Central African Republic: Weak security environment takes toll on CAR economy

Bangui, Central African Republic (PANA) – Deterioration in the security environment, despite the ongoing dialogue with armed groups in Central African Republic, has taken a toll on the country’s economic activity, an International Monetary Fund (IMF) staff team said Friday at the conclusion of a week-long visit to Bangui.

“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,” said a statement issued here at the end of the visit, during which the IMF team held discussions with authorities in CAR on recent economic developments in the country and progress made in implementing the economic programme supported by the Fund’s Extended Credit Facility (ECF).  

According to the team, CAR’s GDP growth was put 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.

IMF team leader, Samir Jahjah said that the 2016 supplemental budget, adopted on 30 September, appropriately focused on raising domestic revenue collection, in the context of low tax revenue stemming from the 2013 crisis.

Convinced that progress in peace consolidation and swift implementation of reforms will support medium-term growth of about 5.5 percent, Jahjah went on: “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.

According to Jahjah, CAR authorities and the IMF mission discussed revenue administration and public financial management measures, which included 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 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.

He said 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 programme under the ECF, pending confirmation of financing assurances from development partners.

In the IMF team’s opinion, the CAR economic programme was 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.
-0- PANA AR 4Nov2016

04 november 2016 19:34:08

xhtml CSS