International Monetary Fund (IMF) Staff completes Review Mission to Central African Republic
Welcomes the progress made in the fight against the Covid-19 pandemic
Pandemic and measures aimed at minimizing its health impact combined with drop in external demand, resulted in a marked slowdown in economic activity in the first half of the year
The IMF team welcomes the progress made in the fight against the Covid-19 pandemic and the preparation of next December’s presidential and legislative elections; the pandemic and the containment measures have had a significant impact on growth, inflation, and public finances; the Central African authorities and the IMF team discussed a set of economic and financial policies necessary for the conclusion of the first and second reviews under the Extended Credit Facility. These discussions will continue over the next few days.
A team from the International Monetary Fund (IMF) led by Édouard Martin carried out a virtual mission from September 28 to October 9, 2020 to lead discussions as part of the first and second reviews of the Central African Republic's economic reform program supported by the Extended Credit Facility.
At the end of the mission, Mr. Martin made the following statement:
“The IMF team welcomes the progress made by the authorities in the fight against the Covid-19 pandemic. While more than 4,800 cases and 60 deaths have been recorded since the first case was confirmed in March, the number of new cases and deaths appears to have fallen sharply in recent months. We hope this improvement will be sustained. However, it is important to remain vigilant, to continue to apply social distancing measures and to be ready to implement additional measures, if need be. In this context, and while the security situation remains fragile, the mission also welcomes the progress made in the preparation of next December’s presidential and legislative elections.
“The pandemic and the measures aimed at minimizing its health impact, combined with the drop in external demand, resulted in a marked slowdown in economic activity in the first half of the year. The most affected sectors were transport, tourism, hotels, and the mining sectors. Though the start of a recovery appears to be underway, economic activity is expected to stagnate in 2020 before growing by around 3½ percent in 2021. Inflation rose significantly in the first half of the year mainly due to higher food prices stemming from the temporary closure of the border with Cameroon. The downward correction in these prices recorded since July is expected to continue, allowing average inflation to remain below 3 percent in both 2020 and 2021.
“Owing to the impact of the economic slowdown on government revenue and the additional spending needed to fight the pandemic, the domestic primary budget deficit is expected to be around 6 percent of GDP this year. The current account deficit is also expected to widen to 6½ percent of GDP in 2020, from 5 percent of GDP in 2019, mainly due to weak external demand and private transfers, which would be only partly offset by greater budget support and the drop in the oil bill.
“Owing to a large extent to the pandemic, the Central African authorities have been unable to meet all the objectives set under the program supported by the Extended Credit Facility (ECF). Most of the quantitative performance criteria could not be met and significant delays were experienced in the implementation of structural reforms.
“The Central African authorities and the IMF staff have agreed that the main objectives of the program, such as maintaining macroeconomic stability and debt sustainability and restoring sustainable inclusive growth, remain central to the government's efforts to restore lasting peace and prosperity. Therefore, we discussed a set of economic and financial policies necessary for the conclusion of the first and second reviews under the ECF.
“Notable progress has also been made towards the implementation of structural reforms delayed by the pandemic. Discussions focused on controlling non-covid-19 related expenditure, on the parameters of the draft budget law for 2021 and on the structural reforms to be implemented over the next twelve months. We agreed that the latter should aim to improve domestic revenues and the efficiency of public spending, and to strengthen governance and the business climate. These discussions will continue over the next few days.
“The team would like to thank the authorities for their close collaboration and the openness that prevailed during the discussions.”
The IMF team met President Touadéra, Prime Minister Ngrébada, Minister of Finance Dondra, Minister of Economy Moloua, Minister of Mines Mboli-Fatrane, Minister of Telecommunications Gourna-Zacko, National Director of BEAC Chaïbou, other senior government and parliamentary officials, as well as representatives of the private sector and technical and financial partners.
End-of-Mission press releases include statements of IMF staff teams that convey preliminary findings after a visit to a country. The views expressed in this statement are those of the IMF staff and do not necessarily represent the views of the IMF’s Executive Board. Based on the preliminary findings of this mission, staff will prepare a report that, subject to management approval, will be presented to the IMF's Executive Board for discussion and decision.
Distributed by APO Group on behalf of International Monetary Fund (IMF).