Central African Republic's Reforms Enter Crucial Phase
| Author | Werner Keller |
| Position | IMF African Department |
The Central African Republic is one of Africa’s least known and most overlooked countries. It is the only nonoil-producing country of the Central African Economic and Monetary Community (CEMAC), landlocked between troubled Sudan, Chad, and the Democratic Republic of Congo.
It also struggles to escape the legacy of years of civil strife and to overcome debilitating structural weaknesses. The population of less than 5 million-among the world’s poorest-occupies an area one and a quarter times that of France that is endowed with rich natural resources and fertile land.
Political instability since independence, deficient infrastructure, and underdeveloped human capital are negatively affecting economic performance. Still, the country has been able to achieve modest economic growth since open conflict ended in 2004, and income per capita has started to recover after years of decline (see chart).
A series of domestic and external shocks in 2008 and early 2009-unstable power supply, surging prices for imports, and then low demand and prices for export goods as a result of the global recession-represented new potential obstacles to maintaining growth, controlling inflation, and supporting the current account.
Despite these shocks the government has made good progress with its fiscal program of mobilizing domestic revenues, controlling spending, and clearing arrears, the IMF said in its regular review of the country’s economy. The Central African Republic received full debt relief from the IMF and World Bank in June 2009 by reaching the final, completion-point stage of the Heavily Indebted Poor Countries Initiative.
The country is also well on the way to concluding its current Poverty Reduction and Growth Facility program in June 2010. This would be the first time in the Central African Republic’s history that it has successfully concluded a three-year program with the IMF, after two successful Emergency Post-Conflict Assistance programs.
A modest recovery from last year’s shocks is already under way, helped by the continued implementation of prudent macroeconomic management policies and necessary structural reforms. The government intends to further strengthen the credibility of public financial management, step up donor relations, and improve public infrastructure and the private sector investment climate.
The...
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