Security volatility, high oil prices up downside risks to CAR’s economic reforms

Bangui, CAR (PANA) – Macroeconomic performance of Central African Republic’s (CAR.) remains favourable, although downside risks have increased due to a deteriorating and volatile security environment and rising oil prices, according to a senior official of the International Monetary Fund (IMF).

“An end to the recent outburst of violence, restoration of peace, the redeployment of the state, and a steadfast implementation of reforms will be key to achieve a sustained economic recovery,” said Mr. Samir Jahjah, who led an IMF team during discussions with CAR authorities on the country’s economic programme supported by the Fund.

The discussions which started during the 2018 Spring Meetings of the IMF and World Bank) in Washington, D.C. were completed Thursday in Paris, France, with a Staff-Level Agreement on the Fourth Review under the Extended Credit Facility (ECF) for CAR.

“The country's economic programme is broadly on track. The data and information collected during the mission indicate that all quantitative performance criteria at end-December 2017 have been met, except for the domestic revenue target,” said Mr. Jahjah at the conclusion of the discussions.

In his statement, a copy of which was made available to PANA, Mr. Jahjah explained that programme discussions focused on corrective measures to bring domestic revenue on track and on the key parameters of a revised budget for 2018, to be submitted to Parliament before mid-June.

“Rising oil prices could, however, lower revenue, in the absence of a revision of the petroleum price structure,” he remarked, noting that the IMF team has encouraged the authorities to accelerate reforms, increase domestic revenue mobilization, strengthen public expenditure management, enhance transparency and governance, with limited borrowing -- including concessional loans—to safeguard debt sustainability.

Economic growth of the Central African Republic was estimated at 4.3 percent in 2017, driven by the forestry and construction activities. It is projected to reach 5 percent on average over the medium-term. Inflation stood at 4.1 percent and is projected to decline gradually.

“The team urged the authorities to further consolidate the treasury single account. The integration of some parafiscal taxes in the treasury single account is a welcome first step. In addition, the planned elimination of taxes and fees with no economic justification will support private sector development,” said Mr. Jahjah.

“The team welcomed the government’s efforts to clear commercial and social arrears as planned, in line with the recommendation of the independent audit finalized in October 2017. Given the large amount of social arrears to be cleared, a close monitoring is needed to ensure transparency and accountability. Tangible progress in this area could help promote social cohesion.”

Subject to approval by IMF management and the Executive Board, Mr. Jahjah added that understandings reached between the CAR authorities and IMF staff could be supported by the Fourth Review under the ECF arrangement.
-0- PANA AR/MA 10May2018

10 Maio 2018 09:17:30

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