## 1cafea2020001

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### Executive summary — context, objectives, and risks
- Context and fragility:
  - Three-year ECF arrangement expired in July helped restore growth, reduce fiscal and external imbalances, and strengthen public administration.
  - Peace agreement signed February 2019 with slow implementation; government controls less than one third of national territory.
  - Human Development Index ranking: 188 out of 189 countries.
  - Poverty rate: 72.2 percent in 2017.
  - Refugees (October): around 600,000; internally displaced persons (October): around 580,000.
  - Persons in need of humanitarian aid: estimated at 2.9 million, or about 60 percent of total population, at end-July.
  - Data limitations: inflation estimates limited to Bangui based on 40-year old weights; GDP estimates uncertain (informal sector estimates based on a 1982 survey).
- Program request and objectives:
  - Authorities requested a 36-month ECF arrangement for SDR 83.55 million (75 percent of quota).
  - Program aims to: support peace agreement and medium-term development strategy, maintain macroeconomic stability, strengthen administrative capacity and governance, mobilize external concessional financing, and protect the most vulnerable.
  - Fiscal focus: revenue mobilization, spending prioritization, strengthening public financial management to finance security, social, and infrastructure needs over the medium term.
- Risks and scenarios:
  - Downside risks: weakened reform implementation ahead of 2020–21 elections, renewal of violence, global slowdown, delays in external budget support.
  - Upside scenario: faster implementation of reforms and the peace agreement could boost medium-term growth, investment and capital inflows.

### Recent developments (economic, fiscal, financial)
- Growth and production:
  - Economic growth expected to recover to 4½ percent in 2019.
  - Diamond and gold productions by end-September 2019 already surpassed 2018 annual levels.
  - Wood production increased by around 10 percent y-o-y.
- Inflation:
  - Expected to average 3¼ percent in 2019 and less than 3 percent in 2020.
- External sector:
  - Current account deficit expected to narrow to 5.6 percent of GDP in 2019, driven primarily by an increase in official transfers.
- Fiscal outturn Jan.–Sep. 2019 (vs 6th review projections):
  - Domestic revenue through end-September: CFAF 86.1 billion (projected CFAF 99.3 billion).
  - Spending through end-September: CFAF 116.9 billion (projected CFAF 132.2 billion).
  - Social spending Jan.–Sep. 2019: CFAF 35.6 billion (projected CFAF 30 billion).
  - Spending through exceptional procedures declined to 5.7 percent from 11 percent at end-December 2018.
- Revenue shortfall drivers:
  - Delays in transferring parafiscal taxes to the TSA; delays in accounting revenue from provinces; fewer controls by tax department; exemptions beyond investment charter provisions.
- Public debt and arrears:
  - End-2017 and end-2018 public debt estimates revised upward by around 0.9 and 1.5 percent of GDP, respectively, mainly due to past misclassification as grants of World Bank project loan disbursements.
  - Disbursements under World Bank loan projected at CFAF 5.7 and 9.2 billion in 2019 and 2020, respectively.
  - In June, China forgave CFAF 1.6 billion in loans.
  - Discussions on arrears continued with Taiwan, province of China, Libya, Equatorial Guinea, Argentina, Chad and a private company from Montenegro.
- Banking sector:
  - Remains well capitalized, liquid, and profitable.
  - Credit to the private sector declined by 3 percent y-o-y in September 2019.
  - Non-performing loans (NPLs): 19.1 percent at end-August 2019 (from 22 to 15.6 percent in second half of 2018, then rebounded). NPLs adequately provisioned.
  - Banking sector composition: 4 banks with total assets about 20 percent of GDP; three foreign-owned; one state-owned representing 25 percent of the sector.
- Structural reforms progress:
  - Since mid-November 2019, parafiscal taxes levied by public agencies are being transferred to the TSA.
  - IGF recommended elimination of several agencies and parafiscal taxes with no economic justification.
  - About two thirds of the stock of potential domestic arrears audited: 0.2 percent of GDP validated, 3.3 percent of GDP rejected, claims equivalent to 2 percent of GDP require further investigation.
  - Hiring of new service provider to monitor wood exports and enhance import valuation progressing (two providers selected to provide proposals).
  - Negotiations started with airline companies to rationalize mission costs for government employees.

### Medium-term outlook and key assumptions
- Growth and inflation:
  - Growth expected to amount to 5 percent over the medium term.
  - Inflation expected to remain under the CEMAC ceiling of 3 percent over the medium term.
- External and fiscal assumptions:
  - Current account deficit would stabilize at about 5½ percent of GDP (improvement in goods and services balance broadly offsets decline in official transfers).
  - Domestic primary balance would stabilize at around 2½ percent, allowing gradual reduction of debt/GDP ratio.
  - Macro framework assumes no conflict resurgence but factors only limited peace dividends given slow implementation of the peace agreement.
- Risks reiterated:
  - Domestic: political pressures ahead of 2020–21 elections, renewal of violence, weak administrative capacity, governance issues.
  - External: intensified global trade tensions, delays in external budget support and project grants.

### Selected macro-fiscal projections and indicators (highlights)
- Real GDP (medium term): projected 5.0.
- Inflation (period average): table entries include 4.5, 1.6, 1.6, 3.2, 2.5, 2.5, 2.5, 2.5.
- Current account balance (percent of GDP): entries include -7.8, -7.9, -8.0, -5.6, -6.3, -5.3, -5.4, -5.7, -5.5.
- Overall fiscal balance (incl. grants, percent of GDP): entries include -1.1, 0.4, -1.0, 1.8, -0.4, 0.2, -0.5, -1.2, -1.4.
- Domestic primary fiscal balance (percent of GDP): entries include -2.1, -1.7, -1.7, -3.0, -2.7, -2.5, -2.5, -2.5, -2.5.
- Public Debt (percent of GDP): entries include 50.3, 48.8, 50.0, 47.1, 42.6, 39.8, 37.1, 35.1, 33.0.
- Budget support (percent of GDP): entries include 1.8, 3.0, 3.0, 6.0, 3.7, 3.4, 2.7, 1.9, 1.8.

### Program Pillar #1 — Sustainably financing government priorities
- Main objective: ensure pressing spending needs are sustainably met while anchoring a gradual reduction of public debt to less than 40 percent of GDP by 2022 through stabilization of the domestic primary balance at 2½ percent of GDP.
- Policy measures:
  - Increase revenue mobilization, streamline non-priority spending, strengthen spending efficiency.
  - Mobilize grant financing for expansion of public services in provinces, strengthening security forces, 2020–21 elections, and infrastructure projects.
  - Additional concessional borrowing up to 5 percent of GDP could be accommodated if long grace periods and/or repayment schedules.
- Fiscal targets and changes:
  - Domestic primary fiscal deficit expected to widen slightly to about 3 percent of GDP against revised budget target of 2.5 percent of GDP.
  - Projected revenue shortfall of about CFAF 16.9 billion or 1.2 percent of GDP; partly offset by lower transfers to public agencies (about CFAF 7 billion) and postponement of some non-priority expenditures (CFAF 2.4 billion).
  - Authorities submitted draft 2020 budget law targeting domestic primary fiscal deficit of 2.7 percent of GDP.
  - Domestic revenues expected to increase to 9.7 percent of GDP, from 8.7 percent of GDP in 2019, owing primarily to fiscal measures (0.2 percent of GDP) and transfer to TSA of parafiscal taxes (¾ percent of GDP).
  - Draft budget law includes elimination of six public agencies with no economic justification.
  - Spending increases in draft budget law: health (35 percent), education (27 percent), humanitarian actions (10 percent).

### Program Pillar #2 — Strengthening public institutions (PFM, revenue, SOEs, debt)
- Revenue administration and PFM actions:
  - Adopt procedure manual for daily reconciliation of tax and customs revenue estimates with Treasury starting January 1, 2020; supported by Sygma-Systac software operational by end-2019 (prior action).
  - Pilot electronic payment of taxes by large enterprises by end-June 2020; expand by end-2020 to tax returns and payments for all large enterprises; ensure 2018 and 2019 corporate tax returns entered into Systemif by mid-2020.
  - Digitalize tax procedures and upgrade ASYCUDA to ASYCUDA World with EU and UNCTAD assistance.
- Customs, exemptions, and TSA consolidation:
  - Recruit service provider for import valuation and certification/securing of wood export receipts (proposed end-January 2020 structural benchmark).
  - Establish logistics and customs platform in Douala via PPP; rehabilitate customs office near Bangui (PK 26).
  - Submit draft supplementary budget law to eliminate remaining public agencies without economic justification (proposed end-June 2020 structural benchmark).
  - Review by end-March taxes and fees levied by line ministries to eliminate those without economic justification and transfer others to TSA by end-2020.
- PFM systems and procurement:
  - Develop new public financial management information system, Sim-ba, implementation scheduled from January 2021.
  - Decentralize expenditure chain; delegate spending commitment and validation functions to five additional line ministries in draft 2020 budget law.
  - Revise public procurement code by end-December 2020 with World Bank assistance.
- SOEs and arrears:
  - Adopt secondary legislation to implement new SOE legal framework (proposed end-March 2020 SB); attach first annual SOE financial performance report to draft budget law for 2021.
  - Clearance of validated domestic arrears ongoing; aim to clear validated 2017 arrears and finalize audits of potential arrears by end-June 2020, adopt clearance plan by end-September, clear by end-2021.
- Debt management:
  - Ensure debt directorate compiles and monitors all financial engagements through Sygade; prepare and publish annual debt management reports.

### Program Pillar #3 — Protecting the most vulnerable and reducing poverty
- Social spending safeguards:
  - Performance monitored through an indicative target (IT, floor) for social spending.
  - Social programs supported by World Bank and EU: free health care, education and money transfer systems targeting populations outside the capital.
  - More financing could be allocated to social sectors if domestic revenue overperforms; staff encouraged targeted and sustainable social policies.
- Specific commitments with partners:
  - Work with World Bank to provide free health care to pregnant and breastfeeding women and children under 5, and extend services for victims of gender-based violence.
  - Work with EU to reinforce health system, improve access to water, and support return of displaced people to Bangui and Bambari.
  - Work with UNDP on women, peace and inclusive governance, social cohesion pilot, and job creation in Batangafo.
  - Work with AfDB and AFD to support reintegration in the Eastern region.

### Program Pillar #4 — Improving governance and the business environment
- Anti-corruption and governance:
  - Fund governance diagnostic mission identified vulnerabilities; program guided by strengthening legal/regulatory framework, improving oversight of public agencies, and fostering digitalization and automation in tax administration and PFM.
  - Commit to align asset declaration regime with international good practices, including penalties for non-declaration or false declarations (proposed end-September 2020 SB).
- Business environment reforms:
  - Revise mining and labor codes; revised labor code to be submitted to Parliament by end-March 2020.
  - WB assessment of private sector opportunities and constraints expected by mid-2020.
  - Mining code revision slated for early 2020 with WB support.
  - Reduce Kimberley Process certification from one month to one week to boost official diamond production and exports.
- Financial sector reforms:
  - Improve access to banking, address unpredictability of court decisions in financial disputes, implement recommendations to create arbitration and mediation mechanisms for banking and financial services litigation.
  - Reiterate commitment to implement COBAC’s 2017 mission recommendations to reinforce banks’ financial stability.

### Capacity development, program financing, and safeguards
- Capacity development priorities:
  - Focus on (i) tax policy and revenue administration; (ii) public finance management, governance and anti-corruption; (iii) macroeconomic programming and statistics; (iv) debt management capacity.
  - Authorities implementing updated Capacity Building Framework (CBF) covering 2019–22; created Economic and Financial Reform Monitoring Unit to coordinate TA.
- Program financing and access:
  - Gross financing requirements over 2020–22: CFAF 210.3 billion.
  - Requested IMF access covers CFAF 66.8 billion (about 30 percent) of gross financing requirement via SDR 83.55 million (75 percent of quota).
  - First 12 months fully financed with firm commitments from key partners; remaining external financing requirement to be met by multilateral and bilateral partners (WB, EU, AfDB, France).
  - Staff cautioned that greater access would pose significant debt sustainability risk given high risk of debt distress due to Fund reimbursements over medium term; access levels could be revisited if revenues and exports improve.
- Capacity to repay and IMF debt-service profile:
  - Capacity to repay the Fund remains adequate but subject to risks associated with high exposure to Fund resources.
  - IMF debt service (including previous obligations) would peak at SDR 35.09 million in 2026, equivalent to 8 percent of exports of goods and services.
- Safeguards and assurances:
  - BEAC continues implementing recommendations from full safeguards assessment (August 2017); transition to IFRS for FY 2019 progressing broadly as planned.
  - Authorities determined only one SOE, SODIAC, held an account abroad and committed to request BEAC waiver for IATA-related requirements.
  - With exception of Libya, official creditors with outstanding external arrears have consented to Fund financing; C.A.R. has arrears predating HIPC Completion Point with some non-Paris Club creditors (Argentina, Equatorial Guinea, Iraq, Libya, Taiwan, Province of China).

### Debt outlook, DSA conclusions, and policy implications
- Debt distress:
  - C.A.R. remains at high risk of debt distress (external and overall).
  - Under the baseline scenario, external liquidity indicators are projected to breach thresholds from 2024–28, owing largely to repayments to the IMF.
- DSA highlights and projections (selected):
  - Public sector debt (percent of GDP) entries: 50.3; 48.8; 50.0; 47.1; 42.6; 39.8; 37.1; 35.1; 33.0 (2017–24 series).
  - External current account balance without grants (percent of GDP) entries: -11.0; -12.3; -12.3; -10.9; -12.9; -11.6; -10.4; -9.8; -9.4; -9.1.
  - Gross financing requirement table (selected): Total financing requirements series include 205.3; 189.7; 185.3; 185.0; 186.3; 198.1 (as presented).
  - Total available financing series include 95.5; 116.6; 112.3; 120.9; 126.3; 133.4.
  - Financing gap series: 109.8; 73.2; 73.0; 64.1; 60.0; 64.7.
- Policy implications:
  - Continue to prioritize grant financing; adopt a prudent approach to contracting new external debt (limit non-concessional borrowing to 0.0 as a performance criterion).
  - Strengthen domestic revenue mobilization as domestic revenue expected to increase only gradually.
  - Monitor inflation dynamics and maintain tight monetary policy in coordination with BEAC to achieve NFA projections.

### Program monitoring, conditionality, and key structural benchmarks
- Monitoring and conditionality:
  - Semi-annual quantitative targets, quarterly indicative targets and structural benchmarks; quantitative PCs, continuous PCs and indicative targets remain similar to previous program.
  - Structural conditionality parsimonious and phased in line with implementation capacity.
  - First program review test date: end-December 2019; second program review test date: end-June 2020.
  - Financing assurances requirement: completion of each review subject to completion of financing assurances review while C.A.R. has external arrears.
- Selected prior actions and structural benchmarks:
  - Prior actions met: submission to parliament of the 2020 draft budget in line with program commitments; adoption of procedures manual for daily reconciliation of customs and tax revenue estimates with Treasury.
  - End-January 2020: recruit new service provider for import valuation and timber export revenue certification.
  - End-March 2020: approve secondary legislations for SOE legal framework.
  - End-June 2020: submit draft supplementary budget law eliminating seven remaining public agencies; capture all 2018 and 2019 corporate tax returns into SYSTEMIF.
  - End-September 2020: submit law aligning asset declaration regime with international good practices.
  - End-December 2020: deploy e-procedures for large companies.

### Staff appraisal and priority policy recommendations
- Overall judgment:
  - Expired ECF contributed to stabilization and capacity building, but C.A.R. remains trapped in fragility with violence, weak governance, lack of social cohesion, and widespread poverty.
- Priority recommendations:
  - Intensify revenue mobilization: digitalize tax returns and payments, strengthen customs administration, eliminate unjustified exemptions, and enhance tax-customs collaboration.
  - Consolidate TSA and strengthen expenditure controls and PFM, finalize audit of potential domestic arrears, and repay validated arrears promptly.
  - Adopt SOE legal framework to strengthen oversight and management performance.
  - Publish governance diagnostic report and use it to design an anti-corruption strategy focused on concrete, actionable reforms.
  - Streamline parafiscal taxes and taxes levied by ministers; adopt new labor and mining codes; reform judicial system using WB private sector diagnostic.
  - Rely on sustained grant financing and coordinated technical assistance; given high risk of debt distress, continue to minimize non-concessional borrowing.

### Lending-into-arrears assessment and program recommendation
- Libyan consent pending; staff assesses Fund can provide financing under lending-into-official-arrears policy given circumstances for C.A.R.’s arrears to Libya are met.
- Staff recommends approval of three-year ECF arrangement SDR 83.55 million (75 percent of quota) notwithstanding official bilateral arrears to Libya.

_Italic: Source — IMF staff report content (1cafea2020001)._

### EXECUTIVE SUMMARY

### EXECUTIVE SUMMARY

### Context
- The three-year ECF arrangement that expired in July helped to restore growth, reduce fiscal and external imbalances, and strengthen public administration.
- The peace agreement signed in February 2019 has had slow implementation, reflecting in part the lack of ownership by some armed groups.
- The Central African Republic (C.A.R.) remains in a very fragile situation with:
  - a volatile security environment,
  - limited administrative capacity,
  - poor governance,
  - lack of social cohesion.
- Government controls less than one third of the national territory, which hinders implementation of development policies and data quality.
- Social outcomes:
  - Human Development Index ranking: 188 out of 189 countries.
  - Poverty rate: 72.2 percent in 2017.
  - Numbers of refugees and internally displaced persons (October): around 600,000 and 580,000, respectively.
  - Persons in need of humanitarian aid: estimated at 2.9 million, or about 60 percent of total population, at end-July.
- Data limitations:
  - Inflation estimates limited to Bangui and based on 40-year old weights.
  - GDP estimates highly uncertain (informal sector estimates based on a 1982 survey).
- To address protracted balance of payments financing needs, the authorities requested a new three-year ECF arrangement for SDR 83.55 million (75 percent of quota).

### Program objectives
- Consistent with the Fund’s Country Engagement Strategy, the Fund-supported program will:
  - support implementation of the peace agreement and C.A.R.’s medium-term development strategy,
  - maintain macroeconomic stability,
  - strengthen administrative capacity, governance, and the business climate,
  - address C.A.R.’s protracted balance of payments needs.
- Fiscal policy focus:
  - revenue mobilization,
  - spending prioritization,
  - strengthening public financial management,
  - with a view to allow, over the medium term, durable financing of considerable security, social, and infrastructure spending needs.
- Structural reforms will aim at:
  - improving government capacity to design and implement policies and reforms,
  - enhancing governance, including strengthening anticorruption institutions,
  - removing bottlenecks and regulatory impediments to private investment.
- The arrangement will help catalyze external concessional financing from other development partners.
- The IMF will continue extensive capacity development aligned with program objectives.

### Risks and scenarios
- Downside risks to the program include:
  - weakened reform implementation ahead of the 2020–21 elections,
  - a renewal of violence,
  - a global slowdown.
- Upside scenario:
  - faster implementation of reforms and of the peace agreement could anchor confidence and boost medium-term growth, investment and capital inflows.

### Recent developments (economic and fiscal)
- Economic activity:
  - Economic growth expected to recover to 4½ percent in 2019, driven by mining, forestry and construction.
  - Diamond and gold productions by end-September had already surpassed 2018 annual levels.
  - Wood production increased by around 10 percent y-o-y.
- Inflation:
  - Expected to be limited to 3¼ percent on average in 2019 and less than 3 percent in 2020, helped by C.A.R.’s membership in CEMAC.
- External sector:
  - Current account deficit expected to narrow to 5.6 percent of GDP in 2019, thanks primarily to an increase in official transfers.
- Fiscal outturn (Jan.–Sep. 2019 versus 6th review projections and 2018 context):
  - Domestic revenue through end-September: CFAF 86.1 billion (projected CFAF 99.3 billion at 6th review).
  - Spending through end-September: CFAF 116.9 billion (projected CFAF 132.2 billion).
  - Social spending Jan.–Sep. 2019: CFAF 35.6 billion (projected CFAF 30 billion).
  - Spending through exceptional procedures declined to 5.7 percent from 11 percent at end-December 2018.
- Reasons for revenue underperformance (as identified):
  - delays in transferring parafiscal taxes to the Treasury Single Account (TSA),
  - delays in accounting of revenue from provinces,
  - fewer controls by the tax department,
  - granting of exemptions beyond the investment charter provisions.
- Public debt revisions:
  - End-2017 and end-2018 public debt estimates were revised upward by around 0.9 and 1.5 percent of GDP, respectively, mainly due to past misclassification as grants of World Bank project loan disbursements.
  - Disbursements under the World Bank loan: projected at CFAF 5.7 and 9.2 billion in 2019 and 2020, respectively.
  - In June, China forgave CFAF 1.6 billion in loans.
  - Discussions on arrears continued with Taiwan, province of China, Libya, Equatorial Guinea, Argentina, Chad and a private company from Montenegro.
- Banking sector:
  - Remains well capitalized, liquid, and profitable.
  - Credit to the private sector declined by 3 percent y-o-y in September 2019.
  - Non-performing loans (NPLs): 19.1 percent at end-August 2019 (from 22 to 15.6 percent in second half of 2018, then rebounded).
  - NPLs adequately provisioned.
  - Banking sector composition: 4 banks with total assets about 20 percent of GDP; three foreign-owned; one state-owned representing 25 percent of the sector.
- Structural reforms progress:
  - Since mid-November 2019, parafiscal taxes levied by public agencies are being transferred to the TSA.
  - General Inspectorate of Finance (IGF) recommended elimination of several agencies and parafiscal taxes with no economic justification.
  - About two thirds of the stock of potential domestic arrears identified last spring were audited:
    - 0.2 percent of GDP validated,
    - 3.3 percent of GDP rejected,
    - claims equivalent to 2 percent of GDP require further investigation.
  - Hiring of a new service provider to better monitor wood exports and enhance import valuation is progressing (two providers selected to provide proposals).
  - Negotiations started with airline companies to rationalize costs for government employee missions.

### Program rationale and expected support
- The new ECF arrangement will:
  - help C.A.R. rebuild an adequate level of international reserves while gradually improving its current account balance (excluding grants),
  - support implementation of the peace agreement and the National Recovery and Peacebuilding Plan (RCPCA),
  - continue providing a macroeconomic framework and catalyze donor financing,
  - contribute to strengthening fiscal institutions and overall governance,
  - prioritize protecting the most vulnerable through increased resources to key social sectors, in consultation with development partners.

*Source: EXECUTIVE SUMMARY (Central African Republic) — IMF staff report, December 10, 2019.*

### 10.      The medium-term outlook remains broadly favorable provided security holds (Text

### 10.      The medium-term outlook remains broadly favorable provided security holds (Text

### Outlook and key assumptions
- Growth is expected to amount to 5 percent over the medium term, driven by the recovery in the mining sector, the implementation of structural reforms, and the gradual loosening of the energy and transportation bottlenecks.
- Inflation is expected to remain under the CEMAC ceiling of 3 percent over the medium term.
- The current account deficit would stabilize at about 5½ percent of GDP, as the improvement in the balance of goods and services would broadly offset the decline in official transfers.
- The domestic primary balance would stabilize at around 2½ percent, allowing a gradual reduction of the debt/GDP ratio.
- Given slow implementation of the peace agreement, the macroeconomic framework assumes no conflict resurgence but factors only limited peace dividends at this juncture.

### Risks to the outlook
- Domestic risks:
  - Political pressures and uncertainty in the run-up to the 2020–21 presidential and general elections could weaken policy and reform implementation.
  - A renewal of violence could exacerbate the humanitarian crisis and political instability.
  - Weak administrative capacity, lack of political cohesion and governance issues could delay public investment projects and slow implementation of reforms and the development strategy.
- External risks:
  - An intensification of global trade tensions could weaken growth and affect commodity prices.
  - Delays in the delivery of external budget support and project grants could impede the government’s capacity to meet its most urgent spending needs.
- Upside:
  - Faster implementation of reforms and of the peace agreement could boost medium-term growth, investment and capital inflows.

### Authorities' stance
- The authorities concurred with staff on the outlook and risks and reasserted their commitments to maintain prudent macroeconomic policies and speed up structural reforms.
- They agreed that implementation of such policies and reforms is key to: strengthening macroeconomic stability, anchoring the legitimacy of the state, bolstering inclusive growth, containing inflation, and reducing external and fiscal imbalances.

### Selected economic indicators (highlights from Text Table 4)
- Real GDP: projected 5.0 (medium term).
- Inflation (period average): expected to remain at or below 2.5–3.2 percent in projection years (table entries include 4.5, 1.6, 1.6, 3.2, 2.5, 2.5, 2.5, 2.5).
- Current account balance (percent of GDP): entries include -7.8, -7.9, -8.0, -5.6, -6.3, -5.3, -5.4, -5.7, -5.5.
- Overall fiscal balance (incl. grants, percent of GDP): entries include -1.1, 0.4, -1.0, 1.8, -0.4, 0.2, -0.5, -1.2, -1.4.
- Domestic primary fiscal balance (percent of GDP): entries include -2.1, -1.7, -1.7, -3.0, -2.7, -2.5, -2.5, -2.5, -2.5.
- Public Debt (percent of GDP): entries include 50.3, 48.8, 50.0, 47.1, 42.6, 39.8, 37.1, 35.1, 33.0.
- Budget support (percent of GDP): entries include 1.8, 3.0, 3.0, 6.0, 3.7, 3.4, 2.7, 1.9, 1.8.
- Sources: C.A.R. authorities and IMF staff estimates and projections.

### Program Pillar #1: Sustainably Financing Government Priorities
- Main objective: ensure pressing spending needs are sustainably met.
- Anchor: gradual reduction of public debt to less than 40 percent of GDP by 2022, brought about by a stabilization of the domestic primary balance at 2½ percent of GDP.
- Policy measures:
  - Increase revenue mobilization, streamline non-priority spending, and strengthen spending efficiency to allow increases in social, security and investment expenditures.
  - Mobilize grant financing to finance major initiatives: expansion of public services and social support in the provinces, strengthening security forces, the 2020–21 elections, and infrastructure projects.
  - Additional concessional borrowing of up to 5 percent of GDP could be accommodated over the program period if it comes with long grace periods and/or repayment schedules.
- Fiscal developments and targets:
  - Domestic primary fiscal deficit expected to widen slightly to about 3 percent of GDP against a revised budget target of 2.5 percent of GDP.
  - The deterioration is largely driven by a projected revenue shortfall of about CFAF 16.9 billion or 1.2 percent of GDP; partly offset by lower transfers to public agencies (about CFAF 7 billion) and postponement of some non-priority expenditures (CFAF 2.4 billion).
  - Authorities submitted a draft budget law for 2020 targeting a domestic primary fiscal deficit of 2.7 percent of GDP.
  - Domestic revenues expected to increase to 9.7 percent of GDP, from 8.7 percent of GDP in 2019, owing primarily to fiscal measures (0.2 percent of GDP) and the transfer to the TSA of parafiscal taxes (¾ percent of GDP).
  - Draft budget law includes provisions to eliminate six public agencies with no economic justification.
  - Spending side provisions include increases in social spending: health (35 percent), education (27 percent), and humanitarian actions (10 percent).

### Debt outlook and caution
- C.A.R. remains at high risk of debt distress.
- Under the baseline scenario, external liquidity indicators are projected to breach their threshold from 2024–28, owing largely to repayments to the IMF.
- Authorities are advised to prioritize grant financing and follow a prudent approach to contracting new external debt.

### Program Pillar #2: Strengthening Public Institutions
- Revenue administration and PFM:
  - Adopt procedure manual for daily reconciliation of tax and customs revenue estimates with Treasury starting January 1, 2020; supported by Sygma-Systac software operational by end-2019.
  - Pilot electronic payment of taxes by large enterprises by end-June (expand by end-2020 to tax returns and payments for all large enterprises); ensure 2018 and 2019 corporate tax returns entered into Systemif by mid-2020.
  - Digitalize tax procedures and upgrade ASYCUDA to its World version with EU and UNCTAD assistance.
- Customs and exemptions:
  - Recruit service provider for import valuation and certification/securing of wood export receipts (proposed end-January 2020 structural benchmark).
  - Establish logistics and customs platform in Douala via PPP; rehabilitate customs office near Bangui (PK 26).
  - Strengthen joint tax and customs brigade; submit exemption proposals to exemption committee; review past exemptions and assess commitments upon expiration.
- Treasury Single Account (TSA) consolidation:
  - Submit draft supplementary budget law providing for elimination of remaining public agencies without economic justification (proposed end-June 2020 SB).
  - Review by end-March taxes and fees levied by line ministries to eliminate those without economic justification and transfer the others to the TSA by end-2020.
- Spending procedures and PFM systems:
  - Regularized all cash funds closed at end-2018; implemented new requirements for medical evacuations and prepayments on official missions’ allowances; plan conventions with airline companies by end-2019.
  - Develop new public financial management information system, Sim-ba, implementation scheduled from January 2021.
  - Decentralize expenditure chain; delegate spending commitment and validation functions to five additional line ministries in draft 2020 budget law.
  - Revise public procurement code by end-December 2020 with World Bank assistance.
- State-owned enterprises and arrears:
  - Adopt secondary legislation to implement new SOE legal framework (proposed end-March 2020 SB); attach first annual SOE financial performance report to draft budget law for 2021.
  - Clearance of validated domestic arrears ongoing; aim to clear validated 2017 arrears and finalize audits of potential arrears by end-June 2020, adopt clearance plan by end-September, clear by end-2021.
- Debt management:
  - Inter-ministerial order to ensure debt directorate compiles and monitors all financial engagements through Sygade.
  - Debt management report for 2018 released in August; authorities will prepare annual debt management reports and publish them on the ministry of finance’s website.

### Program Pillar #3: Protecting the Most Vulnerable and Reducing Poverty
- Social spending protections:
  - Performance monitored through an indicative target (IT, floor) for social spending.
  - Social programs supported by World Bank and EU include free health care, education and money transfer systems targeting populations outside the capital.
  - More financing could be allocated to social sectors if domestic revenue overperforms; staff encouraged more targeted and sustainable social policies.
- Specific commitments to protect vulnerable and conflict victims:
  - Work with the World Bank to identify measures to provide free health care to pregnant and breastfeeding women and children under 5, and extend free, integrated services and care for victims of gender-based violence in some districts.
  - Work with the EU to reinforce the health system, improve access to water, and support the return of displaced people to Bangui and Bambari.
  - Work with UNDP on women, peace and inclusive governance, pilot project on social and humanitarian cohesion, and job creation for vulnerable populations in Batangafo.
  - Work with AfDB and AFD to support reintegration of vulnerable groups in the Eastern region.

### Program Pillar #4: Improving Governance and the Business Environment
- Anti-corruption and governance:
  - Fund governance diagnostic mission identified key vulnerabilities to corruption; program guided by: (i) strengthening legal and regulatory framework; (ii) improving oversight of public agencies; (iii) fostering digitalization and automation in tax administration and PFM.
  - Commit to align asset declaration regime with international good practices, including penalties for non-declaration or false declarations (proposed end-September 2020 SB); take critical legal steps in context of a new anti-corruption law.
- Business environment reforms:
  - Revise mining and labor codes to align with regional regulations and international standards.
  - Revised labor code to be submitted to Parliament by end-March 2020; new legal framework capping fines in employment litigation submitted to Parliament.
  - WB assessment of private sector opportunities and constraints expected by mid-2020.
  - Mining code slated for early 2020 revision with WB support.
  - More sub-provinces assessed compliant with Kimberley Process; reduction of certification process from one month to one week to help boost official diamond production and exports.
- Financial sector reforms:
  - Improve access to banking for the population; address unpredictability of court decisions in financial sector disputes.
  - Implement recommendations from 2018 joint conference between financial sector and judiciary: draft laws/regulations to create arbitration and mediation center and arbitration chamber within commercial court for banking and financial services litigations; create database of court decisions; increase judges and court officers to speed rulings and enforcement.
  - Reiterate commitment to implement recommendations of COBAC’s 2017 mission to reinforce banks’ financial stability.

_Italic: Source — IMF staff report content (Text sections and tables) provided in the content unit._

### 30.      The IMF will continue supporting C.A.R. through extensive capacity development on

### 1cafea2020001 - 30.      The IMF will continue supporting C.A.R. through extensive capacity development on

### Capacity development priorities and coordination
- Technical assistance in the next few years will focus on:
  - (i) tax policy and revenue administration;
  - (ii) public finance management, governance and anti-corruption;
  - (iii) macroeconomic programming and statistics; and
  - (iv) debt management capacity.
- Staff and the authorities agreed to align prioritization and sequencing with program objectives and to seek complementarities with other CD providers.
- If pressing additional technical assistance needs emerge, staff will work with CD partners to ensure these needs can be promptly met.
- The authorities are implementing a capacity building strategy developed in 2017 in the context of the Capacity Building Framework (CBF), updated during the last review of the previous ECF arrangement and covering the period 2019–22.
- The authorities have created the Economic and Financial Reform Monitoring Unit within the Ministry of Finance to coordinate technical assistance from all development partners.

### Program structure, financing, and access
- Authorities request:
  - a 36-month arrangement under the Extended Credit Facility (ECF) with access of SDR 83.55 million (75 percent of quota).
- Rationale for access:
  - Based on the current outlook, the protracted BOP needs, and the strength of envisaged reforms; access level is in line with the norm for ECF arrangements.
  - The ECF-supported program aims to be catalytic, coalescing broader support from multilateral and bilateral creditors.
- Gross financing requirements and coverage:
  - Over 2020–22, the gross financing requirement will amount to CFAF 210.3 billion.
  - Of this, CFAF 66.8 billion (about 30 percent) will be covered by the requested access to IMF resources.
  - The remaining external financing requirement will be met by multilateral and bilateral partners, including the WB, the EU, the African Development Bank, and France.
- Frontloaded financing:
  - The first 12 months are fully financed as the authorities have already received firm commitments from key partners and there are good prospects for full financing thereafter.
- Debt-sustainability caution:
  - Staff emphasized that greater access would pose a significant debt sustainability risk given C.A.R.’s high risk of debt distress stemming primarily from reimbursements to the Fund over the medium term.
  - Access levels could be revisited later if budget revenues and exports improve more rapidly than currently envisaged.

### Program monitoring, conditionality, and timelines
- Performance assessment:
  - Semi-annual quantitative targets, quarterly indicative targets and structural benchmarks.
  - Quantitative performance criteria, continuous performance criteria and indicative targets will remain the same as under the previous program.
- Structural conditionality:
  - Parsimonious, focusing on revenue mobilization, PFM, oversight of SOEs, transparency and governance; phased in line with implementation capacity.
- Test dates for reviews:
  - First program review test date: end-December 2019.
  - Second program review test date: end-June 2020.
- Financing assurances requirement:
  - Given existing external official and commercial arrears, completion of each review will be subject to completion of a financing assurances review for as long as CAR has these arrears.
- Prior actions:
  - (i) Submission to parliament of the 2020 draft budget in line with program commitments.
  - (ii) Adoption of the procedure manual for the daily reconciliation of the customs and tax departments’ revenue estimates with those of the treasury department.

### Capacity to repay the Fund and debt-service profile
- Overall assessment:
  - Capacity to repay the Fund remains adequate but subject to risks associated with high exposure to Fund resources.
  - Authorities are making regular deposits at the BEAC and have always met Fund obligations in a timely manner.
- IMF debt-service peak with proposed access:
  - Debt service to the IMF (including previous obligations) would peak at SDR 35.09 million in 2026, equivalent to 8 percent of exports of goods and services.
- Risk mitigants:
  - Membership in a monetary union provides access to CEMAC’s pool of reserves (subject to budgetary resources to purchase them).
  - Maintenance of significant government deposits with BEAC over the program period.
  - Upside potential from an eventual peace dividend.
- Outlook:
  - C.A.R. is likely to require continued Fund engagement, including some financing, for the foreseeable future.

### Program risks and safeguards
- Key risks:
  - Uncertain security conditions and upcoming elections in 2020–21 could challenge program implementation.
  - Fiscal slippages and resistance to fiscal structural measures could undermine fiscal strategy and debt sustainability.
  - Vested interests may hinder progress in governance and the business environment.
  - Weak administrative capacity may create uncertainties about timing of reform implementation.
- Risk mitigation measures:
  - Tailored technical assistance, increased monitoring of spending to avoid slippages, increasing social spending and transparency to garner support for reforms, and close collaboration with other partners.
  - Successful implementation of the peace agreement would substantially boost program prospects.
- Safeguards at BEAC:
  - BEAC continues to implement remaining recommendations of the full safeguards assessment completed in August 2017.
  - BEAC’s full transition to IFRS for FY 2019 is progressing broadly as planned.
  - Revisions to secondary legal instruments for alignment with the BEAC Charter are being accelerated; adoption of revised secondary legislations was extended beyond the initial timeline (June 2018) for further consultation.
- Foreign exchange and SOE assurances:
  - Authorities determined that only one SOE, SODIAC, held an account abroad and committed to request a waiver from the BEAC for IATA-related requirements.
  - All mining contracts have been submitted to BEAC and authorities committed to ensure new contracts conform with new foreign exchange regulations.
- Regional policy assurances:
  - BEAC provided an updated policy assurance on end-December 2019 NFAs in support of CEMAC countries’ Fund-supported programs, proposed a revised target for end-December 2019 NFA, and reiterated commitment to adequately tight monetary policy to achieve NFA projections.
- Creditor consents and arrears:
  - With the exception of Libya, official creditors with outstanding external arrears have consented to Fund financing notwithstanding these arrears.
  - C.A.R. has accumulated arrears predating the Completion Point of the HIPC initiative with some non-Paris Club creditors (Argentina, Equatorial Guinea, Iraq, Libya, and Taiwan, Province of China).
  - Libya requested more time to convey its position.
  - C.A.R. remains in arrears to a private creditor and is continuing good-faith efforts to reach a collaborative agreement.
  - The Fund may provide financing to C.A.R. notwithstanding its external arrears to private creditors given prompt financial support is considered essential and C.A.R. is pursuing appropriate policies.
  - The country remains current on its remaining external debt service obligations.

### Staff appraisal, policy recommendations, and priorities
- Overall judgment:
  - The expired ECF contributed to stabilization, reduction of external and fiscal vulnerabilities, and strengthening government capacity; however, C.A.R. remains in a fragility trap of violence, weak governance and institutions, lack of social cohesion, and widespread poverty.
- Role of the proposed program:
  - The ECF-supported program is instrumental to help authorities face challenges, aligned with the National Recovery and Peacebuilding Plan, and complementary to the peace agreement implementation.
  - The program will help strengthen fiscal institutions, domestic revenue collection, scale up development aid and social spending, and strengthen governance and the business climate.
- Revenue mobilization (priority actions):
  - Authorities must intensify efforts to meet program revenue targets due to recent poor revenue performance caused by delays in reforms, exemptions with no legal basis, and a slowdown in tax controls.
  - Recommended measures include digitalizing tax returns and payments, strengthening customs administration, and enhancing collaboration between tax and customs departments.
- Public financial management:
  - Pursue consolidation of the TSA, strengthen expenditure controls and procedures, and enhance debt management.
  - Finalize the audit of potential domestic arrears to allow prompt repayment of validated arrears.
  - Adopt the legal framework for SOEs to strengthen oversight and management performance.
- Governance and anti-corruption:
  - Publish the governance diagnostic mission report and use its recommendations as a basis for an anti-corruption strategy.
  - Anti-corruption strategy should focus on simple, concrete reforms to strengthen legal and regulatory frameworks, reduce vulnerabilities in revenue mobilization, and restore confidence in public financial management.
- Business environment reforms:
  - Streamline parafiscal taxes and taxes levied by ministers.
  - Adopt new labor and mining codes and reform the judicial system.
  - Use the WB private sector diagnostic to identify complementary reforms.
- Financing and technical assistance needs:
  - Sustained grant financing and technical assistance from donors remain paramount.
  - Given high risk of debt distress, C.A.R. will continue to rely heavily on grant financing.
  - The Fund will continue to work with CD partners to ensure C.A.R.’s needs can be promptly met and to coordinate conditionality and technical assistance to maximize efficiency and reduce reform fatigue.

*Source: IMF country material provided in the content unit.*

### 49.      In view of C.A.R.’s protracted balance of payments financing needs and the authorities’

### In view of C.A.R.’s protracted balance of payments financing needs and the authorities’

### IMF support and program conditionality
- Staff supports the authorities’ request for an extended arrangement under the ECF in the amount equivalent to SDR 83.55 million (75 percent of quota).
- Staff proposes that completion of the first review under the ECF arrangement be conditional on the implementation of critical policy measures at the union level, as established in the December 2019 union-wide background paper.

### Medium-term economic prospects (2012–24) — qualitative summary from Figure 2
- Swift implementation of economic reforms and improved security could lift medium-term economic growth above the current projections.
- Inflation is projected to decline in light of improved food supply.
- Domestic revenue is expected to increase only gradually, limiting the space to increase current expenditures and domestically-financed capital spending.
- The domestic primary balance is expected to improve gradually.
- The external position reflects the large investment needs.

### Key economic projections and indicators (selected, as reported)
- GDP at constant prices: 4.5; 3.8; 3.8; 4.5; 4.5; 5.0; 5.0; 5.0; 5.0; 5.0 (2017–24 series as listed).
- GDP per capita at constant prices: 3.2; 1.9; 2.3; 2.5; 2.8; 3.2; 3.1; 3.0; 3.0; 2.9.
- GDP at current prices: 11.3; 5.3; 5.2; 7.2; 7.4; 7.6; 7.6; 7.7; 7.7; 7.6.
- GDP deflator: 6.4; 1.4; 1.3; 2.7; 2.8; 2.5; 2.5; 2.6; 2.5; 2.5.
- CPI (annual average): 4.5; 1.6; 1.6; 3.5; 3.2; 2.5; 2.5; 2.5; 2.5; 2.5.
- Broad money (annual % change): 10.3; 14.0; 14.0; 14.1; 3.2; 14.9; 5.8; 8.9; 9.4; 9.6.
- Credit to the economy (annual % change): 1.4; 11.5; 11.5; 9.7; 3.0; 5.0; 7.0; 8.0; 8.0; 8.0.
- Export volume of goods (annual % change): 42.5; 10.3; 10.3; 2.8; -6.5; 14.9; 6.0; 7.0; 8.3; 9.2.
- Import volume of goods (annual % change): -1.9; 0.1; -0.2; 4.2; 10.4; 7.8; 4.0; 5.0; 4.2; 4.1.
- Terms of trade (annual % change): -18.4; -11.7; -12.0; 5.7; 12.7; 3.5; 2.2; 0.5; -1.6; -1.5.
- Gross national savings (percent of GDP): 5.7; 7.1; 8.5; 12.8; 10.5; 10.6; 11.0; 10.9; 11.1; 11.8.
- Gross domestic savings (percent of GDP): -2.9; -2.7; -1.4; 0.2; -1.9; 0.3; 0.9; 1.5; 2.6; 3.5.
- Consumption (percent of GDP): 102.9; 102.7; 101.4; 99.5; 101.9; 99.7; 99.1; 98.5; 97.4; 96.5.
- Gross investment (percent of GDP): 13.5; 15.1; 16.4; 16.6; 16.2; 16.9; 16.3; 16.3; 16.8; 17.3.
- External current account balance with grants (percent of GDP): -7.8; -7.9; -8.0; -3.7; -5.6; -6.3; -5.3; -5.4; -5.7; -5.5.
- External current account balance without grants (percent of GDP): -11.0; -12.3; -12.3; -10.9; -12.9; -11.6; -10.4; -9.8; -9.4; -9.1.
- Overall balance of payments (percent of GDP): 2.9; -1.7; -1.7; 2.9; 1.0; 1.3; 1.5; 1.4; 2.4; 2.6.

### Central government finance (selected fiscal figures, percent of GDP and CFAF billions)
- Total revenue (including grants, percent of GDP): 12.8; 16.6; 16.6; 20.9; 19.4; 18.6; 18.4; 17.8; 17.2; 17.1.
- Domestic revenue (percent of GDP): 7.8; 8.9; 8.9; 9.9; 8.7; 9.7; 10.0; 10.3; 10.6; 10.8.
- Total expenditure (percent of GDP): 13.9; 16.3; 17.6; 18.3; 17.6; 19.0; 18.3; 18.3; 18.4; 18.5.
- Capital spending (percent of GDP): 4.5; 6.0; 7.4; 7.5; 7.1; 7.9; 7.2; 7.2; 7.3; 7.3.
- Overall balance excluding grants (percent of GDP): -6.1; -7.4; -8.7; -8.4; -8.9; -9.3; -8.2; -8.0; -7.8; -7.8.
- Overall balance including grants (percent of GDP): -1.1; 0.4; -1.0; 2.6; 1.8; -0.4; 0.2; -0.5; -1.2; -1.4.
- Domestic primary balance (percent of GDP): -2.0; -1.7; -1.7; -2.5; -3.0; -2.7; -2.5; -2.5; -2.5; -2.5.
- Public sector debt (percent of GDP): 50.3; 48.8; 50.0; 43.3; 47.1; 42.6; 39.8; 37.1; 35.1; 33.0.

Selected central government (CFAF billions, Table 2a):
- Revenue (CFAF billions): 154.0; 210.6; 210.6; 283.8; 263.2; 271.7; 290.6; 301.9; 313.6; 336.6.
- Domestic revenue (CFAF billions): 93.5; 112.4; 112.4; 134.9; 118.0; 141.7; 157.9; 175.5; 192.8; 211.5.
- Grants (CFAF billions): 60.6; 98.2; 98.2; 148.9; 145.2; 130.0; 132.7; 126.4; 120.8; 125.1.
- Total expenditure (CFAF billions): 166.8; 205.9; 222.8; 248.8; 239.0; 277.8; 287.8; 310.8; 336.1; 364.2.
- Capital expenditure (CFAF billions): 53.8; 76.2; 93.1; 102.3; 96.7; 115.1; 114.2; 122.5; 132.5; 143.7.
- Overall balance excluding grants (CFAF billions): -73.3; -93.5; -110.4; -113.9; -121.0; -136.1; -129.9; -135.3; -143.3; -152.6.
- Overall balance including grants (CFAF billions): -12.8; 4.7; -12.2; 35.0; 24.2; -6.1; 2.8; -8.9; -22.5; -27.5.

### Monetary and external sector highlights (selected)
- Net foreign assets (CFAF billions, Q4/Q projections series): 103.7; 79.8; 68.2; 101.9; 82.9; 121.7; 95.2; 105.4; 105.6; 116.3; 116.1; 141.6; 167.7; 214.9; 268.5 (series across reported quarters/projections).
- Money and quasi-money (CFAF billions): 300.7; 343.0; 354.7; 340.1; 344.7; 391.5; 354.1; 379.0; 364.8; 395.4; 406.8; 430.5; 469.0; 513.1; 562.5.
- Exports, f.o.b. (CFAF billions): 85.6; 91.1; 91.1; 94.7; 93.6; 108.1; 116.0; 125.3; 137.0; 151.1.
  - Diamonds (CFAF billions): 5.3; 5.0; 5.0; 2.6; 4.4; 6.2; 8.1; 10.1; 12.7; 16.1.
  - Wood products (CFAF billions): 53.5; 56.8; 56.8; 59.7; 55.8; 65.2; 67.9; 71.5; 77.0; 84.1.
- Imports, f.o.b. (CFAF billions): -255.6; -279.6; -279.6; -278.9; -300.6; -314.9; -324.3; -341.9; -365.5; -390.1.
  - Petroleum products (CFAF billions): -68.6; -87.5; -87.5; -79.8; -91.6; -90.4; -86.3; -87.3; -90.7; -94.3.
- Transfers (net, CFAF billions): 105.8; 126.0; 126.0; 169.5; 171.2; 153.3; 161.7; 160.6; 157.4; 164.2.
  - Of which: Program (CFAF billions): 21.2; 37.6; 37.6; 80.2; 81.9; 54.1; 53.9; 45.0; 35.0; 34.7.

### Policy implications and priorities (derived from program and projections)
- Continue swift implementation of economic reforms and union-level critical policy measures (condition for first ECF review).
- Strengthen domestic revenue mobilization given domestic revenue is expected to increase only gradually and limits fiscal space.
- Prioritize securing external financing and project grants to finance large investment needs while managing public debt (public sector debt projected from 50.3 percent to 33.0 percent of GDP over 2017–24).
- Monitor inflation dynamics in response to food supply improvements and monetary developments (CPI annual average projected at 2.5 percent in later years).

*Sources: C.A.R. authorities and IMF staff estimates and projections.*

### 1. Total financing requirements205.3189.7185.3185.0186.3198.1

### 1. Total financing requirements205.3189.7185.3185.0186.3198.1

### Total financing requirements (components)
- Current account deficit (excl. budget support): 158.4146.6137.5136.3138.3143.1
- Debt amortization: 5.75.45.76.33.64.5
- Repayment to the Fund: 1.64.44.88.914.321.0
- Change in other reserves: 39.633.437.433.630.229.5

### Total available financing (breakdown)
- Total available financing: 95.5116.6112.3120.9126.3133.4
- Capital transfers: 63.375.978.881.485.890.4
- Foreign direct investment (net): 15.020.022.024.025.027.5
- Portfolio investment (net): 0.00.00.00.00.00.0
- Debt financing: 12.215.77.57.57.510.0
  - Public Sector: 12.215.77.57.57.510.0
- Other net capital inflows: 5.05.04.08.08.05.5

### Financing gap
- Financing gap: 109.873.273.064.160.064.7

### Expected sources of financing
- Expected sources of financing: 81.954.153.945.060.064.7
  - of which: Budget support (grants): 81.954.153.945.035.034.7
    - World Bank: 57.628.328.1.........
    - African Development Bank: 0.02.82.8.........
    - European Union: 17.716.416.4.........
    - France: 6.66.66.6.........
    - Other: 0.00.00.0.........
  - of which: Budget support (loans)1: 0.00.00.00.025.030.0

### Residual financing gap and program coverage
- Residual financing gap: 27.919.119.119.10.00.0
- ECF program coverage: 27.919.119.119.10.00.0
- Note: 1 Budget support loans to be identified.

### Projections and source
- Projection
- Source: IMF staff projections.

*Source: IMF staff projections.*

### Annex I. Country Engagement Strategy

### Annex I. Country Engagement Strategy

### Context
- The Central African Republic (C.A.R.) is a fragile state marked by violence, weak governance and institutions, lack of social cohesion, and widespread poverty. Main sources of fragility include:
  - (i) disintegration of the state and lack of state’s control over the whole territory (at present only one third of the country is under government control);
  - (ii) absence of a nationally owned common vision;
  - (iii) lack of education and employment opportunities;
  - (iv) lasting political instability.
- The above factors create a persistent “fragility trap” and keep the country in extreme poverty with one of the lowest rankings of social indicators in the world (World Bank, 2019).
- Humanitarian and socio-economic indicators:
  - The number of persons in need of humanitarian aid was estimated at 2.7 million at end-September (out of a total population of about 5 million).
  - The conflict has worsened economic, fiscal and financial positions, and lowered institutional quality (IMF, 2019).
  - Regional disparities in public service supply are large; nearly 80 percent of civil servants are now posted in Bangui, which accounts for less than 15 percent of the population.
- Text Table 1: Distribution of the population and civil servants (as presented in the source)
  - Number of civil servants (as of Sep. 2019) Population (2015), in thousands Population density (2015)
  - Bangui2179669010478.5
  - Lobaye85431116.7
  - Ouham7734668.8
  - Ombella Mpoko77151317.0
  - Mambere-Kadei74744715.0
  - Ouaka5633487.1
  - Mbomou4942023.4
  - Nana-Mambere44129510.8
  - Nana-Gribizi3391497.5
  - Ouham-Pende24454816.9
  - Kemo2251478.9
  - Bamingui-Bangoran204550.9
  - Sangha-Mbaere1441267.3
  - Haute-Kotto1381151.3
  - Basse-Kotto8830818.7
  - Haut-Mbomou55741.3
  - Vakaga36651.4
  - Total279124857
  - Source: C.A.R's authorities and United Nations
- Political context:
  - February 2019 peace agreement aims to address fragility via power-sharing, strengthened governance and accountability, enhanced security, and expanded government control and public services in provinces.
  - Implementation of the peace agreement has been slow; lack of ownership by some armed groups and reluctance to disarm and cede territorial control and revenue are noted.
  - President Faustin Archange Touadéra was elected in February 2016; a government reshuffle in March 2019 formed an inclusive cabinet with allies and representatives of armed groups.
  - Presidential and general elections are scheduled for late 2020-early 2021; international community expected to provide electoral assistance including financial support, technical advice, logistical assistance and security support.

### Overall Strategy / RCPCA
- Authorities are implementing the 2017–21 national development plan Stratégie de Relèvement et de Consolidation de la Paix en Centrafrique (RCPCA), with strong financial support from the international community (US$2.2 billion).
- The RCPCA meets the Fund’s requirements under the policy for poverty reduction strategies and is being extended to 2023. It addresses economic challenges and pervasive poverty hindering peace and social progress; investment projects are central to stabilization and development objectives.
- RCPCA’s three pillars:
  - Security:
    - Support peace, security, and reconciliation; national disarmament, demobilization, reintegration, and repatriation (DDRR) strategy being developed; complemented by security sector reform.
  - Governance:
    - Renew social contract by building state presence and capacity to provide basic social services (education, health, water and sanitation).
  - Growth:
    - Promote economic recovery and boost productive sectors (agriculture, forestry, extractive industries); upgrade weak infrastructure in transport, electricity, and communication to provide income-generating activities and employment.
- The peace agreement calls for mobilizing national and international resources to implement national development programs focusing on basic social and economic infrastructure, social protection, rehabilitation and local development throughout the territory.
- RCPCA refocus toward applicable Sustainable Development Goals (SDGs): government prioritizes 15 SDGs and 35 targets, including water and sanitation, health, food security, primary and secondary education, agro-pastoral promotion, and good governance.
- As long as security and government control are not fully restored across the territory, delivery of public services and humanitarian assistance in provinces controlled by armed groups will largely rely on donors’ and NGOs’ direct support.

### Support of the International Community
- The international community recognizes the peace agreement’s potential and is committed to continued support via unified efforts (C.A.R. International Support Group and other coordination mechanisms).
- Security support:
  - Since 2016, MINUSCA deployment of 12,000 personnel has facilitated return to stability.
  - Security sector reform supported by EC (training), China and the US (logistics), and France and Russia (arms and complementary training).
- Humanitarian support:
  - Humanitarian Response Plan (HRP) focuses on life-saving interventions, severe malnutrition, protection against violence, and provision of basic services, aiming to enable progressive service delivery by authorities.
  - HRP financial support: on average US$280 million/year during 2016–19 from the Humanitarian Fund and various donors (USA, Germany, EU/ECHO, UK, Ireland, Canada, France, Norway, Switzerland and Belgium).
- Financing and budget support:
  - World Bank, EC, France and AfDB provided budget support averaging US$80 million/year during 2016–19, with a peak of about US$140 million in 2019 to support peace agreement implementation.
  - Budget support expected to remain substantial, leveraged by Fund financial support under the proposed new ECF arrangement.
  - Project grants, investments, and direct support for peace agreement implementation provided by WB, EC, AfDB, France, China and UNDP (mixed brigades, elections, redeployment of security and civil services).
- Capacity development (CD):
  - Significant CD support from WB, EC, AfDB, UNDP, France, USA on governance (including financial governance TA), education, health, natural resources management, and business climate improvement.
  - Coordination via RCPCA steering committee and informal donor meetings.
  - For 2019–22, authorities reached understanding with the Fund on updated capacity-building strategy in the context of the Capacity Building Framework (CBF) pilot project.
  - Under updated CBF:
    - WB to support PFM reforms, development of new software (Simba) for budget implementation and public accounting, and strengthening public procurement.
    - EU to support digitalization of revenue administration including electronic tax return and payment procedures.
    - UNDP and USA to continue supporting governance reforms including judiciary sector.

### The Role of the Fund
- The recent ECF-supported program contributed to:
  - Restoring macroeconomic stability.
  - Strengthening fiscal institutions and domestic revenue collection.
  - Scaling up development aid and social spending.
  - Supporting resilience toward exiting fragility: growth recovery, declining inflation, rebound in domestic revenue mobilization (though less than initially envisaged), consolidation of treasury single account, better revenue administration.
  - Gradual increase in spending and declines in the domestic primary fiscal deficit and the debt-to-GDP ratio.
  - Banks remain adequately capitalized and liquid; nonperforming loans declined steadily; private sector credit growth remains sluggish and access to financial services very low.
- Under the proposed new ECF arrangement, the Fund will:
  - Continue advice on macroeconomic policies and structural reforms aligned with RCPCA.
  - Objectives: maintain macroeconomic stability, improve governance, address protracted balance of payments needs.
  - Fiscal policy focus: revenue mobilization, spending prioritization, strengthening public financial management to durably finance security, social, and infrastructure spending needs.
  - Structural reforms: improve governance (strengthen anticorruption institutions), remove bottlenecks and regulatory impediments to private investment.
  - Continue CD activities to build capacity.
- The Fund-supported program will be catalytic, coalescing broader support from multilateral and bilateral creditors; donors committed to maintaining exposure including budget support, direct support and technical assistance consistent with program objectives.
- Given limited national capacity, program conditionality will be parsimonious and realistic; program implementation must be flexible to respond to new developments.
- Fund technical assistance in the updated Capacity Building Framework (CBF) 2019–22 will be complemented by other partners’ support:
  - Digitalization of revenue agencies to improve revenue mobilization (EC and WB).
  - New IT system for budget preparation and execution (WB).
  - Strengthening public procurement (WB).
  - Control over public enterprises (France).

### Risks to Program Implementation
- Downside risks (domestic):
  - Political pressures and uncertainty could weaken policy and reform implementation.
  - Renewal of violence could exacerbate the humanitarian crisis and political instability.
  - Weak administrative capacity, lack of political cohesion and governance issues could delay public investment projects, slow reform pace and development strategy implementation.
- Downside risks (external):
  - Intensification of global trade tensions could weaken growth and affect commodity prices.
  - Delayed delivery of external budget support and project grants could impede government’s capacity to meet urgent spending needs.
- Upside risks:
  - Faster reform implementation and successful implementation of the peace agreement could boost medium-term growth and improve the macroeconomic environment.

---

### Annex II. Summary of the Capacity Development Strategy Note

### A. CD Strategy
- C.A.R. is a fragile state with significant weaknesses in administrative and institutional capacity and a volatile security environment.
- Since January 2017, authorities implemented key parts of their capacity building strategy under the Capacity Building Framework (CBF) pilot project; the CBF strategy was updated in June 2019 based on progress during 2017-18.
- Policy priorities going forward in the context of a possible successor ECF arrangement:
  - (i) enhancing domestic revenue collection;
  - (ii) strengthening good governance and reducing vulnerabilities to corruption (notably in the fiscal area);
  - (iii) building macroeconomic programming capacity;
  - (iv) strengthening debt management capacity;
  - (v) improving data compilation.

### B. Key Overall CD Priorities Going Forward
- Priorities and Objectives (as presented in the source):
  - Tax policy and revenue administration:
    - Increasing mobilization of domestic resources by reforming taxation of natural resources, rationalizing parafiscal charges, limiting tax and customs exemptions, and strengthening the tax and customs administration.
  - Public financial management, governance and anti-corruption:
    - Reinforcing the overall legal, judicial, and institutional framework to reduce vulnerabilities to corruption.
    - Continued improvements in fiscal governance (notably PFM and fiscal transparency).
  - Macroeconomic programming:
    - Operationalizing the macroeconomic and budgetary committee, improving the preparation of the budget to make it more detailed, credible and policy-based, and strengthening the identification, monitoring and management of budgetary risks.
  - Macroeconomic statistics:
    - Producing more accurate statistics on annual national accounts, government finance statistics, and the external sector.
  - Debt management:
    - Strengthening debt management capacity and improving the debt management strategy.

### C. Main Risks and Mitigation
- Security remains volatile despite recent progress; deterioration of security could affect CD effectiveness.
- C.A.R. faces a difficult balance between deep CD needs and weak absorption capacity due to limited human and technical resources; progress may remain slow and uneven despite strong authorities’ commitment.
- Mitigation measures:
  - Authorities may consider sending staff to outside locations for capacity building.
  - Fund delivery of CD will consider limited absorptive capacity; hands-on TA mixed with peer learning focusing on achievable outcomes.
  - Economic and Financial Reform Monitoring Unit staffing increased to follow up on the reform program and coordinate TA and training from partners.

### D. Authorities’ Views
- Authorities committed to continue rebuilding capacity to ensure successful implementation of the ECF-supported program.
- For 2019–22, authorities reached an understanding with the Fund on the updated capacity-building strategy under the CBF pilot project. Priorities include domestic revenue collection, PFM, macroeconomic statistics, public debt management, and macro-fiscal capacity.
- Authorities requested and received an IMF governance diagnostic mission to guide governance reforms.
- Expected outcomes building on 2017–18 progress:
  - Further strengthen institutional framework to increase revenue;
  - Enhance spending efficiency;
  - Restore budget discipline;
  - Strengthen debt management;
  - Build core macro-fiscal capacity.
- Authorities intend to continue leveraging hands-on Fund TA on tax policy, revenue administration, PFM, national accounts data compilation, GFS and external trade data.
- Under the CBF, authorities will lead coordination of CD delivery plans from donors to avoid overburdening officials, monitor implementation of recommended reforms and identify measures to address unsatisfactory CD outcomes.

---

*Source: Annex I. Country Engagement Strategy, 1cafea2020001 - Annex I. Country Engagement Strategy.*

### 1. Despite the significant progress made in recent years under the program supported by the

### 1cafea2020001 - 1. Despite the significant progress made in recent years under the program supported by the

### Background
- The program supported by the Extended Credit Facility (ECF) that expired last July resulted in significant progress in terms of resumption of growth, reduction in fiscal and external vulnerabilities, and capacity building, all of which occurred in a challenging security environment.
- Tax revenues grew by 0.7 percent of GDP per year in the period 2016–18, contributing to a decline in the primary fiscal deficit and a substantial reduction in public debt.
- Structural reforms achieved significant progress in public financial management, controlling spending, strengthening the tax and customs administrations, the quality of economic data, and the capacity to implement macroeconomic policies.
- The Political Agreement for Peace and Reconciliation (Accord politique pour la paix et la réconciliation – APPR) signed in February 2019 aims to restore peace and stability, provide for a more inclusive government, enhanced governance and accountability, increased security, and re-establishment of State authority across the entire territory.
- The government intends to realign and extend the National Recovery and Peacebuilding Plan (Plan de Relèvement et de Consolidation de la Paix - RCPCA) until 2023, refocusing it on basic social services, agricultural and pastoral productive sectors, and improved governance (including justice and security).

### Recent macroeconomic developments
- Economic growth:
  - Expected rebound to 4½ percent in 2019, driven by the mining, forestry, and construction sectors.
- Inflation:
  - Expected to average 3¼ percent in 2019, and to be slightly negative year-on-year at end-year.
- Current account:
  - Deficit expected to decline to 5½ percent of GDP in 2019, owing primarily to an increase in current grants.
- Fiscal revenue and spending (first three quarters of 2019):
  - Domestic fiscal revenues amounted to CFAF 86.1 billion, compared to a projected total of CFAF 99.3 billion.
  - Primary domestic expenditures amounted to CFAF 116.9 billion, compared to CFAF 132.2 billion projected.
  - Primary domestic fiscal deficit amounted to CFAF 30.8 billion (+CFAF 2 billion relative to projection).
  - Social spending reached CFAF 35.6 billion (projected CFAF 30 billion).
  - Settlement of wage and domestic commercial arrears was CFAF 19.7 billion (projected CFAF 23.4 billion).
- Public debt revisions:
  - Public debt stock estimates for 2017 and 2018 were revised upward by around 0.9 percent and 1.5 percent of GDP, respectively, due to reclassification of disbursements under a World Bank project loan.
- Public financial management actions:
  - Audit of potential arrears: CFAF 75 billion audited; CFAF 2.4 billion validated; CFAF 45 billion rejected; CFAF 27 billion subject to additional investigation.
  - Transfer of parafiscal taxes to the treasury single account (TSA) operational since mid-November 2019.
  - Request for tenders launched to recruit a new service provider to support customs valuation and certification/security of timber exports.
  - Negotiations undertaken to reduce official travel costs with airlines.
- Financial sector indicators:
  - Capital adequacy ratio was 31.4 percent in June 2019.
  - Nonperforming loans declined from 30.9 percent in 2015 to 19.1 percent in the first six months of 2019.
  - Credit to the private sector fell by 3 percent year-on-year in September 2019.

### Program objectives and medium-term policies
- Overall aim:
  - Further reduce fiscal and external imbalances, promote robust and sustainable growth, and reduce poverty.
- Fiscal sustainability targets:
  - Gradually reduce public debt from 50 percent of GDP at end-2018 to less than 40 percent at end-2022.
  - Lower the domestic primary balance to 2.5 percent over the medium term.
- Strategy to achieve targets:
  - Increase mobilization of domestic revenue.
  - Rationalize non-priority spending.
  - Improve the efficiency of public spending.
  - Resort only to concessional loans for investments and within limits established under the ECF-supported program.

### Economic outlook and risks
- Medium-term outlook:
  - Growth expected to reach 5 percent over the medium term, driven by improved security, mining sector recovery, structural reforms, and gradual easing of energy and transport bottlenecks.
  - Inflation expected to remain moderate.
  - Current account deficit expected to stabilize at around 5½ percent of GDP over the medium term, with gradual improvement in the balance of transactions in goods and services offsetting expected decline in official transfers.
- Risks:
  - Downside risks: deterioration in the security situation; weakness of administrative capacities and vulnerabilities to corruption; intensification of global trade tensions; delay in granting external budgetary assistance.
  - Upside scenario: more rapid implementation of reforms and successful implementation of the peace agreement could stimulate growth over the medium term.

### Economic and financial policies

I. Fiscal policy
- Fiscal stance:
  - Contain the primary domestic fiscal deficit to less than 3 percent of GDP in 2019.
  - Given lower-than-projected domestic revenues, keep domestic primary spending at CFAF 158.9 billion in 2019.
- Financing:
  - Domestic primary deficit and payment of domestic arrears to be financed by budgetary support from partners and a decline in deposits held by the Bank of Central African States (BEAC).
- 2020 draft budget law (prior action):
  - Aims to increase domestic revenue and reduce the domestic primary fiscal balance to 2.7 percent of GDP.
  - Expected revenue increase of 1 percent of GDP from transfer of parafiscal revenue to the TSA and fiscal measures.
  - Spending increases: Ministry of Education (+27 percent), Ministry of Health (+35 percent), humanitarian actions (+10 percent), and elections (+30 percent).
  - Provides for elimination of six public agencies without economic justification.
- Revenue measures (expected yield):
  - Taxation ad valorem of used vehicles: 1.0 (CFAF billion)
  - Excise taxes on imported goods: 0.5 (CFAF billion)
  - Excise taxes on locally produced goods: 0.3 (CFAF billion)
  - Administrative measures: 0.5 (CFAF billion)
  - Total: 2.3 (CFAF billion)

II. Public financial reform — Revenue mobilization and customs controls
- Tax exemptions:
  - All exemptions granted to companies will fall within the framework provided by law and not be granted on an exceptional basis.
  - Draft inter-ministerial orders granting tax and customs exemptions under the investment charter will be submitted to the inter-ministerial committee responsible for tax and customs exemptions for approval prior to adoption.
  - By end-March 2020, conduct a review of all exemptions granted to companies and bring exceptional measures into compliance; verify commitments upon expiration and require reimbursement if commitments not kept.
- Digitization and tax administration (structural benchmarks):
  - Pilot electronic payment system for large companies in place by end-June 2020; widespread use of electronic filing and electronic payment of taxes by these companies by end-2020.
  - Ensure all corporate tax returns for 2018 and 2019 are entered in the SYSTEMIF software program by end-June 2020.
  - Over the medium term, digitize all tax procedures with support from partners.
- Customs valuation and timber export controls (structural benchmarks):
  - Recruit a new provider by end-January 2020 to support import valuation and certify and secure timber export revenues.
  - Reinstate monthly reconciliation meeting of the provider's data with customs data starting in March 2020 (based on February data) and evaluate the new contract by end-September 2020.
  - Plan to establish a logistics and customs platform at the port of Douala via a public/private partnership; contract to be finalized by end-March 2020.
  - Rehabilitate the PK 26 regional office to improve control of goods for consumption in Bangui.
- ASYCUDA and customs security:
  - Halted use of temporary tax identification numbers for imports and the entry of declarations by customs agents.
  - Commit to eliminating fast-track customs clearance units by end-January 2020.
  - Continue rollout of ASYCUDA to main customs clearance offices.
  - By June 30, 2020, ensure interconnection of the Douala single window and the offices in Berberati and Mongoumba with central customs services in Bangui.
  - Medium-term intention to roll out ASYCUDA World.

*Attachment I. Memorandum of Economic and Financial Policies (MEFP) for 2019*

### 20. We will continue to consolidate the TSA and to implement a strict management of

### 1cafea2020001 - 20. We will continue to consolidate the TSA and to implement a strict management of

### Treasury Single Account (TSA) and cash management
- Commitments:
  - Conduct a daily reconciliation of revenue data from the tax and customs administrations with Treasury data starting on January 1, 2020.
  - Adopt a manual on the relevant procedures (prior action).
  - Launch the SygmaSystac software on January 1, 2020 to allow real-time processing of operations on the Treasury account at the BEAC, automated tracking of the cash balance, and reconciliation with monetary data.
  - Submit to parliament by end-June 2020 a draft supplementary budget law providing for the elimination of the seven remaining public agencies without economic justification (structural benchmark).

### Identification and integration of fees and minor revenues
- Actions and timeline:
  - Identify all fees and minor revenues collected by ministries and monitor their use during the first quarter of 2020.
  - Adopt an action plan, based on identification and monitoring, to eliminate unjustified fees and transfer other revenues to the TSA by end-2020.
  - Integrate these revenues and corresponding expenditures into the draft budget law for 2021.

### Public financial management (PFM) reforms
- Systems and software:
  - Development of new budget and accounting management software (Sim-ba) supported by the World Bank; expected completion by end-June 2020 and testing during the second half of 2020.
  - Sim-ba to be put into use starting on January 1, 2021, in parallel with GESCO.
- Regulatory and procedural commitments:
  - Limit use of exceptional spending procedures to 5 percent of non-salary spending.
  - Strict application of 2019 regulatory provisions to limit expenditures related to medical evacuations and regularization of mission expenses.
  - Finalize draft agreements with airline companies to reduce mission expenses by December 31, 2019.
  - Expand delegation of expenditure commitments to five additional line ministries as of January 1, 2020.
  - Use electronic transfers to pay salaries of officials living in two localities in early 2020 (within digitization of revenue-collecting agencies).

### Public procurement governance
- Legislative and procedural reforms:
  - Revise the public procurement code with World Bank support and submit the revised legislation to the National Assembly by December 31, 2020.
  - Focus areas during overhaul:
    - Submit public investments above a certain threshold to mandatory cost-benefit analysis (initially requiring support from funding entities).
    - Publish these assessments.
    - Introduce a legal obligation—with sanctions for noncompliance—to publish tenders on the government’s website.
    - Publish criteria for selection of companies.
  - Medium-term: develop a management tool backed by a public procurement portal to ensure full transparency.

### Clearance of domestic arrears and public debt management
- Arrears clearance and audits:
  - Continue implementation of the action plan for clearance of domestic arrears approved in 2017, to be completed in 2020.
  - Audit all potential domestic arrears identified in Spring 2019.
  - Before end-June 2020: conduct additional investigations of CFAF 27 billion whose audit could not be completed due to insufficient documentation, and audit the CFAF 46 billion not yet audited.
  - During Q3 2020: adopt a schedule for clearance of these arrears before end-December 2021.
  - Improve cash flow plan and synchronize with consolidated commitment plan and the plan for issuing debt securities to avoid new arrears.
- Public debt management:
  - Ensure Public Debt Directorate has information required for comprehensive monitoring and reflected in the Sygade program.
  - Commit to preparing an annual debt management report and publishing it on the Ministry of Finance website.
  - Continue negotiations in good faith with creditors owed pre-HIPC arrears to conclude debt relief agreements.

### Debt policy and risk management
- Borrowing policy:
  - Given the high risk of debt distress, continue to rely on grants and will not enter into any non-concessional loan agreement.
  - Use of concessional loans limited to investment projects critical to development that cannot obtain grants, and within limits agreed with the IMF (a total of 5 percent of GDP for the duration of the program).
  - Such concessional loans should have long grace periods and/or repayment schedules to avoid increasing already elevated debt-service-to-exports and -to-revenue ratios projected over the medium term.

### Supervision of public and para-public enterprises
- Governance reforms:
  - Implement reform of supervision of public and para-public institutions and enterprises without delay.
  - Approve secondary legislations by end-March 2020 (structural benchmark).
  - Include the first annual report on their performance as an annex to the draft budget law for 2021.

### Transparency, anti-corruption, and rule of law
- IMF governance diagnostic:
  - Publish the final report of the IMF diagnostic mission on governance by end-March 2020.
  - Use the diagnostic recommendations to update the anti-corruption strategy (first draft prepared by March 2020; publication later).
- Anti-corruption strategy pillars (pact of transparency and exemplarity):
  - Strengthening transparency:
    - Systematic publication of all laws on the government’s website, with implementing documents, decrees, and orders, starting in 2021.
    - As of July 1, 2020, publication of all judicial rulings on institutions’ websites (or government site if none), starting with Constitutional Court, Court of Cassation, Appeals Courts, Council of State, and Administrative Appeals Courts.
    - Public awareness campaign on rights and obligations in the law on transparency through press publications before end-June 2020.
    - As of July 1, 2020, application of administrative sanctions for failure to publish information required by the law on transparency.
    - Readmission to the Extractive Industries Transparency Initiative (EITI) through publishing contracts granting licensing rights and basic production and revenue data on the government’s website.
  - Reducing impunity:
    - Public awareness campaigns and strict application of administrative sanctions against noncompliant officials.
  - Strengthening legal arsenal:
    - Bring asset declaration regime into alignment with international good practices via a law to be submitted to the National Assembly by September 2020 (structural benchmark) including: (i) sanctions and penalties for noncompliance or false declarations; (ii) broaden persons required to declare assets; (iii) redesign asset declaration form (including external assets); (iv) extend requirement to family members and close associates; (v) declaration verification procedures; (vi) mechanism to implement constitutional requirement to publish declarations.
    - Enable cross-checking of asset declarations against information available to the tax administration.
    - Submit a new anti-corruption law to the National Assembly in line with UNCAC by March 2021, including creation of an anonymous reporting system via a free telephone hotline with whistleblower protections.
    - Submit to the National Assembly by end-March 2021 a draft organic law formally setting the Audit Court’s responsibilities and providing for systematic publication of its reports.
  - Strengthening the rule of law:
    - Starting in 2021, annual publication, court by court, of: (i) number of new cases settled during the year; (ii) total number of cases brought before the court; (iii) average time it takes for a case to be handled.
    - Provide specialized training for commercial court judges.
    - Launch public awareness campaigns regarding the legal requirement (1958 law) for notarized-deed-based real property transfers.

### Improvement of the business environment
- Labor and private sector reforms:
  - Draft law capping fines for unlawful employment termination expected to be approved by the National Assembly soon.
  - Update of the Labor Code with UNDP support; revised version to be submitted to the National Assembly by end-March 2020.
  - World Bank support for a draft electronic business guide and a diagnostic assessment of the private sector to be completed by end-June 2020; assessment will evaluate opportunities and constraints, and identify priority actions and political reforms for the next three to five years.
  - Strengthen the Joint Consultation Framework for Business Improvement (CMCAA) to promote government-private sector dialogue.
- Other institutional reforms:
  - Update and simplify tax and customs procedures within digitization of revenue-collecting agencies launched October 2019.
  - Draft new mining code with World Bank support to be submitted to the National Assembly by end-March 2020.
  - Reform the judicial sector in line with strategy approved September 2019.

### Financial sector reforms and inclusion
- Mobile banking:
  - Banking transactions via mobile phone grew from CFAF 2.9 billion to CFAF 10.9 billion between 2017 and 2018.
- Institutional measures:
  - Working group created to follow up recommendations from the “Financial Sector and Justice in the C.A.R.” conference (June 2018) and submitted draft laws and inter-ministerial orders regarding creation and operating procedures for an arbitration and mediation center and an arbitration chamber under the commercial court for banking and financial disputes.

### Support for regional foreign exchange regulations
- Measures and timelines:
  - Identification of accounts abroad held by state-owned enterprises found only SODIAC held an account abroad as required by IATA; SODIAC will file a request with the BEAC by end-December 2019 for an exception to keep its account.
  - Contracts with extractive industry operators specifying revenue sharing, repatriation procedures, and financial terms have been shared with BEAC and PREF-CEMAC; government to set a timetable to ensure full compliance with new foreign exchange regulations by end-March 2020.
  - Commit to consulting BEAC staff prior to signing new mining concession contracts/permits or revenue-sharing agreements with extractive industries to ensure compliance with foreign exchange regulations.
  - BEAC has held high-level consultative meetings with commercial banks, private sector, and government agencies to clarify new foreign exchange regulations.
  - Instructed the unit responsible for repatriation of export earnings within the Ministry of Finance to do due diligence with respect to domiciliation of all export transactions with a resident commercial bank.

### Capacity building and technical assistance (TA)
- Strategy and support:
  - Implement a capacity-building strategy designed with the IMF, updated in May 2019.
  - Ongoing TA to improve customs and tax revenue collection, better cash management, and strengthen the public expenditure chain.
  - Implement the strategy with support from the IMF, World Bank Group, European Union, France, and other partners.
- TA priorities:
  - (i) improvement of revenue administration;
  - (ii) strengthening public financial management and improvement of fiscal governance and anti-corruption mechanisms;
  - (iii) building macroeconomic programming and debt management capacity;
  - (iv) improvement of the quality of economic and financial statistics.
- Institutional coordination:
  - Increased staff of the Economic and Financial Reform Monitoring Unit (Cellule de suivi des réformes économiques et financières, CS-REF) to follow up on the reform program and coordinate TA and training.

### Program monitoring, performance criteria, and quantitative targets
- Monitoring framework:
  - Program monitoring via quantitative performance criteria, indicative targets, and structural benchmarks as defined in the Technical Memorandum of Understanding (Attachment II).
  - Quantitative performance criteria set for end-December 2019 and end-June 2020; indicative targets for end-March and end-September 2020; structural benchmarks through December 2020.
  - First review of the ECF arrangement concerning performance at end-December 2019 envisaged by end-June 2020; second review concerning performance at end-June 2020 envisaged by end-December 2020.
- Exchange restrictions commitment:
  - Commit not to impose or expand restrictions on payments and transfers relating to current international transactions, resort to multiple currency practices, conclude bilateral agreements that do not comply with Article VIII of the IMF’s Articles of Agreement, or impose or expand restrictions to influence the balance of payments.
  - Adopt, in consultation with IMF staff, any new financial or structural measures necessary for program success.
  - Support BEAC efforts in implementing exchange regulations, pursuing full repatriation of export earnings, centralization of foreign currency holdings on BEAC books, and ensuring public entities repatriate and surrender foreign currency holdings.

### Key quantitative performance figures (Table 1 highlights, in CFAF billions)
- Domestic government financing (ceiling, cumulative for the year):
  - End December 2019 PC: -27.0
  - End-March 2020 Indicative Target: 17.0
  - End-June 2020 PC: -4.0
  - End-September 2020 Indicative target: 25.0
  - End-December 2020 Indicative target: 18.0
- Domestic revenue (floor, cumulative for the year)1:
  - End December 2019 PC: 118.0
  - End-March 2020 Indicative Target: 34.6
  - End-June 2020 PC: 70.8
  - End-September 2020 Indicative target: 104.2
  - End-December 2020 Indicative target: 141.7
- Domestic primary fiscal balance (floor, cumulative for the year)2:
  - End December 2019 PC: -40.9
  - End-March 2020 Indicative Target: -3.6
  - End-June 2020 PC: -9.4
  - End-September 2020 Indicative target: -26.5
  - End-December 2020 Indicative target: -39.9
- Repayments of domestic arrears (floor, cumulative for the year):
  - End December 2019 PC: 29.5
  - End-March 2020 Indicative Target: 9.0
  - End-June 2020 PC: 18.0
  - End-September 2020 Indicative target: 27.0
  - End-December 2020 Indicative target: 36.4
- Continuous performance criteria:
  - Contracting or guaranteeing of new external non concessional debt (ceiling)3,4: 0.0 at all listed dates.
  - Non-accumulation of external payments arrears (ceiling, cumulative for the year)3,4: 0.0 at all listed dates.
- Indicative targets:
  - Social spending (floor, cumulative for the year)5:
    - End-December 2019 PC: 25.0
    - End-March 2020 Indicative Target: 5.9
    - End-June 2020 Indicative Target: 12.4
    - End-September 2020 Indicative target: 20.2
    - End-December 2020 Indicative target: 28.0
  - Spending through extraordinary procedures (ceiling, cumulative for the year):
    - End-December 2019 PC: 4.7
    - End-March 2020 Indicative Target: 1.2
    - End-June 2020 Indicative Target: 2.5
    - End-September 2020 Indicative target: 4.0
    - End-December 2020 Indicative target: 5.6
- Memorandum items:
  - New concessional/external debt contracted or guaranteed by the government (projected cumulative basis): 6.0 at End-December 2019 PC and 25.0 for each subsequent date listed.
  - Budget support: End-December 2019 PC: 81.9; End-March 2020 Indicative Target: 0.0; End-June 2020 Indicative Target: 31.1; End-September 2020 Indicative Target: 31.1; End-December 2020 Indicative Target: 54.1
  - Privatization receipts: 0.0 at all listed dates.

### Prior actions and structural benchmarks (selected items and timelines)
- Prior actions (Met or Time line):
  - Submit to parliament the 2020 draft budget in line with program objectives — Prior action — Met.
  - Adopt a procedures manual for daily reconciliation of customs and tax departments’ revenue estimates with those of the treasury department — Prior action.
- End-January 2020:
  - Recruit new service provider to assist customs authorities in controlling import valuation and certifying and securing timber export revenues.
- End-March 2020:
  - Approve secondary legislations to support implementation of new legal framework for public and para-public institutions and enterprises — Improve oversight of SOEs.
- End-June 2020:
  - Submit to parliament a draft supplementary budget law providing for elimination of the seven remaining public agencies without economic justification identified by IGF — Improve transparency and revenue collection.
  - Capture all the 2018 and 2019 corporate tax returns into the SYSTEMIF IT system — Reduce corruption and improve revenue collection.
- End-September 2020:
  - Submit to Parliament a law to bring the asset declaration regime into alignment with applicable international good practices — Improve accountability.
- End-December 2020:
  - Deploy e-procedures (declaration and payments) for large companies — Improve transparency and revenue collection.

*Source: Central African Republic authorities and IMF staff estimates, Attachment II. Technical Memorandum of Understanding 2019.*

### 1.      This Technical Memorandum of Understanding (TMU) defines the quantitative targets

### 1.      This Technical Memorandum of Understanding (TMU) defines the quantitative targets

### E. Definitions
- Government: central government of the C.A.R.; excludes local governments, the central bank, or any public entity with separate legal personality not included in the government financial operations table (Tableau des operations financières de l’État—TOFE).
- Definition of debt (point 8 of the Attachment to IMF Executive Board Decision No. 15688-(14/107)):
  - “Debt” is a current (not contingent) liability created under a contractual arrangement through provision of value (assets or services) requiring the obligor to make one or more payments (assets or services) according to a specific schedule; payments discharge principal and/or interest.
  - Primary forms:
    - i. loans (including deposits, bonds, debentures, commercial loans, buyers’ credits), temporary exchanges equivalent to fully collateralized loans (repurchase agreements and official swap arrangements);
    - ii. suppliers’ credits (supplier permits deferred payments after delivery);
    - iii. leases: debt is the present value (at inception) of all lease payments expected during the agreement, excluding payments necessary for operation, repair, or maintenance.
  - (b) Arrears, penalties, and judicially awarded damages arising from failure to make payment under a contractual obligation that constitutes debt are debt. Failure to make payment on an obligation not considered debt under this definition (e.g., payment on delivery) will not give rise to debt.
  - (c) External debt: debt borrowed or serviced in a currency other than the CFA franc.
  - (d) Domestic debt: debt borrowed or serviced in the CFA franc.
- Guaranteed debt: explicit legal obligation by government to service a debt in event of borrower nonpayment (cash or in kind).
- Concessional debt: grant element at least 35 percent. Grant element = (nominal value − present value) / nominal value. Present value at contracting date discounted at 5 percent.
- Total government revenue: tax and nontax revenue or other revenue recorded on a cash basis. Excludes proceeds from financial asset sales, privatization, licenses, placement proceeds on government assets, and grants.
- Total government expenditure: sum of wages and salaries, goods and services, transfers (including subsidies, grants, social benefits, other expenses), interest payments, and investment expenditure, recorded on a settlement basis unless otherwise stated; includes expenditures executed before payment authorization and not yet settled.
- Wages and salaries: compensation of government employees per paragraphs 6.8–6.18 of GFSM 2014; includes all employees (permanent and temporary), civil servants, members of armed and security forces; compensation = wages and salaries + allowances + bonuses + pension fund contributions + any other form of monetary or non-monetary payment.
- Arrears: any debt obligation (as defined in paragraph 3) not paid in conformity with contract conditions.
- Domestic payment arrears = (i) payment arrears on expenditures; and (ii) payment arrears on domestic debt.
  - Payment arrears on expenditures: all payment orders to the Treasury created by the authorizing entity but not paid 90 days after Treasury authorization. These are part of “balances payable” (or “amounts due”), defined as government unpaid financial obligations including domestic floating debt in addition to expenditure arrears; exclude domestic debt financing (principal plus interest). For program target: domestic payment arrears = “balances payable” whose maturity goes beyond the 90-day regulatory deadline; floating debt = “balances payable” whose maturity does not go beyond the 90-day deadline.
  - Payment arrears on domestic debt: difference between amount required by contract and amount actually paid after the payment deadline in the contract.
- External payment arrears: arrears on external debt obligations; difference between amount required by contract and amount actually paid after payment deadline.

### F. Quantitative Targets
- Quantitative targets specified in Table 1 of the MEFP. Adjusters in Section D. All performance criteria and indicative benchmarks assessed on a cumulative basis from the beginning of the calendar year unless otherwise indicated.
- a) Performance Criteria
  - Ceiling on net domestic financing of the government:
    - Net domestic financing = (i) net bank credit to the government; and (ii) non-bank financing (including proceeds from sale of financial assets, proceeds from privatization or granting of licenses, Treasury bills, other securitized debt issued by the government in the CEMAC regional financial market denominated in CFA francs, and any BEAC credit to the government, including drawings on the CFA franc counterpart of the allocation of SDRs).
    - Net bank credit to the government = balance between debts and claims of the government vis-à-vis the central bank (excluding IMF credit) and national commercial banks. Scope consistent with BEAC definition and IMF practice. Government claims include CFA franc cash balance, [postal checking accounts], securitized debt (obligations cautionnées), and all deposits with BEAC and commercial banks of government-owned entities, except EPICs and government corporations which are excluded. Government debt to the banking system includes all debt to the central bank and local commercial banks, including Treasury bills and other securitized debt.
  - Floor for domestic government revenue:
    - Only revenue on a cash basis (tax and nontax revenue) taken into account in the TOFE.
  - Floor for the domestic primary fiscal balance:
    - Domestic primary fiscal balance (cash basis) = government domestic revenue − government expenditure − all interest payments − externally financed capital expenditure. Payments on arrears are not included.
  - Floor for the payment of domestic arrears:
    - Government undertakes to settle on a priority basis domestic arrears that have been validated.
  - Ceiling on new external debt contracted or guaranteed by the government:
    - Government undertakes not to contract or guarantee non-concessional loans.
  - Non-accumulation of new external payment arrears:
    - Government undertakes not to accumulate external payment arrears, except arrears relating to debt under renegotiation or rescheduling. Applied continuously.
- b) Indicative targets
  - Floor for social spending:
    - Poverty-reducing social spending comprises public non-wage spending on national education (primary, secondary, and higher education), health, social action (promotion of women and families, humanitarian actions), water and sanitation, microfinance (small and medium-sized enterprises and industries), agriculture, livestock, and rural development. Only domestically-financed spending is taken into account. Execution monitored on a payment-order basis during the program.
  - Ceiling on spending through extraordinary procedures:
    - Ceiling set at 5 percent of total non-salary spending or debt service (principal and interest) and funded by external resources.
- c) Memorandum item
  - Ceiling on new external concessional debt contracted or guaranteed by the government:
    - Recourse to concessional debt limited to investment projects critical to the country’s development for which grants are not possible.

### G. Adjusters of Quantitative Targets
- Adjustments for factors outside government performance for 2020 and beyond:
  - a. If total revenue from privatization, sales of financial assets, or renewal of telecommunication licenses or forestry or oil licenses is greater than programmed:
    - i. Ceiling on net domestic financing adjusted upward by amount equivalent to 50 percent of these additional receipts;
    - ii. Floor for the primary domestic budget balance adjusted downward by amount equivalent to 50 percent of these additional receipts.
  - b. If total budget support is greater than programmed:
    - i. Ceiling on net domestic financing adjusted downward by amount equivalent to 50 percent of disbursements in excess of programmed amounts;
    - ii. Floor for the primary domestic budget balance adjusted downward by amount equivalent to 50 percent of disbursements in excess of programmed amounts.
  - c. If total budget support is less than programmed:
    - i. Ceiling on net domestic financing adjusted upward by amount equivalent to the remainder of disbursements programmed but not made, that is, 50 percent of the disbursements programmed but not made;
    - ii. Floor for the primary domestic budget balance adjusted upward by amount equivalent to 50 percent of the disbursements programmed but not made.

### H. Structural Benchmarks
- a) Prior actions (to be implemented prior to discussion of new ECF arrangement by the IMF Executive Board)
  - Submit to parliament the 2020 draft budget in line with program objectives (draft should be in line with commitments under paragraph 15 of the MEFP).
  - Adopt a procedures manual for the daily reconciliation of customs and tax departments’ revenues estimates with those of the treasury department (manual to define procedures for daily reconciliation of customs and tax data with Treasury data to improve transparency and mobilization of budget resources).
- b) Structural benchmarks (timelines preserved)
  - Recruit new service provider to assist customs authorities in controlling import valuation and certifying and securing timber export revenues:
    - By end-January 2020 a new service provider should be recruited to assist the customs administration and to carry out a valuation of imports and secure the export revenues of the forestry sector.
  - Approve secondary legislations to support implementation of the new legal framework for public and para-public institutions and enterprises:
    - Implementing decrees should be adopted by end-March 2020.
  - Submit to parliament a draft supplementary budget law providing for the elimination of the seven remaining public agencies without economic justification identified by the IGF:
    - Draft law should be submitted by end-June 2020.
  - Capture all the 2018 and 2019 corporate tax returns into the SYSTEMIF IT system:
    - All corporate tax returns for 2018 and 2019 should be entered into the SYSTEMIF IT system before end-June 2020.
  - Submit to Parliament a law to bring the asset declaration regime into alignment with the applicable international good practices:
    - Law expected to be presented to parliament by end-September 2020; will specify assets to be declared, persons concerned, means for publication of declarations, and penalties for noncompliance.
  - Deploy e-procedures (declaration and payments) for large companies:
    - Online procedures for filing tax returns and making tax payments expected to be put into place for large taxpayers before end-December 2020.

### I. Reporting of Data to the IMF
- Authorities will report quantitative data on government indicative targets to IMF staff according to periodicity in Table 3. All data revisions will be promptly communicated. Authorities will consult Fund staff regarding any information or data not specifically addressed in the TMU necessary for program implementation and inform Fund staff whether program objectives have been reached.
- Table 3 reporting deadlines (data to be provided in Excel format; deadlines preserved)
  - Semi-annual evaluation report on qualitative indicators and structural measures (Tables 1 and 2 in the MEFP), accompanied by supporting documents: Within four weeks of the end of each quarter
  - Monetary survey, monthly central bank and commercial bank accounts: Within four weeks of the end of each month
  - Table of the government’s monthly cash flow operations, reconciled with the BEAC: Within 10 days of the end of each month
  - Government financial operations table (TOFE): Within four weeks of the end of each month
  - Total monthly amount of domestic payment arrears on goods and services and on wages, including unpaid pensions and bonuses: Within four weeks of the end of each month
  - Stock of external debt at end of period: Within four weeks of the end of each month
  - Breakdown of expenditures listed in the TOFE (goods, services, wages, interest, etc.): Within four weeks of the end of each month
  - Summary table of actual expenditures in priority areas, such as health, education, and security: Within four weeks of the end of each quarter
  - Breakdown of current expenditure and capital disbursements, whether domestically or externally funded: Within four weeks of the end of each quarter
  - Breakdown of revenues by institution and economic classification: Within four weeks of the end of each quarter
  - Revenues and expenditures netted out without a cash settlement (by expenditure and revenue type): Within four weeks of the end of each quarter
  - Breakdown of debt service and external arrears, particularly by interest and principal, and by main creditors: Within four weeks of the end of each month
  - Amount of new non-concessional and concessional external debt contracted by the government: Within four weeks of the end of each month
  - Actual disbursements for projects and programs receiving foreign financial assistance and relief of external debt granted by external creditors (including the date, amount, and creditor): Within four weeks of the end of each month

### Debt Sustainability Analysis (selected points)
- Joint Bank-Fund Debt Sustainability Analysis conclusions:
  - Risk of external debt distress: High
  - Overall risk of debt distress: High
  - Granularity in the risk rating: Sustainable
  - Application of judgement: No
- Summary findings:
  - The Central African Republic (C.A.R.) remains at high risk of external debt distress and overall high risk of debt distress, unchanged from the last DSA.
  - Solvency indicators remain below their relevant thresholds, but liquidity indicators breach their thresholds under the baseline scenario.
  - Sensitivity of debt indicators to standard stress tests, highly uncertain macroeconomic projections, a volatile security environment, and sizeable contingent liabilities support the high-risk assessment.
  - Staff recommendation: government should continue to rely heavily on grant financing for pressing spending needs, with limited room for concessional financing.
- Administrative details:
  - Prepared by staffs of the IMF and IDA; Approved by Annalisa Fedelino (AFR); Seán Nolan (SPR); and Marcello Estevão (IDA); Date on document: December 10, 2019.

*Source: Technical Memorandum of Understanding for the Central African Republic (TMU) — quantitative targets, definitions, adjusters, structural benchmarks, reporting obligations, and Debt Sustainability Analysis.*

### 1. The coverage of public sector debt is in line with the previous DSA, exhibiting some

### 1. The coverage of public sector debt is in line with the previous DSA, exhibiting some

### Coverage and gaps
- Information is available on the central government’s contractual debt obligations.
- State and local governments do not borrow.
- There are no social security funds guaranteed by the public sector.
- The government has not guaranteed other debt (Text Table 1).
- Little information is available on the financial situation and domestic debt and arrears of state-owned enterprises (SOEs).
- Possible domestic payment arrears not included in debt stock: 0 percent of GDP.
- SOEs' debt (guaranteed and not guaranteed by the government) considered in stress design: 1/2 percent of GDP (default value referenced).
- PPPs included in contingent liabilities design: 35 percent of PPP stock0 (as listed in Text Table 1).
- Financial market shock (default minimum): 5 percent of GDP.
- Total tailored contingent liability shock: 15 (in percent of GDP).

### Revisions to debt stock and contingent liabilities assessment
- End-2018 debt stock revised slightly upward compared to the last DSA.
- The debt stock revision amounts:
  - 0.9 percent of GDP at end-2017.
  - 1.5 percent of GDP at end-2018.
- Revision stemmed from a previous misclassification as grants of loan disbursements under a project loan.
- Recent audit of most potential government domestic arrears identified in the Spring indicates only a fraction will need to be repaid.

### Steps to improve SOE oversight and debt coverage
- Authorities submitted to parliament a new legal framework governing SOEs.
- The Ministry of Finance has been reorganized.
- The debt unit is being strengthened through training and better IT systems supported by development partners.
- These steps are expected to lead to better debt coverage going forward.

### Contingent-liabilities stress test design (tailored portion)
- Tailored shock size: 15 percent of GDP (Text Table 1).
- Component shocks and rationale:
  - SOE debt shock: 5 percent of GDP (set at 5 percent instead of 2 percent default to reflect heightened risks associated with non-guaranteed SOE debt and potential expenditure arrears).
  - Domestic arrears shock: 5 percent of GDP (to factor in past and persisting shortcomings in public expenditure management systems).
  - Financial market risk shock: 5 percent of GDP (kept at the minimum default value given the small size and depth and relatively robust financial position of the financial sector in C.A.R.).

### Public and external debt levels and composition
- Total public and publicly guaranteed (PPG) debt at end-2018: 50 percent of GDP (compared with 50.3 percent of GDP at end-2017).
- External debt at end-2018: 36.1 percent of GDP (34.1 percent of GDP at end-2017).
- These debt stocks include about 10 percent of GDP in arrears to non-Paris Club official creditors (these arrears are not expected to be repaid at better terms than the 2009 Paris Club agreement; no debt service on these loans is assumed in the DSA).
- Average nominal interest rate on external debt: 0.6 percent.
- Half of domestic debt consists of statutory and exceptional advances from the Central Bank, consolidated into one loan to be repaid from 2022 onwards.
- Officially recognized arrears amount to 4.7 percent of GDP.

### Recent borrowing and disbursements (since last DSA)
- No new loans contracted since the last DSA.
- Disbursements so far this year:
  - CFAF 3.6 billion under the World Bank project loan.
  - CFAF 2.4 billion from the Saudi Fund.
  - CFAF 0.5 billion from the Arab Bank for Economic Development in Africa.
  - CFAF 18.3 billion under the ECF-supported program.

### Underlying macroeconomic assumptions (medium-term and long-term)
- Medium-term projections (up to 2024) slightly updated and consistent with the new program scenario.
- Key assumptions and projections:
  - Medium-term GDP growth rate: 5 percent (reflects further catch-up to the pre-crisis level of GDP).
  - Long-run (2025–39) growth: 3.4 percent (unchanged from the last DSA).
  - Population growth estimate: about 2.5 percent.
  - Current account: expected to improve over time; non-interest current account deficit expected to reach 3 percent of GDP in the long run.
  - Domestic revenues: gradual upward trend, reaching 14 percent of GDP at the end of the projection period.
  - Fiscal primary balance: expected to turn into a deficit of 1 percent of GDP over the long run as grant financing declines.
  - Budget grants: average of 7.5 percent of GDP during 2019–24, declining to 2 percent of GDP by 2039.
  - Financing assumptions: short-run needs covered by deposit withdrawals; 80 percent of longer-term needs covered through external concessional borrowing (with gradually decreasing concessionality); remaining 20 percent through domestic borrowing.
- Text Table 2 reported selected averages (values preserved):
  - 2019-24 average GDP growth (percent): 4.93
  - 2025-2039 average GDP growth (percent): 3.44
  - 2019-24 average GDP deflator (percent): 2.6
  - 2025-2039 average GDP deflator (percent): 2.8
  - 2019-24 average Non-interest current account balance: -4.8 (percent of GDP)
  - 2025-2039 average Non-interest current account balance: -2.8 (percent of GDP)
  - 2019-24 average Exports: 14.8 (percent of GDP)
  - 2025-2039 average Exports: 15.4 (percent of GDP)
  - 2019-24 average Primary balance: 0.4 (percent of GDP)
  - 2025-2039 average Primary balance: -1.0 (percent of GDP)
  - 2019-24 average Revenues and grants: 18.2 (percent of GDP)
  - 2025-2039 average Revenues and grants: 16.6 (percent of GDP)

### Debt sustainability analysis — External
- Solvency indicators of external PPG debt remain below thresholds under the baseline scenario; PV of debt-to-GDP and PV of debt-to-exports ratios decline from initial levels over the projection period.
- The PV of external debt-to-GDP ratio would breach thresholds for three years under the most extreme standardized stress test (combination shock to growth, primary balance, exports, other non-debt creating flows, and depreciation).
- Standardized stress test of lower nominal export growth leads to a temporary breach of the PV of external debt-to-exports ratio.
- Liquidity indicators breach thresholds:
  - External debt service-to-exports ratio breaches its threshold from 2024–28, driven by an uptick of debt service related to the end of a grace period of a loan and significant repayments to the Fund.
  - External debt service-to-revenue ratio follows a similar trajectory with a shorter and smaller breach.
  - Breaches are larger than in the previous DSA, mainly due to projected disbursements under the proposed new ECF arrangement.
  - Significant and persistent breaches of external debt service-to-exports and external debt service-to-revenue ratios occur under the historical scenario and the most extreme standardized stress test.

### Debt sustainability analysis — Public (PPG)
- Total PPG debt indicator remains well below its benchmark under the baseline scenario; PV of the debt-to-revenue ratio is declining over the projection period.
- Debt-service-to-revenue and grants ratio is set to rise until 2025 reflecting:
  - Start of repayments of exceptional and statutory advances to BEAC.
  - Higher external debt service payments.
- A standardized shock to growth would:
  - Trigger a breach of the threshold for the PV of the debt-to-GDP ratio.
  - Lead to a significant increase in the PV of the debt-to-revenue ratio.
- Public debt indicators could worsen owing to contingent liabilities and an important stock of unverified arrears.
- Adding domestic debt to the analysis does not change the overall risk of debt distress.

### Realism tools and risk assessment
- Realism tools do not flag significant risks around the baseline scenario; external and public PPG debt projections are in line with the previous DSA.
- Factors contributing to debt dynamics broadly align with historical contributions; unexpected changes in external and public debt are close to the median for all LICs.
- It is noted that changes in the primary balance are not always a good indicator of fiscal policy impact in C.A.R.:
  - Primary balance expected to improve substantially owing to significant increase in external grants (only partly spent).
  - Fiscal policy likely to be expansionary owing to increase in spending.

### Conclusion and key risks
- Overall risk ratings:
  - C.A.R. remains at high risk of external debt distress.
  - C.A.R. remains at overall high risk of debt distress.
- Key constraints and risk drivers:
  - Low revenue mobilization and weak export base constrain capacity to service debt.
  - External debt service-to-export and external debt service-to-revenue ratios breach thresholds under the baseline scenario.
  - Macroeconomic projections are highly uncertain given the still volatile security environment.
  - Standardized stress tests show sensitivity of debt indicators to assumptions; lower export or real GDP growth would trigger significant deterioration with multiple threshold breaches.
  - Sizeable contingent liabilities, notably related to limited financial information on SOEs, could materialize and worsen public debt outlook.

*Source: IMF staff estimates and country authorities (extracted from the Central African Republic DSA chapter).*

### 16. The authorities broadly agreed with this assessment. They shared the view that

### 16. The authorities broadly agreed with this assessment. They shared the view that

### Authorities' stance and policy implications
- The authorities consider C.A.R.’s capacity to service debt is limited and are committed to mobilizing grant financing to cover their financing needs to the largest extent possible.
- They emphasized that overall public debt is on a declining trend but agreed on the need to strengthen debt monitoring, especially by broadening coverage to SOEs and clarifying the status of unverified domestic arrears.

### External Debt Sustainability — baseline highlights (2016–39)
- External debt (nominal) 1/: 2016 35.1, 2017 35.4, 2018 37.2, 2019 36.7, 2020 35.4, 2021 33.5, 2022 31.5, 2023 29.8, 2024 27.8, 2029 26.0, 2039 25.7, (PV of PPG external debt-to-GDP) 2039 19.5.
- Change in external debt: 2016 -1.8, 2017 0.4, 2018 1.8, 2019 -0.5, 2020 -1.3, 2021 -1.9, 2022 -2.0, 2023 -1.7, 2024 -2.0, 2029 0.2, 2039 0.0.
- Identified net debt-creating flows: 2017 2.9, 2018 3.9, 2019 2.8, 2020 3.1, 2021 2.2, 2022 2.3, 2023 2.7, 2024 2.6, 2029 0.5, 2039 0.0, 204? 3.4, 2039 1.7. (as presented in table)
- Non-interest current account deficit: 2016 5.0, 2017 7.7, 2018 7.8, 2019 5.4, 2020 6.0, 2021 5.0, 2022 5.1, 2023 5.3, 2024 5.1, 2029 2.8, 2039 2.7, 2039 7.5, 204? 4.2 (table entries preserved).
- Exports (percent of GDP): 2016 18.0, 2017 15.9, 2018 15.9, 2019 15.1, 2020 15.2, 2021 15.1, 2022 15.1, 2023 15.2, 2024 15.2, 2029 15.5, 2039 15.5.
- Imports (percent of GDP): 2016 34.4, 2017 32.4, 2018 33.7, 2019 32.9, 2020 31.4, 2021 30.1, 2022 29.4, 2023 29.1, 2024 28.5, 2029 24.0, 2039 24.0.
- Net current transfers (negative = inflow): 2016 -11.4, 2017 -8.8, 2018 -10.0, 2019 -12.4, 2020 -10.2, 2021 -10.0, 2022 -9.2, 2023 -8.4, 2024 -8.0, 2029 -7.4, 2039 -5.8, 204? -6.8, 2039 -8.8.
- PV of PPG external debt-to-GDP ratio (selected years): 2021 18.3, 2022 17.3, 2023 15.9, 2024 13.4, 2029 16.2.
- PV of PPG external debt-to-exports ratio (selected years): 2021 126.8, 2022 121.6, 2023 114.0, 2024 104.8, 2029 86.0, 2039 104.3.
- PPG debt service-to-exports ratio (selected years): 2019 3.8, 2020 4.8, 2021 6.3, 2022 6.7, 2023 8.0, 2024 8.4, 2029 10.3, 2039 8.3, 2039 5.9.
- PPG debt service-to-revenue ratio (selected years): 2019 3.7, 2020 6.8, 2021 8.3, 2022 9.9, 2023 10.1, 2024 11.6, 2029 12.1, 2039 14.6, 2039 10.8, 2039 6.5.
- Gross external financing need (Million of U.S. dollars): 2016 104.2, 2017 148.9, 2018 173.2, 2019 118.7, 2020 144.4, 2021 129.5, 2022 148.2, 2023 173.1, 2024 192.7, 2029 121.0, 2039 129.7.
- Key macro assumptions (selected):
  - Real GDP growth (percent): 2016 4.7, 2017 4.5, 2018 3.8, 2019 4.5, 2020 5.0, 2021 5.0, 2022 5.0, 2023 5.0, 2024 5.0, 2029 3.4, 2039 3.4, 204? -0.2, 2039 4.2.
  - GDP deflator in US dollar terms (change in percent): 2016 2.7, 2017 8.6, 2018 6.0, 2019 -0.5, 2020 3.6, 2021 3.1, 2022 3.2, 2023 3.0, 2024 4.7, 2029 2.5, 2039 2.5, 204? 2.6, 2039 3.2.
  - Effective interest rate (percent) 4/: 2016 0.9, 2017 0.4, 2018 0.5, 2019 0.4, 2020 0.5, 2021 0.5, 2022 0.5, 2023 0.6, 2024 0.6, 2029 0.8, 2039 1.2, 204? 1.1, 2039 0.6.
- Grant element of new public sector borrowing (percent): projection entries include 37.0, 40.3, 36.3, 36.3, 53.1, 53.2, 46.3, 31.9, ...45.8 (as presented).
- Government revenues (excluding grants, percent of GDP): 2016 7.4, 2017 7.8, 2018 8.9, 2019 8.7, 2020 9.7, 2021 10.0, 2022 10.3, 2023 10.6, 2024 10.8, 2029 11.8, 2039 14.0, ...8.1, 10.6 (table entries preserved).
- Aid flows (Million of US dollars) 5/: 2016 52, 2017 205.0, 2018 144, 2019 34.2, 2020 4576.9, 2021 272.7, 2022 254.9, 2023 246.7, 2024 237.1, 2029 228.1, 2039 240.8, 2039 247.9, 204? 180.6 (as in table).
- Nominal GDP (Million of US dollars): 2016 1,825, 2017 2,071, 2018 2,280, 2019 2,371, 2020 2,579, 2021 2,792, 2022 3,026, 2023 3,271, 2024 3,596, 2029 5,049, 2039 9,029.
- Nominal dollar GDP growth: 2016 7.6, 2017 13.5, 2018 10.1, 2019 4.0, 2020 8.8, 2021 8.2, 2022 8.4, 2023 8.1, 2024 10.0, 2029 6.0, 2039 6.0, 204? 6.0, 2039 2.2, 2039 7.5.

### Public Sector Debt — baseline highlights (2016–39)
- Public sector debt (percent of GDP): 2016 53.9, 2017 50.3, 2018 50.0, 2019 47.1, 2020 42.6, 2021 39.8, 2022 37.1, 2023 35.1, 2024 33.0, 2029 27.7, 2039 27.0, (mem.) 41.9, 34.3 (table entries preserved).
- Of which: external debt (percent of GDP): 2016 35.1, 2017 35.4, 2018 37.2, 2019 36.7, 2020 35.4, 2021 33.5, 2022 31.5, 2023 29.8, 2024 27.8, 2029 26.0, 2039 25.7, 2039 25.8, 29.5 (table entries).
- Change in public sector debt: 2016 -5.9, 2017 -3.6, 2018 -0.3, 2019 -2.9, 2020 -4.5, 2021 -2.8, 2022 -2.7, 2023 -2.0, 2024 -2.2, 2029 -0.2, 2039 0.0.
- Identified debt-creating flows: 2016 -4.3, 2017 -7.9, 2018 -0.1, 2019 -3.8, 2020 -4.6, 2021 -2.8, 2022 -2.7, 2023 -1.9, 2024 -2.1, 2029 -0.2, 2039 0.0, 2039 0.8, 2039 -2.1.
- Primary deficit (percent of GDP): 2016 -1.6, 2017 0.7, 2018 0.6, 2019 -2.1, 2020 0.1, 2021 -0.5, 2022 0.3, 2023 1.0, 2024 1.2, 2029 1.1, 2039 1.2, 2039 0.8, 2039 0.3.
- Revenue and grants (percent of GDP): 2016 13.2, 2017 12.8, 2018 16.6, 2019 19.4, 2020 18.6, 2021 18.4, 2022 17.8, 2023 17.2, 2024 17.1, 2029 16.7, 2039 16.0, 2039 13.6, 2039 17.5.
- Of which: grants (percent of GDP): 2016 5.8, 2017 5.0, 2018 7.8, 2019 10.7, 2020 8.9, 2021 8.4, 2022 7.5, 2023 6.6, 2024 6.4, 2029 4.9, 2039 2.0.
- Automatic debt dynamics (contribution, percent of GDP): 2016 -2.7, 2017 -8.6, 2018 -0.8, 2019 -3.5, 2020 -3.3, 2021 -2.9, 2022 -2.7, 2023 -2.5, 2024 -2.7, 2029 -1.3, 2039 -1.1.
- PV of public debt-to-GDP ratio (selected): 2020 32.1, 2021 30.2, 2022 26.8, 2023 25.3, 2024 23.8, 2029 22.6, 2039 21.1, 2039 15.1, 2039 17.4.
- PV of public debt-to-revenue and grants ratio (selected): 192.8, 156.0, 144.3, 137.2, 134.0, 131.6, 123.1, 109.1, 134.0, 131.6, 123.1 (as presented).
- Debt service-to-revenue and grants ratio 3/: baseline entries include 14.0, 9.2, 18.6, 13.1, 20.7, 10.5, 12.4, 14.4, 18.9, 13.9, 8.8 (table entries preserved).
- Gross financing need 4/ (selected): -0.3, 1.7, 3.7, 0.4, 3.9, 1.5, 2.4, 3.4, 4.4, 3.4, 2.6.
- Key macro/fiscal assumptions (selected):
  - Real GDP growth (percent): as in external DSA: 4.7, 4.5, 3.8, 4.5, 5.0, 5.0, 5.0, 5.0, 5.0, 3.4, 3.4, -0.2, 4.2 (table entries).
  - Average nominal interest rate on external debt (percent): 2016 0.9, 2017 0.5, 2018 0.5, 2019 0.4, 2020 0.5, 2021 0.5, 2022 0.5, 2023 0.6, 2024 0.6, 2029 0.8, 2039 1.2, 2039 1.1, 2039 0.6.
  - Inflation rate (GDP deflator, percent): 2016 3.0, 2017 6.4, 2018 1.3, 2019 2.8, 2020 2.5, 2021 2.5, 2022 2.6, 2023 2.5, 2024 2.5, 2029 2.5, 2039 2.5, 2039 4.6, 2039 3.0.

### Sensitivity analysis and stress tests (public and external debt indicators, 2019–29)
- Baseline PV of PPG external debt-to-GDP ratio (2019–29): 2019 19.8, 2020 19.6, 2021 19.1, 2022 18.3, 2023 17.3, 2024 15.9, 2025 14.8, 2026 14.1, 2027 13.5, 2028 13.3, 2029 13.4.
- Alternative and bound scenarios (selected):
  - A1 (historical averages 2019–2039) PV PPG external debt-to-GDP: 2019 19.8, 2020 21.6, 2021 23.5, 2022 25.1, 2023 26.2, 2024 27.1, 2025 29.4, 2026 31.7, 2027 34.0, 2028 36.7, 2029 39.7.
  - B1 (Real GDP growth shock) PV PPG external debt-to-GDP: 2019 19.8, 2020 24.1, 2021 28.9, 2022 27.7, 2023 26.3, 2024 24.1, 2025 22.3, 2026 21.3, 2027 20.5, 2028 20.2, 2029 20.2.
- PV PPG external debt-to-exports ratio baseline (selected): 2019 131.0, 2020 128.8, 2021 126.8, 2022 121.6, 2023 114.0, 2024 104.8, 2025 94.9, 2026 90.6, 2027 87.1, 2028 85.7, 2029 86.0.
- Debt service-to-exports ratio baseline (2019–29): 2019 4.8, 2020 6.3, 2021 6.7, 2022 8.0, 2023 8.4, 2024 10.3, 2025 11.9, 2026 11.9, 2027 11.4, 2028 10.4, 2029 8.3.
- Public debt (PV) baseline and stress outcomes (selected):
  - PV of Debt-to-GDP ratio baseline: 2019 30.2, 2020 26.8, 2021 25.3, 2022 23.8, 2023 22.6, 2024 21.1, 2025 18.3, 2026 16.9, 2027 15.9, 2028 15.4, 2029 15.1.
  - Under A1 (historical averages) PV of Debt-to-GDP: 2019 30.2, 2020 28.1, 2021 27.7, 2022 27.4, 2023 26.9, 2024 25.9, 2025 25.9, 2026 24.4, 2027 23.1, 2028 22.2, 2029 21.4.
- Public debt benchmark: 35.0 (benchmark shown in table).
- Most extreme shocks identified in figures/tables:
  - For external indicators, "Most extreme shock" labels include Combination and Exports for different indicators (e.g., PV of debt-to-GDP: Combination; PV of debt-to-exports: Exports; Debt service-to-revenue: Combination).
  - Stress test assumption: The shock in one case assumes real GDP growth of one standard deviation below its historical average in the second and third year of the projection period (noted in text).

### Drivers of debt dynamics and realism tools (illustrative)
- Contributions to debt dynamics (drivers shown in figures): nominal interest rate, real GDP growth, price and exchange rate changes, residuals (including capital grants), current account + FDI, change in PPG debt.
- The DSA notes a high value of the residual is related to capital grants which are not captured in the presentation.
- Realism tools highlight projected contributions to real GDP growth from public and private investment and the potential impact of fiscal adjustments (figures and notes provided).

*Sources: Country authorities; and staff estimates and projections.*

### 1990. The size of 3-year adjustment from program inception is found on the horizontal axis; the

### CENTRAL AFRICAN REPUBLIC — REQUEST FOR A THREE-YEAR ARRANGEMENT UNDER THE EXTENDED CREDIT FACILITY—SUPPLEMENTARY INFORMATION

### Lending-into-Arrears Assessment and Recommendation
- Staff has not yet received consent from the Libyan authorities regarding the provision of Fund financing to the C.A.R., but staff assesses that the Fund can nevertheless provide financing to the C.A.R.
- Under the Fund’s lending-into-official-arrears (LIOA) policy, in the absence of creditor consent, the Fund can only lend into official bilateral arrears under carefully circumscribed circumstances; staff assesses these circumstances are met for C.A.R.’s arrears to Libya.
- Specific elements of staff’s assessment:
  - Prompt financial support from the Fund is considered essential and the member is pursuing appropriate policies. Rationale:
    - C.A.R. continues to face significant macroeconomic challenges and deep-seated structural rigidities hindering growth.
    - Financial support is essential to cover the protracted balance of payment need, catalyze external support, and support successful implementation of C.A.R.’s program.
    - The proposed ECF-supported program covering 2020–22 aims to pursue macroeconomic stability and external viability through fiscal and structural reforms: mobilizing domestic revenue, enhancing spending efficiency, restoring and building basic infrastructure and utilities, and improving governance and the business environment.
  - The debtor is making good faith efforts to reach agreement with the creditor on a contribution consistent with the parameters of the Fund-supported program:
    - Process evidence: C.A.R. authorities contacted Libyan authorities bilaterally through letters (most recently on December 4, 2019) and meetings (most recently last March in Tunis); relevant information shared on a timely basis; authorities committed to continue good faith efforts.
    - Terms offered: Authorities seek HIPC terms of 94 percent debt cancellation from Libya, consistent with the financing and debt objectives of the Fund-supported program and not disproportionate relative to other official bilateral creditors at the time of the HIPC operation.
  - Providing financing despite the arrears is not expected to have an undue negative effect on the Fund’s ability to mobilize official financing packages in future cases:
    - The contribution sought from Libya did not account for the majority of financing contributions required from official bilateral creditors in the HIPC context.
    - Libya has undertaken only 5 HIPC restructurings out of its total 18 Completion-Point debtors, indicating limited track record of contributions.
    - Strong support from the international community for the C.A.R. program and the authorities’ efforts to resolve arrears mitigate potential negative effects.

- Staff recommends approval of C.A.R.’s request for a three-year arrangement supported by the Extended Credit Facility notwithstanding official bilateral arrears to Libya.

### Recent Economic Developments (as described by authorities)
- Growth and output:
  - Real GDP growth expected to increase from 3.8 percent in 2018 to 4.5 percent in 2019.
  - Growth supported by forestry, mining and construction; positive output growth in gold, diamonds and wood.
- Inflation:
  - CPI inflation projected at 3.2 percent in 2019 (against 3.5 percent anticipated at the conclusion of the 6th review under the previous ECF program).
- Fiscal:
  - Domestic primary fiscal balance expected to stand at 3.0 percent of GDP in 2019 against 2.0 percent last year.
  - Public debt expected to decrease to 47.1 percent of GDP at end-2019 compared to 50.0 percent in 2018.
  - Revenue performance slightly weaker than expected due to capacity constraints and unplanned tax exemptions.
  - Primary domestic spending lower than anticipated owing to reduced transfers to public agencies and delays in public investment.
  - Structural fiscal reforms advancing: transfer of parafiscal taxes to the Treasury single account (TSA) and elimination of selected agencies.
- External:
  - Current account deficit (including grants) narrowing from 8.0 percent of GDP in 2018 to 5.6 percent in 2019 due to a significant increase in official transfers.
- Financial sector:
  - Banking system well capitalized, liquid, and profitable in 2019, with slightly rising NPLs adequately provisioned.

### Outlook and Risks
- Growth projection:
  - Growth projected at 5.0 percent over the medium-term, with recovery supported by revitalization of energy, mining and transport sectors.
- Risks:
  - Elevated domestic and external risks from security issues, next-year elections, a slowdown of global growth, and potential delays in partners’ financial support.
- Policy intent:
  - Authorities intend to accelerate implementation of key policies and reforms to mitigate risks.

### Policy and Reform Agenda for the Medium-Term
- Overall objectives:
  - Enhance macroeconomic stability, strengthen capacity building, reduce poverty, and support gradual exit from crisis under the regional strategy.
  - Program focus areas: (i) fiscal policy oriented towards increasing domestic revenue mobilization; (ii) reinforcement of public financial management and public institutions; (iii) targeted structural reforms to reduce vulnerabilities in governance and business climate.
- Fiscal policy targets and measures:
  - Medium-term target: reduce public debt to 40.0 percent of GDP and achieve a domestic primary fiscal deficit of about 2.5 percent of GDP.
  - 2020 budget: domestic primary fiscal deficit of 2.7 percent of GDP, down from the 3.0 percent deficit expected in 2019.
  - Implement CEMAC directives and remove six public agencies under the parafiscal reform.
  - Revenue mobilization measures: streamline exemptions, digitalize tax administration, strengthen customs procedures (improve imports value declaration), upgrade IT systems, interconnect main offices; enhance profit taxes, income taxes, and VAT systems; strict TSA cash-flow management.
  - Expenditure measures: streamline public spending by limiting transfers to public entities and non-priority expenditure.
  - Social spending: 2020 budget envisages a substantial increase in resources to health, education and humanitarian sectors; program will safeguard social spending and work with development partners (World Bank, African Development Bank, French Development Agency (AFD), UNDP, European Union).
- Public financial and debt management:
  - Introduce significant changes to budget and accounting management software and the public procurement system; enforce strict control of exceptional spending procedures.
  - Reinforce debt management: improve reporting, auditing and monitoring of debt dynamics; ameliorate quality of debt data.
  - Continue clearance of domestic arrears via action plan approved in 2017.
  - Negotiate in good faith with external creditors, adopt a sound borrowing strategy, and prioritize grants and concessional loans.
- Monetary and financial sector policies:
  - Implement enhanced foreign exchange regulation in collaboration with BEAC to help rebuild international reserves; central bank to organize outreach with commercial banks and private sector (including mining companies).
  - Support BEAC enforcement, including repatriation and surrender of foreign exchange deposits from export proceeds.
  - Expand access to financial services via increased mobile banking to foster financial inclusion.
  - Improve sector business framework: create a credit bureau; establish an arbitrage and mediation center for financial disputes (consistent with “Financial Sector and Justice in the CAR” conference outcomes).
- Structural reforms:
  - Strengthen governance, capacity and business environment: enhance transparency, accountability and rule of law in line with Fund diagnostic mission on governance.
  - Consolidate frameworks for enforcing officials’ asset declaration requirements and align anti-corruption laws with the United Nations Convention Against Corruption (UNCAC).
  - Capacity building: reinvigorate CS-REF unit; focus on public financial and debt management, tax and customs administrations, statistics and fiscal governance.
  - Business climate reforms: reinforce legal frameworks to limit maximum liquidated damages due from employers; revise labor code to introduce more flexibility; maintain dialogue with private sector via CMCAA; simplify tax and customs procedures; develop electronic business guide; revise mining code; reform judicial system (strategy adopted in September 2019).

### Conclusion and Authorities’ Request
- Authorities reiterate strong commitment to pursue sound policies and far-reaching reforms to consolidate gains from the 2016-19 ECF arrangement and support the CEMAC regional strategy.
- Authorities request a new three-year arrangement under the ECF to help catalyze assistance from other external partners and seek Executive Board approval of their request.

*Prepared By The African Department; December 13, 2019. Statement by Mr. Raghani, Mr. N’Sonde, and Mr. Bangrim dated December 20, 2019.*

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_Source: https://www.imf.org/-/media/files/publications/cr/2020/english/1cafea2020001.pdf_