IMF Executive Board Completes the Second Review under the Extended Credit Facility Arrangement for the Central African Republic and Approves US$25 Million Disbursement
IMF News, June 25, 2024
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- IMF Executive Board Completes the Second Review under the Extended Credit Facility Arrangement for the Central African Republic and Approves US$25 Million Disbursement
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- Published: June 25, 2024
Review outcome and financing actions
- Executive Board completed the second review under the Extended Credit Facility (ECF) arrangement for the Central African Republic (CAR).
- Immediate disbursement of SDR 18.60 million (about US$25 million) to CAR to address protracted balance of payments needs and sustain priority spending on basic public services.
- The ECF is SDR 147.48 million (about US$197 million) in total.
- Total disbursements under the ECF following this review: SDR 49.07 million (around US$65 million).
- Executive Board approved:
- A waiver for nonobservance of the performance criterion of non-accumulation of external arrears.
- Completion of the financing assurances review under the ECF.
- Augmentation of access under the ECF to meet additional balance of payment needs caused by delayed capital expenditure decisions in 2023.
Program implementation and performance
- Program implementation described as broadly satisfactory considering significant fragilities and uncertainties.
- Structural benchmarks and performance criteria:
- All but one structural benchmark were met; the remaining benchmark was implemented with a delay.
- All but one performance criterion for end-December 2023 were met; the criterion on non-accumulation of external arrears was missed.
- Indicative targets on social spending and spending through extraordinary procedures were also missed; corrective actions were taken.
- Governance-related progress anchored by the ECF:
- Ongoing strengthening of the Court of Audit and the Financial Intelligence Unit.
- Adoption of a new mining code.
Growth, inflation, and macroeconomic outlook
- Economy projected to grow by 1.4 percent in 2024, up from 0.7 percent in 2023; growth contingent on expediting reforms to the fuel market.
- Inflation projection:
- Inflation expected to remain high at around 5 percent in 2024, driven by energy and food prices.
- CPI (annual average) entries in Table 1 include 5.6, 6.5, 3.2, 4.7 (for years listed).
- CPI (end-of-period) entries in Table 1 include 2.7, 7.6, 5.5, 4.0, 2.8, 5.0 (for years listed).
- Program performance hinges on stronger public financial management and a tightening fiscal stance to address rising debt vulnerabilities.
- Grants and highly concessional financing recommended to limit reliance on expensive financing sources.
Fuel market reform priorities
- Overhaul of the fuel market described as pivotal for macroeconomic stabilization and sustained and inclusive growth.
- Since the subsidy system ended in 2022:
- Fuel market has been in flux with recurrent fuel shortages and prohibitive import costs.
- Informal fuel markets have expanded and eroded fiscal revenues.
- Government adopted an action plan of reforms in the fuel sector with IMF technical assistance missions in February 2023 and 2024.
- IMF recommendation: Decisive steps required to fully implement the action plan to improve economic activity, revenue collection, and reduce cost of living.
Public financial management, debt, and governance recommendations
- Strengthen public financial management (PFM), particularly spending controls, to prevent arrears, excessive use of extraordinary procedures, and under-execution of social spending.
- Implement the institutional plan for the Financial Intelligence Unit and operationalize the new law for the Court of Audit.
- Maintain a proactive debt management strategy amid high rollover risks.
- Continue to enhance non-fuel-related revenue measures and recover past-due taxes.
- Financial and technical support from development partners remain vital.
Key economic and financial indicators (selected entries from Table 1)
- ECF framework and projections header: "Central African Republic: Selected Economic and Financial Indicators, 2021-2029"
- GDP at constant prices (annual percentage change):
- 2021: 1.0
- 2022: 0.5
- 2023: 0.7
- 2024: 1.5
- 2025: 1.4
- 2026: 2.9
- 2027: 3.7
- 2028: 3.6
- 2029: 3.5
- GDP per capita at constant prices (annual percentage change):
- 2021: -1.0
- 2022: -1.5
- 2023: -1.1
- 2024: -1.3
- 2025: -0.5
- 2026: -0.6
- 2027: 1.6
- GDP at current prices (annual percentage change):
- 2021: 4.3
- 2022: 6.9
- 2023: 7.9
- 2024: 4.2
- 2025: 6.1
- 2026: 7.5
- 2027: 7.7
- 2028: 7.1
- 2029: 6.8
- Subsequent line entries include 6.7
- GDP deflator (annual percentage change):
- 2021: 3.3
- 2022: 6.4
- 2023: 3.4
- 2024: 4.6
- 2025: 6.0
- 2026: 4.4
- 2027: 3.8
- 2028: 3.1
- 2029: 3.0
- Broad money (annual percentage change):
- 2021: 14.6
- 2022: 2.5
- 2023: 7.3
- 2024: 4.5
- 2025: 10.0
- 2026: 7.4
- Credit to the economy (annual percentage change):
- 2021: -2.2
- 2022: 28.2
- 2023: 13.0
- 2024: 0.4
- 2025: 5.1
- 2026: 5.2
- 2027: 5.8
- 2028: 5.9
- Export volume of goods (annual percentage change):
- 2021: -5.3
- 2022: 2.6
- 2023: 9.0
- 2024: 12.0
- 2025: 8.7
- 2026: 5.4
- 2027: 9.2
- 2028: 14.7
- Import volume of goods (annual percentage change):
- 2021: -11.5
- 2022: -5.5
- 2023: 10.7
- 2024: 5.7
- 2025: 4.1
- 2026: 7.2
- Gross national savings (percent of GDP):
- 2021: 2.1
- 2022: 7.0
- 2023: 12.3
- 2024: 16.0
- 2025: 15.7
- Government indicators (percent of GDP unless otherwise indicated):
- Gross domestic savings entries include -2.5, -5.1, -1.6, -2.4, -1.7
- Government balance entries include -3.4, -3.8, -3.5, -4.1, -2.7, -1.8, -0.8, 0.1, 0.6
- Consumption and related sequence entries include 102.5, 105.1, 101.6, 102.4, 101.0, 101.7, 99.5, 98.2, 96.0, 94.4, 92.4, 9.1, 8.4, 8.3, 8.5, 7.8, 8.0, 93.4, 96.8, 93.3, 93.9, 93.2, 93.7, 91.7, 90.6, 88.7, 86.9, 84.8 (table includes these entries)
- Gross investment: 14.9, 15.6, 15.0, 15.8, 16.9, 17.3, 18.3, 19.0, 19.7
- External current account balance with grants (percent of GDP): -11.1, -12.7, -8.6, -9.0, -8.3, -7.0, -5.0, -4.0, -2.9
- External current account balance without grants (percent of GDP): -13.0, -14.7, -12.1, -11.3, -12.0, -10.9, -10.1, -6.1, -6.8
- Overall balance of payments entries: -7.8, -2.6, -3.0, -3.3, -1.4
- Central government finance (percent of GDP):
- Total revenue (including grants): 13.7, 14.2, 14.8, 16.3, 17.8, 17.9
- Of which: domestic revenue: 8.8, 9.8, 10.9, 11.5
- Total expenditure (cash basis) entries include 17.6, 18.0, 18.1, 17.7
- Overall balance excluding grants: -9.9, -9.7, -9.6, -7.2, -6.7, -6.3
- Overall balance including grants: -6.0, -3.6, -3.1, 0.3, -2.1
- Domestic primary balance (excludes grants, interest payments, and externally-financed capital expenditures): -4.4, -3.7, -2.8, -0.9
- Public sector debt (percent of GDP):
- 2021: 48.5
- 2022: 51.1
- 2023: 52.9
- 2024: 57.7
- 2025: 53.3
- 2026: 57.3
- 2027: 55.4
- 2028: 50.8
- 2029: 47.3
- Additional sequence entries: 43.5, 42.7
- Of which: domestic debt4 entries: 13.2, 18.2, 20.3, 25.1, 22.0, 26.1, 25.6, 22.7, 20.6, 15.2
- Of which: external debt entries: 35.3, 32.8, 32.6, 31.3, 31.2, 29.8, 26.7, 27.2, 27.5
- Memorandum items:
- GDP per capita (US dollars): 525, 490, 538, 514, 566, 539, 567, 598, 628, 656, 685
- Nominal GDP (CFAF billions): 1,432, 1,531, 1,651, 1,595, 1,752, 1,714, 1,842, 1,984, 2,125, 2,269, 2,420
Source: IMF Executive Board press release and Table 1 projections and notes as presented in the document.
