IMF Executive Board Completes Fourth Review Under the ECF Arrangement for the Central African Republic and Approves US$ 32.1 Million Disbursement

Stocks and Financial Services Press Releases Wednesday July 4, 2018 09:21
IMF--4 Jul--International Monetary Fund
Completion of the review enables a disbursement of US$ 32.1 million.
Program implementation has been satisfactory in a difficult context. Restoring peace and speeding the implementation of the development agenda are key to sustain the economic recovery and reduce poverty.

Improving domestic resource mobilization is crucial for the scaling up of expenditure in key sectors such as health, education, and security.On July 2, 2018, the Executive Board of the International Monetary Fund (IMF) completed the fourth review under the Extended Credit Facility (ECF) arrangement[1] for the Central African Republic. The completion of the review enables a disbursement of SDR 22.84 million (about US$ 32.1 million), which will bring total disbursements under the arrangement to SDR 88 million (about US$ 123.7 million).

The ECF arrangement for the CAR was approved by the Executive Board on July 20, 2016 (see Press Release No. 16/352 ) for SDR 83.55 million and subsequently augmented twice to a total of SDR 133.68 million (about US$ 189.0 million, 120 percent of Central African Republic's quota at the IMF).

At the conclusion of the Board's discussion, Mr. Tao Zhang, Deputy Managing Director and Acting Chair, stated:

Performance under the ECF-supported program has been satisfactory despite a challenging security environment and difficult humanitarian conditions. The authorities stepped up the implementation of their reform agenda and public investment plan.

"Fiscal policy is broadly on track. The revised 2018 budget includes new revenue measures and remains anchored to the domestic primary balance objective while allowing a scale-up of social and capital spending. Renewed efforts to mobilize domestic revenues, which remain weak, will be critical to support the scaling-up. Given the country's high risk of debt distress, continued reliance on grant financing is essential to support debt sustainability. The implementation of the investment program for the National Recovery and Peacebuilding Plan will boost economic prospects.

"The authorities continued to implement fiscal structural reforms, which contributed to the strengthening of the treasury single account, improved budget transparency and traceability of domestic revenues. Quarterly publication of budget execution reports allows for better tracking and monitoring of government expenditures. More consideration should be given to streamlining quasi-fiscal taxes, reducing exceptional payment procedures, and strengthening the asset declaration regime. It will also be important to follow through on commitments to strengthen transparency in the management of natural resources.

"The government started the comprehensive clearance of domestic arrears. The transparent repayment of arrears will support growth, bolster the credibility of the state, and strengthen the banking sector.

"The Central African Republic's program is supported by the implementation of policies and reforms by the regional institutions in the areas of foreign exchange regulations and monetary policy framework and to support an increase in regional net foreign assets, which are critical to the program's success."

[1] The ECF is a lending arrangement that provides sustained program engagement over the medium to long term in case of protracted balance of payments problems. Details on Central African Republic' arrangement are available atwww.imf.org/external/country/CAF.


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