Press Release: Statement at the Conclusion of an IMF Mission to the Central African Republic
April 19, 2012Press Release No. 12/143
April 19, 2012
A mission from the International Monetary Fund (IMF), led by Norbert Toé, visited Bangui during April 4–19, 2012 to conduct discussions on a three-year economic program that could be supported by the IMF under the Extended Credit Facility (ECF). The mission met with President François Bozizé; the President of the National Assembly, Celestin Gaombalet; Prime Minister, Faustin-Archange Touadéra; Minister of State for Finance and Budget, Sylvain Ndoutingaï; Minister of State for Planning and Economy Abdou Karim Meckassoua; Minister of Trade and Industry Marlyn Mouliom Roosalem; Acting National Director of the Bank of Central African States, Mr. Clément Gueremodongou, and other senior government officials as well as representatives of the private sector, civil society, labor unions, and the diplomatic community.
At the end of the mission, Mr. Toé issued the following statement:
“Contrary to earlier expectations, economic activity was more buoyant in 2011, driven by stronger output in the primary sector, and higher production of precious minerals. Gross domestic product (GDP) grew by 3.3 percent, surpassing the growth achieved in 2010. Inflation tapered off in recent years from the peak reached in 2008, falling to a yearly average of 1.2 percent in 2011. However, because of supply disruptions and speculative anticipation, pressures started building up towards the end of 2011, pushing the projected average inflation for 2012, well above the CEMAC convergence rate of 3 percent. The external current account deficit narrowed to 7.5 percent of GDP in 2011 on the back of stronger exports performance, particularly timber and precious minerals, and subdued imports.
“The overall fiscal position deteriorated further in 2011 as expenditures cuts were not enough to offset a decline in domestic revenue and suspension of budget support. For 2012, the situation is projected to improve with the overall balance, including grants, expected to shift from a deficit of 2.4 percent of GDP in 2011 to a small surplus in 2012. However, given the very low level of the revenue-to-GDP ratio, fiscal space for poverty reduction is limited, underscoring the need to accelerate domestic revenue mobilization and strengthen public financial management to attract donor support in order to address the large infrastructure needs and bolster public spending to progress towards the Millennium Development Goals.
“With regard to the financial sector, non-performing loans increased in 2011, but commercial banks are well-capitalized and prudential ratios have, by and large, remained adequate.
“Discussions focused on the government’s economic program, which aims at (i) consolidating macroeconomic stability by restoring fiscal discipline, (ii) creating fiscal space, (iii) strengthening policy implementation capacity, and (iv) removing impediments to strong and sustained growth necessary to reduce poverty.
“Following the National Forum on Public Finances (NFPF) held in September 2011, the government implemented a number of critical measures to strengthen budget execution and the monitoring of macroeconomic developments and structural reforms. The NFPF agreed on a roadmap for a comprehensive reform of public finances, thus reinforcing national ownership of the reform agenda.
“Given the government’s commitment to safeguard budgeted revenues, the mission discussed the need to remove costly subsidies on the consumption of petroleum products and put in place targeted measures to protect the most vulnerable groups of the population.
“Discussions will continue in Washington DC during the upcoming Spring Meetings with a view to reaching understandings on the government’s memorandum of economic and financial policies that will form the basis of the authorities’ request for an ECF arrangement.”