IMF Management has approved the first review of the Staff-Monitored Program (SMP) with the Central African Republic. The SMP aims to improve the track record of policy implementation and unlock budget support from donors. Its satisfactory implementation and financing assurances from donors would permit the resumption of discussions under the ECF-supported program (approved in 2019) in mid-2022; Program performance at end-December 2021 was satisfactory. Quantitative benchmarks and all three structural benchmarks were met. However, two indicative targets—the floor on domestic arrears and spending through extraordinary procedures—were missed; Reaching an agreement with development partners on the remainder of the budget support is critical to safeguard pro-poor spending and the provision of public services and transitioning to an IMF financing arrangement; Achieving tangible progress on the reconciliation and peace fronts is critical to spur economic growth, stability, and inclusion.
The Management of the International Monetary Fund (IMF) approved on March 31, 2022, the completion of the first review of a seven-month (December 2021 – June 2022) Staff Monitored program (SMP) with the Central African Republic.
Policies under the SMP aim to address the challenges caused by the security crisis and the Covid-19 pandemic, provide a roadmap to improve the track record of policy implementation and help the country to benefit from budget support by development partners.
Fiscal policy centers on the sustainable financing of additional high-priority social spending and investments. Structural reforms focus on strengthening revenue mobilization, fiscal transparency, and governance, including in the extractive sector.
The authorities made satisfactory progress through end-December 2021. Thanks to a slightly higher revenue mobilization and improved spending execution, they met all quantitative targets. They also met all structural benchmarks. While the authorities met the indicative target on social spending, however, they missed those on domestic arrears and spending through extraordinary procedures, owing to monitoring weaknesses which are being addressed through IMF capacity development.
Downside risks related to the food and fuel shocks and uncertainties about budget support, are mounting. Reaching an agreement with development partners on the disbursement of the budget support will be critical to preserve stability and limit hardship on the population. Financing assurances will also be required for a transition to an IMF financing arrangement.
Achieving tangible progress on the peace dialogue will sustain the recovery, strengthen inclusion, and unlock C.A.R.’s growth potential.
Distributed by APO Group on behalf of International Monetary Fund (IMF).
