Press Release No. 14/153

Press Release: IMF Mission and the Central African Republic Reach Staff-level Agreement on Financial Assistance Under The Rapid Credit Facility

April 3, 2014

An International Monetary Fund (IMF) mission, headed by Mr. Ekué Kpodar, visited Douala, Cameroon, from March 24 to April 2, 2014 to finalize discussions with the Central African Republic (C.A.R.) authorities on an emergency program that could be supported by the IMF’s Rapid Credit Facility (RCF). The mission held discussions with the C.A.R. Minister of Finance and Budget, Mr. Rémi Yakoro, his delegation, and with representatives of development partners (World Bank, African Development Bank, European Union, and France).

At the end of the mission, Mr. Ekué Kpodar issued the following statement:

“The Transitional Authorities of the C.A.R. and the IMF mission reached staff-level agreement on a macro-fiscal framework and a set of economic and structural policies and measures aimed at restoring progressively macroeconomic stability, achieving fiscal consolidation, strengthening the capacity of the C.A.R. government, and coordinating technical assistance. These policies could be supported by the RCF in an amount of SDR 8.355 million, equivalent to CFAF 6 billion. A second RCF could be established in the amount of SDR 5.570 million, equivalent to CFAF 4 billion, bringing the IMF’s total financial assistance for 2014 to SDR 13.925 million, equivalent to approximately CFAF 10 billion, subject to approval by Management and the Executive Board of the IMF. Financial contributions from development partners would be added to the IMF’s assistance to bring total financial support for the C.A.R. to approximately CFAF 84 billion for 2014.

“The political and security crises that the C.A.R. has faced since December 2012 has led to a collapse of economic activity, paralyzed the government, and caused an unprecedented humanitarian crisis, with nearly a quarter of the population displaced. Real gross domestic product (GDP) contracted sharply (approximately 36 percent) in 2013, as all sectors of economic activity experienced downturns. Inflation accelerated to 6.6 percent in 2013, compared with 5.9 percent in 2012, reflecting the decline in food production and supply disruptions throughout the year. Government revenues fell by more than half to 5.7 percent of GDP, while the external current account deficit virtually doubled to 10.4 percent of GDP.

“For 2014, a slight recovery in economic activity is projected with real GDP growing at around 1.5 percent, assuming a normalization of security conditions, the return of displaced persons, and a gradual resumption of economic activity, particularly in the agriculture and commerce sectors. Price pressures are expected to ease gradually and inflation is expected to be around 4.4 percent in 2014, albeit at a level exceeding the Central African Economic and Monetary Community (CEMAC) convergence criterion of 3 percent. The external current account is projected to further deteriorate to reach 14.1 percent of GDP in 2014, reflecting the revival of investment and consumption associated with the resumption of financial support from the C.A.R. technical and financial partners as well as the Economic Community of Central African States (ECCAS) countries.

“In the budget area, the priority is to progressively restore public finances through improved mobilization of tax revenues and more effective control of spending with a view to limiting the domestic primary balance to 7.6 percent of GDP. Accordingly, the Transition Authorities and the mission agreed on measures to resume and strengthen public financial management by restoring revenue mobilization capacity, rationalizing and enhancing the monitoring of cash flow management, cleaning up the database for civil servants and payroll, and resuming swiftly normal expenditure execution procedures.

“Finally, the mission held discussions on the broad lines of a draft budget policy for 2015, against the backdrop of a return to growth at around 5 percent and improved political and security conditions.

“The mission takes this opportunity to thank the C.A.R. authorities for their exemplary cooperation and the candid and constructive discussions that took place. Furthermore, the mission wishes to thank the BEAC authorities for their logistical support.”