The executive board of the International Monetary Fund (IMF) on Friday approved $115.1 million three-year loan for the Central African Republic under an extended credit facility. The board also approved an immediate disbursement of $16.4 million.
“Disbursement of the remaining amount will be phased in over the duration of the program, subject to semi-annual reviews of the IMF-supported program by its Executive Board,” IMF said in a statement received by TODAY NEWS AFRICA in Washington D.C.
An extended credit facility (ECF) allows the borrowing country to take out money over an extended period of time rather than reapplying for a loan each time it needs money.
Mr. Mitsuhiro Furusawa, a Deputy Managing Director and Acting Chair at the IMF said despite significant progress under the ECF arrangement that expired last July, “the Central African Republic remains very fragile, with a volatile security environment, limited administrative capacity, poor governance, and lack of social cohesion”.
He added: “The new three-year program supported by the IMF Extended Credit Facility (ECF) will support the implementation of the February 2019 peace agreement and of C.A.R.’s medium-term development strategy. It aims at maintaining macroeconomic stability, strengthening administrative capacity, governance and the business climate, promoting robust and sustainable growth, and reducing poverty.
“Fiscal policy will focus on enhanced revenue mobilization, spending prioritization, and strengthened public financial management. This will ensure that C.A.R.’s considerable security, social, and infrastructure spending needs are sustainably met. Revenue mobilization measures will include the daily reconciliation of revenue data, the digitalization of tax returns and payments, and enhanced coordination between revenue administrations. The further strengthening of public financial management will involve the elimination of the remaining public agencies with no economic justification, the finalization of the audit of domestic arrears, and the strengthening of SOEs’ oversight and management.
“Structural reforms will aim at improving the government’s capacity to design and implement policies and reforms, enhancing governance, including through strengthening anticorruption institutions, and removing bottlenecks and regulatory impediments to private investment.
“Continued financial and technical support from development partners will be critical to the program’s success. Given its high risk of debt distress and limited revenue base, C.A.R. will have to continue relying heavily on grant financing to finance its most pressing spending needs. The authorities will work closely with their technical partners to ensure that capacity development focuses on priorities closely aligned with the program objectives and is efficiently delivered.
“The C.A.R.’s program is supported by the implementation of policies and reforms by the CEMAC regional institutions in the areas of foreign exchange regulations and monetary policy framework, and to support an increase in regional net foreign assets, which are critical to program’s success.”