On December 20, 2019, the Executive Board of the International Monetary
Fund (IMF) approved a three-year arrangement under the IMF’s Extended
Credit Facility (ECF) for the Central African Republic (CAR) equivalent to
SDR83.55 million (about US$115.1 million, or 75 percent of the Central
African Republic’s quota in the Fund). The IMF-supported program aims to
maintain macroeconomic stability, strengthen administrative capacity,
governance and the business climate, and address the country’s protracted
balance of payment needs.
The IMF Executive Board’s decision enables an immediate disbursement of SDR
11.936 million, about US$16.4 million.
Disbursement of the remaining amount will be phased in over the
duration of the program, subject to semi-annual reviews of the
IMF-supported program by its Executive Board.
Following the Executive Board’s discussion on Central African Republic, Mr.
Mitsuhiro Furusawa, Deputy Managing Director and Acting Chair, made the
following statement:
“Despite significant progress under the ECF arrangement that expired last
July, the Central African Republic (C.A.R.) remains very fragile, with a
volatile security environment, limited administrative capacity, poor
governance, and lack of social cohesion.
“The new three-year program supported by the IMF Extended Credit Facility
(ECF) will support the implementation of the February 2019 peace agreement
and of C.A.R.’s medium-term development strategy. It aims at maintaining
macroeconomic stability, strengthening administrative capacity, governance
and the business climate, promoting robust and sustainable growth, and
reducing poverty.
“Fiscal policy will focus on enhanced revenue mobilization, spending
prioritization, and strengthened public financial management. This will
ensure that C.A.R.’s considerable security, social, and infrastructure
spending needs are sustainably met. Revenue mobilization measures will
include the daily reconciliation of revenue data, the digitalization of tax
returns and payments, and enhanced coordination between revenue
administrations. The further strengthening of public financial management
will involve the elimination of the remaining public agencies with no
economic justification, the finalization of the audit of domestic arrears,
and the strengthening of SOEs’ oversight and management.
“Structural reforms will aim at improving the government’s capacity to
design and implement policies and reforms, enhancing governance, including
through strengthening anticorruption institutions, and removing bottlenecks
and regulatory impediments to private investment.
“Continued financial and technical support from development partners will
be critical to the program’s success. Given its high risk of debt distress
and limited revenue base, C.A.R. will have to continue relying heavily on
grant financing to finance its most pressing spending needs. The
authorities will work closely with their technical partners to ensure that
capacity development focuses on priorities closely aligned with the program
objectives and is efficiently delivered.
“The C.A.R.’s program is supported by the implementation of policies and
reforms by the CEMAC regional institutions in the areas of foreign exchange
regulations and monetary policy framework, and to support an increase in
regional net foreign assets, which are critical to program’s success.”
Annex
Recent Economic Developments
The Central African Republic authorities’ program of economic policies and
reforms implemented under the three-year ECF arrangement that expired in
July helped to restore economic growth, reduce fiscal and external
imbalances, and strengthen public administration. Recent economic
developments have been broadly satisfactory, with growth expected to
recover to 4 ½ percent this year, mainly driven by the mining, forestry and
construction sectors. As the inflationary pressures that resulted from the
blockade of the main trade route between Bangui and Cameroon in March have
abated, inflation is expected to be limited to 3¼ percent on average this
year and less than 3 percent next year. The current account deficit is
expected to narrow to 5.6 percent of GDP in 2019, thanks primarily to an
increase in official transfers.
The banking sector remains well capitalized, liquid, and profitable
although credit to the private sector declined by 3 percent year-to-year in
September 2019. Some progress has also been made in the implementation of
structural reforms.
Progress under the peace agreement signed in February 2019 remains fragile.
Overall, CAR remains in a very fragile situation, with a volatile security
environment, limited administrative capacity, poor governance, and lack of
social cohesion.
Program Summary
The program will support the implementation of the peace agreement and
of CAR’s medium-term development strategy. Fiscal policy will focus on
revenue mobilization, spending prioritization, and strengthening public
financial management, with a view to allow, over the medium term, the
sustainable financing of CAR’s considerable security, social, and
infrastructure spending needs. Structural reforms will aim at improving the
government’s capacity to design and implementing policies and reforms, at
enhancing governance, and at removing bottlenecks and regulatory
impediments to private investment.
The medium-term outlook remains broadly favorable, provided security holds.
Given the peace agreement’s slow implementation, the macroeconomic
framework
assumes no conflict resurgence but factors in only limited peace dividends
at this juncture. Growth is expected to amount to 5 percent over the medium
term, driven by the recovery in the mining sector, the implementation of
structural reforms, and the gradual loosening of the energy and
transportation bottlenecks. Inflation is expected to remain under the CEMAC
ceiling of 3 percent over the medium term. The current account deficit
would stabilize at about 5½ percent of GDP, as the improvement in the
balance of goods and services would broadly offset the decline in official
transfers. The domestic primary balance would stabilize at around 2½
percent, allowing a gradual reduction of the debt/GDP ratio. Facing
lower-than-expected revenues, the authorities are committed to containing
the domestic primary balance.
The new arrangement will help catalyzing external concessional financing
from other development partners, which is critical to support CAR’s path
out of fragility. The IMF will also continue its extensive capacity
development on priorities that are aligned with the program objectives.
However, risks to the outlook remain high. Political pressures and
uncertainty could weaken policy and reform implementation in the run-up to
the 2020–21 presidential and general elections. A renewal of violence could
also exacerbate the humanitarian crisis and political instability.
Background
The Central African Republic, which became a member of the IMF on July 10,
1963, has an IMF quota of SDR111.4 million.
For additional information on the IMF and the Central African Republic,
see:
https://www.imf.org/en/Countries/CAF
|
Table 1. Central African Republic: Selected Economic
and Financial Indicators, 2017–2024
|
|
|
2017
|
2018
|
2019
|
2020
|
2021
|
2022
|
2023
|
2024
|
|
|
Est.
|
6th Rev.
|
Est.
|
6th Rev.
|
Est.
|
Proj.
|
|
|
(Annual percentage change; unless otherwise indicated)
|
|
National income and prices
|
|
|
|
|
|
|
|
|
|
|
|
GDP at constant prices
|
4.5
|
3.8
|
3.8
|
4.5
|
4.5
|
5.0
|
5.0
|
5.0
|
5.0
|
5.0
|
|
GDP per capita at constant prices
|
3.2
|
1.9
|
2.3
|
2.5
|
2.8
|
3.2
|
3.1
|
3.0
|
3.0
|
2.9
|
|
GDP at current prices
|
11.3
|
5.3
|
5.2
|
7.2
|
7.4
|
7.6
|
7.6
|
7.7
|
7.7
|
7.6
|
|
GDP deflator
|
6.4
|
1.4
|
1.3
|
2.7
|
2.8
|
2.5
|
2.5
|
2.6
|
2.5
|
2.5
|
|
CPI (annual average)
|
4.5
|
1.6
|
1.6
|
3.5
|
3.2
|
2.5
|
2.5
|
2.5
|
2.5
|
2.5
|
|
CPI (end-of-period)
|
7.2
|
4.6
|
4.6
|
3.0
|
-0.3
|
2.5
|
2.5
|
2.5
|
2.5
|
2.5
|
|
Money and credit
|
|
|
|
|
|
|
|
|
|
|
|
Broad money
|
10.3
|
14.0
|
14.0
|
14.1
|
3.2
|
14.9
|
5.8
|
8.9
|
9.4
|
9.6
|
|
Credit to the economy
|
1.4
|
11.5
|
11.5
|
9.7
|
3.0
|
5.0
|
7.0
|
8.0
|
8.0
|
8.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
External sector
|
|
|
|
|
|
|
|
|
|
|
|
Export volume of goods
|
42.5
|
10.3
|
10.3
|
2.8
|
-6.5
|
14.9
|
6.0
|
7.0
|
8.3
|
9.2
|
|
Import volume of goods
|
-1.9
|
0.1
|
-0.2
|
4.2
|
10.4
|
7.8
|
4.0
|
5.0
|
4.2
|
4.1
|
|
Terms of trade
|
-18.4
|
-11.7
|
-12.0
|
5.7
|
12.7
|
3.5
|
2.2
|
0.5
|
-1.6
|
-1.5
|
|
|
(Percent of GDP; unless otherwise indicated)
|
|
Gross national savings
|
5.7
|
7.1
|
8.5
|
12.8
|
10.5
|
10.6
|
11.0
|
10.9
|
11.1
|
11.8
|
|
Of which:
current official transfers
|
1.8
|
3.0
|
3.0
|
5.9
|
6.0
|
3.7
|
3.4
|
2.7
|
1.9
|
1.8
|
|
Gross domestic savings
|
-2.9
|
-2.7
|
-1.4
|
0.2
|
-1.9
|
0.3
|
0.9
|
1.5
|
2.6
|
3.5
|
|
Government
|
-1.4
|
-1.2
|
-1.2
|
-0.7
|
-1.6
|
-1.3
|
-0.9
|
-0.6
|
-0.5
|
-0.4
|
|
Private sector
|
-1.5
|
-1.5
|
-0.2
|
1.2
|
-0.3
|
1.6
|
1.7
|
2.2
|
3.1
|
3.9
|
|
Consumption
|
102.9
|
102.7
|
101.4
|
99.5
|
101.9
|
99.7
|
99.1
|
98.5
|
97.4
|
96.5
|
|
Government
|
7.0
|
7.7
|
7.7
|
7.6
|
7.3
|
7.5
|
7.5
|
7.5
|
7.5
|
7.5
|
|
Private sector
|
95.9
|
95.0
|
93.7
|
91.9
|
94.6
|
92.3
|
91.7
|
90.9
|
89.9
|
89.0
|
|
Gross investment
|
13.5
|
15.1
|
16.4
|
16.6
|
16.2
|
16.9
|
16.3
|
16.3
|
16.8
|
17.3
|
|
Government
|
4.5
|
6.0
|
7.4
|
7.5
|
7.1
|
7.9
|
7.2
|
7.2
|
7.3
|
7.3
|
|
Private sector
|
9.0
|
9.0
|
9.0
|
9.0
|
9.0
|
9.0
|
9.0
|
9.0
|
9.5
|
10.0
|
|
External current account balance
|
|
|
|
|
|
|
|
|
|
|
|
with grants
|
-7.8
|
-7.9
|
-8.0
|
-3.7
|
-5.6
|
-6.3
|
-5.3
|
-5.4
|
-5.7
|
-5.5
|
|
without grants
|
-11.0
|
-12.3
|
-12.3
|
-10.9
|
-12.9
|
-11.6
|
-10.4
|
-9.8
|
-9.4
|
-9.1
|
|
Overall balance of payments
|
2.9
|
-1.7
|
-1.7
|
2.9
|
1.0
|
1.3
|
1.5
|
1.4
|
2.4
|
2.6
|
|
Central government finance
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue (including grants)
|
12.8
|
16.6
|
16.6
|
20.9
|
19.4
|
18.6
|
18.4
|
17.8
|
17.2
|
17.1
|
|
of which:
domestic revenue
|
7.8
|
8.9
|
8.9
|
9.9
|
8.7
|
9.7
|
10.0
|
10.3
|
10.6
|
10.8
|
|
Total expenditure 1
|
13.9
|
16.3
|
17.6
|
18.3
|
17.6
|
19.0
|
18.3
|
18.3
|
18.4
|
18.5
|
|
of which:
capital spending
|
4.5
|
6.0
|
7.4
|
7.5
|
7.1
|
7.9
|
7.2
|
7.2
|
7.3
|
7.3
|
|
Overall balance
|
|
|
|
|
|
|
|
|
|
|
|
Excluding grants
|
-6.1
|
-7.4
|
-8.7
|
-8.4
|
-8.9
|
-9.3
|
-8.2
|
-8.0
|
-7.8
|
-7.8
|
|
Including grants
|
-1.1
|
0.4
|
-1.0
|
2.6
|
1.8
|
-0.4
|
0.2
|
-0.5
|
-1.2
|
-1.4
|
|
Domestic primary balance 2
|
-2.0
|
-1.7
|
-1.7
|
-2.5
|
-3.0
|
-2.7
|
-2.5
|
-2.5
|
-2.5
|
-2.5
|
|
Public sector debt
|
50.3
|
48.8
|
50.0
|
43.4
|
47.1
|
42.6
|
39.8
|
37.1
|
35.1
|
33.0
|
|
Of which:
domestic debt 3
|
16.2
|
13.9
|
13.9
|
10.2
|
10.2
|
7.8
|
6.9
|
5.9
|
5.1
|
4.3
|
|
Of which:
external debt
|
34.1
|
34.9
|
36.1
|
33.2
|
36.9
|
34.8
|
32.9
|
31.2
|
30.0
|
28.6
|
|
Memorandum items:
|
|
|
|
|
|
|
|
|
|
|
|
GDP per capita (US dollars)
|
451
|
449
|
489
|
457
|
500
|
534
|
567
|
603
|
639
|
688
|
|
Nominal GDP (CFAF billions)
|
1,203
|
1,266
|
1,266
|
1,356
|
1,360
|
1,464
|
1,575
|
1,696
|
1,826
|
1,966
|
|
Sources: C.A.R. authorities and IMF staff estimates and
projections.
|
|
1
Expenditure is on a cash basis.
|
|
2
Excludes grants, interest payments, and
externally-financed capital expenditures.
|
|
3
Comprises government debt to BEAC, commercial banks,
and government arrears.
|
