The Executive Board of the International Monetary Fund (IMF) approved on May 14, 2014 financial assistance under the Rapid Credit Facility (RCF) in the amount equivalent to SDR 8.355 million (about US$12.9 million) for the Central African Republic (C.A.R.) in support of the authorities's emergency economic recovery program.
The financial assistance from the IMF will help the Transitional Authorities of the C.A.R. to implement a set of economic and structural policies and measures aimed at restoring progressively macroeconomic stability and strengthening the capacity of the C.A.R. government. The Executive Board's approval of the RCF will also enable the authorities to engage in discussions with development partrners regarding further assistance. The Executive Board's approval enables the immediate disbursement of the full amount, which is equivalent to 15 percent of C.A.R.'s quota in the IMF.
The Executive Board noted the authorities' cancellation of the Extended Credit Facility (ECF) arrangement for C.A.R.that was approved on June 25, 2012 (Press Release No. 12/237). The Executive Board can consider renewal of financing under the RCF before the end of the year, provided the C.A.R. meets the policy requirements for repeated use under the RCF, including the establishment of a track record of adequate macroeconomic policies for a period of normally six-months prior to a new request for financial assistance under the RCF. Timely provision of pledged financial and technical assistance is crucial to sustain the momentum for the recovery, strengthen the capacity of the C.A.R. government and exit from the emergency situation.
The RCF provides rapid concessional financial assistance with limited conditionality to low-income countries with an urgent balance of payments need. In this context, the economic policies of a member receiving RCF financing are expected to address the underlying balance of payments difficulties and support policy objectives including macroeconomic stability and poverty reduction. Financing under the RCF carries zero interest, has a grace period of 5 ½ years, and a final maturity of 10 years. The Fund reviews the level of interest rates for all concessional facilities every two years.
Following the Executive Board's discussion of the C.A.R.'s request for financial assistance under the RCF, Naoyuki Shinohara, Deputy Managing Director and Acting Chair, stated:
“The political and security crisis that followed the seizing of power by a rebel coalition in March 2013 has produced large-scale economic dislocation in the C.A.R. and exacerbated an already fragile situation. The new transition government is strongly committed to restoring security, mobilizing humanitarian assistance, reviving the economy, and rebuilding democratic institutions, but faces daunting challenges.
“With support under the Fund's Rapid Credit Facility, the transition authorities aim to implement macroeconomic policies and structural reforms to restore macroeconomic stability, rebuild basic state functions, improve domestic revenue mobilization, return to normal budgetary procedures, clear domestic arrears, and ensure regular payments of salaries and pensions to civil servants. Transparent management of public resources including external support, better prioritization of spending, and improving treasury management will be critical for the success of the program. Preserving debt sustainability will also be important.
“The Fund will continue to play a key role in coordinating international efforts in the provision of much needed financial support and technical assistance to rebuild key financial functions of the government.”