CAR relies on grant financing due to debt distress risk - IMF

Bangui, Central African Republic (PANA) – Continued reliance on grant financing is essential to support debt sustainability in Central African Republic (CAR), the Executive Board of the International Monetary Fund (IMF) has said while approving a disbursement of US$32.1 million for the country.

“Despite a challenging security environment and difficult humanitarian conditions, CAR’s performance under the Fund’s Extended Credit Facility (ECF)-supported programme has been satisfactory,” said IMF Deputy Managing Director Tao Zhang in a statement issued on Wednesday following the Board’s completion of the fourth review of the ECF arrangement.

According to Mr. Zhang, the authorities in CAR have stepped up the implementation of their reform agenda and public investment plan.

“Fiscal policy is broadly on track. The revised 2018 budget includes new revenue measures and remains anchored to the domestic primary balance objective while allowing a scale-up of social and capital spending,” he said, however, noting that renewed efforts to mobilize domestic revenues, which remain weak, will be critical to support the scaling-up.

In the view of the IMF, the country’s reliance on grant financing would continue due to its high risk of debt distress. Also, it must implement the investment program for the National Recovery and Peacebuilding Plan in order to boost economic prospects.

The Executive Board approved the ECF arrangement for the CAR on 20 July 2016 for about US$189.0 million. The latest disbursement will bring total disbursements under the arrangement to about US$ 123.7 million.

According to Mr. Zhang, continued implementation of fiscal structural reforms contributed to the strengthening of the CAR’s treasury single account, improved budget transparency and traceability of domestic revenues.

“Quarterly publication of budget execution reports allows for better tracking and monitoring of government expenditures. More consideration should be given to streamlining quasi-fiscal taxes, reducing exceptional payment procedures, and strengthening the asset declaration regime. It will also be important to follow through on commitments to strengthen transparency in the management of natural resources,” he said.

“The government started the comprehensive clearance of domestic arrears. The transparent repayment of arrears will support growth, bolster the credibility of the state, and strengthen the banking sector,” Mr. Zhang added, explaining that CAR’s programme is supported by the implementation of policies and reforms by the regional institutions in the areas of foreign exchange regulations and monetary policy framework.
-0- PANA AR/MA 4July2018

04 Julho 2018 10:19:46

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