Press Release No. 23/20

IMF Staff Completes 2022 Article IV Mission to the Central African Republic

January 26, 2023

• The economic recovery that began in 2022 after the COVID-19 crisis has been severely disrupted by fuel shortages and soaring foodstuff prices as a result of the war in Ukraine. The food crisis that was already affecting the country has also worsened and requires immediate humanitarian and budgetary assistance.
• Economic growth in 2023 will depend on financing conditions and the continuation of reforms, including the fuel market reforms aimed at improving supply to the Central African market. Nevertheless, downside risks to the economic outlook remain high.
• The mission encourages the authorities to continue their efforts to mobilize domestic revenues and concessional financing in order to ensure priority public expenditure and public debt sustainability.

Washington, DC: An International Monetary Fund (IMF) team led by Albert Touna Mama visited Bangui during December 5-16, 2022 to conduct the 2022 Article IV consultations with the Central African Republic (CAR). These discussions continued virtually until January 20, 2023.

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

“Economic activity in CAR was lackluster in 2022. The economic recovery that began after the COVID-19 crisis was severely disrupted by fuel shortages and soaring food prices following the war in Ukraine. Record double-digit inflation—the highest in the Central African Economic and Monetary Community (CEMAC)—was recorded in 2022, further aggravating food insecurity. These shocks are occurring at a time when the country has little room for maneuver, owing in particular to the suspension of budgetary support. As a result, forecasts for growth prospects have been revised downward and near-stagnation is now expected in 2022, given the generalized increase in production and import costs due to the country’s landlocked situation and the decline in domestic demand caused by the slowdown in public spending.

“The food crisis that was already affecting the country has worsened after the war in Ukraine and requires immediate humanitarian and budgetary assistance. The proportion of people suffering from acute food insecurity—already one of the highest in the world in 2022—is expected to increase from 44 to 49 percent in 2023 according to the World Food Programme (WFP).

“Budget execution in 2022 was severely disrupted by the economic downturn and the collapse of public revenues, particularly those related to the taxation of fuel. The authorities’ prudent implementation of current expenditures and the under-execution of the investment budget helped partially offset the underperformance of public revenues and contain the increase in the public deficit.

“Economic growth in 2023 will depend on financing conditions and the continuation of reforms. In this light, the government is encouraged to intensify the dialogue with the international community to secure concessional financing in 2023 and beyond, meet external financing needs and ensure public debt sustainability. Progress in this dialogue and continued reforms, including efforts to strengthen the management and transparency of public finance and improve governance, as well as fuel market reforms, could support a recovery in 2023. However, the downside risks to the economic outlook remain high, including a possible deterioration in the terms of trade and a worsening of the security situation.

“The 2023 Budget Law aims at stabilizing public finances, while continuing efforts to mobilize domestic revenues through new measures. The increase in fuel prices at the pump should enable the government to regain tax revenues in order to support priority public spending and re-establish a regular, high-quality fuel supply on the Central African market. The IMF stands ready to support authorities in their reform of the fuel price structure to improve its flexibility and better protect the most vulnerable population groups affected by the spike in fuel prices.

“The mission also encourages the authorities to bring the law governing cryptocurrencies in the CAR in line with existing laws and regulations under the Central African Monetary Union (CAMU) and the CEMAC.

“The IMF mission would like to express its deep appreciation to the Central African authorities for the frank discussions and the warm welcome it received.”

The mission met with the Prime Minister, Mr. Félix Moloua, the President of the National Assembly, Mr. Simplice Sarandji, the Minister for Finance and Budget, Mr. Hervé Ndoba, the Minister for Humanitarian Action and National Reconciliation, Ms. Virginie Baikoua, the Minister for Energy, Mr. Arthur Piri, the National Director of the Bank of Central African States (BEAC), Mr. Ali Chaïbou, other members of the government and senior officials of the administration and the BEAC, as well as representatives of the private sector and the development partner community.