IMF aims to restore macroeconomic stability in CAR - CNBC Africa

IMF aims to restore macroeconomic stability in CAR

Special Report

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The Bangui shopping district in the Central African Republic. PHOTO: Wikipedia

This was after an International Monetary Fund (IMF) mission, headed by Ekué Kpodar, visited Central African Republic (CAR), from November 11 to 18, 2014 to hold discussions with the country’s authorities on an emergency programme that could be supported by the IMF’s Rapid Credit Facility (RCF).

The mission reportedly met with the president of the CAR, Catherine Samba-Panza, and held discussions with the prime minister, Mahamat Kamoun as well as representatives of development partners, the diplomatic community and the private sector.

(READ MORE: Political tensions could slow Africa’s growth)

“The Transitional Authorities of the CAR and the IMF mission reached staff-level understandings on a macro-fiscal framework and a set of economic and structural policies to reinforce the progress made since the previous RCF approved by the IMF Executive Board in May 2014,” said Kpodar.

“These policies are aimed at further restoring macroeconomic stability, achieving fiscal consolidation, strengthening the capacity of the CAR government, coordinating technical assistance, and maintaining the commitment of international donors.”

He further stated that under these understandings, CAR could receive support on these policies through a follow-up Rapid Credit Facility for an amount of SDR 5.57 million.

According to the IMF, the currency value of the SDR is determined by summing the values in US dollars, based on market exchange rates, of a basket of major currencies – the US dollar, Euro, Japanese yen, and pound sterling.

“The IMF’s total financial assistance to CAR for 2014 would thus reach SDR 13.925 million. Additional contributions from development partners to the IMF’s assistance would bring the total external budgetary support to the CAR to approximately CFAF 80 billion for 2014,” Kpodar said.

He also believes that the protracted political and security crisis in the CAR and the resulting collapse of economic activity continue to present major challenges to the Transitional Authorities.

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“For 2014, while economic activity is gradually resuming and some of the displaced persons have been able to return, the volatile security situation led the mission and the CAR authorities to revise the GDP growth forecast downward to one per cent,” Kpodar stated.  

“At the same time, the scarcity of basic consumption goods has translated into a steady rise in prices, with inflation projected to reach 11.6 per cent on average in 2014, well above the Central African Economic and Monetary Community convergence criterion of three per cent.”

Kpodar added that the external current account deficit is projected to narrow to 6.4 per cent of GDP in 2014, reflecting the substantial financial support from the donor community as well as the Economic Community of Central African States countries.

“In the budget area, the priority remains to further improve the mobilization of domestic revenues and enhance the quality of spending with a view to limiting the domestic primary balance to five per cent of GDP in 2014 and 4.1 per cent in 2015,” he said.

(READ MORE: IMF expects regional GDP growth to surge to 5 ¾%)

“The Transitional Authorities will continue implementing measures to strengthen public financial management by enhancing the monitoring of cash flow management, revising the convention with commercial banks to administer tax collection, and strengthening transparency in oil taxation.”

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