Press Release No. 23/322

IMF Reaches Staff-Level Agreement on the First Review of the Extended Credit Facility Arrangement with Central African Republic

September 21, 2023

• The Central African Republic (CAR) authorities and IMF staff have reached agreement on the policies underpinning the first review of the program supported by the Extended Credit Policy (ECF) arrangement.
• The economic situation in CAR is stabilizing. The growth outlook as well as the plans for mobilizing tax revenues depend on the successful outcome of the fuel import campaigns.
• The authorities intend to make significant improvements in revenue collection during FY 2024, increasing tax revenues by approximately CFAF 20 billion.

Washington, DC: A team from the International Monetary Fund (IMF) led by Mr. Albert Touna Mama visited Bangui from August 29 to September 9, 2023 to conduct a mission in connection with the first review of the CAR’s program supported by the IMF’s Extended Credit Facility (ECF) arrangement approved in April 2023 (see Press Release No. 23/129). Mr. Touna Mama issued the following statement at the conclusion of the mission:

“The economic situation in Central African Republic (CAR) is stabilizing. The risks of a major crisis have been eased as a result of the government’s efforts, supported by the ECF arrangement. The fuel market—where recurrent disruptions have been one of the factors exacerbating the challenges facing the country—is beginning to stabilize. The outlook for budget financing has also improved significantly, as evidenced by the successful outcome of the recent domestic syndication operation.

“Although these trends are headed in the right direction, the situation nonetheless remains challenging. The anticipated revival in growth will be more modest. Growth projections in 2023 have been revised downward from 2.2 percent to 1 percent. Manufacturing industry, forestry, and transportation have experienced a particularly severe impact. Inflation has stayed at high levels, driven by fuel and food prices. This situation is continuing to underscore the seriousness of the humanitarian emergency, particularly in the prefectures of Vakaga and Bamingui-Bangoran where the Sudanese crisis is causing severe supply difficulties. In this context, the recent downturn in pump fuel prices is welcome, as this has helped to provide relief for the CAR people and business community, while encouraging formal sales at gas stations.

“Program implementation has been broadly satisfactory. All the reforms planned for end-October 2023 are being implemented. The domestic revenue target for end-June 2023 under the program has also been surpassed. However, the limits for the primary deficit and for net domestic financing have been overshot, in the former case reflecting the acute social pressures and in the latter case illustrating the uncertainties which continue to weigh heavily on the composition of budget financing. The authorities have adopted corrective measures to mitigate any risk of future budget overruns.

“The authorities intend to achieve significant improvements in revenue mobilization throughout FY 2024, increasing the government’s own revenues by approximately CFAF 20 billion. Major reforms are in progress—in particular the digitalization of tax and customs agencies, the reform of administrative fees and charges (menues-recettes), etc.—in an effort to stabilize government finance, safeguard the sources of budget financing, and ensure that tax revenue collection allows the government to meet the general public’s various expectations.

“The adoption of the new Organic Law on the Prevention and Punishment of Corruption is an important step forward in improving public financial management. The authorities are committed to implementing the new provisions of the law, as part of the ECF-supported program, as well as strengthening the institutions working to ensure respect for good governance, such as the Audit Office and the Financial Intelligence Unit equivalent (ANIF).

“As far as the outlook is concerned, we anticipate that economic growth will accelerate gradually to 1.5 percent in 2024 and to 2.5 percent in 2025. These growth prospects as well as the revenue mobilization plans are crucially dependent upon the successful outcome of the campaign to import fuel via the Ubangi River, which unfortunately experienced a major launch delay. All necessary steps must be taken to remedy this situation, in order to prevent further fuel shortages during the first half of 2024. Furthermore, the implementation of tax measures introduced in the 2023 budget law should be improved, as should the monitoring of the various reforms that are currently being implemented.

“The mission wishes to thank the CAR authorities for their warm welcome and for the atmosphere of candor and openness in which the discussions were held.”

The IMF delegation met with President Touadéra, Prime Minister Moloua, Finance and Budget Minister Ndoba, Minister of Energy Piri, Minister of Mines Beltoungou, BEAC National Director Chaïbou, other senior officials, as well as representatives of the private sector and the community of development partners.