Central African Republic: Fourth Review Under the Three-Year Arrangement Under the Poverty Reduction and Growth Facility, Request for Waivers for Nonobservance of Performance Criterion, Modification of Performance Criteria, Augmentation of Access, Extension of Time Under the Arrangement, and Financing Assurances Review

This paper discusses key findings of the Fourth Review for the Central African Republic (CAR) under the three-year arrangement under the Poverty Reduction and Growth Facility (PRGF). Short-term fiscal policy of the CAR attempts to stabilize demand through government spending while preserving medium-term fiscal discipline. The revised program safeguards budgeted spending and incorporates new externally financed peace-process spending. Structural reforms are focused on areas critical to economic stability and the recovery of growth. IMF staff supports completion of the fourth review, augmentation of PRGF access, and program extension.

Abstract

This paper discusses key findings of the Fourth Review for the Central African Republic (CAR) under the three-year arrangement under the Poverty Reduction and Growth Facility (PRGF). Short-term fiscal policy of the CAR attempts to stabilize demand through government spending while preserving medium-term fiscal discipline. The revised program safeguards budgeted spending and incorporates new externally financed peace-process spending. Structural reforms are focused on areas critical to economic stability and the recovery of growth. IMF staff supports completion of the fourth review, augmentation of PRGF access, and program extension.

Appendix I: Central African Republic Relations with the Fund

(As of April 30, 2009)

I. Membership Status: Joined: 07/10/1963; Article VIII

II. General Resources Account:

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III. SDR Department:

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IV. Outstanding Purchases and Loans:

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V. Latest Financial Arrangements:

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VI. Projected Payments to the Fund (without HIPC Assistance)5

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VII. Implementation of HIPC Initiative:

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VIII. Implementation of Multilateral Debt Relief Initiative (MDRI): Not applicable

IX. Safeguards Assessments: The Bank of the Central African States (BEAC) is the regional central bank of the Central African States. The most recent safeguards assessment of the BEAC was completed on August 30, 2004. In accordance with the four year cycle established for assessments of regional central banks, an update assessment was initiated in April 2008. The preliminary findings of this assessment indicate that implementation of previous safeguards recommendations on financial reporting, internal audit, and internal control has been limited, and that the changing risk profile of the BEAC foreign exchange holdings requires further actions to strengthen safeguards at the BEAC. Completion of the update assessment, however, requires an official response from the BEAC authorities that has yet to be received.

Exchange Rate Arrangement

The Central African Republic is a member of a monetary association with a common central bank, the BEAC. The exchange system common to all members operates without restrictions on the making of payments and transfers for current international transactions. The CFA franc is pegged to the euro at the fixed rate of CFAF 655.957 = €1. On April 30, 2009, the rate of the CFA franc in terms of SDRs was SDR 1 = CFAF 740.12.

Article IV Consultations

The Central African Republic is currently on the standard 24-month cycle for Article IV consultations for program countries. The last Article IV consultation was concluded on September 28, 2007.

Resident Representative

The Fund’s office in Bangui reopened in October 2007 (after being closed in September 2003). The Resident Representative is Mr. Joseph Ntamatungiro.

Table.

Central African Republic: Recent Technical Assistance

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APPENDIX II: Central African Republic Joint Bank-Fund Work Program, 2009–10

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5

When a member has overdue financial obligations outstanding for more than three months, the amount of such arrears will be shown in this section,

6

Assistance committed under the original framework is expressed in net present value (NPV) terms at the completion point, and assistance committed under the enhanced framework is expressed in NPV terms at the decision point. Hence, these two amounts cannot be added.

7

Under the enhanced framework, an additional disbursement is made at the completion point corresponding to interest income earned on the amount committed at the decision point but not disbursed during the interim period.

Central African Republic: Fourth Review Under the Three-Year Arrangement Under the Poverty Reduction and Growth Facility and Request for Waiver of Nonobservance of Performance Criterion, Modification of Performance Criteria, Augmentation of Access, Extension of Arrangement, and Financing Assurances Review: Staff Report; Press Release on the Executive Board Discussion; and Statement by the Executive Director for Central African Republic
Author: International Monetary Fund