togo.

The IMF report also said governments still had room for fiscal expansion despite a projected widening of the average budget deficit to 3.2 percent of GDP in 2009 from 2 percent in 2008, largely through a decline in tax and other receipts.

"We agree but our countries don't have much margin for manoeuvre," he said.