Press Release No. 24/375

IMF Staff Completes Third Review Mission of the Extended Credit Facility (ECF) to Central African Republic

October 16, 2024

• Challenging business environment, regulatory uncertainty, insecurity, and exorbitant fuel prices at the pump continue to weigh on economic activity in the Central African Republic
• A significant improvement in domestic revenues requires an improved contribution of fuel revenues to the tune of 20-25 percent of total revenue.
• Increased support from the international community is essential to obtain financing assurances for 2025 and beyond.

Washington, DC: A team from the International Monetary Fund (IMF), led by Mr. Albert Touna Mama, held discussions with the Central African Republic (CAR)’s authorities in Bangui from September 23 - October 2, 2024, in connection with the third review of CAR’s  program supported by the Extended Credit Facility (ECF). Discussions will continue in the coming weeks, virtually and then in Washington on the sidelines of the Annual Meetings of the International Monetary Fund and the World Bank Group.

At the end of the discussions, Mr. Touna Mama made the following statement:

“Despite progress in peacekeeping, CAR's economic outlook remains subject to numerous challenges. Economic growth in 2024 has been revised slightly downward to 1.0 percent due to disruptions in the supply of electricity as well as significant delays in fuel imports via the Ubangi River. The still unfavorable business environment, regulatory uncertainty, persistent insecurity in certain mining areas as well as onerous fuel prices at the pump—among the highest in the world—continue to weigh on economic activity in CAR.

“In a context of restoring state authority, coupled with significant humanitarian needs, the authorities continue to face strong budgetary pressures. Despite an increase in domestic revenue, which reached near CFAF 80 billion at the end of June 2024, a worsening of the domestic primary deficit was nevertheless noted over the same period. The authorities have committed to implementing a series of emergency measures—including the suspension of exceptional customs exemptions—as part of an upcoming revised budget to meet their deficit targets for 2024.

“However, a significant improvement in domestic revenues in the short term will only be possible with a higher contribution of fuel taxation, whose current performance (about 9 percent of total domestic revenues in 2024) is well below its historical levels (between 20-25 percent). We thus urge the government to ensure the effective implementation of its reform commitments in the fuel sector, to reduce import costs, boost fiscal revenues, and relieve costs for Central African populations and businesses.

“In the medium term, efforts to modernize tax and customs administrations remain the best guarantee of lasting improvement in the mobilization of domestic resources. Thus, the ongoing deployment of the new electronic tax declaration system at the General Directorate of Taxes and Domains, E-tax, combined with the introduction of a new unique identification number (NIU), constitute major advance. Progress is also expected in the systematic use of the integrated financial information system at the General Directorate of the Treasury as well as in sectoral ministries, including for expenditure by extraordinary procedures.

“Furthermore, increased financial support by the international community is now more crucial than ever. Despite the resumption of budget support by certain donors, the overall envelope remains well below the historical levels, and thus of the needs to stabilize public finances and reduce dependence on more expensive sources of financing. Yet, significant uncertainties continue to weigh on sources of budgetary financing in 2025 and beyond.

“We call on all donors to support the stabilization and public finance reform efforts underway in CAR through grants and highly concessional financing. In that vein, we encourage the authorities to maximize efforts to obtain the financing assurances needed for the continuation of the program supported by the Extended Credit Facility.

“The mission wishes to thank the CAR authorities for their warm welcome and for the open and candid atmosphere in which the discussions were held.

“The IMF delegation met with Prime Minister Moloua, President of the National Assembly Sarandji, Minister of Finance Ndoba, Minister of Economy Filakota, Minister of Energy Piri, Minister of Health Somse, Interministerial Committee in charge of the reforms in the fuel sector chaired by Minister of Justice Djoubaye, BEAC National Director Chaïbou and other senior officials, as well as representatives of development partners and the private sector.”