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Central African Republic: Staff Report for the 2009 Article IV Consultation and Fifth Review Under the Arrangement Under the Poverty Reduction and Growth Facility, Requests for Waiver of Nonobservance and Modification of Performance Criteria, and Financing Assurances Review

Author(s):
International Monetary Fund
Published Date:
January 2010
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Appendix I. Central African Republic: Relations with the Fund

(As of September 30, 2009)

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

II. General Resources Account:

SDR million% Quota
Quota55.70100.00
Fund holdings of currency55.5199.66
Reserve position in Fund0.190.34

III. SDR Department:

SDR million% Allocation
Net cumulative allocation53.37100.00
Holdings44.1582.72

IV. Outstanding Purchases and Loans:

SDR million% Quota
PRGF arrangements38.5569.22

V. Latest Financial Arrangements:

Amount ApprovedAmount Drawn
TypeApproval DateExpiration Date(SDR millions)
PRGFDec. 22, 2006Jun. 30, 201069.6249.50
PRGFJul. 20, 1998Jan. 19, 200249.4424.48
Stand-ByMar. 28, 1994Mar. 27, 199516.4810.71

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

(SDR million; based on existing use of resources and present holdings of SDRs):

Forthcoming
20092010201120122013
Principal1.49
Charges/interest0.100.220.220.220.22
Total0.100.220.220.221.71

VII. Implementation of HIPC Initiative:

Enhanced
I. Commitment of HIPC AssistanceFramework
Decision point dateSeptember 2007
Assistance committed by all creditors (US$ million)6578.00
Of which: IMF Assistance (US$ million)26.77
(SDR equivalent in millions)17.19
Completion point dateJune 2009
II. Disbursement of IMF Assistance (SDR million)
Assistance disbursed to the member17.19
Interim assistance6.59
Completion point balance10.60
Additional disbursement of interest income70.90
Total disbursements18.09

VIII. Implementation of Multilateral Debt Relief Initiative (MDRI):

I. MDRI-eligible debt (SDR Million)84.02
Financed by: MDRI Trust1.90
Remaining HIPC resources2.13
II. Debt Relief by Facility (SDR Million)
Eligible Debt
Delivery DateGRAPRGFTotal
July 2009N/A4.024.02

IX. Safeguards Assessments: The Bank of the Central African States (BEAC) is the central bank of the CEMAC region. The most recent safeguards assessment of the BEAC was completed on July 6, 2009. The findings 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 BEAC’s foreign exchange holdings requires further actions to strengthen safeguards. Furthermore, BEAC initiated a number of structural and internal reforms during 2007 aimed at increasing member representation on governance bodies, strengthening management, and enhancing risk management and controls. Several of these reforms remain work in progress, and should be impacted by the ongoing investigations into the Paris fraud case and the measures taken after the conclusions of these investigations.

Exchange Rate Arrangement

The Central African Republic participates in a currency union with five other members of the CAEMC and has no separate legal tender. The de facto exchange rate arrangement is conventional peg; the CFA franc is officially pegged to the euro, the intervention currency, at a fixed rate of CFAF 655.957 per €1. On September 30, 2009, the rate of the CFA franc in terms of SDRs was SDR 1 = CFAF 709.74. The exchange system common to all members operates without restrictions on the making of payments and transfers for current international transactions.

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 1.Central African Republic: Recent Technical Assistance
DateDepartmentPurpose
Apr. 2001FADFollow-up on the introduction of the VAT and discuss measures to improve tax and customs revenue collection.
Jan.—Feb. 2004STAReview and follow-up of the General Data Dissemination System (GDDS); TA in government finance statistics.
March 2004FADTo assist the authorities in the area of revenue administration.
Apr. 2004FADPublic financial management.
Aug.—Oct. 2004FADTax administration.
Feb.—Dec. 2005FADPublic financial management.
May 2005FADFollow-up on implementation of tax administration reforms; review of progress made since the end of the three-month assignment of an FAD tax expert.
June—July 2005STAGovernment finance statistics.
July 2005STAReal sector data.
May 2006FADRecovery of tax arrears.
May 2006FADFax administration reform.
Sep.–Oct. 2006STAMonetary and financial statistics.
Jan. 2007—Aug. 2008FADPublic financial management.
Apr.—May 2007FADFiscal implications of alternative fuel pricing policies and their distributional impact on vulnerable household groups, including mitigating measures.
Oct. 2007AFRITAC/FADCustom administration; and follow-up on the new customs organizational structure.
Oct. 2007AFRITAC/FADFollow up on implementation of tax administration reforms and review of progress made since the expert’s previous visit in May 2006.
Nov.—Dec. 2007FADInspection of FAD resident PFM advisor.
Dec. 2007AFRITAC/STANational account data.
March 2008AFRITAC /MCMDebt management.
June 2008AFRITACFollow-up on implementation of tax administration
June 2008AFRITACFollow-up on implementation of customs administration
Aug. 2008AFRITAC/STANational account data.
Sep. 2008AFRITACPublic financial management.
Sep.–Oct. 2008AFRITAC/FADIntroduction of new accounting framework and budget classification system.
Oct. 2008AFRITACTax collection and use of tax administration information.
Jan. 2009AFRITACFollow-up on implementation of tax collection reform measures.
March 2009AFRITAC/FADAccounting procedures reforms.
March 2009AFRITACElaboration of public debt management manual.
March 2009AFRITACImprovement in the coordination of customs procedures.
May 2009AFRITAC/FADAssessment of tax administration and outline for new reforms.
May 2009AFRITACReform of debt administration.
May—Sept. 2009AFRITACModernizing compilation of national account data.
July 2009AFRITACRebasing of price statistics.
Sep.—Oct. 2009AFRITACAssessment of customs administration and new reforms.

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

TitleProductsProvisional timing of missionsActual or Expected delivery date
A. Mutual information on relevant work programs
World Bank work program in the next 12months
  • Emergency Urban Infrastructure Rehabilitation and Maintenance Project. Additional financing to support the reconstruction and recovery after flooding and to mitigate the frequency and impact of future flooding.
November 2009March 2010
  • Public Expenditure Review (FY11) Review of budget implementation
December 2009September 2010
  • Country Environmental Analysis This project is designed to (i) estimate the principle sources, costs and trends of environmental degradation, (ii) to analyze institutional capacity for environmental management, and (iii) to analyze priority environmental issues for policy recommendations.
March 2010
  • Technical assistance on Mining sector Technical Assistance on experience with mining codes and standard mining agreements.
November 2009June 2010
IMF work program in the next 12 monthsMacroeconomic policy analysis and advice
  • Sixth PRGF review
March 2010June 2010
Technical assistance

  • Public debt management
November 2009
  • Public financial management
November 2009
  • Statistics
December 2009

January 2009
B. Requests for work program inputs
Fund request to BankPeriodic update on progress
Bank request to FundRegular update of medium-term macroeconomic framework covering the period until 2014
C. Agreement on joint products and missions
Joint products in the next 12 months
  • Joint Debt Sustainability Analysis
June 2009June 2010

Appendix III. Central African Republic: Statistical Issues

As of November 13, 2009

I. Assessment of Data Adequacy for Surveillance
General: Data provision has some shortcomings, but is broadly adequate for surveillance. Issues with source data and compilation affect most datasets, but are particularly problematic in the real sector.
National Accounts: There is a high degree of uncertainty attached to estimates of the level and growth rate of real GDP, as estimates for informal sector activity are still based on a 1982 survey. Furthermore, developments in the subsistence agriculture sector, accounting for an estimated 30 percent of the economy, are not tracked well and would benefit from the development of source data through surveys. STA is providing technical assistance in national accounts.
Price statistics: The measurement of inflation is also subject to a high degree of uncertainty since the CPI is based on expenditure weights that are thirty years old and the index covers only a limited number of items for the capital city. STA is providing technical assistance in this area.
Government finance statistics: Data provision is broadly satisfactory for surveillance purposes, although coverage is not complete. The main shortcomings relate to expenditures financed by line ministries’ own resources and foreign-financed expenditures, which are estimated by the Ministry of Finance and are considered to be broadly satisfactory. Budget accounting procedures continue to suffer from serious shortcomings and delays, which are addressed though various reforms, including through technical assistance programs, including the Fund. General government statistics are not available
Monetary statistics: Data provision is broadly satisfactory for surveillance purposes. In mid-2007, the BEAC started a project to migrate monetary statistics of CEMAC member countries to the methodology in the Monetary and Financial Statistics Manual (2000).
Balance of payments statistics: Key shortcomings affect the accuracy and reliability of balance of payments estimates and relate to source data and the need maintain an up-to-date business register for surveys (list of respondents, reporting forms, and codification). Methodologies and statistical techniques also need to be reviewed, particularly the computation of freight and insurance and procedures for attributing banknote movements among transactions, while more detail on imports and exports is desirable. For surveillance purposes, IMF staff must estimate certain items using its own methodologies, including for freight and insurance, and imports and exports for which details are not available. STA is providing technical assistance in balance of payments statistics.
External and domestic debt statistics: The quality of external debt data has improved following reconciliation with external creditors in April 2009 conducted in the context of reaching the Completion Point under the HIPC initiative. Domestic debt data are of poor quality, due in part to the difficulty of monitoring all stages of the public expenditure chain from commitment to payment. On the other hand, the stock of government domestic arrears has been verified up to end-2007. On remedial measures, the IMF set the introduction of a government financial management information system as a structural conditionality under the PRGF, and the system is now operational although it does not cover all payments yet.
II. Data Standards and Quality
The Central African Republic has participated in the General Data Dissemination System (GDDS) since June 2004.No data ROSC is available.
Table 2.Central African Republic: Table of Common Indicators Required for Surveillance

(As of November 13, 2009)

Date of Latest ObservationDate ReceivedFrequency of Data6Frequency of Reporting6Frequency of Publication6
Exchange RatesCurrentCurrentDDM
International Reserve Assets and Reserve Liabilities of the Monetary Authorities1June. 2009Sep. 2009MMM
Reserve/Base MoneyJune. 2009Sep. 2009MMM
Broad MoneyJune. 2009Sep. 2009MMM
Central Bank Balance SheetJune 2009Sep. 2009MMM
Cons. Bal. Sheet of the Banking SystemJune. 2009Sep. 2009MMM
Interest Rates2Sep. 2009Sep. 2009MMM
Consumer Price IndexSep. 2009Oct. 2009MMM
Rev., Exp., Balance and Composition of Financing3–General Government4June. 2009Sep. 2009NANANA
Rev., Exp., Balance and Composition of Financing3–Central GovernmentJune. 2009Sep. 2009MMM
Stocks of Central Government and Central Government-Guaranteed Debt5June. 2009Sep. 2009AAA
External Current Account Balance2008Sep. 2009AAA
Exports and Imports of Goods and Services2008Sep. 2009AAA
GDP/GNP2008Sep. 2009AAA
Gross External Debt2008June. 2009AIA
International Investment PositionNANANA

Includes reserve assets pledged or otherwise encumbered as well as net derivative positions.

Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.

Foreign, domestic bank, and domestic non-bank financing.

The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.

Including currency and maturity composition.

Daily (D), Weekly (W), Monthly (M), Quarterly (Q), Annually (A); Irregular (I); Not Available (NA)

Includes reserve assets pledged or otherwise encumbered as well as net derivative positions.

Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.

Foreign, domestic bank, and domestic non-bank financing.

The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.

Including currency and maturity composition.

Daily (D), Weekly (W), Monthly (M), Quarterly (Q), Annually (A); Irregular (I); Not Available (NA)

5When a member has overdue financial obligations outstanding for more than three months, the amount of such arrears will be shown in this section.
6Assistance 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.
7Under 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.
8The MDRI provides 100 percent debt relief to eligible member countries that qualified for the assistance. Grant assistance from the MDRI Trust and HIPC resources provide debt relief to cover the full stock of debt owed to the Fund as of end-2004 that remains outstanding at the time the member qualifies for such debt relief.

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