Press Release No. 10/127

Press Release: Statement at the Conclusion of an IMF Mission to the Central African Republic

March 31, 2010

An International Monetary Fund (IMF) mission, led by Martin Petri, visited the Central African Republic during March 18–31, 2010 to conduct the sixth and last review of the authorities’ program supported by the Extended Credit Facility (ECF).

The mission met with His Excellency President François Bozizé; the President of the National Assembly, Célestin Gaombalet; the Prime Minister, Faustin Archange Touadéra; Minister of State for Mining, Energy, and Hydrology, Sylvain Ndoutingaï; Minister of Finance and Budget, Albert Besse; Minister Delegate in charge of Resource Mobilization, Abdalla Kadre; Minister Delegate for International Cooperation, Raymond Adouma; and other senior government and Bank of Central African States (BEAC) officials, as well as representatives of labor unions, the private sector and the donor community.

At the conclusion of the visit, Mr. Petri issued the following statement:

“Economic activity in 2009 slowed due to a series of global and domestic shocks. Real gross domestic product (GDP) growth is estimated at 1.7 percent compared to 2.0 percent in 2008. Average inflation fell to 3.5 percent in 2009 after reaching 9.3 percent in 2008. The external current account deficit declined to 8 percent of GDP because of reduced import volumes and improved terms of trade (due to a decrease in world oil prices and an increase in diamond prices). Fiscal performance was encouraging. Domestic revenues increased as a ratio to nominal GDP and expenditures were managed prudently, although some new arrears were accumulated. As a result, a domestic primary fiscal surplus was recorded. There was also some progress in structural reforms. The implementation of the fuel price adjustment mechanism is important for generating stable revenues which finance government services and poverty reducing spending. Fiscal management improved as revenue administration and public financial management were strengthened.

“The short-term economic outlook has improved and growth in 2010 is projected to recover to 3¼ percent, while average inflation is expected to moderate to about 2½ percent. The external current account deficit will likely remain stable as higher aid inflows and a recovery of exports are counterbalanced by higher oil imports and a larger public investment program.

“The ECF-supported program for 2010 aims to support domestic demand through the government’s expenditure program. The program incorporates expenditures on the 2010 elections and the peace process entailed by the recommendations of the Inclusive Political Dialogue of December 2008, which are mainly financed externally. Additional donor support would play an important role in managing the fiscal situation while limiting recourse to expensive domestic financing.

“Overall performance under the ECF-supported program has been broadly satisfactory and, subject to approval by IMF management and continued implementation of program policies, it is expected that the IMF’s Executive Board will discuss the sixth and last review of the Central African Republic’s program supported by the ECF in the second quarter of 2010. Following the completion of the review by the IMF’s Executive Board, a disbursement of SDR 8.67 million (about US$13.2 million) would become available to the Central African Republic.”