Press Release: Statement at the Conclusion of an IMF Mission to the Central African Republic
October 1, 2009Press Release No. 09/342
October 1, 2009
An International Monetary Fund (IMF) mission, led by Martin Petri, visited the Central African Republic during September 17–October 1, 2009. The objective of the mission was to conduct the fifth review of the authorities’ program supported by the Poverty Reduction and Growth Facility (PRGF) arrangement and to conduct the 2009 Article IV consultation.1
The mission met with His Excellency President François Bozizé; the Prime Minister, Faustin Archange Touadéra; Minister of Finance and Budget, Albert Besse; Minister Delegate in charge of Resource Mobilization, Abdalla Kadre; Minister Delegate in charge of Energy, Jean-Chrysostome Mekondongo; Bank of Central African States (BEAC) National Director, Camille Kelefio; the President of Finance and Economy Commission of the National Assembly, Eric Sorongope, who was representing the President of the National Assembly, Célestin Gaombalet; and other ministers and senior government and BEAC officials, as well as representatives of 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 expected at 2.0 percent compared to 2.2 percent in 2008. Average inflation has fallen to 8.8 percent in July after reaching 9.3 percent in 2008. The external current account deficit is projected to decline somewhat to 9 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 over the first half of the year. Domestic revenues increased as a ratio to nominal GDP and expenditures were managed prudently. As a result, a domestic primary fiscal surplus was recorded. There was also progress in structural reforms. The implementation of the automatic fuel pricing 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 topics that the Article IV consultation dealt with in detail were (i) sources of long-term economic growth; (ii) removing constraints on private sector access to credit; (iii) reforms for raising the tax-to-GDP ratio over time; and (iv) fiscal policy for long-term fiscal sustainability.
“In June 2009, the Central African Republic reached the completion point under the enhanced Heavily Indebted Poor Countries Initiative. Debt relief of some US$741 million dollars in net present value (NPV) terms is expected to be delivered as agreements with creditors are reached. Multilateral creditors have already provided irrevocable debt relief amounting to US$525 million in NPV terms.
“The impact of global slowdown continues to cloud the short-term economic outlook but growth in 2010 is projected to recover to 3½ percent, while average inflation is expected to moderate to 3 percent. The external current account deficit will likely decrease on account of higher aid inflows and some recovery of exports.
“The PRGF-supported program for 2009/10 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 PRGF-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 2009 Article IV consultation and the fifth review of the Central African Republic’s program supported by the PRGF in December 2009.”
1 Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country's economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board. At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country's authorities.