Press Release No. 17/202

IMF Staff Team Completes Review Mission to the Central African Republic

June 1, 2017

• The IMF team reached a staff-level agreement with the authorities on economic and financial policies that could support approval of the second review under the ECF
• Growth in 2017 is projected at 4.7 percent, assuming the ongoing dialogue with armed groups helps to reduce violence, and public and private investment rebound
• Average inflation is projected to decline to 3.8 percent in 2017, supported by increased food supply.

An International Monetary Fund (IMF) team, led by Samir Jahjah, visited Bangui from May 26 – June 1, 2017, to finalize discussions in the context of the second review of the program supported by an arrangement under the Extended Credit Facility (ECF). The arrangement for an amount of SDR 83.55 million, US$116 million, was approved by the IMF Executive Board on July 20, 2016. Consideration of the report on the second review by the IMF Executive Board is tentatively scheduled for July 2017.

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

“The IMF staff team and the Central African Republic authorities held discussions on recent economic developments in the Central African Republic and progress made in implementing the program supported by the ECF.

“The team reached a staff-level agreement with the authorities on economic and financial policies that could support approval of the second review under the ECF. The country's economic program is broadly on track. All quantitative performance criteria were met. The implementation of the program’s structural benchmarks is broadly on track. Looking forward, the government remains committed to taking any measures necessary to achieve its key objectives in the Fund supported program, including stepping up social spending, scaling up public investment, and increasing domestic revenue.

“Deterioration in the security environment disrupted trade, agriculture and mining in the last quarter of 2016, pushing growth for 2016 down to 4.5 percent, slightly lower than initially programmed, and inflation is estimated at 4.6 percent. Growth in 2017 is projected at 4.7 percent, assuming the ongoing dialogue with armed groups helps to reduce violence and destruction of property, and public and private investment rebound. Private sector development will hinge on the government’s actions to streamline excessive para-fiscal taxes, create a level playing field by eliminating ad hoc exemptions, and clear outstanding government arrears to small and medium-sized enterprises. Average inflation is projected to decline to 3.8 percent in 2017, supported by increased food supply.

“The IMF team urged the authorities to maintain and step up the reform momentum in improving domestic revenue mobilization and expenditure management, and limit borrowing - including of highly concessional loans - to safeguard debt sustainability. Specifically, the team discussed with the authorities measures to rationalize the tax system; streamline extra budgetary levies; strengthen revenue administration; address customs revenue shortfalls; enhance reporting on budget execution; and accelerate clearance of domestic arrears, especially of social debt.

The team met with President Touadéra, Minister of Finance Dondra, Minister of Economy, Plan and Cooperation Moloua, National Director of BEAC Chaibou, and other senior officials, and development partners. The team thanks the authorities for their hospitality, collaboration, and quality discussions.