Press Release No. 21/349

IMF Staff Completes Mission to the Central African Republic

November 26, 2021

• The Central African authorities and IMF staff discussed economic policies and structural reforms that could form the basis of a staff-monitored program. These discussions will continue in the coming days.
• The staff-monitored program will aim at helping the authorities address the economic challenges caused by the security crisis and the Covid-19 pandemic and allow them to benefit from budget support by other development partners. It calls for the implementation of structural reforms to improve governance and public financial management and strengthen domestic revenue mobilization.
• The improvement in the security situation over the past few months and the reopening of the trade corridor between Bangui and Cameroon have allowed economic activity to pick up more quickly than expected in the spring, while inflationary pressures have started to abate.

Washington, DC: An International Monetary Fund (IMF) team led by Mr. Édouard Martin conducted a mission with the Central African Republic from November 15 to 26, 2021, to discuss a staff-monitored program with the authorities.

At the conclusion of the mission, Mr. Martin issued the following statement:

"The Central African authorities and the staff of the International Monetary Fund (IMF) discussed economic policies and structural reforms that could form the basis of a staff-monitored program (SMP). These discussions will continue in the coming days so as to reach a staff-level agreement that could be submitted for approval to IMF Management by the end of the year. The 7-month SMP will aim at helping the authorities address the economic challenges caused by the security crisis and the Covid-19 pandemic. Its satisfactory implementation would allow for the resumption of discussions under the Extended Credit Facility (ECF) supported program in the second half of 2022.

" The improvement in the security situation over the past few months and the reopening of the trade corridor between Bangui and Cameroon have allowed economic activity to pick up more quickly than expected in the spring. The growth forecast for 2021 has therefore been revised upwards from -1 to 1 percent. The continued economic recovery next year is expected to allow growth to reach 4 percent. As inflationary pressures stemming from supply bottlenecks caused by the closure of the trade corridor at the start of the year have eased in recent months, inflation is expected to gradually moderate to 3½ percent year-on-year by the end of the year and less than 3 percent next year. Owing to the 5 percent drop in GDP in official transfers resulting from the postponement of the disbursement of budget support by technical and financial partners expected this year, the current account deficit would increase to 10½ percent of GDP in 2021, against 8½ percent of GDP in 2020.

“ Budgetary developments in recent months appear to be in line with the objectives of the supplementary budget law. Domestic revenue is expected to be slightly higher than expected—on account of a faster economic recovery—while spending appears to be well under control. The on-lending by the BEAC of part of the Special Drawing Rights (SDR) allocation provided by the IMF should make it possible to accelerate the repayment of domestic arrears and to start repaying the bridge loans contracted with commercial banks during the last months.

" The 2022 budget law will seek to ensure the sustainable financing of priority spending — including in sectors such as health and security — through increased mobilization of revenue and grants, non-priority spending rationalization, and prioritization of concessional external financing. In order to contain the pandemic, and with the support of development partners, the government also intends to accelerate the vaccination campaign, with the objective of vaccinating close to 3 million people by the end of 2022.

" The IMF team also discussed with the Central African authorities a structural reform program for the coming months, aimed at improving public financial management, increasing domestic revenue mobilization and strengthening governance. The authorities intend in particular to submit a draft anti-corruption law to the National Assembly and to continue their efforts to fully deploy the system for electronic tax declarations by large companies, consolidate the single treasury account, and digitalize customs procedures and controls.

"The team would like to express its deep appreciation to the authorities for their excellent collaboration and the open atmosphere that prevailed during the discussions. "

The IMF team met with President Touadéra, President of the National Assembly Sarandji, Finance Minister Dondra, Health Minister Somse, Mines Minister Benam-Beltoungou, BEAC National Director Chaïbou, other senior government officials, and representatives of technical and financial partners.