Washington, DC:
An International Monetary Fund (IMF) team led by Mr. Édouard Martin
conducted a virtual mission from May 4 to 20, 2021, to discuss a
staff-monitored program with the authorities.
At the conclusion of the mission, Mr. Martin issued the following
statement:
"The Central African authorities and the staff of the International
Monetary Fund (IMF) discussed economic policies and structural reforms that
could form the basis of a staff-monitored program (SMP). These discussions
will continue in the coming days so as to reach an agreement that could be
submitted for approval to IMF Management once the prior actions have been
implemented. The 7-month SMP will aim at helping the authorities address
the economic challenges caused by the security crisis and the pandemic. Its
satisfactory implementation would allow for the resumption of discussions
under the Extended Credit Facility (ECF) supported program in the first
half of 2022.
"The deterioration of the security situation at the beginning of the year
and the prolonged closure of the trade corridor between Bangui and Cameroon
have had a substantial social and economic impact. The cut-off of the
country's main source of supply led to a sharp rise in consumer prices and
affected production owing to a lack of inputs. While the reopening of the
corridor has allowed trade flows to resume, they remain lower than in the
past. Even assuming it continues to recover gradually over the next few
months, economic activity is expected to contract slightly this year,
compared to the 3½ percent growth expected before the security situation
deteriorated. After rising sharply at the beginning of the year, inflation
is expected to decline gradually, to just over 3 percent year-on-year by
the end of 2021. Owing mainly to lower imports, the current account deficit
would decline to about 6½ percent of GDP in 2021 from 8½ percent of GDP in
2020.
"The closure of the corridor also affected significantly public finances.
Domestic government revenues in the first quarter were about 20 percent
below expectations, while security spending increased sharply. This,
combined with budgetary slippages at the end of 2020 and lower budget
support, led to a rapid decline in government deposits with BEAC. To ensure
that the government can meet its financial obligations in the coming
months, the IMF team emphasized the need to revise downwards non-priority
expenditures to offset the increase in security expenditures in the context
of the supplementary budget law. In view of the apparent resurgence of the
pandemic, the IMF team also encouraged the authorities to accelerate the
implementation of their vaccination strategy with the support of their
technical and financial partners.
"The IMF team also discussed with the authorities a program of structural
reforms for 2021 aimed at improving governance and public financial
management and strengthening domestic revenue mobilization. In particular,
the authorities committed to submit a new anti-corruption law to the
National Assembly, systematically publish public contracts, and to make the
e-procedures for tax filing and payment by large companies operational.
"The team would like to express its deep appreciation to the authorities
for their excellent collaboration and the open atmosphere that prevailed
during the discussions."
The IMF team met with President Touadéra, Finance Minister Dondra, Economy
Minister Moloua, Mines Minister Mboli-Fatrane, BEAC National Director
Chaïbou, other senior government officials, and representatives of
technical and financial partners.
