IMF Reaches Staff Level Agreement on the Fourth Review under the Extended Credit Facility for the Central African Republic

Stocks and Financial Services Press Releases Thursday May 10, 2018 10:10
IMF--10 May--International Monetary Fund
  • Restoring peace and speeding the implementation of the development agenda are key to sustain the economic recovery and reduce poverty.
  • Economic growth is estimated at 4.3 percent in 2017 and projected at 5 percent in the medium term.
  • The IMF team encouraged the authorities to accelerate reforms, increase domestic revenue mobilization, strengthen public expenditure management and enhance transparency and governance.

An International Monetary Fund (IMF) team led by Mr. Samir Jahjah held program discussions with the Central African Republic authorities on the fourth review of the program supported by an Extended Credit Facility (ECF). Discussions took place during the 2018 Spring Meetings of the IMF and World Bank (WB) in Washington, D.C. and were completed, from May 4–11, in Paris.

At the conclusion of the discussions, Mr. Jahjah issued the following statement:

"The authorities and IMF staff have reached understandings on a set of policies that, subject to approval by IMF management and the Executive Board, could be supported by the Fourth Review under the ECF arrangement.

"The Central African Republic's (C.A.R.) macroeconomic performance remains favorable, although downside risks have increased due to a deteriorating and volatile security environment and rising oil prices. Economic growth is estimated at 4.3 percent in 2017, driven by the forestry and construction activities. It is projected to reach 5 percent on average over the medium-term. Inflation stood at 4.1 percent and is projected to decline gradually.

" An end to the recent outburst of violence, restoration of peace, the redeployment of the state, and a steadfast implementation of reforms will be key to achieve a sustained economic recovery.

"The country's economic program is broadly on track. The data and information collected during the mission indicate that all quantitative performance criteria at end-December 2017 have been met, except for the domestic revenue target. Program discussions focused on corrective measures to bring domestic revenue on track and on the key parameters of a revised budget for 2018, to be submitted to Parliament before mid-June. Rising oil prices could, however, lower revenue, in the absence of a revision of the petroleum price structure.

"The team urged the authorities to further consolidate the treasury single account. The integration of some parafiscal taxes in the treasury single account is a welcome first step. In addition, the planned elimination of taxes and fees with no economic justification will support private sector development. The authorities also need to strengthen public expenditure management, enhance transparency and governance, and limit borrowing—including concessional loans—to safeguard debt sustainability.

"The team welcomed the government's efforts to clear commercial and social arrears as planned, in line with the recommendation of the independent audit finalized in October 2017. Given the large amount of social arrears to be cleared, a close monitoring is needed to ensure transparency and accountability. Tangible progress in this area could help promote social cohesion.

"The team had talks with President Touadera, Mr. Dondra, Minister of Finance and Budget, Mr. Chaibou, National Director of BEAC, senior government officials, as well as the representatives of the European Union and the Agence Francaise de Development (AFD). The team thanks the authorities for their collaboration and constructive discussions."

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