Press Release No. 14/529

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

November 19, 2014

An International Monetary Fund (IMF) mission, headed by Mr. Ekué Kpodar, visited Bangui, Central African Republic (C.A.R.), from November 11 to 18, 2014 to hold discussions with the C.A.R. authorities on an emergency program that could be supported by the IMF’s Rapid Credit Facility (RCF).¹

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

“The Transitional Authorities of the C.A.R. and the IMF mission reached staff-level understandings on a macro-fiscal framework and a set of economic and structural policies to reinforce the progress made since the previous RCF approved by the IMF Executive Board in May 2014. These policies are aimed at further restoring macroeconomic stability, achieving fiscal consolidation, strengthening the capacity of the C.A.R. government, coordinating technical assistance, and maintaining the commitment of international donors. Under these understandings, C.A.R. could receive support on these policies through a follow-up RCF for an amount of SDR 5.57 million (equivalent to CFAF 4 billion). The IMF’s total financial assistance to C.A.R. for 2014 would thus reach SDR 13.925 million (equivalent to approximately CFAF10 billion). Additional contributions from development partners to the IMF’s assistance would bring the total external budgetary support to the C.A.R. to approximately CFAF 80 billion for 2014.

“The protracted political and security crisis in the C.A.R. and the resulting collapse of economic activity continue to present major challenges to the Transitional Authorities. For 2014, while economic activity is gradually resuming and some of the displaced persons have been able to return, the volatile security situation led the mission and the C.A.R. authorities to revise the GDP growth forecast downward to 1 percent. At the same time, the scarcity of basic consumption goods has translated into a steady rise in prices, with inflation projected to reach 11.6 percent on average in 2014, well above the Central African Economic and Monetary Community (CEMAC) convergence criterion of 3 percent. The external current account deficit is projected to narrow to 6.4 percent of GDP in 2014, reflecting the substantial financial support from the donor community as well as the Economic Community of Central African States (ECCAS) countries. However, the strong reliance on food and oil imports and the lagging performance of the exporting industries make further balance of payments support necessary.

“In the budget area, the priority remains to further improve the mobilization of domestic revenues and enhance the quality of spending with a view to limiting the domestic primary balance to 5 percent of GDP in 2014 and 4.1 percent in 2015. The Transitional Authorities will continue implementing measures to strengthen public financial management by enhancing the monitoring of cash flow management, further cleaning up the civil servants roster and payroll, revising the convention with commercial banks to administer tax collection, and strengthening transparency in oil taxation.

“Finally, the mission held in-depth discussions on a draft budget and policies for 2015. For next year, we expect that the return of security and the successful completion of the political transition will mark the beginning of a sustainable economic recovery with a real GDP growth rate estimate of 5.7 percent with inflation being contained at 5.7 percent. However, public finances will continue to be under pressure and will require continued support of the international community.

“The mission met with the President of the C.A.R., Mrs. Catherine Samba-Panza, and held discussions with the Prime Minister, Mr. Mahamat Kamoun, the Minister of Finance and Budget, Mr. Bounandele Koumba, and his delegation, and representatives of development partners, the diplomatic community, and the private sector.

“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.”

¹ The RCF (http://www.imf.org/external/np/exr/facts/rcf.htm) is a lending arrangement that provides rapid financial support in a single, up-front payout for low-income countries facing urgent financing needs.