Press Release No. 10/318

Press Release: IMF Completes Sixth Review Under the Central African Republic's ECF Arrangement and Approves US$13.1 Million Disbursement

August 25, 2010

The Executive Board of the International Monetary Fund (IMF) approved today the sixth review of the Central African Republic (C.A.R.)’s performance under a program supported by the Extended Credit Facility¹. The approval will enable the disbursement of an amount equivalent to SDR 8.67 million (about US$13.1 million), bringing total disbursements under the program to an amount equivalent to SDR 69.62 million (about US$104.9 million).

The Executive Board approved a three-year arrangement for an amount equivalent to SDR 36.2 million (about US$ 54.6 million) in 2006 (see Press Release No. 06/299). It approved augmentations of an amount equivalent to SDR 8.355 million (about US$12.6 million) in June 2008 (see Press Release No. 08/142) and an amount equivalent to SDR 25.065 million (about US$37.8 million) in June 2009, when it also approved a six-month extension of the arrangement (see Press Release No. 09/242). Last June the Board approved another six-month extension of the arrangement.

Following the Executive Board’s discussion, Mr. Murilo Portugal, Deputy Managing Director and Acting Chair, issued the following statement:

“The Central African Republic (C.A.R.) authorities are to be commended for the satisfactory implementation of the program supported by the Extended Credit Facility (ECF), against the backdrop of difficult domestic and external challenges.

“The C.A.R. authorities have made further progress under their economic and financial reform program. The credibility of public finances has improved through domestic revenue mobilization, prudent budget execution, and reduction of domestic arrears. In part thanks to the reform measures, the economy now appears to be on its way toward sustainable higher growth.

“The authorities have drawn on the Fund SDR allocation, which has helped replace expensive commercial bank financing, thus saving budget resources, and strengthening liquidity in the banking system. The restructuring strategy of one local bank in accordance with international best standards will be an important step in this process.

“It is important for the economy to continue improving the security situation and maintaining political stability in the period ahead of the January 2011 general elections. Donor funding for the peace building process and elections is essential. Enhanced donor financial and technical support is also needed to help the authorities build economic management capacity and address critical infrastructure bottlenecks.

“The C.A.R. authorities need to continue their reform efforts to accelerate growth, strengthen competitiveness, and to mobilize resources required for poverty reduction while keeping debt sustainable. The authorities need to continue to focus on efficient government revenue mobilization, prudent expenditure and debt management, business climate improvement, and the promotion of private sector activities including through better access to credit and diversification of exports. Resuming regular and automatic fuel price adjustment to avoid subsidies will be important,” Mr Portugal added.

¹ . The Extended Credit Facility (ECF) has replaced the Poverty Reduction and Growth Facility (PRGF) as the Fund’s main tool for medium-term financial support to low-income countries by providing a higher level of access to financing, more concessional terms, enhanced flexibility in program design features, and more focused streamlined conditionality. Financing under the ECF currently carries a zero interest rate, with a grace period of 5½ years, and a final maturity of 10 years. The Fund reviews the level of interest rates for all concessional facilities every two years.