Central African Republic: Request for Disbursement Under the Rapid Credit Facility and the Cancellation of the Extended Credit Facility Arrangement-Staff Report; Press Release; and Statement by the Executive Director for Central African Republic

Publication Date: June 16, 2014
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Summary: EXECUTIVE SUMMARY Context: The March 24, 2013, seizing of power by a coalition of rebels (Séléka) triggered a political and security crisis that resulted in a sharp contraction of economic activity, budgetary pressures, widespread destruction of administrative and economic infrastructures, a paralysis of the public administration, intercommunity conflicts, and a major humanitarian crisis. The new transitional government in place since the beginning of 2014 is facing significant challenges, including restoring security, reviving economic activity, and rebuilding the democratic process. As donors reengage, the economy is expected to recover slightly in 2014, subject to improvement in security conditions that would allow a resumption of agriculture activities and trade. Program issues: The authorities wish to inform the International Monetary Fund (IMF) of their decision to cancel with immediate effect the Extended Credit Facility (ECF) arrangement that was approved on June 25, 2012. They are requesting a disbursement of SDR 8.355 million (15 percent of quota, or about US$12.9 million) under the Rapid Credit Facility (RCF) to help meet their urgent balance of payments needs and support their economic program for 2014 and their reengagement with development partners. A successor RCF could follow before the end of the year, conditional upon the continued presence of urgent balance of payments needs and satisfactory performance under this RCF. Timely provision of pledged financial and technical assistance is crucial to sustain the momentum and exit from the emergency situation. Main policy recommendations: • Prepare the ground for the return of a normal budgetary process. Limit spending executed under emergency procedures, and reconnect the budget and accounting systems. • Ensure transparency and accountability in the use of public resources. Establish effective functioning of a Treasury Committee and a multi-partner Committee to monitor and manage public finances to reduce fiduciary risks. • Implement a prudent fiscal policy and restore fiscal discipline. Strengthen revenue mobilization, better prioritize spending, improve cash flow management, and gradually clear domestic arrears. • In the medium term, foster inclusive growth and create employment opportunities. Develop inclusive processes for conflict resolution, create fiscal space for social and other priority spending, and improve the business environment.
Series: Country Report No. 14/164
Subject(s): Rapid Credit Facility | Fiscal policy | Budgets | Tax collection | Revenue mobilization | Economic indicators | Extended Credit Facility | Debt sustainability analysis | Staff Reports | Letters of Intent | Press releases | Extended arrangement cancellations | Central African Republic

Notes Also available in French
Publication Date: June 16, 2014
ISBN/ISSN: 9781498346863/1934-7685 Format: Paper
Stock No: 1CAFEA2014001 Pages: 67
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