The Executive Board of the International Monetary Fund (IMF) approved today a disbursement under the Rapid Credit Facility (RCF) equivalent to SDR 27.85 million (US$38 million, 25 percent of quota) to help the Central African Republic (C.A.R.) meet the urgent balance of payments needs stemming from the COVID-19 pandemic.
C.A.R. has also benefited from the IMF Executive Board decision of April 13, 2020 to provide debt service relief to all countries eligible for support from the International Development Association (IDA) in the form of grant assistance under the Catastrophe Containment window of the Catastrophe Containment and Relief Trust (CCRT). As a result, C.A.R. will receive relief from the CCRT on debt service falling due to the IMF in the next 6 months (about US$4 million). This relief could be extended for up to 2 years, subject to the availability of resources under the CCRT.
If not contained, the COVID-19 pandemic could have a considerable economic and social impact on the C.A.R. The sharp global economic downturn and border closures with neighboring countries have already led to a significant reduction in economic activity, with sectors such as commodity exports, trade, and construction particularly hard-hit.
The authorities have acted fast to prevent the spread of the pandemic by setting up preventive measures and designing a response plan, in collaboration with the WHO. The plan aims at: (i) providing medical care of confirmed cases; (ii) improving monitoring system for the country's main points of entry and; (iii) strengthening the capacity of medical staff and facilities. IMF financing will help preserve fiscal sustainability and catalyze further assistance from the international community, in the form of grants.
The IMF continues to monitor C.A.R.'s situation closely and stands ready to provide policy advice and further support as needed.
Following the Executive Board's discussion on C.A.R., Mr. Mitsuhiro Furusawa, Deputy Managing Director and Acting Chair, issued the following statement:
"The global COVID-19 crisis is expected to have a considerable economic and social impact on the Central African Republic (C.A.R.), a fragile country with a volatile security environment, limited administrative capacity, and weak governance. The outbreak will likely affect C.A.R.'s economy both directly, as containment measures impact domestic demand and disrupt supply and trade, and indirectly, as the marked slowdown in economic activity worldwide will affect demand for C.A.R.'s commodity exports. Along with a decline in financial flows, the latter will create substantial urgent external financing needs.
"To limit the pandemic's human and economic impact, the authorities have adopted measures- including border closures, school closings, and prolonged curfews-to contain its spread and prepared, in collaboration with the World Health Organization, a response plan to strengthen the health system's capacity. In addition, the regional central bank and banking commission are taking steps to support growth and preserve financial sector stability.
"A temporary widening of the budget deficit is warranted in the short term to allow for the implementation of the response plan while continuing to meet C.A.R.'s considerable social, infrastructure, and security needs. The IMF's emergency financial support under the Rapid Credit Facility, along with the additional donor grant financing it will help to catalyze, will address C.A.R.'s urgent balance of payments needs while supporting this temporary fiscal loosening. The recent approval of debt service relief for C.A.R. under the Catastrophe Containment and Relief Trust (CCRT) will also play an important role in freeing up resources to cope with the pandemic.
"The implementation of the policies and structural reforms to which the authorities committed under the ECF arrangement adopted in December remains key to ensuring macroeconomic stability and debt sustainability and restoring sustained inclusive growth. Additional external support, preferably in the form of grants, is also urgently required to meet C.A.R.'s elevated financing needs and ease the financial burden of the pandemic. These are also essential to the authorities' efforts to restore peace and prosperity in the country."
IMF Lending Tracker (emergency financing request approved by the IMF Executive Board)
IMF Executive Board calendar