Washington — The Executive Board of the International Monetary Fund (IMF) completed today the second review of the Extended Credit Facility arrangement (ECF) of SDR 147.48 million (about US$197 million) for the Central African Republic (CAR). The ECF was approved by the IMF Executive Board in April 2023 (see Press Release No. 23/129). The completion of this review allows for the immediate disbursement of SDR 18.60 million (about US$25 million) bringing total disbursements under the ECF to SDR 49.07 million (around US$65 million).

In completing the review, the Executive Board also approved the authorities' request for a waiver for nonobservance of the performance criterion of non-accumulation of external arrears. Further, the Executive Board completed the financing assurances review under the ECF. The Executive Board also approved the augmentation of access under the ECF to enable CAR to meet the additional balance of payment needs caused by delayed capital expenditure decisions in 2023.

The ECF is part of coordinated efforts by international financial institutions to support the people of CAR. It will continue to help the country meet protracted balance of payments needs and sustain spending on basic public services, including in the health and education sectors. The ECF has allowed to anchor important governance-related initiatives, including the ongoing strengthening of the Court of Audit and the Financial Intelligence Unit. The authorities have committed to further strengthen governance, transparency, and financial integrity frameworks.

Following subdued growth in 2023, economic activity is projected to expand at a faster pace going forward contingent on a thorough implementation of the agreed reforms in the fuel market as those aim at improving fuel supply and reducing pump prices. In 2024, inflation is expected to remain high at around 5 percent, driven by energy and food prices. Spending pressures continue to overshadow improvements in revenue collection. Achieving the targeted primary deficit of 2.8 percent of GDP this year would require more efforts. A tightening in the fiscal stance is important to address rising debt vulnerabilities.

The overhaul of the fuel market remains pivotal for macroeconomic stabilization and both sustained and inclusive growth in CAR. Since the subsidy system ended in 2022, the fuel market has been in flux with recurrent fuel shortages and prohibitive import costs. It has also created the conditions for informal fuel markets to thrive and to erode fiscal revenues. The government, with the technical assistance missions of the IMF in February 2023 and 2024, has adopted an action plan of reforms in this sector.

Following the Executive Board's discussion, Mr. Kenji Okamura, Deputy Managing Director and acting Chair, issued the following statement:

The Central African Republic (CAR) has shown commitment to structural reforms under the ECF-arrangement despite facing deep-rooted fragility and significant uncertainty. Both financial and technical support from development partners remain vital to the program's success, to overcome fragility, and to alleviate humanitarian needs.

Program performance has been broadly satisfactory. All but one structural benchmarks were met, with the remaining implemented with a delay. All but one performance criteria for end-December 2023 were met. The criterion on non-accumulation of external arrears was missed, while the indicative targets on social spending, and spending through extraordinary procedures were also missed. Corrective actions were taken accordingly. The adoption of a new mining code signals the authorities' commitment to reforms and economic development.

Decisive steps are required to fully implement the action plan for the fuel market with the view of improving economic activity, revenue collection, and reducing cost of living. A well-functioning fuel market is critical for both fiscal sustainability and macroeconomic stability. In addition, the authorities should continue to enhance the non-fuel-related revenue measures, as well as recover past-due taxes.

Program performance also hinges on stronger public financial management (PFM), in particular spending controls. Improving PFM is key to help prevent arrears, the excessive use of extraordinary procedures, and the under-execution of social spending. A proactive debt management strategy remains crucial amid high rollover risks. Grants and highly concessional financing should be pursued to limit reliance on expensive financing sources.

Governance reforms will complement PFM efforts. The authorities should implement the institutional plan for the Financial Intelligence Unit and take steps to operationalize the new law for the Court of Audit.

CAR's economic program will remain supported by the implementation of policies and reforms agreed among CEMAC regional institutions, which notably aim at supporting an increase in regional net foreign assets which are ultimately critical to program's success.

Table 1. Central African Republic: Selected Economic and Financial Indicators, 2021-2029

2021

2022

2023

2024

2025

2026

2027

2028

2029

Act.

Act.

ECF 1st

Review

Act.

ECF 1st

Review

Proj.

Projections

(Annual percentage change; unless otherwise indicated)

National income and prices

GDP at constant prices

1.0

0.5

1.0

0.7

1.5

1.4

2.9

3.7

3.7

3.6

3.5

GDP per capita at constant prices

-1.0

-1.5

-1.1

-1.3

-0.5

-0.6

1.0

1.6

1.6

1.4

1.4

GDP at current prices

4.3

6.9

7.9

4.2

6.1

7.5

7.5

7.7

7.1

6.8

6.7

GDP deflator

3.3

6.4

6.9

3.4

4.6

6.0

4.4

3.8

3.3

3.1

3.0

CPI (annual average)1

4.3

5.6

6.5

3.2

3.2

4.7

4.6

3.8

3.4

3.1

3.0

CPI (end-of-period)

2.7

7.6

5.5

4.0

2.8

5.0

4.2

3.5

3.3

3.0

3.0

Money and credit

Broad money

14.6

2.5

3.6

7.3

2.9

4.5

10.0

3.6

6.1

7.4

7.6

Credit to the economy

-2.2

28.2

13.0

0.4

7.4

5.1

5.2

5.2

5.6

5.8

5.9

External sector

Export volume of goods

-5.3

2.6

9.0

9.0

5.2

12.0

8.7

5.4

9.2

14.6

14.7

Import volume of goods

-11.5

-5.5

7.4

5.5

7.1

10.7

5.7

4.1

9.0

7.1

7.2

Terms of trade

1.8

-8.4

14.7

14.4

7.9

6.8

7.5

2.8

11.8

2.0

3.4

(Percent of GDP; unless otherwise indicated)

Gross national savings

4.6

2.1

7.0

6.0

7.5

7.2

10.0

12.3

14.4

16.0

15.7

Of which: current official transfers

0.0

0.0

1.5

1.1

1.0

1.4

2.0

3.0

3.1

3.2

1.0

Gross domestic savings

-2.5

-5.1

-1.6

-2.4

-1.0

-1.7

0.5

1.8

4.0

5.6

7.6

Government

-3.4

-3.8

-3.5

-4.1

-2.4

-2.7

-1.8

-0.8

0.1

0.7

0.6

Private sector

0.9

-1.3

1.9

1.7

1.4

1.0

2.3

2.6

3.8

4.8

7.0

Consumption

102.5

105.1

101.6

102.4

101.0

101.7

99.5

98.2

96.0

94.4

92.4

Government

9.1

8.4

8.3

8.5

7.8

8.0

7.8

7.6

7.3

7.5

7.6

Private sector

93.4

96.8

93.3

93.9

93.2

93.7

91.7

90.6

88.7

86.9

84.8

Gross investment

15.7

14.9

15.6

15.0

15.8

15.8

16.9

17.3

18.3

19.0

19.7

Government

7.4

5.9

6.1

5.5

5.8

5.8

6.4

6.3

6.7

6.8

6.9

Private sector

8.3

8.9

9.5

9.5

10.0

10.0

10.5

11.1

11.6

12.2

12.8

External current account balance

with grants

-11.1

-12.7

-8.6

-9.0

-8.3

-8.6

-7.0

-5.0

-4.0

-2.9

-3.9

without grants

-13.0

-14.7

-12.1

-12.1

-11.3

-12.0

-10.9

-10.1

-9.0

-6.1

-6.8

Overall balance of payments

0.1

-7.8

-2.6

-2.9

-3.0

-3.3

-1.4

0.6

3.0

4.0

5.0

Central government finance

Total revenue (including grants)

13.7

12.3

14.7

14.4

14.2

14.8

16.3

17.8

17.9

18.3

15.8

of which: domestic revenue

8.8

7.8

8.3

8.3

9.0

9.2

9.8

10.5

10.9

11.5

11.5

Total expenditure2

19.7

17.6

18.0

17.9

17.3

17.8

18.1

17.7

17.6

17.7

17.8

of which: capital spending

7.4

5.9

6.1

5.5

5.8

5.8

6.4

6.3

6.7

6.9

6.9

Overall balance

Excluding grants

-10.9

-9.9

-9.7

-9.6

-8.3

-8.6

-8.3

-7.2

-6.7

-6.1

-6.3

Including grants

-6.0

-5.3

-3.3

-3.6

-3.1

-3.1

-1.8

0.1

0.3

0.7

-2.1

Domestic primary balance3

-5.1

-4.4

-3.8

-3.7

-2.8

-2.8

-2.2

-1.5

-1.1

-0.9

-1.4

Public sector debt

48.5

51.1

52.9

57.7

53.3

57.3

55.4

50.8

47.3

43.5

42.7

Of which: domestic debt4

13.2

18.2

20.3

25.1

22.0

26.1

25.6

22.7

20.6

16.3

15.2

Of which: external debt

35.3

32.8

32.6

32.6

31.3

31.2

29.8

28.2

26.7

27.2

27.5

Memorandum items:

GDP per capita (US dollars)

525

490

538

514

566

539

567

598

628

656

685

Nominal GDP (CFAF billions)

1,432

1,531

1,651

1,595

1,752

1,714

1,842

1,984

2,125

2,269

2,420

Sources: CAR authorities and IMF Staff estimates and projections.

1 Revision of CPI weights and transition to COICOP was performed starting from 2020.

2 Expenditure is on a cash basis.

3 Excludes grants, interest payments, and externally-financed capital expenditures.

4 Comprises government debt to BEAC, commercial banks, and government arrears.