The International Monetary Fund (IMF) reaches agreement at staff level with the Central African Republic on the second review of the Extended Credit Facility (ECF)

The International Monetary Fund (IMF) reaches agreement at staff level with the Central African Republic on the second review of the Extended Credit Facility (ECF)
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The International Monetary Fund (IMF) reaches agreement at staff level with the Central African Republic on the second review of the Extended Credit Facility (ECF)The authorities of the Central African Republic and the Fund’s staff have agreed on the economic policies that could underpin the forthcoming approval by the IMF Board of Governors of the second revision of the ECF-supported programme; Despite an extremely challenging economic and social context, the Central African Republic (CAR) continues to make progress in stabilizing its economy and achieving fiscal consolidation; The effective implementation of reforms, in particular in the fuel market, will be crucial to address the numerous economic and social challenges facing authorities in an environment of budgetary constraints.

An International Monetary Fund (IMF) team, led by Mr Albert Touna Mama, will hold talks with the authorities of the Central African Republic (CAR) in Bangui from April 3 to 12, 2024, and then in Washington on April 18 D.C. , 2024, in connection with the second evaluation of CAR’s ECF-supported programme.

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




“The Central African Republic continues to make progress in stabilizing its economy and achieving fiscal consolidation, despite an extremely challenging economic and social context. Government tax revenues – a prerequisite if the government is to meet the long-term needs of the CAR people – increased by 0.5 percent of GDP in 2023. The resumption of budget support from the African Development Bank and also from the IMF. World Bank assistance has improved the country’s prospects for financing in the regional market, ensuring fiscal continuity and ensuring the safe delivery of basic social services. has been stated. Economic growth is estimated to rise slightly to reach 0.7 percent in 2023, although this reflects the country’s fuel and electricity supply problems as inflationary pressures begin to ease.

“The implementation of the program has been generally satisfactory, despite certain obstacles. All quantitative performance criteria by the end of December 2023 – covering tax revenues, primary deficit and domestic financing – have been met. Moreover, the reforms expected before the end of April – regarding administrative fees, taxes, fines and levies (“menus recipes“), the interconnection between taxes and customs, the institutional strengthening of the Financial Intelligence Unit (ANIF) and the revision of the organic law regulating the State Audit Office – are on track. However, the indicative criteria regarding the floor for expenditure in favor of the social sectors and expenditure implemented through exceptional procedures have not been met, due to severe cash flow pressures and structural constraints in the implementation of expenditure.

“Despite these notable achievements in fiscal consolidation, a number of economic and social challenges remain to be addressed in the short to medium term. The first concerns the crisis facing the energy sector (fuel and electricity), whose persistent problems continue to impact business operations and household well-being. Moreover, the succession of shocks in recent years, combined with the weakness of social safety nets, has exacerbated the complex humanitarian crisis the country is experiencing. Finally, this situation is aggravated by the limited fiscal space available to the government, given the increased risks to the public debt.

“Against this backdrop, the CAR government has adopted a series of commitments and emergency measures under the ECF program with the aim of addressing this situation. These efforts include: (i) adopting an action plan consisting of fuel market reforms designed to end supply constraints, increase tax revenues in this sector and provide relief to consumers; (ii) providing a budget injection to the National Electricity Company, ENERCA; (iii) clearing payment arrears in favor of certain government suppliers while providing relief to the local private sector; and (iv) taking measures to increase the government’s own revenues with the aim of increasing budget margins, etc.

“The government is pursuing important reforms in the field of digitalization and modernization of public finances, including the continued deployment of new IT systems and modern applications within the tax authorities, customs and the Ministry of Finance, with the support of technical and financial partners. . Given the major challenges currently facing public debt management, we encourage the authorities to continue implementing the new National Public Debt Management Committee (CNDP), chaired by the Minister of Finance, and the new Treasury Liquidity Committee, chaired by the head of the Ministry of Finance. of state. It is expected that these forums for dialogue will enable better decision-making in managing the limited fiscal space available to the government.

“In terms of prospects, we expect a gradual acceleration of economic activity to around 1.3 percent by 2024. However, these growth prospects will crucially depend on the success of the fuel import campaign through the Oubangui River, as well as the extent to which problems with the electricity supply can be overcome. Accordingly, we encourage the authorities to implement the agreed action plan and take all appropriate steps to ensure the success of the ‘river campaign’.campaign fleuve),’ and ensure the achievement of the tax revenue targets set by the authorities under the ECF programme.

“The mission would like to thank the CAR authorities for their warm welcome and for the open and frank atmosphere in which the discussions took place.”

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

Distributed by APO Group on behalf of the International Monetary Fund (IMF).