## 1cafea2023003

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### Executive summary and context
- Board approval of the new ECF-supported program on April 27, 2023, helped avert a crisis by boosting investor confidence and improving access to domestic financing.
- Program objectives:
  - Implement fiscal and governance reforms.
  - Unlock IFI financing.
  - Safeguard public service delivery in social sectors.
- Environment and constraints:
  - Persistent fragility from protracted security risks and volatile politics (constitutional reform removing presidential term limits).
  - Macroeconomic standing weak as CAR climbs out of loss of budget support and severe local fuel market disruptions.

### Outlook and risks
- Baseline assumptions:
  - Resolution to the fuel shortages.
  - Significant strengthening of policies consistent with program commitments.
  - Partial resumption in donor support.
- Key baseline projections:
  - Real GDP: rebound to 1.5 percent in 2024; could accelerate to 3.7 percent by 2026 under stronger governance and investment.
  - Inflation: projected to decline towards CEMAC’s 3 percent convergence criterion.
  - Domestic primary deficit: could narrow from 3.8 percent of GDP this year to below 2 percent by 2026 if medium-term budget objectives are met.
  - Current account deficit (including grants): projected to shrink from 8.6 percent of GDP to 5.4 percent of GDP by 2026.
- Major downside risks:
  - Security deterioration disrupting activity and donor financing.
  - Fuel supply disruptions from entry of inexperienced players.
  - Rollover risks from tightening regional financial conditions or unfavorable investor sentiment.
  - Inability to mobilize concessional donor support.
- Fiscal and debt risk assessment:
  - CAR remains at high risk of external and overall debt distress.
  - Public debt projected sustainable but with substantial liquidity risks.
  - Balance of payments projections include a financing gap of about 2.9-5 percent of GDP per year.
  - Projected financing gap significantly lower than historic average of budget support of 6 percent of GDP due to sizable revenue-led adjustment.

### Program performance (first review)
- Overall: mixed performance in first four months; most end-year targets remain within reach.
- Quantitative performance criteria (end-June 2023):
  - Two of three QPCs missed by small margins:
    - Domestic primary balance exceeded its QPC by CFAF 2.5 billion (0.15 percent of GDP) due to expenditure overruns in security and education.
    - Adjusted net domestic financing QPC missed by around CFAF 8 billion; QPC adjusted upward to reflect delayed World Bank disbursements totaling CFAF 18 billion now anticipated before end-October 2023.
  - QPC on domestic revenues met.
- Indicative targets (end-June 2023):
  - Spending via emergency procedures: CFAF 6.6 billion as of end-June vs ceiling of CFAF 2.5 billion; metric already above ceiling of CFAF 5 billion for end-December 2023.
  - Social spending: CFAF 4.5 billion in June vs targeted floor of CFAF 8 billion; World Bank extended PACAD financing until April 2024.
- Structural benchmarks:
  - All but one SB for the first review were met.
  - Reduction in fuel prices at the pump targeted for October 2023 was met in July.
  - SB on establishment of public debt coordination and management framework met in early October.
  - Operationalization of key functions of new IT system for domestic revenues in progress; procurement challenges expected to be overcome before end-October.
  - Adoption of the Anti-Corruption Law (second review) met in May.
- Continuous performance criteria: all three met.

### Recent economic developments (highlights)
- Growth and inflation:
  - Real GDP growth projection for 2023 cut from 2.2 percent to 1.0 percent due to limited fuel imports.
  - Inflation projection for 2023 raised from 6.3 percent to 6.5 percent; expected to subside in second half of 2023 if fuel supply holds.
  - Inflation reached 7.1 percent in March; would decline gradually towards CEMAC’s 3 percent criterion if fuel supply improves.
- Food insecurity:
  - Approximately 2.4 million people (some 39 percent of CAR’s population) in IPC Phase 3 and IPC Phase 4 between April and August 2023 (also cited as 2.9 million in other statements).
- Fiscal through June:
  - Domestic fiscal revenue collected by end June: more than CFAF 67 billion, versus ECF programme target of CFAF 62 billion.
  - Revenues supported by recoveries of past dues around CFAF 4 billion and BEAC dividend distribution about CFAF 1.75 billion.
  - Expenses exceeded projections by CFAF 7.8 billion, partly due to overdue teachers’ benefits and recruitment of education and security personnel.
  - Domestic primary deficit at end June 2023: CFAF 26.5 billion, against a target of CFAF 24 billion.
- Regional financing:
  - Subscription rates to regional debt issuances rose from below 20 percent in 2023Q1 to about 70 percent in May and June.
  - On August 14, CAR raised CFAF 25 billion (1.5 percent of GDP) in a fully subscribed syndicated issuance; CFAF 15.3 billion used to repay a maturing treasury bond.
  - In March, authorities opened a credit line with a local bank to address cash management challenges.
- Financial soundness indicators (end-December 2022):
  - Banks’ capital adequacy ratio: 23.5 percent.
  - Short-term liquidity ratio: 151.8 percent.
  - NPL ratio: 12.4 percent (down from 13.9 percent in December 2021).
- External position: substantially weaker than fundamentals imply due to lack of competitiveness, weak buffers, and low donor support.

### Fiscal outlook and 2023–2024 policy stance
- 2023:
  - Domestic primary deficit target end-December 2023: CFAF 64 billion.
  - Domestic primary balance QPC at end-2023 remains within reach conditional on stepped-up revenue efforts and containment in expenses.
  - Domestic revenue collection target for 2023: CFAF 5.7 billion (Table 2).
  - Measures to achieve targets in H2: better fuel tax collection after pump price reduction, collection of tax debts, gradual resolution of “TIC-TECH” implementation.
- 2024 Budget Law:
  - Fiscal stance: a 1 percent reduction in domestic primary deficit to 2.8 percent of GDP is envisaged for 2024, of which 0.7 percent of GDP from revenue measures.
  - Primary spending: remain relatively stable as share of GDP but shift composition toward social spending and domestically-financed capital expenditure.
  - Ceiling on spending through extraordinary procedures for 2024: CFAF 8 billion.
  - Floor on social spending for 2024: CFAF 22 billion.
  - Revenue target: generate an additional CFAF 20 billion compared with 2023, reaching CFAF 160 billion (0.7 percent of GDP); achievement contingent on stable petroleum supplies.
- Medium-term objectives:
  - Revenue mobilization to increase by about 0.6 percent of GDP per year via tax and customs reform.
  - By end-2026: domestic primary balance below 2 percent; outstanding debt stock reduced to 46 percent of GDP.

### Revenue measures agreed for 2024 (selected)
- Broadening the tax base:
  - Streamline tax exemptions, expand list of goods non-eligible for customs duty exemptions, enforce sunset clauses under the Charter of Investment.
- VAT efficiency measures:
  - Reduce exemptions and apply law-based rates; apply CEMAC directives on VAT on transport services.
  - Expected VAT yield: 1.9 percent of GDP in 2024 compared to 1.5 percent of GDP in 2022.
  - Apply import-VAT deferred payment process at customs; introduce e-VAT electronic invoicing for VAT-registered businesses.
- Customs and other revenue measures:
  - Apply penalty on not recognized importers: guarantee enforcement of Art. 344 of the tax code (10 percent penalty on import value and minimum penalty of CFAF 1 million).
  - Enforce minimum customs declaration values for cigarette imports; ensure strict application of Art. 294 of the tax code.
  - Transfer fees and charges for service provision in line ministries to the TSA and implement electronic payment at all payment points.
- Specific revenue items as presented:
  - Fuel taxes 40.2
  - Streamlining tax exemptions and strengthen VAT collection 4.50.3
  - Strengthen revenue measures adopted in 2023 40.2
  - Details: Apply import-VAT deferred payment process; step-up “TIC-TECH” tax implementation; introduce e-VAT; increase minimum price for new category of cigarettes; ensure BEAC account dedicated to VAT refunds.

### Expenditure priorities and arrears management
- Prioritize infrastructure: roads, electricity supply, and telecommunication penetration; create fiscal space by containing non-priority outlays.
- Step-up social spending while curtailing non-priority spending (non-essential transfers and goods and services).
- Gradually settle outstanding payments (“reste à payer”) concentrated in unpaid capital expenditure, transfers, and goods and services.
- Arrears management:
  - Inventory of domestic arrears initiated; plan to facilitate clearance including potential securitization of audited arrears.
  - Undertaking: ensure new debt owed to SOEs recorded in debt books from December 2023; update arrears payment plans no later than December 2023.

### Public debt management and rollover risk
- Lumpy and concentrated redemptions starting in 2024 from greater domestic financing reliance.
- 2023 domestic syndication: rolled over maturing 2-year treasury bond in August worth CFAF 15.3 billion (0.9 percent of GDP); issued a 4-year treasury bond for first time since 2020.
- Lumpy maturities: around CFAF 20 billion in short and medium-term debt.
- Recommended actions:
  - Scale up issuances of different tenors and build cash buffers in ringfenced account at BEAC.
  - Pre-finance 2025 redemptions using 3-year instruments or longer.
  - Consider voluntary liability management operations: buybacks and market-based exchanges.
  - Improve debt statistics and welcome IMF TA to bridge gaps.

### Debt sustainability, financing and capacity to repay
- Debt sustainability assessment:
  - Risk of external debt distress: High.
  - Overall risk of debt distress: High.
  - Public debt projected sustainable but liquidity risks from shortfalls in donor support and market access.
  - Present value of debt-to-GDP elevated; PV threshold breach in 2024 in baseline.
  - Liquidity indicators breach (debt service-to-exports and debt service-to-revenue) for 5 years starting in 2023 due to Fund obligations.
- Financing assurances and donor commitments:
  - Program fully financed with firm commitments from World Bank and AfDB for next 12 months and good prospects thereafter.
  - AfDB increased budget support from UA10 million in 2023 to UA15 million over 2023 and 2024 (about US$20 million in total, assumed equally split between 2023 and 2024).
  - World Bank anticipated to disburse CFAF 9 billion before end-October 2023 under its operation financing non-discretionary fiscal expenditures.
  - AfDB anticipated to approve first disbursement of CFAF 6 billion before end-December 2023.
  - Financing does not assume resumption of bilateral budget support in baseline.
- Capacity to repay:
  - Capacity to repay remains weak; would become adequate only amid program success and prompt implementation of remediation plans.
  - Risks: slower reforms, natural disasters, security deterioration, difficulties mobilizing fiscal revenue.

### Program issues, conditionality, and monitoring
- Authorities requested rephasing of program disbursements to align with changed BoP needs and increased interest payments on external obligations.
- Risk mitigation for rephasing:
  - Authorities commit to deposit share of program disbursements in CAR’s SDR account at the IMF to prefinance 100 percent of obligations to the Fund for at least 6 months.
  - Continued commitment to program objectives.
- Waiver and QPC adjustments:
  - Waiver requests for end-June 2023 QPCs on primary deficit and net domestic financing.
  - Request to increase QPC on net domestic financing for December 2023 from CFAF 37 billion to CFAF 57 billion.
- Structural benchmarks (selected):
  - Prior action: request BEAC written opinion on Tokenization law consistency with CEMAC framework.
  - Second review SBs: operationalize cross-verification module of tax IT system; adopt streamlined fuel pricing structure; bolster ANIF.
  - Third review SBs: define minimal criteria for official taxpayer recognition; prepare fiscal risk statement on Sango project; audit hydrocarbon import costs and margins; operationalize asset declaration law.
- Reporting commitments:
  - Extensive data reporting schedule to IMF with specified deadlines (monthly, quarterly) covering TOFE, cash flow, debt stock, arrears, and sector expenditure breakdowns.

### Fuel market developments (Annex II & reform actions)
- Suppliers and transport:
  - Total imported just 6,000 m3 during current river campaign, compared with 54,000 m3 in 2021.
  - 66 percent of fuel imports (16,792 m3) in first two months of river campaign executed by TRISTAR.
  - Total of 15,263 m3 of fuel imported from Cameroon in July and August.
  - River transport management transferred from SOCATRAF to Mercure Logistics in February 2023; Mercure transported 11,000 m3 for TRISTAR and Total as of August 2023.
  - CAR fleet capacity 13,000 m3 in Kinshasa ready for transport.
- Storage and infrastructure:
  - New 5,500 m3 reservoir under construction at SOCASP; storage capacity still underwhelming.
  - Plans to build storage around Mongoumba to extend river campaign from 6 to 10 months and expand storage countrywide starting with center-east region.
  - World Bank approved five-year US$830 million project to bolster transport and trade efficiency along waterways and roads connecting CAR and Republic of the Congo.
  - AfDB financing to improve river navigation and upgrade Port of Mongoumba; 108 km Bangui–Mbaiki (R13) rehabilitation and 122 km Mbaiki–Mongoumba construction.
- Price structure reforms:
  - Since July, taxes and fees aligned with legal and regulatory documents.
  - Several quasi-taxes consolidated into single “infrastructure fee”; capacity expansion fee retained.
  - Increasing capacity extension fee to CFAF 12 would fund construction of a 5,500 m3 reservoir within a year.
  - Authorities plan to implement new price structure for all imports.
- Fuel sector milestones:
  - On July 6, 2023, authorities lowered pump prices and adopted a new fuel price structure (structural benchmark).
  - Commitments include auditing supply costs, unifying price formula by supply channel, launching tender for public import, and introducing an automatic price review mechanism.

### Governance, AML/CFT, anti-corruption, and tokenization
- Anti-corruption:
  - New law on prevention and punishment of corruption adopted in May 2023 (ahead of schedule); adoption of Anti-Corruption Law counted as SB met.
  - Commitment to implement implementing regulation and operationalize asset declarations; asset declaration operationalization timeline by end-2025 with threshold of at least 50 million CFAF for simplified declarations.
- Court of Audit:
  - Draft organic law to improve institutional and financial independence prepared with EU support; intended Cabinet submission by February 2024.
- AML/CFT and ANIF:
  - Mutual evaluation by GABAC ongoing; results expected by October 2023.
  - SB to adopt detailed institutional plan strengthening ANIF (confidentiality, human, financial, technical resources).
- Tokenization / Sango platform:
  - Law No. 23-010 of July 24, 2023 on tokenization enacted; authorities requested BEAC written opinion on law’s consistency with CEMAC (prior action).
  - Program requires fiscal risk statement on Sango, audit of fuel procurement costs, and mitigation of ML/TF and fiscal risks from tokenization.
  - Authorities to assess and mitigate risks to avoid deterring traditional investment; staff encourage ringfencing crypto activities and strengthening AML/CFT controls.

### Risk Assessment Matrix (selected risks and mitigation)
- Intensification of regional conflict(s):
  - Relative Likelihood: High; Time Horizon: Short Term; Expected Impact: High.
  - Mitigation: automatic fuel price adjustment, targeted social safety net expansion, intensified cooperation with humanitarian agencies.
- Social discontent:
  - Relative Likelihood: High; Time Horizon: High; Expected Impact: High.
  - Mitigation: cooperation with international organizations; monitor social sentiment.
- Abrupt global slowdown:
  - Relative Likelihood: Medium; Time Horizon: Medium; Expected Impact: Medium.
  - Mitigation: fuel sector reforms, improved revenue mobilization, regional market engagement.
- Commodity price volatility:
  - Relative Likelihood: Medium; Time Horizon: Short Term; Expected Impact: High.
  - Mitigation: automatic fuel price adjustment; targeted social measures.
- Monetary policy miscalibration; systemic financial instability; sovereign debt distress:
  - Relative Likelihood: Medium; Time Horizon: Short to Medium; Expected Impact: Medium.
  - Mitigation: fiscal prudency, engagement with bondholders, regular communication with COBAC.
- Structural risks:
  - Deepening geoeconomic fragmentation: High likelihood, Short to Medium Term, High impact — Mitigation: active engagement with development partners for development financing.
  - Cyberthreats and crypto-related risks: Medium likelihood — Mitigation: collaborate with CEMAC and strengthen AML/CFT.
  - Extreme climate events: High likelihood and impact — Mitigation: engagement with development partners, infrastructure resilience, fiscal prudency.
- Regional/domestic risks:
  - Increased insecurity and political instability: High likelihood, High impact — Mitigation: stakeholder dialogue; budget contingency plan.
  - Setback in reform momentum: Medium/High likelihood — Mitigation: accelerate structural reforms and prudent budget management.
  - Promulgation of tokenization law: Medium likelihood, Short to Medium Term, High impact — Mitigation: ringfence crypto activities; strengthen AML/CFT controls.

### Selected key statistics and fiscal/sectoral aggregates (figures preserved as presented)
- External current account balance (CFAF, percent of GDP, 2019–2027 series): Current account (incl. grants): -8.2 -11.1 -12.8 -8.7 -8.6 -8.3 -6.9 -5.4 -4.5.
- Nominal GDP (CFAF billions, memorandum): 1,373 1,432 1,530 1,671 1,651 1,752 1,844 1,961 2,082.
- GDP per capita (US dollars, memorandum): 494 525 490 534 538 566 585 611 632.
- CPI (annual average): 0.9 4.3 5.6 6.3 6.5 3.2 2.8 2.5 2.5.
- Broad money (annual percent change): 11.5 14.6 2.5 3.6 3.6 2.9 4.5 3.1 6.4.
- Public sector debt (percent of GDP): 44.4 48.6 54.2 50.5 52.9 53.3 52.5 48.7 45.9.
  - Domestic debt (percent of GDP): 9.4 13.2 18.2 18.4 20.3 22.0 22.2 19.6 18.0.
  - External debt (percent of GDP): 35.0 35.3 36.0 32.0 32.6 31.3 30.3 29.1 27.9.
- Central government finance (percent of GDP):
  - Total revenue (including grants): 21.8 13.7 12.3 13.8 14.7 14.2 16.3 17.9 18.0.
  - Domestic revenue: 9.2 8.8 7.8 7.9 8.3 9.0 9.8 10.6 10.9.
  - Total expenditure: 25.1 19.7 17.6 16.8 18.0 17.3 18.0 17.7 17.9.
  - Capital expenditure: 11.3 7.4 5.9 5.8 6.1 5.8 6.4 6.3 6.8.
  - Overall balance including grants: -3.4 -6.0 -5.3 -3.0 -3.3 -3.1 -1.7 0.2 0.1.
- Central government cash flows (CFAF billions):
  - Revenue (total): 298.6 195.7 188.2 230.8 242.4 248.3 300.1 351.6 374.3.
  - Grants (total): 172.9 69.8 69.2 99.1 105.0 90.3 120.0 143.3 146.8.
  - Expenditure (total): 344.7 281.9 270.0 281.1 297.3 302.9 331.2 347.3 371.8.
  - Capital expenditure (total): 155.7 106.3 90.7 96.5 100.0 100.8 118.1 123.4 141.2.
- Balance of payments (CFAF billions):
  - Balance on goods (f.o.b.): -226.3 -221.9 -257.1 -245.1 -236.1 -235.5 -243.6 -261.4 -255.4.
  - Exports, f.o.b.: 82.7 91.4 104.9 120.4 120.2 131.3 149.3 166.6 198.1.
    - Diamonds: 3.8 6.9 9.6 13.8 13.8 19.7 26.0 31.4 35.9.
    - Wood products: 50.6 48.3 47.8 54.6 54.6 56.6 63.9 69.7 91.6.
  - Imports, f.o.b.: -309.0 -313.3 -362.0 -365.6 -356.3 -366.8 -392.9 -427.9 -453.6.
    - Petroleum products: -66.3 -88.0 -107.3 -89.8 -84.5 -85.8 -86.7 -88.4 -92.0.
  - Transfers (net): 155.1 103.6 113.0 151.3 148.3 156.1 182.6 213.9 227.0.
    - Official transfers (of which program): 93.1 26.9 30.7 60.5 57.3 52.4 73.4 99.1 106.2.
    - Program: 70.1 0.0 0.0 26.5 24.0 17.1 36.6 60.0 65.0.
  - Capital account (project grants): 102.8 69.8 69.2 72.5 81.0 73.2 83.4 82.5 81.8.
- Financing needs and gaps (selected sequences and aggregates preserved as presented):
  - Total financing requirements aggregate sequence: 283.3147.5153.9147.7187.5208.1223.0.
  - Financing gap sequence: 108.8113.11.548.947.445.071.798.093.6.
  - Residual financing gap: 38.6113.11.522.423.427.935.123.0-1.4.
  - ECF arrangement proposed disbursements total: SDR 141.68 million, 127.18 percent of quota (CAR quota: SDR 111.4 million).
- Financial soundness indicators (2015–2022, selected ratios preserved):
  - Total bank regulatory capital to risk-weighted assets: 38.7 32.0 34.3 28.5 30.3 23.9 21.0 23.5.
  - Non-performing loans to total loans: 31.3 26.2 25.1 17.6 16.1 17.5 13.9 12.4.
  - Liquid assets to short-term liabilities: 276.1 219.6 227.4 198.6 165.8 202.0 162.2 151.8.

### Program decisions and staff appraisal
- Staff supports:
  - waivers for non-observance of QPCs;
  - rephasing of disbursements;
  - modification of end-December QPCs;
  - completion of financing assurances review;
  - completion of the first review under the ECF-supported program.
- Completion of first review conditional on implementation of critical policy assurances at union level per July 2023 union-wide background paper.
- Staff appraisal highlights:
  - CAR economy bouncing back from 2022 fuel crisis; fuel imports and pump price reduction expected to bolster formal imports.
  - Outlook uncertain with exceptionally high downside risks; drivers of FCS status endure.
  - Passage of anti-corruption law ahead of second review demonstrates commitment.
  - Authorities urged to expedite disbursements from World Bank and AfDB (World Bank CFAF 9 billion before end-October 2023; AfDB CFAF 6 billion before end-December 2023).

### Authorities’ statement and commitments (October 25–30, 2023)
- Authorities broadly agreed with staff assessment and reaffirm commitment to ECF objectives.
- Policy commitments and actions:
  - Mobilize 0.7 percent of GDP additional revenues in 2023 and 1 percent of GDP consolidation in 2024.
  - Leverage digitalization to improve tax yield; step-up tax enforcement; broaden tax base.
  - Address fuel market dysfunctions and build storage capacity.
  - Prioritize grants and highly concessional financing; limit non-concessional borrowing.
  - Active liability management to lengthen maturities; set up escrow account at BEAC.
  - Consent to use 90 percent of IMF disbursements under ECF toward paying forward Fund obligations for at least six months.
  - Continue good faith efforts to resolve arrears (including pre-HIPC legacies).
  - Strengthen governance measures: operationalize asset declarations; enhance Court of Audit independence; strengthen ANIF.

*Source: Central African Republic — IMF staff report content unit 1cafea2023003.*

### EXECUTIVE SUMMARY

### EXECUTIVE SUMMARY

### Context
- Board approval of the new ECF-supported program on April 27, 2023, helped avert a crisis in CAR by boosting investor confidence and markedly improving the government’s access to domestic financing.
- The program established a framework to implement fiscal and governance reforms, unlock IFI financing, and safeguard public service delivery in social sectors.
- The overall environment remains fragile due to protracted security risks and a volatile political situation, recently heightened by a constitutional reform that removed presidential term limits.
- Macroeconomic standing remains weak as CAR continues to climb out of the loss of budget support and severe disruptions in the local fuel market.

### Outlook and risks
- Baseline scenario assumptions:
  - Resolution to the fuel shortages.
  - Significant strengthening of policies consistent with program commitments.
  - Partial resumption in donor support.
- Key baseline projections:
  - Real GDP: rebound to 1.5 percent in 2024; could accelerate to 3.7 percent by 2026 under stronger governance and investment.
  - Inflation: projected to decline towards CEMAC’s 3 percent convergence criterion.
  - Domestic primary deficit: could narrow from 3.8 percent of GDP this year to below 2 percent by 2026 if medium-term budget objectives are met.
  - Current account deficit (including grants): projected to shrink from 8.6 percent of GDP to 5.4 percent of GDP by 2026.
- Major downside risks:
  - Security: deterioration could disrupt activity and donor financing, causing hefty revenue losses.
  - Fuel supply: entry of inexperienced players could delay adequate provision of fuel; persistent shortages would weigh on growth, fiscal revenues, and inflation.
  - Rollover risks: tightening of regional financial conditions or unfavorable investor sentiment could hinder refinancing of lumpy maturities through 2026.
  - External financing: inability to mobilize concessional donor support would challenge balance of payments financing.
- Fiscal and debt risk assessment:
  - CAR remains at high risk of external and overall debt distress.
  - Public debt is projected sustainable but with substantial liquidity risks from possible shortfalls in donor support and regional market access.
  - Balance of payments projections include a financing gap of about 2.9-5 percent of GDP per year.
  - Projected financing gap is significantly lower than the historic average of budget support of 6 percent of GDP due to sizable revenue-led adjustment.

### Program performance (first review)
- Overall: mixed performance against a challenging macroeconomic backdrop in the first four months of the year; most end-year targets remain within reach.
- Quantitative performance criteria (end-June 2023):
  - Two of three QPCs missed by small margins:
    - Domestic primary balance exceeded its QPC by CFAF 2.5 billion (0.15 percent of GDP) due to expenditure overruns in security and education.
    - Adjusted net domestic financing QPC missed by around CFAF 8 billion, as the treasury frontloaded domestic financing given improved investor confidence. This QPC was adjusted upward to reflect delayed World Bank disbursements totaling CFAF 18 billion now anticipated before end-October 2023.
  - QPC on domestic revenues was met.
- Indicative targets (end-June 2023):
  - Spending via emergency procedures: CFAF 6.6 billion as of end-June vs ceiling of CFAF 2.5 billion (reflecting weak PFM and unforeseen security expenses); metric already above ceiling of CFAF 5 billion for end-December 2023.
  - Social spending: CFAF 4.5 billion in June vs targeted floor of CFAF 8 billion (under-executed initiatives); World Bank extended PACAD financing until April 2024 to guarantee funding of the PACAD transfer program.
- Structural benchmarks:
  - All but one SB for the first review were met.
  - Reduction in fuel prices at the pump targeted for October 2023 was met in July.
  - SB on establishment of public debt coordination and management framework met in early October.
  - Operationalization of key functions of new IT system for domestic revenues in progress; procurement challenges expected to be overcome before end-October.
  - Adoption of the Anti-Corruption Law (second review) met in May, ahead of target date of April 2024.
- Continuous performance criteria: all three met.

### Recent economic developments (highlights)
- Real GDP growth projection for 2023 cut from 2.2 percent to 1.0 percent due to limited fuel imports hindering manufacturing and transportation.
- Acute food insecurity: approximately 2.4 million people (some 39 percent of CAR’s population) in IPC Phase 3 and IPC Phase 4 between April and August 2023.
- Inflation projection for 2023 raised from 6.3 percent to 6.5 percent; expected to subside in the second half of 2023 provided fuel supply does not deteriorate.
- Fiscal through June:
  - Revenues supported by internal tax collection and non-recurrent revenues (recoveries of past dues around CFAF 4 billion and BEAC dividend distribution about CFAF 1.75 billion).
  - Expenses exceeded projections by CFAF 7.8 billion, partly due to payments of overdue teachers’ benefits and recruitment of new education and security personnel.
- Regional financing access improved:
  - Subscriptions to regional debt issuances rose from an average below 20 percent in 2023Q1 to about 70 percent in May and June.
  - On August 14, CAR raised CFAF 25 billion (1.5 percent of GDP) in a fully subscribed syndicated issuance; CFAF 15.3 billion used to repay a maturing treasury bond.
  - In March, authorities opened a credit line with a local bank to address cash management challenges.
- Financial soundness indicators at end-December 2022:
  - Banks’ capital adequacy ratio: 23.5 percent.
  - Short-term liquidity ratio: 151.8 percent.
  - NPL ratio: 12.4 percent (down from 13.9 percent in December 2021).
- External position: substantially weaker than implied by fundamentals due to lack of competitiveness, weak buffers, and low donor support.

### Policy recommendations and planned corrective actions
- Short-term corrective measures committed by authorities to avoid further target misses:
  - Additional revenue efforts in the recently approved revised 2023 Budget Law, focusing on recovering overdue taxes, stronger fuel-import tax collection, and steadier implementation of earlier revenue measures.
  - New mechanism to monitor achievement of QPCs monthly with direct oversight by the Minister of Finance.
  - Revenue-led consolidation to be enshrined in the 2024 Budget Law.
  - Updated financing strategy to address lumpy debt maturities through 2026 and improve tenor distribution of new issuances.
- Revenue mobilization priorities for 2024:
  - Streamline tax exemptions.
  - Strengthen VAT collection.
  - Bolster customs revenues.
- Longer-term fiscal reforms:
  - Centralize all resources received by public entities in the single Treasury account.
  - Improve transparency in recording customs operations.
  - Optimize the new electronic tax system.
  - Simplify the fuel price structure.
- Expenditure and debt management:
  - Increase revenues should be matched by a spending structure that prioritizes social-related outlays to support equitable growth.
  - Adopt a more proactive debt management approach and build cash buffers to mitigate rollover risks.
- Governance and integrity:
  - Foster good governance, anti-corruption efforts, transparency, and financial integrity to catalyze donor support.

### Program issues and updated conditionality
- Authorities requested a rephasing of program disbursements for better alignment with balance of payments needs that changed since program approval, partly due to increased interest payments on external obligations.
- Risks to rephasing mitigated by:
  - Authorities’ commitment to deposit the share of program disbursements in CAR’s SDR account at the IMF to prefinance 100 percent of obligations to the Fund for at least 6 months.
  - Authorities’ commitment to program objectives.
- Prior action and added SBs to mitigate risks:
  - Prior action (first review): authorities requested a written opinion on the consistency of the Tokenization law with the CEMAC legal and regulatory framework.
  - Three SBs added for the second review:
    - Operationalize the cross-verification module of the new tax IT system.
    - Adopt a new and streamlined fuel pricing structure.
    - Bolster the financial intelligence unit (ANIF).
  - Four SBs added for the third review:
    - Define minimal criteria for official taxpayer recognition.
    - Prepare a fiscal risk statement on the Sango project.
    - Conduct an audit of hydrocarbon imports costs and margins.
    - Operationalize the asset declaration law.

*IMF staff report — Executive Summary, October 16, 2023.*

### 9.      Improved revenue collection is needed to achieve the deficit target for 2023. Despite

### 1cafea2023003 - 9.      Improved revenue collection is needed to achieve the deficit target for 2023. Despite

### Fiscal outlook and 2023 position
- Primary balance QPC at end-2023 remains within reach conditional on a step-up in revenue efforts and containment in expenses after a small overrun during the first half of 2023.
- Domestic revenue collection target for 2023: CFAF 5.7 billion (Table 2).
- Key revenue anchors for 2023:
  - Higher tax receipts from fuel sales following the reduction in pump prices and the decline in informal sector sales.
  - Improved collection of tax debts.
  - Gradual resolution of challenges implementing the “TIC-TECH” tax on telecommunication services (MEFP ¶12).
- Greater emphasis on expense containment is needed across wages, transfers, and goods and services.

### 2024 Budget Law: stance and targets
- Fiscal stance: a 1 percent reduction in the domestic primary deficit to 2.8 percent of GDP is envisaged for 2024, of which 0.7 percent of GDP from revenue measures.
- Primary spending: remain relatively stable as a share of GDP but shift composition toward social spending and domestically-financed capital expenditure (MEFP ¶13).
- Ceiling on spending through extraordinary procedures for 2024: CFAF 8 billion.
- Floor on social spending for 2024: CFAF 22 billion.

### Revenue measures agreed for 2024 (Text Table 1)
- Broadening the tax base:
  - Streamline tax exemptions and tackle abuses; expand list of goods non-eligible for customs duty exemptions; enforce sunset clauses on tax exemptions under the Charter of Investment.
  - Authorities could seek dialogue with MINUSCA to address potential exemption abuses (Art. 15b and Art. 21).
- VAT efficiency measures:
  - Reduce exemptions and apply law-based rates; apply CEMAC directives on VAT on transport services.
  - Expected VAT yield: 1.9 percent of GDP in 2024 compared to 1.5 percent of GDP in 2022.
  - Apply import-VAT deferred payment process at customs to reduce VAT credit accumulation.
  - Introduce e-VAT electronic invoicing system for VAT-registered businesses for real-time reporting.
- Customs and other revenue measures:
  - Apply penalty on not recognized importers by the tax office to promote formalization and increase customs revenue.
  - Enforce minimum customs declaration values for cigarette imports to address under-declaration.
  - Transfer fees and charges for service provision in line ministries to the Treasury Single Account (TSA) and implement electronic payment at all payment points.
- Specific items/entries as presented:
  - Fuel taxes40.2
  - Streamlining tax exemptions and strengthen VAT collection 4.50.3
  - Strengthen revenue measures adopted in 2023 40.2
  - Details: Apply the import-VAT deferred payment process at customs and tax office; Step-up the implementation of the “TICH-TECH” tax on telecommunication services; Transfer fees and charges ("menu recettes") for service provision in line ministries to the Treasury Single Account; Introduce the e-VAT electronic invoicing system; Increase minium price for new category of cigarettes; Guarantee the enforcement of Art. 344 of the tax code, which imposes a 10 percent penalty (of the import value) and a minimum penalty of CFAF 1 million on companies not included in the tax office's list of recognized companies and individuals; Ensure the provision of the BEAC account dedicated to VAT refunds; Ensure strict application of Art. 294 of the tax code, which sets a minimum value per pack of cigarettes for customs purposes.

### Expenditure measures for 2024
- Prioritize infrastructure projects given limited financing: focus on road network, electricity supply, and telecommunication penetration; create fiscal space by containing non-priority outlays.
- Step-up social spending while selectively curtailing non-priority spending, with focus on non-essential transfers and goods and services.
- Gradually settle outstanding payments (“reste à payer”) concentrated in unpaid capital expenditure, transfers, and goods and services; outstanding payments constrain private sector financing and could create risks to the banking system.

### Public debt management and rollover risk
- Government faces lumpy and concentrated redemptions starting in 2024 due to growing reliance on domestic financing after budget support shortfalls since 2021.
- 2023 domestic syndication: rolled over a maturing 2-year treasury bond in August worth CFAF 15.3 billion (0.9 percent of GDP); government issued a 4-year treasury bond for the first time since 2020.
- Lumpy maturities: around CFAF 20 billion in short and medium-term debt.
- Recommended medium-term debt management actions:
  - Scale up issuances of different tenors and build cash buffers in the ringfenced account at BEAC (MEFP ¶18).
  - Pre-finance the redemption of bonds maturing in 2025 through issuances of 3-year instruments or longer.
  - Consider voluntary liability management operations such as buybacks and market-based exchanges.
- Data management: improvement in debt statistics and IMF TA welcomed to bridge data gaps.

### Medium-term fiscal reforms (commitments and initiatives)
- Public Financial Management:
  - Enforce budgetary unity principle: deposit all public entity resources in the TSA and reflect expenditures and allocations transparently in the Budget Law.
  - Expedite execution of rapid results action plan with IMF, AFRITAC, and UNDP to shift to program budget and accrual accounting (MEFP ¶30).
- Customs administration:
  - Improve transparency by streamlining training for ASYCUDA World for all actors, including SOCASP (MEFP ¶23).
  - Enforce customs and tax code dispositions.
- Tax administration:
  - Incorporate external data cross-verification module to optimize the new electronic tax system and improve collection (SB for second review) (MEFP ¶23).
- Migration of fees and charges to the TSA:
  - Over 700 fees and charges identified not transferred to the TSA; government reorganized collection and conditions for repatriation to the TSA.
  - Pilot phase for electronic payment underway (MEFP ¶23); evaluation of yields could determine revenue collection targets per payment point.
- Fuel market reform:
  - Consolidate multiple taxes and levies on fuel into a unified tax while maintaining a specific line for stock capacity expansion.
  - Dedicated fee for stock capacity expansion preserved and to be deposited into an escrow account at the BEAC (MEFP ¶24).

### Governance, anti-corruption, AML/CFT, and tokenization risks
- Court of Audit:
  - Authorities preparing a new draft organic law (with EU support) to improve institutional and financial independence; commitment to submit to Cabinet for discussion (SB, second review) and subsequently to Parliament.
- AML/CFT:
  - Mutual evaluation by GABAC ongoing; results expected by October 2023; potential need for further actions depending on results.
  - Authorities encouraged to significantly improve compliance with FATF recommendations.
- Anti-corruption:
  - Adoption of the Anti-Corruption Law (SB, second review) to increase penalties, introduce disclosure requirements, and strengthen prosecutor/judiciary capacity.
  - Commitment to implement implementing regulation and operationalize new asset declaration requirements for senior public officials (SB, third review).
- Tokenization Law:
  - President signed the law on July 24, 2023 governing tokenization of natural and land resources via blockchain (Sango platform referenced).
  - Authorities indicated commitment to address risks, but implementation timeline uncertain.
  - Identified risks and mitigation needs:
    - Assess consistency with CEMAC legal framework; authorities requested BEAC opinion (prior action).
    - Prepare a fiscal risk statement on the Sango project (SB, third review).
    - Address significant AML/CFT regulatory and supervisory gaps related to crypto assets.
    - Strengthen ANIF (financial intelligence unit) operationally by addressing confidentiality, human, financial and technical resource issues (MEFP ¶32) (SB, second review).
    - Concerns over the process for identifying and valuing resources to be tokenized, especially mining, given weaknesses in rule of law and border governance.

### Program modalities, conditionality, and financing adjustments
- Waiver requests for non-observance of PCs: include end-June 2023 QPCs on primary deficit and net domestic financing; corrective actions include additional revenue efforts, monthly QPC monitoring mechanism with direct Minister of Finance oversight, revenue-led fiscal consolidation of 1 percent of GDP in 2024 Budget Law, updated financing strategy to address lumpy maturities through 2026, and improvements to budget preparation (MEFP ¶26).
- Request to increase QPC on net domestic financing for December 2023: increase from CFAF 37 billion to CFAF 57 billion (Table 8) to accommodate substantial domestic debt issuance in first eight months of 2023 and lumpy maturities around CFAF 20 billion.
- QPCs for 2024 reflect revenue increases from Text Table 1, expenditure restraint, and gradual reduction in domestic financing.
- New structural benchmarks (SBs):
  - Second review SBs: operationalize cross-verification module and interconnection with SYDONIA World; adopt new fuel pricing structure that rationalizes taxes and charges; adopt plan to strengthen the financial intelligence unit.
  - Third review SBs: issue ministerial decree on minimal criteria for official taxpayer recognition; prepare fiscal risk statement on Sango/tokenization project; conduct audit of fuel import costs and margins; operationalize the law on asset declaration.
- Rephasing request: align disbursements with changed BoP needs and additional external obligations related to interest payments; proposed rephasing deviates minimally from program request and maintains back-loaded disbursement schedule.
- Risk mitigation for rephasing: authorities commit to deposit the share of the disbursement to cover Fund obligations for at least the upcoming 6 months in their SDR account at the IMF, and to the program objectives.
- Safeguards and escrow arrangements:
  - Remaining access will be deposited in newly created escrow account at the BEAC to supplement a World Bank operation financing certain non-discretionary fiscal expenditures.
  - Fund disbursements will benefit from verification processes and safeguarded disbursement arrangements, including internal and external audit requirements on the usage of Fund resources (Annex III).
  - Authorities committed to draw from the special escrow account at BEAC only after the World Bank’s first disbursement has materialized under its operation.

*Source: IMF staff report excerpt (Central African Republic).*

### 31.      Regional assurances. BEAC met its end-December 2022 NFA (Net Foreign Assets) target

### 31.      Regional assurances. BEAC met its end-December 2022 NFA (Net Foreign Assets) target

### Regional assurances and NFA targets
- BEAC met its end-December 2022 NFA target and provided updated policy assurances in support of CEMAC countries’ Fund-supported programs.
- Preliminary data suggest that the end-June 2023 regional policy assurance on NFA was met.
- A review of regional policies and policy assurances is scheduled to be discussed by the Executive Board in December 2023.
- Adequate policies and assurances are a condition for the conclusion of the review.
- The regional assurances on regional NFA are critical for the success of CAR’s Fund-supported program and to help bolster the region’s external sustainability.

### Capacity to repay the Fund
- Capacity to repay remains weak (Figure 3).
- Capacity to repay would only become adequate amid success of the program and prompt implementation of remediation plans to prevent further QPC breaches.
- Capacity to repay the Fund is subject to significant downside risks, including:
  - slower pace of reforms,
  - natural disasters,
  - deterioration in the security situation,
  - difficulties in mobilizing fiscal revenue that could reduce debt service capacity.
- Risks to capacity to repay are mitigated by several factors as set out in the program request documents (Country Report No. 2023/155).

### Safeguards and governance
- The 2022 safeguards assessment found that the BEAC maintained strong governance arrangements.
- An external quality assessment of internal audit is being finalized and staff is monitoring implementation of the remaining safeguards recommendations.

### Financing assurances and donor commitments
- The program remains fully financed, with firm commitments from World Bank and AfDB for the next 12 months and good prospects thereafter.
- AfDB increased its budget support from UA10 million in 2023 to UA15 million over 2023 and 2024 (i.e., about US$20 million in total, assumed to be equally split between 2023 and 2024).
- It is anticipated that the World Bank will make its first CFAF 9 billion-disbursement before the end of October 2023 under its operation to finance certain non-discretionary fiscal expenditures in critical service delivery areas.
- AfDB is anticipated to approve a first disbursement for CFAF 6 billion before the end of December 2023.
- Financing for the program does not assume resumption of bilateral budget support in the baseline.

### Statistics and transparency
- The authorities should continue improving the quality and transparency of national statistics, including debt statistics.

### Arrears, creditor engagement, and LIOA compliance
- CAR has accumulated arrears to Angola and OFID in addition to arrears that pre-date the Completion Point of the HIPC initiative with some non-Paris Club creditors.
- The authorities are in contact with creditors to find a resolution to the arrears though the process has been slow.
- All official bilateral creditors to which there are outstanding external arrears have consented to Fund financing notwithstanding these arrears except for Angola which has requested more time to consider consenting to Fund financing despite the arrears.
- An update will be circulated to the Executive Board not later than one week prior to the scheduled Board consideration.
- The country remains current on its remaining external debt service obligations.
- As required under the LIOA policy, the authorities continue to make good faith efforts, including by sharing additional information and communicating through both formal and informal channels to facilitate resolution.
- For OFID, since it is a multilateral organization the policy of non-toleration of arrears (NTP) applies, and staff assesses there is a credible plan in place by the authorities to clear the arrears.

### Staff appraisal — economic rebound and risks
- CAR economy is bouncing back from the fuel crisis of 2022.
- Fuel imports have markedly improved this year, especially for diesel, and the reduction in fuel prices at the pump is expected to further bolster fuel imports through the formal channels.
- Economic activities continue climbing back closer to capacity.
- Improved financing conditions have also helped support public spending in the economy.
- The outlook remains uncertain and subject to exceptionally high downside risks.
- Drivers of CAR’s deep-rooted FCS status endure, including security risks.
- The socioeconomic situation continues to be precarious, with a large number of internally displaced persons (IDPs) and acute food insecurity.
- The ongoing conflict in Sudan has exacerbated food insecurity in the north-east part of the country.

### Program performance and fiscal outlook
- Performance under the program has been mixed amid a difficult macroeconomic backdrop.
- Some quantitative targets have been missed; all but one structural benchmark have been met.
- Passage of the anti-corruption law well ahead of the second review demonstrates the authorities’ commitment to the program.
- Despite small spending overruns due to pressing education and security needs, the deficit target for 2023 remains within reach but would require steadfast and rigorous implementation of revenue measures as well as spending restraint.
- Contingency measures could be triggered later in the year if needed.

### Revenue mobilization and 2024 priorities
- Decisive steps are required to bolster domestic revenue mobilization in 2024, including through the Budget Law.
- Substantial efficiency gains in both internal tax and customs administration are within reach in 2024 with:
  - the operationalization of the new tax IT system,
  - the deployment of new customs offices at the country’s borders,
  - improvements to the customs IT platform.
- Better oversight of tax and customs administration will help enshrine these reforms.
- Measures to broaden the tax base in the 2024 Budget Law and to improve compliance will complement revenue administration reforms.
- The government will continue to implement policies consistent with regional external stability, which requires the rebuilding of foreign exchange reserves at the BEAC.

### Fiscal stance, financing, and concessional resources
- Over the medium term, a tight fiscal stance remains necessary to safeguard debt sustainability and improve capacity to repay.
- The revenue-led fiscal consolidation strategy is adequate given the country’s high tax potential.
- In the meantime, the authorities should continue to favor grants and highly concessional resources to finance much needed primary spending and infrastructure.
- The authorities should continue to consult closely with staff when new financing opportunities arise.

### Fuel imports, market reforms, and infrastructure
- Macroeconomic stabilization and a successful revenue-led fiscal consolidation strategy depends critically on stable fuel imports.
- Continued fuel price and market reforms should foster import through formal channels and protect revenue collection.
- Authorities should prioritize investment in additional storage capacity and infrastructure to maximize the use of the Ubangi River (Annex II) beyond the current 6 months within the year.

### Debt management
- A proactive medium-term debt management strategy would help mitigate rollover risks.
- Staff commend the authorities’ active engagement with the market in the lead up to the successful syndication in August.
- A strategy to rollover maturities in the coming years and lengthen the yield curve needs to be put in place.

### Governance, anti-corruption, and judicial oversight
- Efforts to improve governance and fighting corruption should be sustained.
- Staff commend the authorities for the adoption of the anti-corruption law well ahead of the second review.
- Pressing ahead with implementing regulations and empowering relevant institutions will complement ongoing reforms of public financial management.
- Progress in providing financial and institutional independence to the court of audit is crucial.

### Tokenization of natural and land resources
- Plans to tokenize natural and land resources should address related risks.
- Authorities clarified that implementing regulations would take time and resources and acknowledged challenges to transparently identify and value natural resources, particularly in the mining sector.
- Staff strongly encourage authorities to make further efforts to avoid deterring traditional investments into the country, including by adopting targeted measures specifically aimed at mitigating fiscal and ML/TF concerns resulting from tokenization through the Sango platform.

### Disbursements and conditionality
- Authorities are urged to expedite efforts to unlock disbursements from the World Bank and the AfDB.
- This includes meeting the requirements established by the World Bank for financing certain non-discretionary fiscal expenditures in critical service delivery areas and concurrently the IMF’s budget support for the same purpose (Text Figure 4 and Annex III).
- The government has made progress in the completion of the audit of the pandemic-expenses requested by the AfDB though work remains before its budget support could proceed.

*Source: IMF and World Bank staff*

### 47.      Considering the strength of the authorities’ corrective actions, the implementation of

### 1cafea2023003 - 47.      Considering the strength of the authorities’ corrective actions, the implementation of

### Program decisions and conditionality
- Staff supports:
  - the requests of waivers for non-observance of QPCs,
  - rephasing of disbursements,
  - the modification of the end-December QPCs,
  - the completion of the financing assurances review,
  - completion of the first review under the ECF-supported program.
- The completion of the first review will be conditional on the implementation of critical policy assurances at the union level, as established in the July 2023 union-wide background paper.
- Authorities remain closely engaged with creditors to ensure obligations are current.

### Recent economic developments (highlights)
- Growth decelerated in 2022 due to the fuel shortages.
- Inflation rose sharply in 2022 on the back of a strong increase in food and fuel prices.
- Public debt increased reflecting a weaker CFAF versus the USD, and a shift to domestic financing given budget shortfalls.
- The current account deficit deteriorated in line with the large terms of trade shock and lack of budget support.

### Medium-term economic prospects (2015–2025) — key outlook points
- Growth should accelerate over the medium-term if fuel shortages are resolved and donor support reignited.
- Inflation would subside owing to more stable energy prices.
- Revenue mobilization should increase in line with fiscal structural reforms and a resumption in budget support.
- Increased fiscal space would allow reallocating expenditure to favor the provision of public goods and services.
- Fiscal deficits would narrow in light of fiscal efforts.
- The current account deficit would be reduced concomitantly.

### Capacity to Repay (CtR) and arrangement comparisons
- Figure 3 presents CtR indicators compared to UCT arrangements for PRGT countries:
  - Indicators are shown as percent of the indicated variable across T to T+10.
  - Notes indicate: T = date of arrangement approval; red lines/bars indicate the CtR indicator for the arrangement of interest; comparator series is for PRGT arrangements only and runs up to T+10.
  - Debt service obligations to the Fund reflect prospective payments, including for the current year.
  - In blenders and RST cases, red lines/bars refer to the combined instruments (PRGT+GRA; PRGT+GRA+RST).

### Selected key statistics and fiscal/sectoral aggregates (preserving source figures exactly)
- External current account balance (CFAF, percent of GDP):
  - Current account (incl. grants): -8.2 -11.1 -12.8 -8.7 -8.6 -8.3 -6.9 -5.4 -4.5 (2019–2027 series across Table 1/4)
  - Current account (excl. grants): -15.0 -13.0 -14.8 -12.3 -12.1 -11.3 -10.8 -10.5 -9.6
- Nominal GDP (CFAF billions, memorandum): 1,373 1,432 1,530 1,671 1,651 1,752 1,844 1,961 2,082
- GDP per capita (US dollars, memorandum): 494 525 490 534 538 566 585 611 632
- CPI (annual average): 0.9 4.3 5.6 6.3 6.5 3.2 2.8 2.5 2.5 (series shown in Table 1)
- Broad money (annual percent change): 11.5 14.6 2.5 3.6 3.6 2.9 4.5 3.1 6.4 (Table 1)
- Public sector debt (percent of GDP): 44.4 48.6 54.2 50.5 52.9 53.3 52.5 48.7 45.9 (Table 1)
  - Of which: domestic debt (percent of GDP): 9.4 13.2 18.2 18.4 20.3 22.0 22.2 19.6 18.0
  - Of which: external debt (percent of GDP): 35.0 35.3 36.0 32.0 32.6 31.3 30.3 29.1 27.9
- Central government finance (percent of GDP, Table 2b snapshots):
  - Total revenue (including grants): 21.8 13.7 12.3 13.8 14.7 14.2 16.3 17.9 18.0
  - Domestic revenue: 9.2 8.8 7.8 7.9 8.3 9.0 9.8 10.6 10.9
  - Total expenditure: 25.1 19.7 17.6 16.8 18.0 17.3 18.0 17.7 17.9
  - Capital expenditure: 11.3 7.4 5.9 5.8 6.1 5.8 6.4 6.3 6.8
  - Overall balance excluding grants: -16.0 -10.9 -9.9 -8.9 -9.7 -8.3 -8.2 -7.1 -6.9
  - Overall balance including grants: -3.4 -6.0 -5.3 -3.0 -3.3 -3.1 -1.7 0.2 0.1
- Central government cash flows (CFAF billions, Table 2a snapshots):
  - Revenue (total): 298.6 195.7 188.2 230.8 242.4 248.3 300.1 351.6 374.3
  - Grants (total): 172.9 69.8 69.2 99.1 105.0 90.3 120.0 143.3 146.8
  - Expenditure (total): 344.7 281.9 270.0 281.1 297.3 302.9 331.2 347.3 371.8
  - Capital expenditure (total): 155.7 106.3 90.7 96.5 100.0 100.8 118.1 123.4 141.2
- Balance of payments (CFAF billions, Table 4a snapshots):
  - Balance on goods (f.o.b.): -226.3 -221.9 -257.1 -245.1 -236.1 -235.5 -243.6 -261.4 -255.4
  - Exports, f.o.b.: 82.7 91.4 104.9 120.4 120.2 131.3 149.3 166.6 198.1
    - of which: Diamonds: 3.8 6.9 9.6 13.8 13.8 19.7 26.0 31.4 35.9
    - of which: Wood products: 50.6 48.3 47.8 54.6 54.6 56.6 63.9 69.7 91.6
  - Imports, f.o.b.: -309.0 -313.3 -362.0 -365.6 -356.3 -366.8 -392.9 -427.9 -453.6
    - of which: Petroleum products: -66.3 -88.0 -107.3 -89.8 -84.5 -85.8 -86.7 -88.4 -92.0
  - Transfers (net): 155.1 103.6 113.0 151.3 148.3 156.1 182.6 213.9 227.0
    - Official transfers (of which program): 93.1 26.9 30.7 60.5 57.3 52.4 73.4 99.1 106.2
    - Program: 70.1 0.0 0.0 26.5 24.0 17.1 36.6 60.0 65.0
  - Capital account (project grants): 102.8 69.8 69.2 72.5 81.0 73.2 83.4 82.5 81.8

### Financing and reserves (selected monetary/financing datapoints)
- Net foreign assets (BEAC + commercial banks, Table 3 top-lines): 88.7 72.0 -19.4 -26.1 -34.1 -42.8 -43.5 -65.0 -86.2 -96.6 -90.9 -26.4 (quarterly/annual mix displayed)
- SDR allocation (Table 3): 41.4 130.0 137.9 137.9 137.9 137.9 137.9 137.9 137.9 137.9 130.8
- Use of IMF credit (Table 3): 150.2 170.6 168.8 168.8 168.8 168.8 166.8 181.1 169.2 171.4 172.5 139.1
- Money and quasi-money (Table 3): 416.4 477.1 488.9 496.5 504.8 507.7 506.7 506.4 521.6 545.2 597.9

### Policy implications and priorities implied by the text and tables
- Resolve fuel shortages to support near-term growth recovery.
- Reignite donor budget support and resume program-related official transfers to improve the current account and fiscal space.
- Reinforce revenue mobilization through fiscal structural reforms to increase domestic revenue (noting historical domestic revenue shares: 9.2 8.8 7.8 7.9 8.3 9.0 9.8 10.6 10.9 percent of GDP).
- Reallocate public expenditure toward public goods and services while narrowing deficits.
- Maintain creditor engagement to keep obligations current and ensure continued access to financing.

*Source: Central African Republic — IMF staff report content unit 1cafea2023003 (figures and tables as presented).*

### 1. Total financing requirements214.5278.

### 1. Total financing requirements214.5278.

### Total financing requirements
- Aggregate sequence: 283.3147.5153.9147.7187.5208.1223.0
- Current account deficit (excl. budget support): 182.2158.7195.1171.3166.3163.0163.1166.2157.9
- Debt amortization: 5.45.66.32.86.510.111.412.112.3
- Repayment to the Fund: 4.94.61.711.214.120.626.329.628.5
- Change in other reserves: 22.0109.3-119.8-37.8-33.0-45.9-13.40.224.3

### Total available financing
- Aggregate sequence: 105.7165.181.798.5106.5102.7115.8110.1129.4
- Capital transfers: 102.869.869.272.581.073.283.482.581.8
- Foreign direct investment (net): 1.03.015.023.523.524.525.528.033.9
- Portfolio investment (net): 0.00.00.00.00.00.00.01.01.0
- Debt financing: 21.98.87.57.57.010.011.88.617.7
  - Public Sector: 21.98.87.57.57.010.011.88.617.7
- SDR allocation: 0.088.50.00.00.00.00.00.00.0
- Other net capital inflows: -20.0-5.0-10.0-5.0-5.0-5.0-5.0-10.0-5.0

### Financing gap
- Sequence: 108.8113.11.548.947.445.071.798.093.6

### Expected sources of financing
- Expected sources sequence: 70.10.00.026.524.017.136.675.095.0
- of which: Budget support (grants)1: 70.10.00.026.524.017.136.660.065.0
- of which: Budget support (loans)2: 0.00.00.00.00.00.00.015.030.0

### Residual financing gap and concessional support
- Residual financing gap: 38.6113.11.522.423.427.935.123.0-1.4
- ECF arrangement: 9.618.80.023.524.529.035.524.40.0
- RCF: 22.30.00.00.00.00.00.00.00.0
- CCRT3: 4.73.52.20.00.00.00.00.00.0
- G20 DSSI4: 2.12.2-0.7-1.1-1.1-1.1-0.4-0.4-0.4
- Unidentified financing: 0.00.00.00.00.00.00.00.00.0

### Financial Soundness Indicators (2015–2022) — key ratios (In Percent)
- Capital Adequacy:
  - Total bank regulatory capital to risk-weighted assets: 38.732.034.328.530.323.921.023.5
  - Total capital (net worth) to assets: 18.116.117.715.115.913.813.913.2
- Asset Quality:
  - Non-performing loans to total loans: 31.326.225.117.616.117.513.912.4
  - Non-performing loans net of provision to capital: 40.124.28.26.214.612.910.712.8
- Earnings and Profitability:
  - Net income to average assets (ROA): -1.10.20.71.71.70.00.61.1
  - Net income to average capital (ROE): -6.40.33.06.97.60.14.38.2
  - Non interest expense to gross income: 77.881.385.290.578.971.582.2....
- Liquidity:
  - Liquid assets to total assets: 40.031.930.729.926.332.226.926.4
  - Liquid assets to short-term liabilities: 276.1219.6227.4198.6165.8202.0162.2151.8

### Proposed access and phasing under the ECF Arrangement (Includes Rephasing)
- Disbursement schedule (Date, Amount, Percent of quota):
  - First disbursement upon program approval April 28, 2023: SDR 11.30 million, 10.14
  - October 30, 2023: SDR 19.17 million, 17.21
  - April 30, 2024: SDR 17.15 million, 15.40
  - October 30, 2024: SDR 19.15 million, 17.19
  - April 30, 2025: SDR 22.62 million, 20.31
  - October 30, 2025: SDR 21.74 million, 19.51
  - April 30, 2026: SDR 30.55 million, 27.42
  - Total: SDR 141.68 million, 127.18
- Note: CAR's quota is SDR 111.4 million
- Conditions for disbursement tied to observance of performance criteria and completion of reviews for specified dates.

### Quantitative performance criteria and indicative targets (CFAF Billions; cumulative)
- Selected items and status (End-September 2023; End-March 2024; End-June 2024; End-September 2024; End-December 2024):
  - Net domestic financing of the government (ceiling, cumulative flows for the year): 19.0; 16.8 Met; 11.0; 29.0; 37.2 Not met; 28.0; 37.0; 57.0; 18.0; 30.0; 40.0; 55.0
  - Domestic government revenue (floor, cumulative for the year)1: 30.0; 30.2 Met; 62.0--67.4 Met; 96.0; 130.0; 130.0; 34.0; 75.0; 115.0; 155.0
  - Domestic primary fiscal balance (floor, cumulative for the year)2: -12.0; -11.0 Met; -24.0---26.5 Not met; -35.0-64.0-64.0-13.0-22.0-33.0-50.0
- Continuous performance criteria (selected; cumulative from January 1, 2023):
  - New external debt contracted or guaranteed by the Government (ceiling): 0.0 0.0 Met
  - Disbursement of external nonconcessional debt (ceiling): 0.0 0.0 Met
  - Non accumulation of new external payments arrears by the government: 0.0 0.0 Met
- Indicative targets:
  - Social spending (floor, cumulative for the year)5: 2.51.1 Not met; 8.0--4.5 Not met; 17.0 22.0 22.0 4.0 8.0 17.0 22.0
  - Spending using extraordinary procedures (ceiling, cumulative for the year): 1.51.6 Not met; 2.5--6.6 Not met; 4.0 5.0 5.0 2.0 5.0 7.0 8.0
  - New external concessional debt contracted or guaranteed by the government (ceiling): 20.00.0 Met; 20.0--0.0 Met; 20.0 20.0 20.0 20.0 20.0 20.0 20.0
- Memorandum items:
  - Budget support: 0.00.018.0--0.0 18.0 26.6 24.0 0.0 6.3 11.1 17.1
  - Privatization receipts: 0.01.90.0--1.9 0.0 0.0 1.9 0.0 0.0 0.0 0.0

### Prior actions and structural benchmarks — selected entries
- Operationalize key functions of the new IT system for domestic revenues, including online registration, online declaration and electronic payments.
  - Objective: Improve revenue collection
  - SB first review (October 2023) — Met
- Address fuel shortages and stabilize government revenues by calculating hydrocarbon price structure and signing an inter-ministerial decree with new hydrocarbon prices in line with IMF TA.
  - Objective: Improve transparency and revenue collection
  - SB first review (October 2023) — Met
- Transfer to the TSA all funds collected directly by the ministries in exchange for services provided to users.
  - Objective: Improve revenue collection
  - SB second review (April 2024) — In progress
- Operationalize the cross-verification module of the new DGID IT system and interconnection with customs (Sydonia World).
  - Objective: Improve revenue collection
  - SB second review (April 2024) — Proposed
- Adopt the anti-corruption law submitted to parliament on February 4, 2022.
  - Objective: Improve transparency and revenue collection
  - SB second review (April 2024) — Met
- Multiple additional proposed SBs related to fiscal risk statements, audits of fuel procurement, operationalization of asset declaration law, consolidation of quasi-taxes, strengthening ANIF, and legal adjustments for Court of Audit (timelines and status indicated as Proposed or In progress).

### External Borrowing Program — summary
- PPG external debt contracted or guaranteed:
  - Volume of new debt, US million1/: 11.7 7.0
  - Present value of new debt, US million1/: 11.7 7.0
- Sources of debt financing:
  - Concessional debt, of which2/: 11.7 7.0
  - Multilateral debt: 3.32.7
  - Bilateral debt: 8.34.3
  - Non-concessional debt, of which2/: 0.00.0
  - Semi-concessional debt3/: 0.00.0
  - Commercial terms4/: 0.00.0
- Uses of debt financing:
  - Infrastructure / Budget financing: 11.7 / 7.0
- Memorandum — Indicative projections:
  - Year 2: 16.97.7
  - Year 3: 20.110.4

### Indicators of Capacity to Repay the IMF, 2023–2033 (selected rows)
- IMF obligations based on existing credit (SDR millions) — Principal: 17.525.832.937.135.726.419.611.04.72.31.1
- IMF obligations based on existing credit — Charges and interest: 5.56.56.56.56.56.56.56.56.56.56.5
- IMF obligations based on existing and prospective credit (SDR millions) — Principal: 17.525.832.937.135.726.425.124.427.728.327.2
- IMF obligations based on existing and prospective credit (CFA billions) — Principal: 14.020.626.429.728.521.120.119.522.122.721.8
- Outstanding IMF Credit (SDR Millions): 215.6226.1237.5231.0195.4169.0143.9119.591.863.536.3
- Outstanding IMF Credit (CFAF Billions): 172.2180.6190.1184.9156.3135.2115.195.673.550.829.1
- Percent of government revenue: 125.4114.3105.688.868.755.045.635.024.815.98.4
- Percent of exports of goods and services: 72.772.866.058.443.835.328.022.015.410.15.6
- Percent of debt service: 405.2390.0340.9389.1271.9282.7263.9227.7163.897.952.3
- Percent of GDP: 10.410.310.39.47.56.14.93.92.81.81.0
- Percent of quota: 193.5203.0213.2207.4175.4151.7129.2107.382.457.032.6
- Net use of IMF credit (SDR millions) — Disbursements: 30.536.344.430.60.00.00.00.00.00.00.0
- Net use of IMF credit — Repayments and repurchases: 23.032.339.443.642.132.931.630.934.234.833.7
- Memorandum items (selected):
  - Nominal GDP (billions of CFA francs): 1651.11751.91844.01960.92082.22205.32333.02468.02610.62761.62921.4
  - Exports of goods and services (billions of CFA francs): 236.9248.0288.3316.6356.7383.2410.8433.9476.2500.9516.6
  - Government revenue (billions of CFA francs): 137.4158.0180.1208.3227.5245.7252.4273.0296.9318.9344.9
  - Debt service (billions of CFA francs): 42.546.355.847.557.547.843.642.044.951.955.5
  - IMF Quota (SDR millions): 111.4111.4111.4111.4111.4111.4111.4111.4111.4111.4

### Risk Assessment Matrix — selected risks, likelihoods, horizons, impacts, and mitigation
- Intensification of regional conflict(s)
  - Relative Likelihood: High
  - Time Horizon: Short Term
  - Expected Impact if Realized: High
  - Policies to Mitigate the Risks:
    - Supply chain disruptions lead to higher prices for essential imports such as fuel and wheat.
    - Application of the automatic fuel price adjustment mechanism to avoid expectations of a subsidy and to safeguard critical revenues.
    - Introduce targeted measures to mitigate the impact of the shock, e.g., by expanding the social safety net.
    - Intensify cooperation with humanitarian agencies, including the WFP.
- Social discontent
  - Relative Likelihood: High
  - Time Horizon: High
  - Expected Impact if Realized: High
  - Policies to Mitigate the Risks:
    - Continued cooperation with international organizations to support social programs.
    - Pay attention to evolution of social sentiments and provide solutions to ease tension.
- Abrupt global slowdown or recession
  - Relative Likelihood: Medium
  - Time Horizon: Medium
  - Expected Impact if Realized: Medium
  - Policies to Mitigate the Risks:
    - Continued reforms in the fuel sector and improve revenue mobilization to enable investment in priority areas.
    - Take advantage of the regional market to increase trade and investment.
- Commodity price volatility
  - Relative Likelihood: Medium
  - Time Horizon: Short Term
  - Expected Impact if Realized: High
  - Policies to Mitigate the Risks:
    - Application of the automatic fuel price adjustment mechanism.
    - Introduce targeted social measures and intensify cooperation with humanitarian agencies.
- Monetary policy miscalibration
  - Relative Likelihood: Medium
  - Time Horizon: Short to Medium Term
  - Expected Impact if Realized: Medium
  - Policies to Mitigate the Risks:
    - Fiscal prudency amid active engagement with bondholders to curb borrowing costs.
- Systemic financial instability
  - Relative Likelihood: Medium
  - Time Horizon: Medium
  - Expected Impact if Realized: Medium
  - Policies to Mitigate the Risks:
    - Fiscal prudency and active engagement with bondholders.
    - Regular communication with COBAC to monitor banking system health.
- Sovereign debt distress
  - Relative Likelihood: Medium
  - Time Horizon: Medium
  - Expected Impact if Realized: Medium
- Structural risks (selected)
  - Deepening geoeconomic fragmentation: High likelihood, Short to Medium Term, High impact.
    - Mitigation: Active engagement with development partners on development financing, including budget support.
  - Cyberthreats: Medium likelihood, Medium horizon.
    - Mitigation: Mitigate risks related to crypto assets projects in collaboration with CEMAC monetary and regulatory authorities.
  - Extreme climate events: High likelihood, High impact.
    - Mitigation: Deepen engagement with development partners to strengthen infrastructure against climate shocks; continued fiscal prudency.
  - Disorderly energy transition: Medium likelihood, Medium impact.
- Regional and domestic risks (selected)
  - Increased insecurity and political instability: High likelihood, High impact.
    - Mitigation: Maintain dialogue with stakeholders; prepare a budget contingency plan.
  - Setback in fiscal and structural reform momentum: Medium/High likelihood.
    - Mitigation: Accelerate structural reforms; ensure prudent budgetary management; put in place social programs.
  - Promulgation of the law on the tokenization of CAR’s natural resources: Medium likelihood, Short to Medium Term, High impact.
    - Mitigation: Ringfence crypto-related activities; strengthen AML/CFT controls to vet investors in the SANGO platform.

*Source: Central African Republic — IMF staff projections and program documents as presented in the provided content.*

### Annex II. Developments in the Fuel Market

### Annex II. Developments in the Fuel Market

### Suppliers
- The acquisition of Total Energies by Tamoil (Transafrica Market oil) has been concluded, with the transition impeded by challenges in securing financing and negotiating product deals.
- Total imported just 6,000 m3 during the current river campaign, compared with 54,000 m3 imported in 2021.
- During the first two months of the river campaign, 66 percent of fuel imports (16,792 m3) were executed by TRISTAR, a marketer primarily operating for MINUSCA.
- Other importers have predominantly utilized the river route despite higher import costs.
- A total of 15,263 m3 of fuel were imported from Cameroon in July and August.

### Transporters
- River transport management was transferred from SOCATRAF (a subsidiary of Bolloré Africa Logistics) to Mercure Logistics in February 2023.
- The transition caused delays in contract signing with importers; the first two out of seven convoys were transported by the Congolese company SEP-Congo.
- As of August 2023, Mercure has transported 11,000 m3 for TRISTAR and Total.
- Contracts with other importers are nearing completion.
- The entire CAR fleet, with a capacity of 13,000 m3, is in Kinshasa ready for product transportation.

### Storage and Infrastructure
- Current storage capacity remains underwhelming despite a new 5,500 m3 reservoir under construction at SOCASP.
- Authorities plan to increase stock capacity by:
  - building storage facilities around Mongoumba (halfway to Bangui) to extend the river campaign from 6 to 10 months, and
  - expanding storage capacity countrywide starting with the center-east region to enhance formal market coverage beyond Bangui.
- The World Bank has approved a five-year, US$830 million project to bolster transport and trade efficiency along waterways and road corridors connecting the Central African Republic and the Republic of the Congo.
- The African Development Bank (AfDB) is financing a project to improve river navigation on the Brazzaville-Bangui River route and upgrade the Port of Mongoumba.
- As part of these projects:
  - 108 km of roads between Bangui and Mbaiki (R13) will be rehabilitated, and
  - 122 km of roads between Mbaiki and Mongoumba will be constructed.

### Price Structure
- Since July, taxes and fees in the pricing structure have been aligned with provisions in various legal and regulatory documents.
- Several quasi-taxes have been consolidated into a single line referred to as “infrastructure fee”, while the capacity expansion fee has been retained.
- Increasing the capacity extension fee to CFAF 12 would fund the construction of a 5,500 m3 reservoir within a year.
- The authorities plan to implement the new price structure for all imports.

*Source: Annex II. Developments in the Fuel Market (content unit: 1cafea2023003) — IMF staff text provided in the source PDF.*

### 5.      Persistent difficulties in fuel supply have prevented the expected rebound in economic

### 5. Persistent difficulties in fuel supply have prevented the expected rebound in economic growth in 2023.

### Growth, inflation, and sectoral impacts
- Growth projection for 2023 revised downward from 2.2 percent to 1 percent.
- Average inflation for 2023 is expected to rise to 6.5 percent (from 6.3 percent previously).
- Cause: persistent fuel crisis since mid-2022 following low supplies during the 2022 river campaign and an upsurge in the informal market due to significant price differentials with neighbouring countries.
- Sectors most affected: forestry, manufacturing, and transport.

### Domestic revenue performance and drivers
- Domestic fiscal revenue collected by end June: more than CFAF 67 billion, versus an ECF programme target of CFAF 62 billion.
- Performance supported partly by one-off inflows (collection of previous tax debts), despite delays in implementing the new "TIC-TECH" tax and shortcomings in applying minimum prices on cigarettes.
- Reform momentum: ongoing reforms within tax administrations beginning to yield results.

### Mid-year deficit, social pressures, and mitigation
- Domestic primary deficit at end June 2023: CFAF 26.5 billion, against a target of CFAF 24 billion.
- Overshoot driver: strong social pressures, including clearance of unpaid teachers allowances in late June to permit school exams.
- Mitigation measures: new real-time monitoring system of the remaining budgetary margin under the ECF quantitative criteria and increased monitoring of priority spending to improve budget visibility.

### Domestic public bond market and debt management capacity
- Average subscription rate for treasury bond issues rose to over 70 percent immediately after ECF programme approval (from a very low level before approval).
- Recent domestic syndication operation included a 5-year OTA (first since 2020) with a subscription rate of 100 percent.
- Need: strengthen Debt Department capacities to improve communication with primary dealers and maintain market confidence.

### Balance of payments outlook
- Current account deficit expected to fall from 12.7 percent of GDP in 2022 to around 8.6 percent of GDP in 2023, reflecting increased mining and forestry exports and a fall in imports due to fuel shortages.
- Official transfers expected to increase to around 3.5 percent of GDP in 2023, compared with 2 percent in 2022; still below 6.8 percent observed in 2020 due to suspension of some donors' budget support.

### Economic outlook and risks
- GDP growth expected to reach 1.5 percent in 2024.
- Policy priorities to raise growth potential: ensure stable supply of fuel in formal channels; increase spending in roads, security, agriculture, and social sectors to raise productive capacity and strengthen state–population relations.
- Baseline scenario assumptions: partial resumption of budget support and significant strengthening of economic policies under the ECF-supported programme.
- Downside risks: deterioration in security, resumption of fuel shortages, difficulties refinancing domestic debt.
- Upside possibilities: faster implementation of structural reforms, quicker return to peace, stronger revenue mobilization and public spending control.

### Short- and medium-term fiscal policy: 2023–2024
- Supplementary budget adopted on September 1 maintained the deficit target from the 2023 Finance Bill.
- Domestic primary deficit target for end-December 2023: CFAF 64 billion.
- Measures to achieve 2023 target in H2: (i) better return on taxes and fees on petroleum products following a drop in pump prices and decline in informal sector sales; (ii) collection of tax debts across sectors; (iii) gradual resolution of TIC-TECH implementation difficulties.
- Anticipated supports reducing financing gap risk in 2023: disbursement of first tranche of World Bank social sector wage support operation and success of August syndication operation.

- 2024 fiscal commitments:
  - Domestic primary budget deficit expected to fall from 3.8 percent of GDP in 2023 to 2.8 percent of GDP in 2024.
  - Total primary expenditure package planned at around CFAF 207 billion.
  - Reallocate expenditure to favour infrastructure spending financed with own resources; prioritize social spending to protect vulnerable people and essential Government functions, including security.
  - 2024 Finance Bill measures to reduce tax exemptions and improve tax collection (telecommunications services and tobacco imports).
  - Revenue target: generate an additional CFAF 20 billion compared with 2023, reaching CFAF 160 billion (0.7 percent of GDP); achievement contingent on stable and sufficient petroleum supplies.

- Financing outlook:
  - Confidence that regional market can provide at least the same gross domestic financing as in 2023, conditional on preparing a comprehensive refinancing strategy for substantial regional maturities in 2024 and 2025.

### Medium-term fiscal objectives and public debt stance
- Medium-term revenue strategy: increase capacity to collect domestic resources by around 0.6 percent of GDP per year via in-depth reform of tax and customs administrations.
- Expected outcomes by end-2026 if strategy implemented:
  - Domestic primary balance below 2 percent.
  - Outstanding debt stock reduced to 46 percent of GDP.
- Continued donor dialogue to restore full budget support; commitment to strengthen fiscal transparency.

### Public debt management actions and constraints
- Framework established for coordination and management of public debt (structural benchmark) to improve planning and debt profile.
- Specific strategy for repayment of government bonds in 2024 and 2025 with IMF technical support; options include swaps and/or buy-backs and accumulation of dedicated resources at BEAC to guarantee repayment at maturity.
- Inventory of domestic arrears initiated and a plan to facilitate clearance, including potential securitization of audited arrears.
- Arrears management strategy elements: (i) detailed schedule; (ii) criteria to clear arrears to minimize favouritism and corruption; (iii) improved cash flow plan synchronized with consolidated accounts, commitment plan, and public securities issue plan.
- Public enterprises arrears: plan drawn for ENERCA, SODECA and SOCATEL arrears and pre-2019 arrears, but payment plan not yet implemented.
  - Undertaking: ensure new debt owed to State-owned enterprises recorded in debt books from December 2023; update arrears payment plans to include new arrears no later than December 2023.
  - Commitment to enforce Law No. 20/004 requiring written authorization of the Minister of Finance and Budget before public entities sign loan agreements.
- Debt policy: continue to rely on grants and not enter non-concessional lending; concessional loans limited to priority investments within IMF-agreed limits. Planned investment conference with Islamic and Arab donors/funds to raise concessional financing for infrastructure in agriculture, energy, water, transport, and social sectors; such loans should have long grace periods and/or repayment schedules to avoid worsening debt service ratios.
- Steps taken: Presidential decree prohibiting contracting new government liabilities outside the new debt management committee established with IMF support (structural benchmark).

### Structural reforms — improving and securing domestic revenue
- Administrative fees and petty revenues:
  - Complete reorganization of national system for collecting petty revenues: clarified legal basis; separate revenue and expenditure departments to mitigate conflicts of interest; conditions for repatriation to the Treasury Single Account (TSA) and use for spending within collecting ministries (structural benchmark).
  - EU-supported pilot digital collection tests in the Ministry in charge of Justice and the Ministry in charge of Public Security, with intent to extend digital solutions government-wide after trials.

- Tax collection action plan targeting an additional CFAF 2.7 billion:
  - Systematic use of the electronic declaration system for all large companies.
  - Apply a 10 percent penalty (on the value of imports) with a minimum of CFAF 1 million in duty payments to importers not registered with tax authorities.
  - Collect owed sums from importers and public contract beneficiaries not up to date with tax obligations.
  - Reclassify some medium and small companies as large companies following joint missions between tax, customs, and trade departments in Bangui districts.

- Customs and IT modernization:
  - Computerize two additional border points by end-2023; plan to increase computerized customs posts with MINUSCA support.
  - Migration from ASYCUDA++ to ASYCUDA World installed in customs clearance offices and within SOCASP; continue skills transfer, importer training, and work toward bank payment of declarations via Webservice.
  - Short-term rollout to Berberati, Mongoumba and Gamboula offices to facilitate data exchange between Directorate General of Taxation and Directorate General of Customs.

- Tax exemptions and transparency:
  - Studies on tax expenditure (tax exemptions) initiated with TFPs (AfDB, WB, IMF); outcomes will inform a work plan to better manage exemptions, assess relevance, legal conformity, and improve transparency of granting processes.
  - Preliminary 2024 Finance Bill measures to exclude staples (rice, flour, oil and sugar) and all products from the CEMAC zone from eligibility for tax exemptions.
  - Commitment to publish the list of beneficiaries of exemptions and their legal basis by October 2024 at the latest (structural benchmark).

- E-filing and cross-check modules:
  - EU-supported IT system within DGID to allow remote declaration, remote payment and online taxpayer registration (structural benchmark).
  - Commitment: all large companies to use e-filing by end-December 2023; extend to medium-sized businesses from Q4 2023; compulsory for all businesses from January 2024.
  - Introduce by April 2024 a "cross-check" module enabling automatic cross-referencing between DGID and Customs (structural benchmark) and introduce e-VAT electronic invoicing integrated with the e-tax system.

- Enforcement of Section 344 of the Tax Code:
  - Steps taken to implement penalty on importers not on the list of companies deemed active and known to tax authorities.
  - With IMF technical assistance, a decree will be published by end of year to define minimum criteria for taxpayers to be considered active and known (structural benchmark).

### Reforming the fuel sector
- Persistent fuel supply constraints are central to the 2023 economic underperformance and are a precondition for meeting revenue and growth targets (multiple references in fiscal and revenue measures emphasize dependence on stable and sufficient petroleum supplies).

*Source: Memorandum of Economic and Financial Policies (excerpt).*

### 24.      Major reforms have been undertaken in the fuel sector since the start of the crisis. On

### Content unit: 1cafea2023003 - 24.      Major reforms have been undertaken in the fuel sector since the start of the crisis. On

### Fuel sector reforms
- On July 6, 2023, authorities lowered pump prices of fuel to relieve the population, discourage growth of the informal market, and guarantee sufficient revenue collection for the government.
- A new fuel price structure was adopted to streamline a number of taxes and charges and simplify their application, in line with IMF recommendations (structural benchmark).
- Commitments and follow-up actions:
  - Continue calculating the structure of hydrocarbon prices while complying with the tax rates and incidental taxes stipulated in the Tax Code, the Finance Bill and the CEMAC directives.
  - Continue exploring IMF technical assistance recommendations, in particular:
    - Apply the price structure to customs.
    - Carry out an audit and review of the components of supply costs (margins and fees) (structural benchmark).
    - Unify the price formula by supply channel.
    - Launch a call for tenders for the public import of fuel for the approved market.
    - Introduce an automatic price review mechanism suitable to the CAR context.

### Strengthening fiscal management and transparency
- Cash flow and donor coordination:
  - The Ministry of Finance will continue regular monthly meetings on cash flow management with technical and financial partners; the next meeting will take place no later than the end of October 2023.
  - An escrow account at BEAC was opened to deposit IMF disbursements, net of reimbursements, to supplement the World Bank operation; IMF disbursements from that account are to be drawn only after the WB’s first disbursement for the operation financing non-discretionary fiscal expenditures.
  - Government is considering allocating IMF ECF disbursements to pay salaries and wages of public servants in the Ministries of Finance and the Economy, and possibly Magistrates of the Audit’s Court, subject to sharing statistics with IMF services and agreeing guarantees.
- Public expenditure transparency:
  - A workshop was held in July 2023 to present preliminary PEFA review findings for 2019-2021; the final report will be sent to technical and financial partners and published by September 26.
  - Quarterly budget execution tables (TOFE) for 2022 and the first two quarters of 2023 have been prepared using the IMF-proposed format and will continue to be published no later than 45 days after the end of the quarter.

### Treasury single account (TSA), digitalization, and payroll reforms
- TSA consolidation and IT:
  - An initial draft TSA agreement between BEAC and the Treasury has been sent to BEAC headquarters for review; agreement will be signed as soon as possible.
  - Interconnection of Sygma-Systac and SimBa software is operational and being used to execute this year's budget.
  - Since 2022, a new digital application to manage pension arrears is in use to end arrears accumulation and immediately add new pensioners.
- Payroll cleanup:
  - An audit of the payroll chain by CGIC-Afrique, financed by the World Bank, produced conclusions and an action plan validated by inter-ministerial order n°789/MFB/MFPRA/23 of August 9, 2023.
  - Implemented measures include: creating and adapting view screens to track payroll file updates; adapting processing screens to create locks preventing duplicate entries in GIRAFE; cleaning the database of duplicate entries and similar anomalies.
  - A new format for publishing actual expenditure of ministerial departments, classified by economic nature, was introduced.

### Governance, anti-corruption, and judicial oversight
- Anti-corruption framework:
  - A new law on prevention and punishment of corruption and related offences was adopted in May 2023, almost a year ahead of schedule; it fully complies with IMF recommendations and the United Nations Convention against Corruption.
  - Commitment to implement new provisions relating to asset declarations (structural benchmark) and to seek IMF technical assistance for this implementation.
- Court of Audit independence:
  - A process to amend the relevant organic law to guarantee institutional and financial independence of the Audit’s Court is underway; a Bill prepared with EU support was submitted to TFPs for comments and is intended to be submitted to the Council of Ministers by February 2024 at the latest (structural benchmark).
- Asset declaration operationalization:
  - Pursuant to Art. 22 of the asset declaration law (n. 21.011) and Art. 4 of the anti-corruption law (n. 23.009), the Cabinet will adopt and implement regulation to allow the Haute Autorité de la Bonne Gouvernance (HABG) to operationalize asset declarations with:
    - a timeline for operationalization by the end of 2025,
    - a monetary threshold of at least 50 million CFAF for simplified declarations (Art. 22),
    - asset declaration forms.
  - This is identified as a structural benchmark for the third review (October 2024).

### Public procurement and fiscal accountability
- Transparency measures:
  - Published names of companies receiving pandemic-related funds and selection criteria until contract execution.
  - Published full details of all public contracts concluded in 2023 above the 10 million CFA francs threshold, including names of actual beneficiaries (measure in force since August 2021).
  - Will continue to make available all information required by the ministerial decree of 4 August 2021.
- COVID-19 audit:
  - The audit report on COVID-19 financing granted by the African Development Bank (ADB) was finalized and transmitted in accordance with ADB requirements.

### Business climate, mining, cryptoassets, and tokenization risks
- Mining sector:
  - TFP comments on the mining code will be taken into account before submission to the National Assembly to ensure compliance with FATF recommendations and CEMAC foreign exchange directives.
  - With World Bank support, government is committed to tabling and adopting the new mining code, the model mining agreement, and regulatory instruments for the mining fund and new public agencies.
- Financial mediation and debt collection:
  - Texts relating to financial mediation were validated by COBAC in May 2023.
  - Articles of association for a company to collect overdue bank debts were adopted; the first constitutive General Meeting will be convened no later than the end of December 2023.
- Cryptoassets and tokenization:
  - Law No. 22.004 of April 22, 2022 on cryptoassets had incompatibilities with CEMAC regulatory framework; the revised law No. 23.005 of April 6, 2023 removed legal tender status and guaranteed convertibility of cryptoassets.
  - Following enactment of Law No. 23-010 of 24 July 2023 on the "tokenization" of CAR's natural and land resources, the government requested a written opinion from BEAC on the law's compliance with CEMAC community provisions (prior action).
  - Measures to mitigate risks from the Sango project and tokenization:
    - Strengthen AML/CFT institutional framework by adopting a detailed institutional strengthening plan for Agence Nationale d'Investigation Financière (ANIF) addressing confidentiality, human resources, financial resources and technical resources (structural benchmark).
    - Disclose existing fiscal commitments and assess how the platform's activities could affect the government's fiscal position and overall debt sustainability; assessment to be presented to Cabinet and conducted following a framework developed with IMF TA, recommending legal measures to mitigate identified risks (structural benchmark).
    - Implement an action plan from the fiscal risks statement involving operational and legal reforms in the short (6 months), medium (9 months), and long term (over 12 months); revise the tokenization law where necessary and disseminate results to the National Assembly and the public.

### Banking system soundness
- Key indicators as of end-December 2022:
  - Capital adequacy ratio: 23.5% (regulatory minimum 10.5%).
  - Short-term liquidity ratio: 151.8% (regulatory minimum 100%).
  - Loans to the private sector: increased by 0.6 percent year-on-year in December 2022.
  - Non-performing loans (NPLs): 12.4 percent in December 2022.
  - Provisioning: 97 percent of NPLs are well provisioned.
- Risks:
  - Significant gaps remain in liquidity and concentration of NPLs among financial institutions, calling for increased vigilance.

### Capacity building
- Ongoing technical assistance and training by IMF and partners (World Bank Group, European Union, AfDB and others) in:
  - Improving revenue administration.
  - Strengthening fiscal management and anti-corruption mechanisms.
  - Designing macroeconomic programming and debt management.
  - Improving quality of economic and financial statistics.

### Program monitoring, targets, and structural benchmarks
- Monitoring framework:
  - The program will be monitored using quantitative performance criteria, indicative targets and structural benchmarks as stipulated in the Technical Memorandum of Understanding (Attachment No. II).
  - Quantitative performance criteria set for end December 2023, end June 2024 and end December 2024.
  - Indicative targets set for March 2024 and end September 2024.
  - Structural benchmarks set up to October 2024.
  - Second and third performance reviews scheduled on or after April 30, 2024 and October 30, 2024, respectively.
- Selected structural benchmarks and status (from Table 2):
  - Operationalize key functions of the new IT system for domestic revenues (online registration, online declaration and electronic payments) — SB first review (October 2023) — In progress.
  - Address fuel shortages and stabilize government revenues by: (i) calculating the hydrocarbon price structure while respecting the tax rates* and quasi-taxes** defined in the tax code, the finance law, and the CEMAC directives; and (ii) signing an inter-ministerial decree with the new hydrocarbon prices in line with IMF TA recommendations — SB first review (October 2023) — Met.
  - Transfer to the TSA all the funds collected directly by the ministries in exchange for services provided to users — SB second review (April 2024) — In progress.
  - Operationalize cross-verification module of new DGID IT system and interconnection with the customs computer system (Sydonia World) — SB second review (April 2024) — New.
  - Establish a public debt coordination and management framework with IMF TA support — SB first review (October 2023) — Met.
  - Adopt the anti-corruption law submitted to parliament on February 4, 2022 — SB second review (April 2024) — Met.
  - Consolidate all quasi-taxes into a single quasi-tax within the fuel price equation — SB second review (April 2024) — New.
  - Adopt a detailed institutional plan to strengthen ANIF (confidentiality, human, financial, technical resources) — SB second review (April 2024) — New.
  - Prepare a fiscal risk statement on the Sango project with IMF TA-developed framework and present to Cabinet — SB third review (October 2024) — New.
  - Conduct an audit of fuel procurement costs (margins and fees) and adapt price structure based on findings — SB third review (October 2024) — New.
  - Request an expedited written opinion from BEAC on the consistency of the Tokenization Law no. 23-010 of July 24, 2023 with the CEMAC legal and regulatory framework — Prior action.

*Italic line: Source: Central African Republic—IMF ECF program documentation (extracted content).*

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

### This Technical Memorandum of Understanding (TMU) defines the quantitative performance criteria, indicative targets, and structural benchmarks

### A. Definitions
- Government scope:
  - Defined as the central government of the CAR; excludes local governments, the central bank, and public entities with separate legal personality not included in the government financial operations table (TOFE).
- Debt (per para. 8 of the “Guidelines on Public Debt Conditionality in Fund Arrangements”):
  - “Debt” = current (not contingent) liability created under a contractual arrangement requiring future payments in assets or services.
  - Forms of debt include:
    - Loans (including deposits, bonds, debentures, commercial loans, buyers’ credits, repurchase agreements, official swap arrangements).
    - Suppliers’ credits (deferred payment contracts).
    - Leases (debt = PV at lease inception of all lease payments expected during the agreement, excluding operation/repair/maintenance payments).
  - Arrears, penalties, and judicially awarded damages from nonpayment under a contractual obligation that constitutes debt are debt.
  - External vs. domestic debt defined by residency of the creditor except:
    - (i) Treasury bills and bonds and other securitized debt issued by the government on the CEMAC regional financial market and not held by the local banking system are considered domestic debt.
    - (ii) Any BEAC credit to the government, including use of the SDR allocation, is considered domestic debt.
- Guaranteed debt:
  - Explicit legal obligation by the government to service a debt in event of borrower nonpayment (cash or in kind).
- Concessional debt:
  - Defined as debt with a grant element of at least 35 percent.
  - Grant element = (nominal value − present value) / nominal value; present value computed at contracting date using a 5 percent discount rate.
- Revenue and expenditure definitions:
  - Total government revenue: tax and nontax revenue or other revenue recorded on a cash basis. Excludes proceeds from sale of financial assets, privatizations, licensing renewals, investment proceeds, and grants.
  - Total government expenditure: wages and salaries, goods and services, transfers (including subsidies, grants, social benefits), interest payments, and investment expenditure, recorded on a settlement basis; includes expenditures executed before payment authorization and not yet regularized.
  - Wages and salaries: compensation per GFSM 2014 paras 6.8–6.18 (wages, salaries, allowances, bonuses, pension fund contributions, and other monetary or non-monetary payments) for all employees including armed and security forces.
- Arrears:
  - Any debt (per paragraph 3) not paid per contractual conditions.
- Domestic payment arrears = (i) payment arrears on expenditures; and (ii) payment arrears on domestic debt.
  - Payment arrears on expenditures: payment orders authorized by Treasury but not paid 90 days after authorization. Defined as “balances payable” whose maturity goes beyond the 90-day regulatory deadline; floating debt = “balances payable” whose maturity does not go beyond 90 days.
  - Payment arrears on domestic debt: difference between contractual amount due and amount actually paid after contractual deadline.
- External payment arrears:
  - Difference between contractual amount due on external debt and amount actually paid after contractual deadline.

### B. Quantitative Targets
- General:
  - Targets specified in Table 8 of the MEFP; adjusters in Section C. All quantitative performance criteria and indicative targets are assessed cumulatively from start of calendar year unless stated otherwise.
- Quantitative 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 privatizations or granting of licenses, Treasury bills and bonds and other securitized debt issued by the government in the CEMAC regional financial market denominated in CFA francs and not held by the local banking system, and any BEAC credit to the government including drawings on the CFA franc counterpart of the SDR allocation.
    - Net bank credit to the government = balance between debts and claims of the government vis-à-vis the central bank (excluding use of IMF credit) and national commercial banks. Government claims include CFA franc cash balance, postal checking accounts, guaranteed tax promissory notes, and deposits with BEAC and commercial banks of government-owned entities (excluding EPICs and government corporations). Government debt to the banking system includes all debt to the central bank and local commercial banks, including Treasury bills and securities and other securitized debt.
  - Floor for Domestic Government Revenue:
    - Only revenue on a cash basis (tax and nontax revenue) counted 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 excluded.
- Continuous Performance Criteria:
  - Ceilings on New External Debt Contracted or Guaranteed by the Government:
    - Government undertakes not to contract or guarantee nonconcessional debt (excluding newly contracted IMF financing and the General SDR allocation). Assessed cumulatively from October 1, 2021.
    - Government undertakes not to disburse nonconcessional debt (excluding newly contracted IMF financing and the General SDR allocation).
  - Non-Accumulation of New External Payment Arrears:
    - Government undertakes not to accumulate external payment arrears on external debt contracted or guaranteed by the government, except arrears relating to debt under renegotiation or rescheduling. Applied continuously.
- Indicative Targets:
  - Floor for Social Spending:
    - Poverty-reducing social spending = non-wage spending on national education (primary, secondary and higher), 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 counted. Execution monitored on a payment-order basis.
  - Ceiling on Spending using Extraordinary Procedures:
    - Set at 7 percent of total spending excluding wage spending, debt service (principal and interest), and externally financed spending.
  - Ceiling on New External Concessional Debt Contracted or Guaranteed by the Government:
    - Set at a cumulative CFAF 20 billion as of end-December 2023 and 2024.

### C. Adjusters of Quantitative Performance Criteria
- Privatizations / sales of financial assets / license renewals:
  - If receipts > programmed:
    - Ceiling on net domestic financing adjusted upward by 50 percent of additional receipts.
    - Floor for primary domestic fiscal balance adjusted downward by 50 percent of additional receipts.
- Budgetary support:
  - If total budgetary support exceeds programmed amount:
    - Ceiling on net domestic financing adjusted downward by 100 percent of the difference (programmed − actual).
  - If total budgetary support is less than programmed:
    - Ceiling on net domestic financing adjusted upward by 100 percent of the difference (programmed − actual).

### D. Structural Benchmarks
- Prior action (must be implemented at least five days before IMF board date for first review):
  - Request an expedited written opinion from BEAC on consistency of Tokenization Law No 23-010 of July 24, 2023 with CEMAC legal and regulatory framework, including exclusive use of the Sango Coin and Bitcoin as sole payment instrument for tokenized asset transactions through the Sango platform (Article 18) and repatriation of benefits (Article 8).
- First Review (October 2023) benchmarks:
  - Operationalize key functions of new IT system for domestic revenues, including online registration, online declaration, and electronic payments.
  - Address fuel shortages and stabilize government revenues by:
    - (i) calculating the hydrocarbon price structure while respecting tax/quasi-tax rates in the tax code, finance law, and CEMAC directives; and
    - (ii) signing an inter-ministerial decree with new hydrocarbon prices in line with IMF TA recommendation on fuel prices.
  - Establish a public debt coordination and management framework with IMF TA support.
- Second Review (April 2024) benchmarks:
  - Adopt detailed institutional plan to strengthen operational work of Agence Nationale d'Investigation Financière (ANIF) addressing confidentiality, human, financial and technical resources.
  - Transfer to the TSA all funds collected directly by ministries in exchange for services provided to users.
  - Operationalize cross-verification module of new DGID IT system and interconnection with customs computer system (SYDONIA World).
  - Adopt the anti-corruption law submitted to parliament on February 4, 2022 (met).
  - Consolidate all quasi-taxes into a single quasi-tax within the fuel price equation.
  - Submit to Cabinet a draft new organic law regulating statute and functions of the Court of Audit to ensure financial and operational independence (per IMF recommendations).
- Third Review (October 2024) benchmarks:
  - Prepare a fiscal risk statement on the Sango project, disclosing fiscal commitments and assessing how platform activities could affect government fiscal position and debt sustainability; present to Cabinet. Assessment to follow a framework developed with IMF TA and recommend legal measures to mitigate identified risks.
  - Pursuant to Art. 22 of asset declaration law (n. 21.011) and Art. 4 of anti-corruption law (n. 23.009), Cabinet will adopt an implementing regulation to allow Haute Autorité de la Bonne Gouvernance (HABG) to operationalize asset declaration law, focusing on receiving and publishing asset declarations of senior public officials. Implementing regulation should include:
    - (i) specific timeline for operationalization of asset declaration requirements at the latest by the end of 2025;
    - (ii) a monetary threshold of at least 50 million FCFA for simplified declarations contemplated in Art. 22 of the asset declaration law;
    - (iii) asset declaration forms.
  - Issue ministerial decree outlining minimal criteria for official taxpayer recognition by the tax office.
  - Conduct an audit of fuel procurement costs (including margins and fees) to establish optimal levels reflecting efficient operations by suppliers; adapt price structure based on audit findings.

### E. Reporting of Data to the IMF
- Authorities commit to reporting quantitative data for indicative targets per Table III and to promptly report all data revisions. Consultation with Fund staff required for any additional information needed for program implementation and confirmation whether program objectives have been achieved.
- Reporting deadlines and data (to be provided in Excel format):
  - Semi-annual evaluation report on qualitative indicators and structural measures (Tables 1 and 2 in the MEFP), with 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 payments arrears on goods and services and on wages, including unpaid pensions and bonuses — Within four weeks of the end of each month.
  - End-of-period stock of external debt — Within four weeks of the end of each month.
  - Breakdown of expenditures included in the TOFE (goods, services, wages, interest, etc.) — Within four weeks of the end of each month.
  - Summary table of actual expenditure in priority sectors (health, education, security) — Within four weeks of the end of each quarter.
  - Breakdown of current and capital expenditure, by funding source — 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.
  - Revenue 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, by principal and interest 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 external debt relief granted by external creditors (including date, amount, and creditor) — Within four weeks of the end of each month.

### Debt Sustainability Analysis (selected findings)
- Risk ratings:
  - Risk of external debt distress: High
  - Overall risk of debt distress: High
  - Granularity in the risk rating: Sustainable
  - Application of judgement: No
- Key points:
  - CAR remains at high risk of external debt distress and overall high risk of debt distress.
  - Public debt projected to be sustainable, but substantial liquidity risks exist stemming from possible shortfalls in donor support and domestic/regional market access.
  - Approval of ECF-supported program in April 2023 catalyzed regional market financing; high uncertainty persists regarding external financing amid geopolitical tension and uncertainties created by laws on cryptocurrencies and tokenization of natural and land resources.
  - Compared to previous DSA, domestic debt increased due to ramped-up borrowing in the CEMAC regional debt market amid delayed donor budget support.
  - Present value of debt-to-GDP elevated following 2022 data outturn, resulting in a breach in the threshold in 2024.
  - Solvency indicators for external debt remain below thresholds, but liquidity indicators (debt service-to-exports and debt service-to-revenue) exhibit breaches for 5 years starting in 2023, largely on account of obligations to the Fund falling due.
  - Sensitivity of debt indicators to standard stress tests, significant macroeconomic and financing uncertainty, and sizeable contingent liabilities support the high-risk assessment.
  - Assessment predicated on authorities’ continued prioritization of and ability to secure grant financing for essential current spending and developmental projects.

*Source: https://www.imf.org/-/media/files/publications/cr/2023/english/1cafea2023003.pdf*

### 1. The coverage of public sector debt includes external and domestic contractual

### 1. The coverage of public sector debt includes external and domestic contractual

### Coverage and data gaps
- Public sector debt coverage includes external and domestic contractual obligations of the central government, unchanged from the previous DSA.
- 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).
- Coverage gaps noted:
  - Non-guaranteed SOE debt.
  - Supplier arrears.
- Post HIPC arrears of the central government account for less than 1 percent of GDP.
- A full arrears determination is expected this year as the public sector begins a plan to negotiate with all creditors it has arrears in an attempt to resolve them.
- The limited debt coverage is symptomatic of capacity weakness to effectively collect debt data, thus limiting the scope for a full-scale debt analysis.

### SOEs, audits, and reform measures
- Implementation of the new legal framework governing SOEs would improve their financial oversight and should lead to better debt coverage going forward.
- Under the World Bank Sustainable Development Financing Policy (SDFP), the government completed and published in 2021 the audits of the three largest state-owned enterprises operating in the energy, telecommunications, and water sectors (ENERCA, SODECA, SOCATEL).
  - Objective of the audits: assess financial viability, increase transparency in contingent liabilities reporting, and clarify the status of unaudited domestic arrears.
- The government prepared and approved a cross-debt settlement plan for these SOEs based on the audits.
- As per SDFP FY23 PPA#1 (adopted in 2022):
  - Authorities plan to prepare and publish an annual report on the financial performance and fiscal risks associated with these three SOEs.
  - The first annual report, released in April 2023 and covering January–December 2021, discloses consolidated financial and operational information and aims to be updated annually on the Ministry of Finance and Budget's website.
- The cross-debt settlement plan covering 2023–2025 is on hold due to significant treasury pressures and the absence of budget support from development partners owing to the absence of any commitment that sanctioned entities will not be financed from the budget or other public sources.

### Contingent liabilities stress test design
- The DSA includes a combined contingent liabilities stress test that assumes a tailored shock at 15 percent of GDP capturing public sector exposure to arrears, SOEs, and a financial market shock (Text Table 1).
- Rationale and calibration:
  - Total tailored shock: 15.0 (percent of GDP).
  - Contingent liabilities shock components:
    - SOE debt shock set at 5 percent of GDP (instead of the default 2 percent) to reflect heightened risks associated with non-guaranteed SOE debt and potential expenditure arrears.
    - Domestic arrears shock set at 5 percent of GDP to incorporate past and persisting shortcomings in public expenditure management systems.
    - Financial market risk shock kept at the default value of 5 percent of GDP given the small size and depth of the financial sector in CAR.
  - CAR has started publishing detailed debt reports since the last DSA; the latest one records CFAF 48.6 billion as debt of SOEs and CFAF 147.9 billion as arrears, by the second half of 2021.

### Background on public debt levels and drivers
- Public and publicly guaranteed (PPG) debt developments:
  - After gradually declining to 44  .4 percent of GDP in 2020, public sector debt increased to 48.6 percent of GDP in 2021 and to 54.2 of GDP in 2022, on account of a conjunction of negative shocks: the security crisis, the COVID-19 pandemic, and the pause in donor-financing owing to fiscal transparency concerns.
  - Public debt is estimated to decline to about 50 percent of GDP in 2023 led by a fall in external debt which represents about 60 percent of CAR’s total public indebtedness.
- Most of the increase in public debt since 2020 has been driven by higher domestic borrowing.
  - Domestic debt consists of statutory and exceptional advances from the Bank of Central African States (BEAC) consolidated into one loan.
  - In 2021, BEAC restructured the CFAF 80.5 billion debt via an extension of the grace period to 2025 (instead of 2022) and of the maturity to 20 years (from 10 years).
  - Given additional issuance of domestic securities and use of SDR allocation in 2022, domestic debt is estimated to have reached 18.2 percent of GDP that year.
  - In 2023, domestic debt should stand at about 20 percent of GDP.
  - Subscription rates in 2023 increased from an average of less than 20 percent during the first quarter, to around 70 percent right after approval of the current ECF-supported program, and to 100 percent for a CFAF 25 billion-syndicated regional issuance executed in August.
  - Yields on 3- year issuances have hovered around 11 percent.
- SDR use and domestic debt recording:
  - By May 2022, CAR had drawn down its 2021 SDR allocation in three tranches to support the budget.
    - December 2021: draw-down of CFAF 35 billion (SDR 44.5 million).
    - March 2022: draw-down of CFAF 20 billion (SDR 25 million).
    - May 2022: draw-down of CFAF 30.5 billion (SDR 37.3 million).
  - The SDR use in 2021 and 2022 is recorded as domestic debt and adjusted to be on present value terms.
- External debt and composition:
  - External debt is estimated to have reached 36 percent of GDP at the end of 2022, driven mainly by the depreciation of the CFAF.
  - Authorities refrained from contracting or disbursing any new external non-concessional debt consistent with the World Bank’s SDFP and Fund advice.
  - A loan of $20 million contracted by CAR in 2014 from Angola has been added to the debt stock resulting in a slight uptake in external debt stock.
  - Debt owed to multilateral creditors and pre-HIPC arrears continue to account for the bulk of external debt.
    - Multilateral creditors (mainly the IMF and the World Bank) held close to 60 percent of external debt in 2022.
    - CAR has officially recognized pre-HIPC arrears amounting to 8 percent of GDP with non-Paris Club creditors (Argentina, Equatorial Guinea, Iraq, Libya, and Taiwan, Province of China).
    - Total bilateral debt amounts to about 13 percent of GDP, with India, China, Saudi Arabia, Kuwait, Angola and Congo as main creditors.
    - Debt to private creditors is negligible. This debt is included in the baseline.
- Debt relief and arrears resolution:
  - 2020 debt relief: China cancellation operation about 0.8 percent of GDP; Energoprojekt (Serbia) 90-percent principal reduction and rescheduling about 1.7 percent of GDP.
  - Under the G20 DSSI (May 2020–December 2021), US$7 million was rescheduled.
  - CCRT assistance: US$18.4 million covering IMF payments from April 14, 2020, to April 13, 2022.
  - CAR has accumulated arrears to Angola and OFID; there is a credible plan to resolve arrears with OFID; negotiations ongoing with Angola to clear arrears.
  - Some small external arrears of US$0.15 million to IFAD started in December 2020 but were cleared in March 2021.

### Composition snapshot (selected figures from Text Table 2)
- Total debt (2022): 1,338.7 (mil US$) = 100.0 (Percent total debt) = 54.2 (Percent GDP).
- External debt (2022): 888.5 (mil US$) = 66.4 (Percent total debt) = 36.0 (Percent GDP).
- Domestic debt (2022): 450.2 (mil US$) = 33.6 (Percent total debt) = 18.2 (Percent GDP).
- Multilateral creditors (2022): 532.0 (mil US$) = 39.7 (Percent total debt) = 21.5 (Percent GDP).
  - IMF (2022): 269.3 (mil US$) = 20.1 (Percent total debt) = 10.9 (Percent GDP).
  - World Bank (2022): 124.7 (mil US$) = 9.3 (Percent total debt) = 5.0 (Percent GDP).
- Non-Paris Club pre-HIPC arrears (2022): 207.4 (mil US$) = 15.5 (Percent total debt) = 8.4 (Percent GDP).
- Nominal GDP (2022): 2,469.5 (mil US$).

### Underlying macroeconomic assumptions, risks, and projections
- Near-term risks: regained regional market access balanced by high security and geopolitical risks and the passage of the law for the tokenization of natural and land resources. Donors have been withholding budget support since 2021 due to transparency concerns.
- Tokenization law:
  - Promulgated in July 2023; implementing decrees are yet to be introduced.
  - Provides a framework for tokenization through the SANGO platform.
  - Could raise risks related to transparency, financial integrity, and fiscal risks that ought to be mitigated as part of the ECF-supported program.
- Financing outlook:
  - Dependence on government ability to adhere to ECF-program targets and foster good governance, transparency, and financial integrity to protect market access and catalyze donor support.
  - Failure to meet goals could lead to acute financing needs and a disorderly, steep spending adjustment with significant population hardship.
- Growth projections and revisions:
  - Real GDP growth:
    - Stagnated at 1.0 percent in 2021.
    - 0.5 percent in 2022.
    - Projected at 1 percent for 2023 (down from 2.2 percent in the prior DSA).
    - Medium-term: revised to 1.5 percent for 2024 (from 3 percent), 2.5 percent for 2025 (from 3.8 percent).
    - Growth for 2026 and 2027 unchanged at 3.7 percent.
    - Long-term growth (2028-42) projected at 3.2 percent.
  - Drivers for revisions: fuel shortages, security, global environment; long-term assumptions include normalization with the international community, peace agreement, restoration of services, arrears clearance, increased investments, and improvements in human capital and productivity.
- Inflation:
  - Average inflation reached 5.6 percent in 2022.
  - Inflation projection for 2023 raised from 6.3 percent in the prior DSA to 6.5 percent.

### Policy and technical priorities signaled in the text
- Improve SOE financial oversight through implementation of the new legal framework governing SOEs and publication of annual SOE financial performance and fiscal risk reports.
- Resolve arrears via planned creditor negotiations and a full arrears determination.
- Strengthen debt data collection capacity to enable comprehensive debt analysis.
- Attract donor support to protect debt service capacity and reduce reliance on high-cost domestic market financing.
- Mitigate risks from the tokenization law (transparency, financial integrity, fiscal risks) within the ECF-supported program framework.
- Maintain commitment to zero new external non-concessional borrowing under the SDFP and coordinate any exceptions with the World Bank and IMF as specified.

*Source: IMF staff estimates and country authorities (excerpts from the cited DSA chapter).*

### 7.1 percent in March. Inflation would subsequently decline gradually towards the CEMAC’s

### 1cafea2023003 - 7.1 percent in March. Inflation would subsequently decline gradually towards the CEMAC’s

### Inflation and near-term outlook
- Inflation reached 7.1 percent in March.
- Inflation would subsequently decline gradually towards the CEMAC’s 3 percent convergence criterion, provided that fuel supply improves and the trade corridor with Cameroon remains active.

### Public finances: recent developments and medium-term outlook
- For 2021 and 2022, overlapping crises and the continued standstill in budgetary support resulted in a difficult budget situation.
- Most of the financing needs for 2022 are estimated to have been covered by the use of the SDR allocation, with the residual being met by borrowing from domestic and regional markets.
- In 2023, the financing gap has thus far been covered through issuances of debt in the regional market coupled with a credit line with a local bank, as well as IMF financing.
- Financing from the IMF, World Bank, and the African Development Bank are expected to cover financing needs during the last quarter of the year.
- Medium term (2024-2027) assumptions:
  - Budget support grants are expected to gradually increase to 3.0 percent of GDP on the assumption that the government will reach an agreement with the main donors to unblock their financing.
  - Revenue mobilization is anticipated to increase by an average of 0.6 percent of GDP per year, chiefly led by a streamlining in tax exemptions, a bolstering in revenues at customs, and continued efforts to recover past-due taxes in line with the ECF program targets.
  - Expenditures are expected to remain overall stable as a percentage of GDP.
  - As a result, the fiscal primary balance (including grants) for 2027 was left unchanged at around a surplus of 1 percent of GDP (from a deficit of 2.5 percent of GDP for 2024).
  - Most financing needs in 2024 and 2025 would still be covered through the regional debt market, while in 2026 and 2027 it is anticipated that external concessional borrowing would have been resumed.
- Long term (2028-42) assumptions:
  - Domestic revenues (government revenues excluding grants) are assumed to follow a gradual upward trend, reaching 13.7 percent of GDP at the end of the projection period.
  - Budget support grants are assumed to decline to 1 percent of GDP, to account for IDA regular credit terms being applied where World Bank grant financing has not already been committed.
  - The primary fiscal deficit is expected to decline gradually to 0.4 percent of GDP over the long run.
  - Financing composition: about one half of financing needs is assumed to be covered through external concessional borrowing—with a gradually decreasing degree of concessionality—and another half through domestic borrowing.
- Current and planned revenue reforms to underpin projections:
  - Incorporate the external data cross-verification module to optimize the performance of the new electronic tax system and improve tax collection.
  - Consolidate in a single levy numerous taxes and levies imposed on fuel destined to finance much-needed infrastructure.
  - Incorporate all fees and expenses of services (minor revenue) collected by the various ministries in the Treasury Single Account (TSA).
  - Broaden the usage of new software (SYDONIA World) to register customs operations.

### Macroeconomic assumptions (selected figures from Text Table)
- GDP growth (percent) averages:
  - 2021-27: 2.0
  - 2028-42: 3.2
  - Current DSA-2022 AIV and ECF request averages: 2021-27: 2.6; 2028-42: 3.2
- GDP deflator (percent) averages:
  - 2021-27: 3.8
  - 2028-42: 2.5
- Non-interest current account balance:
  - 2021-27: -8.0 percent of GDP
  - 2028-42: -6.7 percent of GDP
- Exports of goods and services:
  - 2021-27: 15.0 percent of GDP
  - 2028-42: 16.9 percent of GDP
- Primary balance:
  - 2021-27: -2.1 percent of GDP
  - 2028-42: -0.8 percent of GDP
- Revenues and grants:
  - 2021-27: 15.3 percent of GDP
  - 2028-42: 14.9 percent of GDP

### External sector and balance of payments
- Current account:
  - Deteriorated to an 11.1 percent of GDP deficit in 2021, due mainly to the non-disbursement of donors’ budget support, the security crisis, and higher import prices.
  - Deteriorated further to -12.8 percent of GDP in 2022, driven mainly by an 8.4 percent drop in terms of trade (due to both fuel and food price shocks).
  - Expected to converge to a 4.5 percent of GDP deficit by 2027, owing to the expected fiscal adjustment and an increase in exports driven by reforms for economic diversification and adding value to existing exports.
- SDR allocation and balance of payments:
  - The SDR allocation helped generate a small balance of payment surplus in 2021.
  - The nearly 6 percent of GDP in SDR allocation compensated for the decline in official public transfers.
  - The lack of donor financing in 2022, coupled with the exhaustion of the SDR allocation and the large trade deficit, led to a balance of payments deficit of about 7.8 percent of GDP.
- Medium term external flows:
  - Official budget support transfers are expected to resume.
  - Project-support transfers remain relatively solid.
  - FDI inflows are projected to increase moderately to about 1.5 percent of GDP.
  - Overall, the balance of payments is projected to reach a moderate surplus of around 2.6 percent of GDP by 2027.

### Realism of baseline assumptions and growth prospects
- Debt dynamics tools show a broadly unchanged trajectory for external PPG debt and public debt compared with the previous DSA.
- Risks flagged around the baseline include:
  - Growth projection risks.
  - Ambitious projected fiscal consolidation (the envisaged fiscal path in terms of the projected 3-year primary balance adjustment is in the top quartile relative to the comparison group).
  - Long-term private investment outlook uncertainty.
- Growth in 2023 appears strong given the fiscal consolidation for standard values of fiscal multipliers; growth is mostly driven by private sector rebound after the fuel shock shortage is resolved, in particular the primary sector (agriculture, mineral extraction).
- Over time there is a projected switch from public to private investment as a driver of growth.

### Debt carrying capacity, debt sustainability, and stress tests
- Debt carrying capacity:
  - CAR’s composite indicator (CI) is 2.27, a decline from 2.33, driven by a downgrade in the WEO outlook component and stagnation of the CPIA overall score.
  - CI rating: Weak.
  - Under weak debt carrying capacity, applicable external debt burden thresholds are:
    - PV of debt-to-GDP ratio: 30 percent
    - PV of debt-to-exports ratio: 140 percent
    - Debt service-to-exports ratio: 10 percent
    - Debt service-to-revenue ratio: 14 percent
  - Benchmark for the PV of total public debt: 35 percent of GDP.
- External debt sustainability (A):
  - Present value of external debt-to-GDP ratio is on a declining trajectory and remains well below the relevant threshold under the baseline scenario, but comes close to breaching the threshold for the most extreme standardized stress test.
  - PV of debt-to-exports declines from close to the 140 percent threshold to well below it in the medium term.
  - Liquidity indicators breach thresholds for 5 years from 2023 under the baseline scenario:
    - External debt service-to-exports and debt-to-revenue ratios both breach their respective threshold for 5 years starting in 2023, driven by a significant uptick in debt service, primarily related to an increase in repayments to the Fund and increased debt payment obligation to OPEC Fund for International Development (OFID) due to recognition of arrears.
  - Mitigating factors: CAR is part of CEMAC and has access to its pool of reserves (provided it has budgetary resources to purchase them) and access to the CEMAC domestic debt market. Under successful ECF-supported program implementation, large repayments to the Fund are feasible based on program financing assumptions.
- Public debt sustainability (B):
  - Driven by the surge in domestic debt, total public debt indicators are high but remain below the relevant threshold.
  - PV of debt-to-GDP breaches its threshold in 2024 before gradually declining until 2027 and broadly stabilizing thereafter under current financing assumptions.
  - PV of the debt-to-revenue ratio is on a declining path and stabilizes after 2029.
  - The debt-service-to-revenue and grants ratio will increase to about 60 percent by 2025 and remain elevated, reflecting higher domestic debt service payments.
  - A standardized shock to growth would trigger a breach of the threshold for the PV of the debt-to-GDP ratio and significantly increase the PV of the debt-to-revenue ratio.

### Risk rating, vulnerabilities, and key policy implications
- Risk rating:
  - CAR remains at high risk of external debt distress and overall high risk of debt distress, but debt is assessed to be sustainable.
  - The rating is driven by persistent breaches in the medium term of the thresholds for both the external debt service-to-export and external debt service-to-revenue ratios under the baseline scenario, signaling potential liquidity problems.
- Key vulnerabilities and considerations:
  - Persistent standstill in budget support, overlapping adverse shocks (security and terms of trade), and recent fiscal revenue decline linked to fuel shortages.
  - The recently passed crypto law has elicited criticism from regional financial authorities and damaged prospects for immediate budget support.
  - Increased tapping of domestic CEMAC markets in 2021-23; large financing needs in 2024 and 2025 can exacerbate rollover risks.
  - Further delays in resumption of budget support would raise the risk of disorderly fiscal adjustments, weigh on growth, and could trigger a total loss of access to the regional market with debt sustainability repercussions.
  - Contingent liabilities from vulnerable SOEs could severely affect the budget and debt risks.
- Policy recommendations and priorities:
  - Urgency of fiscal measures to strengthen revenue.
  - Renewed efforts to restore relations with donors to ensure sustainability and unlock budget support.
  - Short-term fiscal prudency, supported by World Bank and African Development Bank financing and a disbursement under the ECF, is expected to help close the 2023 financing gap.
  - Avoid disbursing the highly non-concessional BDEAC loan signed in 2021, as it would worsen external debt sustainability indicators; staff continue to advise against it.
  - Ensure successful execution of the UCT (Upper Credit Tranche) program and reach agreement with donors to unlock budget support to secure medium-term debt sustainability.
  - Additional domestic borrowing could be used to cover gaps given access to the liquid domestic CEMAC market, and the ample pool of regional foreign exchange reserves mitigates repayment risks—conditional on preserving market access.

*Source: IMF staff projections and analysis as presented in the provided content.*

### 23. The authorities broadly agreed with the assessment contained in the report. They

### 23. The authorities broadly agreed with the assessment contained in the report

### Authorities' assessment and key policy implications
- The authorities broadly agreed with the assessment contained in the report.
- They agreed that debt sustainability hinges on the successful implementation of reforms under the ECF-supported program.
- A sustainable fiscal consolidation that is revenue led is critical for revenue mobilization and unlocking donor support.
- Structural reforms to enhance governance and transparency are critical for revenue mobilization and unlocking donor support.
- Grant financing, as well as external concessional financing, is needed to ensure debt sustainability in addition to better capacity development in the area of debt management.

### Stress-test framework and technical notes (Figures and captions)
- Indicators cover Public and Publicly Guaranteed (PPG) external debt under alternative scenarios, 2022-2032.
- Sources: Country authorities; and staff estimates and projections.
- Definition of most extreme stress test:
  - "The most extreme stress test is the test that yields the highest ratio in or before 2032."
  - "The stress test with a one-off breach is also presented (if any), while the one-off breach is deemed away for mechanical signals."
  - "When a stress test with a one-off breach happens to be the most exterme shock even after disregarding the one-off breach, only that stress test (with a one-off breach) would be presented."
- Note on additional financing under stress tests:
  - "All the additional financing needs generated by the shocks under the stress tests are assumed to be covered by PPG external MLT debt in the external DSA."
  - "Default terms of marginal debt are based on baseline 10-year projections."
- Stress-test customization and settings (as presented):
  - Threshold: 1.0%1.0%
  - Interactions: No
  - User defined Default
  - Terms of marginal debt: Market financing n.a.n.a.
  - Tailored Stress: 5.0% 6 25 5.0% 25 6 Combined CL Natural disaster
  - Most extreme shock 1/: No
  - Size: 0 5 10 15 20 25 30 35 40 (years shown: 2022 2024 2026 2028 2030 2032)
  - Debt service-to-revenue ratio: Most extreme shock: Growth (scale 0–250 shown for 2022–2032)
  - PV of debt-to-exports ratio: Most extreme shock: Exports (scale 0–40 shown for 2022–2032)
  - PV of debt-to-GDP ratio: Most extreme shock: Growth (scale 0–30 shown for 2022–2032)
  - Debt service-to-exports ratio: Most extreme shock: Exports

### Public debt composition and assumptions (Figure 2)
- Indicators cover Public Debt under alternative scenarios, 2022-2032.
- Composition labels and numerical fragments as presented:
  - Baseline Most extreme shock 1/ TOTAL public debt benchmark Historical scenario Default User defined
  - 35%60% 65%14% 0%26% 1.0%1.8% 2530 66 3.0%5.4% 52 21 0.0%2.0%
- Debt categories and terms (as presented):
  - External PPG medium and long-term
  - Domestic medium and long-term
  - Domestic short-term
  - Domestic MLT debt
  - External MLT debt
  - Avg. real interest rate on new borrowing
  - Avg. maturity (incl. grace period)
  - Avg. grace period
  - Avg. nominal interest rate on new borrowing in USD
  - USD Discount rate
  - * Note: "The public DSA allows for domestic financing to cover the additional financing needs generated by the shocks under the stress tests in the public DSA. Default terms of marginal debt are based on baseline 10-year projections."
- Time series and ratios shown: PV of Debt-to-Revenue Ratio, Debt Service-to-Revenue Ratio, PV of Debt-to-GDP Ratio for 2022–2032.

### Drivers of debt dynamics (Figure 3)
- Two panels shown: External Debt and Public Debt.
- External Debt drivers and displays:
  - Gross Nominal PPG External Debt (in percent of GDP; DSA vintages)
  - Debt-creating flows (percent of GDP)
  - Unexpected Changes in Debt 1/ (past 5 years, percent of GDP)
  - Contribution components listed: Residual; Price and exchange rate; Real GDP growth; Nominal interest rate; Current account + FDI; Change in PPG debt 3/
  - Time series coverage includes years 2017–2032 (and 2017–2033 in some panels).
- Public Debt drivers and displays:
  - Gross Nominal Public Debt (in percent of GDP; DSA vintages)
  - Debt-creating flows (percent of GDP)
  - Unexpected Changes in Debt 1/ (past 5 years, percent of GDP)
  - Contribution components listed: Residual; Other debt creating flows; Real Exchange rate depreciation; Real GDP growth; Real interest rate; Primary deficit; Change in debt
  - Distribution metrics across LICs: Interquartile range (25-75), Median, Change in PPG debt 3/
- Notes:
  - 1/ "Difference between anticipated and actual contributions on debt ratios."
  - 2/ "Distribution across LICs for which LIC DSAs were produced."
  - 3/ "Given the relatively low private external debt for average low-income countries, a ppt change in PPG external debt should be largely explained by the drivers of the external debt dynamics equation."

### Realism tools for fiscal adjustment and growth paths (Figure 4)
- Source: IMF staff projections
- Elements shown:
  - Fiscal Adjustment and Possible Growth Paths 1/
  - Gov. Invest. - Prev. DSA; Gov. Invest. - Curr. DSA; Contribution of other factors
  - Priv. Invest. - Prev. DSA; Priv. Invest. - Curr. DSA; Contribution of government capital
  - Metrics presented as percent of GDP and contribution to Real GDP growth (percent, 5-year average)
  - Public and Private Investment Rates
- Note:
  - 1/ "Data cover Fund-supported programs for LICs (excluding emergency financing) approved since"

*Source: Excerpt from the IMF country report text and figures as provided in the content unit.*

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

### 1cafea2023003 - 1990. The size of 3-year adjustment from program inception is found on the horizontal axis; the

### 3-Year Fiscal Adjustment and Growth Scenarios
- Chart caption: "3-Year Adjustment in Primary Balance (Percentage points of GDP)".  
- Distribution: Projected 3-yr adjustment (horizontal axis) and percent of sample (vertical axis).  
- Notable percentile: "3-year PB adjustment greater than 2.5 percentage points of GDP in approx. top quartile."  
- Growth scenario lines use multipliers: Multiplier = 0.2; Multiplier = 0.4; Multiplier = 0.6; Multiplier = 0.8.  
- Time series shown (selected years): 2016, 2017, 2018, 2019, 2020, 2021, 2022, 2023 and projections to 2027.

### External Debt Sustainability Framework — Baseline Scenario (2019–2042)
- External debt (nominal), percent of GDP (selected years):  
  - 2019: 37.1; 2020: 35.0; 2021: 35.3; 2022: 36.0; 2023: 31.0; 2024: 29.8; 2025: 28.9; 2026: 27.7; 2027: 26.5; 2032: 30.6; 2042: 29.5.  
- Change in external debt (percent of GDP): -0.1; -2.1; 0.3; 0.7; -5.0; -1.2; -0.9; -1.2; -1.2; 0.2; -2.9.  
- Identified net debt-creating flows (percent of GDP): 3.8; 6.4; 8.2; 11.6; 6.9; 6.5; 4.8; 3.0; 1.9; 3.7; 3.8; 6.4; 4.7.  
- Non-interest current account deficit (percent of GDP): 4.8; 8.0; 11.0; 12.6; 8.4; 8.1; 6.7; 5.2; 4.3; 6.3; 6.8; 7.4; 6.8.  
- Deficit in balance of goods and services (percent of GDP): 18.3; 19.4; 18.2; 20.0; 17.2; 16.8; 16.4; 16.0; 15.1; 15.1; 12.4; 16.4; 16.1.  
- Exports (percent of GDP): 15.7; 14.0; 13.7; 13.7; 14.3; 14.2; 15.6; 16.1; 17.1; 18.1; 15.8.  
- Imports (percent of GDP): 34.1; 33.3; 31.9; 33.7; 31.5; 31.0; 32.1; 32.2; 32.2; 33.2; 28.2.  
- Net current transfers (negative = inflow), percent of GDP: -13.6; -11.3; -7.2; -7.4; -9.0; -8.9; -9.9; -10.9; -10.9; -8.6; -5.3; -9.0; -9.3.  
  - Of which: official transfers (percent of GDP): -7.3; -6.8; -1.9; -2.0; -3.5; -3.0; -4.0; -5.1; -5.1; -2.6; -1.3.  
- Net FDI (negative = inflow), percent of GDP: -1.1; -0.1; -0.2; -1.0; -1.4; -1.4; -1.4; -1.4; -1.6; -2.0; -2.4; -0.9; -1.6.  
- Endogenous debt dynamics (percent of GDP): 0.2; -1.6; -2.6; 0.0; -0.1; -0.2; -0.5; -0.8; -0.8; -0.6; -0.6.  
  - Contribution from nominal interest rate (percent of GDP): 0.1; 0.1; 0.1; 0.1; 0.2; 0.2; 0.2; 0.2; 0.2; 0.3; 0.4.  
  - Contribution from real GDP growth (percent of GDP): -1.1; -0.3; -0.3; -0.2; -0.3; -0.4; -0.7; -1.0; -1.0; -0.9; -1.0.  
  - Contribution from price and exchange rate changes: 1.1; -1.4; -2.3; ... (ellipsis in source).  
- Residual (includes exceptional financing, valuation adjustments) (percent of GDP): -4.0; -8.5; -7.9; -10.9; -11.9; -7.7; -5.7; -4.2; -3.1; -3.5; -6.6; -3.7; -5.2.  
  - Of which: exceptional financing (percent of GDP): 0.0; -0.5; -0.4; -0.1; 0.1; 0.1; 0.0; 0.1; 0.0; 0.0; 0.0.  
- Sustainability indicators (selected):  
  - PV of PPG external debt-to-GDP ratio (selected years): 18.; 6. (ellipsis in source) ... 19.8 (table shows sequence with ellipses).  
  - PV of PPG external debt-to-exports ratio (selected): 136.; 0 (ellipsis) ... 125.6 (table entries contain ellipses and sequences).  
  - PPG debt service-to-exports ratio: 3.7; 3.7; 3.5; 4.9; 10.6; 12.9; 13.3; 13.4; 11.8; 8.6; 6.7.  
  - PPG debt service-to-revenue ratio: 6.6; 5.6; 5.5; 8.7; 18.2; 20.2; 21.2; 20.3; 18.5; 13.5; 7.7.  
- Gross external financing need (Million of U.S. dollars, selected years): 96.3; 202.7; 291.1; 302.6; 234.3; 252.8; 230.2; 198.9; 164.4; 275.4; 447.7.  

### Key Macroeconomic Assumptions (External DSA table)
- Real GDP growth (in percent): 3.0; 1.0; 1.0; 0.5; 1.0; 1.5; 2.5; 3.7; 3.7; 3.2; 3.2; -0.9; 2.6.  
- GDP deflator in US dollar terms (change in percent): -2.9; 3.8; 7.1; -5.3; 10.9; 5.8; 3.2; 2.8; 2.0; 2.5; 2.5; 2.7; 2.9.  
- Effective interest rate (percent): 0.4; 0.4; 0.3; 0.3; 0.6; 0.7; 0.6; 0.6; 0.7; 1.1; 1.2; 0.7; 0.8.  
- Growth of exports of G&S (US dollar terms, in percent): -1.3; -7.1; 6.1; -4.6; 17.0; 6.0; 16.7; 10.1; 12.2; 5.2; 5.5; 2.4; 8.4.  
- Growth of imports of G&S (US dollar terms, in percent): 0.9; 2.5; 3.7; 0.5; 4.7; 5.4; 9.5; 6.9; 5.9; 6.0; 4.1; 6.8; 5.9.  
- Grant element of new public sector borrowing (in percent): ...; 48.7; 35.8; 35.5; 36.1; 35.3; 35.8; 45.9; 41.6; ...; 40.1.  
- Government revenues (excluding grants, percent of GDP): 8.7; 9.2; 8.8; 7.8; 8.3; 9.0; 9.8; 10.6; 10.9; 11.5; 13.8; 7.7; 10.2.  
- Aid flows (Million of US dollars): 235.9; 339.0; 141.8; 121.6; 185.0; 163.4; 219.4; 250.6; 256.0; 249.6; 181.6.  
- Grant-equivalent financing (percent of GDP): ...; 4.8; 7.0; 5.9; 7.4; 8.2; 7.9; 4.7; 2.0; ...; 6.5.  
- Grant-equivalent financing (percent of external financing): ...; 95.0; 85.2; 80.6; 81.9; 83.8; 84.3; 73.7; 57.5; ...; 80.2.  
- Nominal GDP (Million of US dollars, selected years): 2,278.3; 2,388.4; 2,583.7; 2,457.8; 2,752.8; 2,956.1; 3,124.7; 3,330.7; 3,523.3; 4,672.8; 8,205.4.  
- Nominal dollar GDP growth (percent): -0.1; 4.8; 8.2; -4.9; 12.0; 7.4; 5.7; 6.6; 5.8; 5.8; 5.8; 1.6; 5.6.  
- Memorandum: PV of external debt (Million of US dollars): 481.1; 494.8; 511.6; 525.7; 538.5; 546.3; 554.4; 830.8; 1,625.0.  
  - (PVt-PVt-1)/GDPt-1 (in percent): 0.5; 0.7; 0.5; 0.4; 0.3; 0.2; 1.0; 1.4.  
  - Non-interest current account deficit that stabilizes debt ratio (percent of GDP): 4.9; 10.1; 10.7; 12.0; 13.4; 9.3; 7.6; 6.5; 5.5; 6.1; 9.6.

### Public Sector Debt Sustainability Framework — Baseline Scenario (2019–2042)
- Public sector debt (percent of GDP), selected years: 48.2; 44.4; 48.6; 54.2; 50.0; 50.5; 49.7; 46.6; 43.9; 41.8; 28.8; 50.1; 45.8.  
  - Of which: external debt mirrors external DSA series (see above).  
- Change in public sector debt (percent of GDP): -1.9; -3.8; 4.1; 5.7; -4.2; 0.5; -0.8; -3.1; -2.7; -0.2; -4.1.  
- Identified debt-creating flows (percent of GDP): -3.2; -1.1; 6.5; 2.1; -0.5; 0.4; -0.6; -2.9; -2.6; -0.1; -1.1; 1.1; -0.5.  
- Primary deficit (percent of GDP): -1.8; 3.1; 5.7; 5.0; 2.7; 2.4; 0.9; -1.1; -0.9; 1.3; 0.4; 1.4; 1.3.  
- Revenue and grants (percent of GDP): 18.3; 21.8; 13.7; 12.3; 14.7; 14.2; 16.3; 17.9; 18.0; 14.9; 14.7.  
  - Of which: grants (percent of GDP): 9.6; 12.6; 4.9; 4.5; 6.4; 5.2; 6.5; 7.3; 7.1; 3.3; 1.0.  
- Primary (noninterest) expenditure (percent of GDP): 16.6; 24.8; 19.4; 17.2; 17.4; 16.5; 17.1; 16.9; 17.1; 16.2; 15.1.  
- Automatic debt dynamics (percent of GDP): -1.4; -4.2; 1.0; -2.7; -3.2; -1.9; -1.5; -1.9; -1.7; -1.4; -1.5.  
  - Contribution from interest rate/growth differential: -2.2; -1.0; -1.6; -2.7; -3.2; -1.9; -1.5; -1.9; -1.7; -1.4; -1.5.  
  - Contribution from average real interest rate: -0.8; -0.6; -1.2; -2.4; -2.7; -1.2; -0.3; -0.1; 0.0; -0.1; -0.4.  
  - Contribution from real GDP growth: -1.4; -0.5; -0.4; -0.2; -0.5; -0.7; -1.2; -1.8; -1.7; -1.3; -1.0.  
- Contribution from real exchange rate depreciation (percent of GDP): 0.9; -3.1; 2.6; ... (ellipsis).  
- Residual (percent of GDP): 1.3; -2.7; -2.3; 3.5; -3.7; 0.1; -0.2; -0.1; -0.2; -0.1; -3.1; 1.8; -0.1.  
- Sustainability indicators (selected):  
  - PV of public debt-to-GDP ratio (selected): ...; 31.1; 34.7; 33.9; 35.2; 35.0; 32.5; 30.4; 27.0; 18.2.  
  - PV of public debt-to-revenue and grants ratio (selected): ...; 227.5; 282.4; 230.8; 248.6; 214.9; 181.3; 169.2; 181.4; 123.6.  
  - Debt service-to-revenue and grants ratio: 17.1; 9.1; 10.4; 10.0; 25.9; 41.0; 59.4; 97.4; 98.5; 38.5; 36.2.  
  - Gross financing need: 1.4; 5.0; 6.9; 6.1; 6.5; 8.1; 10.5; 7.8; 7.8; 7.0; 1.3.

### Key Macroeconomic and Fiscal Assumptions (Public DSA table)
- Real GDP growth (percent): 3.0; 1.0; 1.0; 0.5; 1.0; 1.5; 2.5; 3.7; 3.7; 3.2; 3.2; -0.9; 2.6.  
- Average nominal interest rate on external debt (percent): 0.4; 0.4; 0.3; 0.4; 0.6; 0.7; 0.6; 0.6; 0.7; 1.1; 1.2; 0.7; 0.8.  
- Average real interest rate on domestic debt (percent): -0.7; -0.1; -1.6; -3.6; -3.2; -0.4; 1.7; 2.1; 2.5; 2.4; -5.5; -2.3; 1.0.  
- Real exchange rate depreciation (percent, + indicates depreciation): 2.4; -8.7; 7.7; ... (ellipsis).  
- Inflation rate (GDP deflator, percent): 2.4; 1.9; 3.3; 6.3; 6.9; 4.6; 2.7; 2.5; 2.4; 2.5; 2.5; 4.2; 3.5.  
- Growth of real primary spending (deflated by GDP deflator, percent): -0.95; 1.2; -21.0; -10.7; 2.0; -3.6; 6.1; 2.1; 4.9; 0.4; 4.2; 5.7; 1.0.  
- Primary deficit that stabilizes debt-to-GDP ratio (percent): 0.1; 6.8; 1.6; -0.7; 6.9; 1.9; 1.6; 2.0; 1.8; 1.6; 4.5; 2.8; 1.9.  
- PV of contingent liabilities (not included in public sector debt): 0.0 across presented years.

### Sensitivity Analysis — Publicly Guaranteed External Debt and Public Debt (2023–2032)
- Multiple scenario panels show indicator trajectories (Debt service-to-exports ratio; Debt service-to-revenue ratio; PV of debt-to-exports ratio; PV of debt-to-GDP ratio; PV of Debt-to-Revenue Ratio; Debt Service-to-Revenue Ratio; PV of Debt-to-GDP Ratio).  
- Selected baseline and alternative scenario values (examples from tables):  
  - Baseline PV of debt-to-GDP ratio (percent) (2023–2032): 34; 35; 35; 33; 30; 28; 28; 27; 27.  
  - Alternative scenario A1 (historical averages) PV of debt-to-GDP ratio: 38; 40; 40; 40; 40; 40; 40; 40; 40; 40.  
  - Bound test B1 (Real GDP growth) PV of debt-to-GDP ratio: 49; 69; 73; 73; 74; 77; 81; 84; 88 (table entries present many numbers across years).  
- Thresholds and breaches: Tables note "A bold value indicates a breach of the threshold" and provide threshold lines: e.g., Threshold 30, Threshold 140, Threshold 10, Threshold 14, TOTAL public debt benchmark 35.  
- Tailored tests: include Combined contingent liabilities, Natural disaster, Commodity price, Market Financing (many entries marked "n.a." for not applicable).

### Policy-Relevant Indicators and Risks
- Debt vulnerabilities: High debt service-to-exports and debt service-to-revenue ratios in projection years (examples include PPG debt service-to-exports up to 13.4 and PPG debt service-to-revenue up to 21.2 in some projection years).  
- Gross external financing needs fluctuate with projections (for example, an increase to 447.7 Million of U.S. dollars in projection horizon).  
- Sensitivity tests indicate material variance under adverse growth, primary balance, export, other flows, and depreciation scenarios; combination scenarios produce larger deteriorations (e.g., Combination of B1-B5 and C1 show elevated PV and debt-service indicators).

### Supplementary Policy Note (Financing and Arrears)
- Supplement statement: "This supplement provides staff’s assessment of the ability of the Fund to provide financing to the Central African Republic (CAR) notwithstanding official bilateral external arrears to Angola. It does not alter staff’s assessment of policy issues and recommendations contained in the report."

*Source: Staff estimates and projections presented in the IMF chapter/sections for Central African Republic (tables and charts as provided in the source content).*

### 2.      Staff has not yet received consent from the Angolan authorities

### 2.      Staff has not yet received consent from the Angolan authorities

### Summary of staff position on lending into arrears
- Staff has not yet received consent from the Angolan authorities regarding the provision of Fund financing to the CAR, but staff assesses that the Fund can nevertheless provide financing to the CAR.
- 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.
- For the arrears of the Central African Republic to Angola, staff assesses that the LIOA circumstances are met.
- Staff’s detailed assessment is provided as part of this supplement which will be added to the staff report.
- Staff continues to recommend completion of the First Review under the Extended Credit Facility arrangement notwithstanding official bilateral arrears to Angola.
- Prepared By: The African Department
- Date: October 25, 2023

### Annex I — Assessment against LIOA criteria (key findings)
- Staff assesses that the conditions are met for the Fund to provide financing to CAR in line with the Fund’s policy on lending into arrears to official bilateral creditors, notwithstanding CAR’s outstanding arrears to Angola.
- Specific findings:
  - Prompt financial support from the Fund is considered essential and the member is pursuing appropriate policies.
    - CAR continues to face significant macroeconomic challenges exacerbated by significant balance of payments pressures resulting from increased external debt service obligation.
    - Fund support is considered essential to allow for orderly adjustment by covering CAR’s protracted balance of payments need, catalyzing external support, and supporting implementation of CAR’s program under the Extended Credit Facility (ECF) arrangement.
    - CAR’s policies under the arrangement aim at strengthening macroeconomic stability and external viability through fiscal and structural reforms: enhancing domestic revenue mobilization, public financial management and spending efficiency, restoring and building basic infrastructure and utilities, improving governance and the business environment, and catalyzing additional financial support from other IFIs.
  - The authorities have been making good faith efforts to reach agreement with the creditor on a contribution consistent with the parameters of the Fund-supported program.
    - In terms of process, the CAR authorities fully accepted the extent of the obligation they owe and have recently been in contact with the Angolan authorities bilaterally through letters (most recently September 2023) explaining that the CAR authorities are not seeking a treatment on the arrears and that capacity constraints are a key reason for why they have not yet been resolved.
  - Relevant information has been requested and shared with the Angolan authorities on a timely basis. The CAR authorities are committed to continue making their good faith efforts until all the arrears are resolved.
  - The terms of the loan agreement between the CAR authorities and the Angolan authorities and the associated amortization payments are incorporated into the baseline projections of the ECF-supported program and the contributions are not disproportionate relative to terms sought from other creditors in the official sector.
  - The decision to provide 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.
    - Staff’s view: providing financing to CAR despite the arrears is not expected to have an undue negative effect on the Fund's ability to mobilize future financing packages, given the willingness and strong support from the international community in the context of the ECF-supported program for CAR and the strong resolve of the authorities to find a resolution in a timely manner.

### Statement by CAR authorities (Mr. Sylla, Mr. N'Sonde, and Mr. Tall) — key points (October 30, 2023)
- I. Introduction and Context
  - Appreciation for IMF staff and Management for productive policy dialogue under the First Review of the ECF, held in Bangui and Marrakesh during the 2023 Annual Meetings.
  - Since ECF program approval, gains in macroeconomic stabilization and mobilizing resources for inclusive growth.
  - Reductions in fuel and food prices, and carving out of resources for social spending provided relief to vulnerable households.
  - The ECF program helped prevent an impending economic crisis by strengthening public finances and bolstering investor confidence in CAR sovereign debt.
  - CAR remains fragile with significant internal and external challenges: climate-related events, natural disasters, geopolitical tensions, regional crises, and the crisis in Sudan adding more than 51,000 refugees to the large number of internally displaced population in CAR.
  - Food insecurity: 2.9 million people, or 39 percent of the population, are in acute food emergency phase 3 or above of the Integrated Food Security Phase Classification.
  - Authorities request waivers for non-observance of performance criteria, modification of performance criteria, and a rephasing of access to align disbursements with changed balance of payments needs while maintaining strict priority in meeting obligations to the Fund and strengthened structural conditionality.
  - Call for stepped-up IMF engagement in line with the new IMF strategy on fragile and conflict-affected states.

- II. Program Implementation
  - All but one structural benchmark (SBs) for the first review were met, including reduction in fuel prices and establishment of a debt coordination and management framework.
  - Anti-Corruption Law planned for April 2024 for the second review was observed in May 2023.
  - Operationalization of new IT system for domestic revenues is well advanced.
  - On the quantitative front, two performance criteria related to limits on domestic financing were missed by small margins due to higher-than-expected education and security spending and availability of more favorable domestic financing options.
  - The indicative target of social spending was missed due to delays in World Bank financing, since resolved.
  - Floor on spending through extraordinary procedures could not be met due to exogenous shocks.
  - Authorities undertook corrective actions to prevent future slippages and keep end-year program targets within reach.

- III. Recent Economic Developments and Outlook
  - Growth: anticipated at 1 percent for 2023 (down from initial projection of 2.2 percent at program request).
  - Average inflation: around 6.5 percent in 2023.
  - 2024 outlook: growth expected to recover to 1.5 percent; inflation should decline toward 3 percent as monetary tightening and supply-chain normalization occur.
  - Recovery hinges on resumption of budget support; outlook subject to significant risks.
  - Authorities seek adjustments to program performance criteria and rephasing of access to adapt to evolving risks and tightening financial conditions.

- IV. Policies for 2024 and Beyond
  - Fiscal and Debt Policies — Pursuing Revenue-based Fiscal Consolidation
    - Authorities aim to mobilize 0.7 percent of GDP of additional revenues in 2023, and a 1 percent of GDP of fiscal consolidation in 2024.
    - Measures: leverage digitalization to improve tax yield, step-up tax enforcement, consider measures to broaden tax base, reforms of tax and customs administrations with IMF technical assistance.
    - Fuel market: address dysfunctions, improve supplies, combat fraud, reform petroleum price-setting mechanism to streamline it and provide resources to build market infrastructure.
  - Improving Spending Efficiency
    - Commitment to improve expenditure efficiency and re-allocate spending toward priority sectors.
    - Public financial management reforms remain a priority; social spending levels protected.
    - With World Bank support: cleaning up the payroll, enhanced safeguards throughout expenditure chain, ex-post audits, and resumption of Treasury Committee meetings with donors’ attendance.
  - Enhancing Debt Policy and Management
    - Commit to prudent debt policies, limit new borrowing within program parameters, prioritize grants and highly concessional loans.
    - Reforms to improve revenue collection and bolster exports to mitigate liquidity risks.
    - Active liability management to lengthen maturities and limit rollover risks.
    - Setting up an escrow account within the central bank to improve timely debt servicing.
    - On external debt, given the large share of IMF loans, authorities consented to using 90 percent of IMF disbursements under the ECF arrangement toward paying forward obligations to the Fund coming due for at least six months.
    - Continue good faith efforts to strengthen relations with creditors and address pre-HIPC legacy arrears; note past arrears with China, Iraq, and Libya and recent discovery of debt contracted under a previous administration after the 2013 conflict, steps taken to record the debt and reach out to the creditor, overhaul of debt policies to vet and register new debt, and consideration of remedial steps with IMF technical assistance.
  - Monetary and Financial Sector Policies
    - Monetary policy conducted at the regional level will continue to preserve price stability and exchange rate sustainability; current stance remains tightening.
    - Financial soundness indicators have strengthened: banks’ capital adequacy ratios remain strong; profitability and asset quality indicators have improved.
    - Authorities to monitor individual banks closely and deepen the financial system via digitalization.
    - Adoption of tokenization of land and natural resources law to provide framework to leverage blockchain technology; authorities seek BEAC opinion on conformity with regional legal framework and will remain committed to CEMAC obligations.
  - Structural Reforms
    - Continue efforts to revise the mining code with World Bank support to leverage natural resources for growth.
    - Pursue structural fiscal reforms including program budgeting with EU technical assistance.
    - Prepare an assessment of fiscal risks related to the tokenization law and present it to the Cabinet; adopt a plan to strengthen ANIF (agency monitoring AML/CFT risks).
    - Commit to enhanced governance standards: operationalize asset declarations by high officials under the adopted anti-corruption legislation.
    - Strengthen supreme audit institutions, including revising legislation to enhance their financial and institutional autonomy.

- V. Conclusion
  - The authorities reaffirm strong attachment to the objectives of the ECF-supported arrangement.
  - Given implementation challenges, corrective actions taken, and the program’s objectives, authorities call on Executive Directors’ support for their requests and for completion of the First Review under the ECF arrangement.

*Source: 1cafea2023003 - 2.      Staff has not yet received consent from the Angolan authorities (PDF), African Department, October 25, 2023; Statement by Mr. Sylla, Mr. N'Sonde, and Mr. Tall, October 30, 2023.*

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_Source: https://www.imf.org/-/media/files/publications/cr/2023/english/1cafea2023003.pdf_