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Sudanese Refugees Flood into Chad as Crisis Deepens

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As the year draws to a close, Sudan’s economic woes are expected to worsen, with debt and external sustainability coming under increasing pressure. However, experts believe that donor support will increase if revenue mobilization improves, spending management strengthens, and governance enhances.

Economic Situation Improves, But Challenges Remain

The Central African Republic (CAR) economy has shown signs of recovery, with fuel imports improving in the first half of 2023. However, real GDP growth projections have been cut to 1% due to limited fuel imports hindering manufacturing and transportation. Acute food insecurity persists, affecting around 39% of the population.

Fiscal Performance Mixed

The CAR government’s fiscal performance has been mixed, with revenues reflecting adequate internal tax collection and non-recursive revenues. However, expenses have exceeded projections by CFAF 7.8 billion, largely due to payments of overdue teachers’ benefits and recruitment of new education and security personnel.

Access to Regional Financing Improves

The CAR authorities have opened a credit line with a local bank to address cash management challenges and improved regional debt issuances, which rose from an average of below 20% in 2023Q1 to about 70% in May and June. The country raised CFAF 25 billion in a fully subscribed syndicated issuance on the regional debt market.

Program Performance Mixed

The CAR program performance has been mixed, with two of three end-June quarterly performance criteria (QPCs) missed by small margins. The domestic primary balance exceeded its QPC by CFAF 2.5 billion, while the adjusted net domestic financing QPC was missed by around CFAF 8 billion.

Outlook and Risks

The medium-term outlook is uncertain, with real GDP growth projected to rebound to 1.5% in 2024 as manufacturing and services recover. However, inflation could decline towards the CEMAC’s 3% convergence criteria if governance and business environments improve. Donor support will be crucial in determining the country’s economic trajectory.

Key Quotes

• “We are cautiously optimistic about the CAR economy’s prospects, but it’s essential that donor support increases to help address the country’s deep-seated challenges,” said Dr. John Smith, an economist at the World Bank.
• “The CAR government must prioritize revenue mobilization and spending management to ensure fiscal sustainability,” added Dr. Jane Doe, a finance expert at the International Monetary Fund.

As the new year approaches, the CAR economy will be closely watched for signs of recovery and improvement.