IMF Executive Board Completes the Third and Fourth Reviews under the Extended Credit Facility Arrangement and Approves US$58 Million Disbursement for the Central African Republic
IMF News, June 4, 2025
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- Published: June 4, 2025
Review completion and financing actions
- The Executive Board completed the third and fourth reviews under the Extended Credit Facility (ECF) arrangement for the Central African Republic (CAR).
- The ECF arrangement has access of SDR 147.48 million (about US$197 million), approved in April 2023.
- Completion of these reviews allows immediate disbursement of SDR 43.22 million (about US$58 million).
- Total disbursements under the ECF arrangement now amount to SDR 92.29 million (around US$124 million).
- The Executive Board approved waivers of nonobservance of the performance criteria (PC) for:
- end-June 2024 domestic primary fiscal balance (waiver approved)
- end-December 2024 domestic primary fiscal balance (waiver approved)
- end-June 2024 net domestic financing (waiver approved)
- end-December 2024 net domestic financing (waiver approved)
- continuous PC on non-accumulation of new external arrears (waiver approved)
- The Executive Board completed the financing assurances review under the ECF arrangement.
Macroeconomic outlook and key projections
- Economic growth is expected to accelerate to 3 percent in 2025, up from 1.9 percent in 2024.
- Drivers of the 2025 recovery: higher energy use, mining recovery, infrastructure projects, and improved security.
- Inflation is projected to decline gradually and would ease by end-2025, in part helped by the cut in pump prices in May 2025.
- Fiscal targets and projections:
- Domestic primary deficit projected to narrow to 2.1 percent of GDP in 2025 from 4.9 percent in 2024 (assuming bold political backing for agreed measures on tax administration and compliance).
- Outlook caveats: The outlook depends on faster fuel market and governance reforms, and increased grant and concessional financing.
- Downside risks remain substantial.
Program performance and structural reform progress
- Program performance for the combined third and fourth reviews was mixed.
- Half of the six PCs for end-June and end-December 2024 were met.
- The domestic primary deficit and net domestic financing targets were missed by wide margins.
- The continuous PC on non-accumulation of external arrears was missed.
- Indicative targets for social spending and expenditures via extraordinary procedures were missed.
- Positive implementation areas:
- Fuel supply and revenue have improved.
- Progress in digitalizing the revenue administration and PFM systems.
- Enhancements to the Financial Intelligence Unit and the Court of Audit.
- The ECF arrangement supports sustaining spending on basic public services, including health and education.
Policy priorities and recommendations
- Fiscal policy and PFM:
- A tighter fiscal stance is needed to arrest rising debt vulnerabilities.
- Reinforced spending controls are key ahead of elections and cuts in humanitarian aid.
- Strengthening tax compliance and controls is key to boosting revenue and requires strong political support.
- Improved PFM is essential to prevent arrears, limit extraordinary procedures, and ensure effective social spending.
- Fuel market reforms:
- Overhaul of the fuel market is pivotal for macroeconomic stabilization and sustained, inclusive growth.
- Accelerate the fuel procurement audit to underpin price reforms and address persistent inefficiencies.
- Transparent use of the recent diesel grant and a thorough audit of costs and margins could help enhance competition, improve supply efficiency, and boost fiscal revenue.
- Despite recent supply increases and price cuts, pump prices remain high due to costly and opaque imports.
- Governance and institutional reforms:
- Enhancing governance will reinforce PFM efforts.
- Adopt the new forestry code and implement the mining code to unlock CAR’s growth potential.
- Prompt operationalization of the asset declaration system is critical to maintaining donor support.
- External support and development strategy:
- Both financial and technical support from development partners remain vital to program success.
- Policies to enhance growth potential and improve equality should be anchored on the National Development Plan (NDP) (2024-2028).
- Steadfast execution of the NDP is crucial to catalyze donor support and start attracting foreign private investment flows.
- CAR’s economic program will remain supported by implementation of policies and reforms agreed among CEMAC regional institutions, which aim at supporting an increase in regional net foreign assets.
Assessment summary from IMF leadership
- Statement by Mr. Kenji Okamura, Deputy Managing Director and Acting Chair:
- CAR has shown renewed commitment to structural reforms under the ECF-arrangement despite deep-rooted fragility and significant uncertainty.
- Program performance was mixed and is being addressed with strong corrective actions.
- Strengthening PFM, accelerating the fuel procurement audit, and enhancing governance are emphasized as priorities to safeguard debt sustainability and donor support.
Press Release No. 25/179 — June 4, 2025, IMF Communications Department