An International Monetary Fund (IMF) team, led by Samir Jahjah, visited Bangui during October 28–November 4, 2016 to conduct the first review of the program supported by an arrangement under the Extended Credit Facility (ECF). The arrangement for an amount of SDR 83.55 million was approved by the IMF Executive Board on July 20, 2016. Consideration of the report on the first review by the IMF Executive Board is tentatively scheduled for December 2016.
At the conclusion of the mission, Mr. Jahjah issued the following statement:
“The IMF staff team and the Central African Republic authorities held discussions on recent economic developments in the Central African Republic and progress made in implementing the program supported by the ECF.
“The mission reached agreement, at the staff level, with the authorities on economic and financial policies that could support approval of the first review of the three-year program under the ECF, pending confirmation of financing assurances from development partners. The country’s economic program is broadly on track, with all quantitative performance criteria met, with the exception of the criterion on non-accumulation of external arrears. Structural reforms have been implemented and all structural benchmarks met, albeit with some delays.
“Deterioration in the security environment, despite the ongoing dialogue with armed groups, took a toll on economic activity, with GDP growth at 4.5 percent and 5.0 percent in 2016 and 2017, respectively, slightly below initial projections of 5.2 percent and 5.5 percent, made in July 2016. Prices of key staple goods have increased, with average annual inflation now projected at 5.1 percent, against an earlier projection of 4.0 percent. The 2016 supplemental budget, adopted on September 30, appropriately focuses on raising domestic revenue collection, in the context of low tax revenue stemming from the 2013 crisis. The mission welcomes the authorities’ efforts to clear wage and pension arrears and contain the public wage bill; steps taken to ensure the payment of priority spending, including wages and pensions; and efforts made to build a budgetary reserve for next year to address the volatility in foreign aid.
“The mission welcomes the authorities’ efforts to accelerate the preparation of the new Recovery and Peace Consolidation Plan (RPCP), which will underpin the government’s medium-term strategy and the 2017 budget. The RPCP aims at reducing poverty, fostering inclusive economic growth, improving domestic revenue mobilization, and restoring credibility and transparency in the budget process. Progress in peace consolidation and swift implementation of structural reforms and of the public investment program will support medium-term economic growth of about 5.5 percent; a reduction in annual inflation to 3.0 percent; and a decline in the fiscal domestic primary deficit to 1.0 percent of GDP by 2019.In turn, this will help a decline in public debt.
“The mission discussed revenue administration and public financial management measures. These measures include improved controls of the tax base and exemptions, better reporting on budget execution to improve transparency, improved treasury management to prioritize spending, and better control of the wage bill to allow new hiring in the health and education sectors. The mission welcomes the authorities’ participation in the IMF’s Capacity Building Framework that will step up delivery of technical assistance and capacity building.”
The mission met with President Touadera, Minister of Finance Dondra, Minister of Economy, Plan and Cooperation Moloua, the National Director of BEAC Chaibou, the President and members of the Finance Committee of the National Assembly, and other senior officials, development partners, representatives of NGOs, the civil society and private sector. The mission team wishes to thank the authorities for their warm hospitality, excellent collaboration, and the quality of discussions.
Distributed by APO on behalf of International Monetary Fund (IMF).