IMF Executive Board Completes Fourth Review Under the ECF Arrangement for the Central African Republic and Approves US$ 32.1 Million Disbursement

IMF News, July 3, 2018

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On July 2, 2018, the IMF Executive Board completed the fourth review under the Extended Credit Facility (ECF) arrangement for the Central African Republic.
Completion of the review enables a disbursement of SDR 22.84 million (about US$ 32.1 million).
Total disbursements under the arrangement will reach SDR 88 million (about US$ 123.7 million) after this disbursement.
The ECF arrangement was approved on July 20, 2016 for SDR 83.55 million and was subsequently augmented twice to a total of SDR 133.68 million (about US$ 189.0 million, 120 percent of Central African Republic’s quota at the IMF).

Program implementation has been satisfactory in a difficult context characterized by a challenging security environment and difficult humanitarian conditions.
Restoring peace and speeding the implementation of the development agenda are identified as key to sustaining the economic recovery and reducing poverty.
The implementation of the investment program for the National Recovery and Peacebuilding Plan is expected to boost economic prospects.
The Central African Republic’s program is supported by policies and reforms by regional institutions in the areas of foreign exchange regulations and monetary policy framework to support an increase in regional net foreign assets.

Fiscal policy is described as broadly on track.
The revised 2018 budget:
- includes new revenue measures,
- remains anchored to the domestic primary balance objective,
- allows a scale-up of social and capital spending.
Improving domestic resource mobilization is crucial for scaling up expenditure in key sectors such as health, education, and security.
Continued reliance on grant financing is essential given the country’s high risk of debt distress to support debt sustainability.

Authorities have stepped up implementation of their reform agenda and public investment plan.
Fiscal structural reforms contributed to:
- strengthening of the treasury single account,
- improved budget transparency,
- improved traceability of domestic revenues.
Quarterly publication of budget execution reports allows for better tracking and monitoring of government expenditures.
Recommendations and priorities include:
- give more consideration to streamlining quasi-fiscal taxes,
- reduce exceptional payment procedures,
- strengthen the asset declaration regime,
- follow through on commitments to strengthen transparency in the management of natural resources.

The government started the comprehensive clearance of domestic arrears.
Transparent repayment of arrears is expected to:
- support growth,
- bolster the credibility of the state,
- strengthen the banking sector.

Source: IMF Press Release No. 18/272, July 3, 2018.