Press Release No. 22/257

IMF Staff Completes Mission for a Staff-Monitored Program to the Central African Republic

July 14, 2022

• The economy is feeling the strains from the impact of two-consecutive years of the Covid-19 pandemic, compounded by rising international food and fuel prices, financing shocks, and the acute risk of food insecurity.
• Inflation is on the rise reflecting the pass through from higher commodity import prices, elevated shipping costs as the Central African Republic is landlocked, and the recent fuel shortages.
• Performance under the Staff Monitored Program (SMP) has been broadly satisfactory as most end-March quantitative and structural benchmarks were met. At the authorities’ request, the SMP has been extended by three months to end-September 2022 to provide more time to secure financing assurances from development partners and to harmonize their crypto assets law with regional commitments at the CEMAC level.

Washington, DC : An International Monetary Fund (IMF) staff team led by Mr. Oral Williams visited Bangui from July 7–15 2022, to discuss the second review of the Central African Republic’s Staff-Monitored Program (SMP), which was approved in December 2021 .

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

“The economy, after showing signs of a promising recovery, is experiencing a downturn in the face of rising food and fuel import prices, fuel shortages, and higher shipping costs. “

“The main risks to the outlook include lower growth owing to fuel shortages, higher inflation, and shortfalls in budget support. The draw down on the IMF’s SDR allocation (CFAF 85 billion/6 percent of GDP) helped cushion the adverse impact of recent shocks by ensuring the budget implementation remained on track. Nevertheless, the authorities have had to embark on further fiscal consolidation in response to the shortfalls in budget support and rising food and fuel import prices. Given the difficult context, sustained efforts are needed to ensure suppliers are paid on time to sustain their activity and limit layoffs.

“IMF staff and the Central African Republic authorities discussed the progress that has been made in the implementation of the SMP, which, at the authorities’ request has now been extended by three months to end-September 2022. This extension will give the authorities more time to secure financing assurances with other development partners and allow them to pursue ongoing efforts to harmonize C.A.R.’s crypto assets law with regional commitments at the CEMAC level.

“The execution of the 2022 budget appears to be broadly in line with the SMP commitments, with key end-March budget targets being met. In light of the multiple shocks the economy is experiencing, the mission and the authorities explored ways to ensure the smooth implementation of the 2022 budget. This would form the basis for the submission of a revised budget to parliament.

“The authorities have requested capacity development from the IMF to mitigate the impact of higher international fuel prices and to design effective social safety nets while at the same time safeguarding fiscal revenues.

“Further progress was made on the reform front including the submission to parliament of a new anti-corruption law and verifying the accuracy of importers’ declarations at customs. Initial steps for conducting a Public Expenditure and Financial Accountability Assessment (PEFA) have also started and the monthly Treasuring Committee meetings with the participation of technical and financial partners recently resumed. The ongoing revisions to the mining code should aim at strengthening the institutional framework essential for improving the business climate and leveraging C.A.R.’s rich resource base.

“Looking ahead, concerted efforts to catalyze concessional financing from development partners will be instrumental in cushioning the impact of recent shocks, safeguard pro-poor spending, and preserving the provision of public services.

"The team would like to express its deep appreciation to the authorities for their excellent collaboration, openness, and hospitality during the discussions."

The IMF staff team met with President Touadéra, Prime Minister Moloua President of the National Assembly Sarandji, Finance Minister Ndoba, Mining Minister Benam-Beltoungou, BEAC National Director Chaïbou, other senior government officials, development partners, and representatives from the private sector.