Press Release No. 15/292

Press Release: IMF and the Central African Republic Reach Staff-level Agreement on Financial Assistance under the Rapid Credit Facility

June 22, 2015

A mission of the International Monetary Fund (IMF), headed by Abdelrahmi Bessaha, visited Bangui, Central African Republic (C.A.R.) from June 9 to 18, 2015 to hold discussions on a possible financial assistance under the IMF’s Rapid Credit Facility (RCF) to support the authorities’ emergency program.¹

At the end of the mission, Mr. Bessaha issued the following statement:

“The Transition Government of the C.A.R. and the IMF mission reached staff-level understandings on a macroeconomic framework and policies to reinforce the progress made since the second RCF was approved by the IMF Executive Board in March 2015. These policies are aimed at further enhancing macroeconomic stability, advancing fiscal consolidation, coordinating technical assistance, and maintaining the commitment of international donors for continued assistance. Under the understandings reached, C.A.R. could receive financial assistance through a third RCF disbursement for an amount of SDR 8.355 million (about US$11.83 million or CFAF 6.2 billion). This will bring IMF’s total emergency financial assistance to C.A.R. since 2014 to SDR 22.28 million (40 percent of quota), about US$31.49 million or CFAF 16.71 billion. Additional contributions from development partners, contingent on the IMF’s assistance, would bring total external budget support to the C.A.R. to CFAF 56.2 billion or US$ 95.6 million which would help close the financial gap for 2015.

“The protracted political and security crisis in the C.A.R. and the resulting collapse of economic activity continue to present major challenges to the Transition Government. For 2015, while economic activity is gradually picking up, the fragile security situation led the mission and the C.A.R. authorities to revise the real GDP growth projection to 5.5 percent, mainly reflecting slower-than-projected recovery of forestry and mining activity. As a result of higher food supply and improved distribution networks, average inflation has abated and is projected to decline to 5.7 percent, still exceeding the Central African Economic and Monetary Community convergence criterion of 3 percent. The external current account deficit is projected to increase to 11.8 percent of GDP, on account of rising investment-related imports.

“The fiscal priority remains to further increase domestic revenue and enhance spending quality with a view to limiting the domestic primary deficit to 3.7 percent of GDP in 2015. The Transition Government will continue implementing measures to improve tax administration and strengthen public financial management by adopting plans to limit tax and customs exemptions and increase domestic revenue, notably from forestry, mining, and telecommunications, and by enhancing cash flow management and further cleaning up the civil service roster and payroll.

“The mission also held discussions on a broad outline of the 2016 budget. Assuming improved security conditions, and adequate policy responses, real GDP growth rate may reach 5.7 percent with inflation contained at 4.9 percent. However, public finances will remain under pressure, and C.A.R. will require continued aid and technical support from the international community.

Board discussion for the third RCF request is expected to take place in mid-September 2015. A staff visit could take place in mid-October 2015 to assess progress under the RCF, and assist the authorities in the preparation of the 2016 budget.”

“The mission met with the Transition President of the C.A.R., Mrs. Catherine Samba-Panza, and held discussions with the Prime Minister, Mr. Mahamat Kamoun, the Minister of Finance and Budget, Mr. Abdalla-Kadre Assane, and other ministers and government officials, as well as with development partners, the diplomatic community, security specialists, and the private sector.

“The mission thanks the C.A.R. authorities for their hospitality, and the candid and constructive discussions that took place.

¹ The RCF(http://www.imf.org/external/np/exr/facts/rcf.htm) is a lending arrangement that provides rapid financial support in a single, up-front payout for low-income countries facing urgent financing needs.