IMF Executive Board Completes Third Review Under the ECF Arrangement for the Central African Republic, Approves US$40.2 Million Disbursement, and an Augmentation of US$55.1 Million
IMF News, December 15, 2017
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- Published: December 15, 2017
Review completion, disbursement, and augmentation
- The Executive Board completed the third review under the Extended Credit Facility (ECF) arrangement for the Central African Republic on December 15, 2017.
- Completion of the review enables a disbursement of SDR 28.41 million (about US$40.2 million).
- The Executive Board approved an augmentation of the ECF arrangement in the amount of SDR 38.99 million (about US$55.1 million).
- The augmentation is intended to cover significant balance of payments needs in the context of the national strategy for recovery and peace and to support social cohesion and economic growth.
Program financing, quota, and totals
- The ECF arrangement was approved on July 20, 2016 for SDR 83.55 million (about US$118.1 million, 75 percent of Central African Republic’s quota at the IMF).
- Following augmentations, total financing amounts to SDR 133.68 million (about US$189.0 million, 120 percent of the country’s IMF quota).
Program performance and targets
- Program performance through end-June has been satisfactory.
- All quantitative criteria and indicative targets were met, with the exception of the domestic revenue target.
- Authorities are taking corrective actions for the domestic revenue shortfall and a waiver of non-observance was granted.
- All structural reforms have been implemented, albeit with some delays.
Key policy messages and fiscal recommendations (as stated by Mr. Mitsuhiro Furusawa, Deputy Managing Director and Acting Chair)
- “Performance under the ECF-supported program has been satisfactory despite a challenging security environment and difficult humanitarian conditions.”
- Fiscal policy and budget:
- “Fiscal policy is broadly on track. The 2018 budget 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 scale-up.”
- Given the country’s high risk of debt distress: “continued reliance on grant financing while limiting borrowing—even on highly concessional terms— is essential.”
- “Available assistance must be channeled effectively into priority projects to boost economic growth, create jobs, and reduce poverty.”
- “Sound implementation of the investment program for the National Plan for Recovery and Peace will boost economic prospects.”
- Structural and fiscal transparency measures:
- Structural reforms contributed to strengthening of the treasury single account, streamlining of quasi-fiscal taxes, improved budget transparency and traceability of domestic revenues.
- Quarterly publication of budget execution reports improves tracking and monitoring of government expenditures.
- “More consideration should be given to reducing exceptional payment procedures which can undermine recent progress.”
- Arrears clearance:
- The government adopted a comprehensive domestic arrears clearance strategy.
- “The repayment of arrears will support growth, bolster the credibility of the state, and strengthen the banking sector.”
- The arrears clearance plan “includes measures to ensure the integrity of the arrears clearance process.”
- Regional and institutional support:
- The program is supported by regional institutions’ policies, including tighter monetary policy, elimination of statutory advances, sound bank regulation and supervision, and firm controls over the extension of credit to banks.
Operational context and intent
- The augmentation and disbursement are linked to supporting social cohesion, economic growth, and the swift implementation of the National Plan for Recovery and Peace.
- Emphasis on gradual restoration of state authority and channeling assistance into priority projects to create spaces of stability, reconstruction, and growth.
Press Release No. 17/501 — December 15, 2017, IMF Communications Department.