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Economic Situation in the Central African Republic: Challenges and Opportunities

The International Monetary Fund (IMF) has released a report assessing the economic situation and program performance of the Central African Republic. The report highlights both significant challenges facing the economy and opportunities for growth in the medium term.

Economic Challenges

  • Fuel Shortages and Weak Governance: The economy has been struggling due to persistent fuel shortages, weak governance, and limited donor support.
  • Weak External Position: The external position remains weaker than implied by fundamentals and desirable policy settings.
  • Financial Soundness Indicators: Financial soundness indicators remain broadly adequate, but gaps in liquidity and concentration of non-performing loans among banks call for increased vigilance.

Program Performance

  • Mixed Results: Performance under the program has been mixed against a challenging macroeconomic backdrop.
  • Missed Quarterly Performance Criteria (QPCs): Two of three end-June quarterly performance criteria were missed by small margins.
  • Domestic Primary Balance: The domestic primary balance exceeded its QPC, while the adjusted net domestic financing QPC was missed due to treasury taking advantage of improved investor confidence.
  • Emergency Procedures and Social Spending: End-June indicative targets on spending via emergency procedures and social spending were not met.

Outlook and Risks

  • Uncertain Medium-Term Outlook: The medium-term outlook has been slightly marked down from the time of program approval and remains uncertain.
  • Assumptions for a Baseline Scenario: A resolution to fuel shortages, significant strengthening of policies consistent with program commitments, and partial resumption in donor support are assumed for a baseline scenario.
  • Growth Projections: Real GDP is expected to rebound to 1.5 percent in 2024 as manufacturing and services recover, and growth could accelerate to 3.7 percent by 2026 if stronger governance and business environment attract donor support and private investment.

Overall, the IMF report highlights ongoing economic challenges and mixed program performance, but also provides a cautiously optimistic outlook for the medium term with assumptions of improved policies and donor support.