AFRICAN DEVELOPMENT BANK GROUP
CENTRAL AFRICAN REPUBLIC
EMERGENCY POST-CRISIS AND ECONOMIC RECOVERY SUPPORT
PROGRAMME – PHASE 2 (PUASCRE-2)
OSGE DEPARTMENT
September 2015
Translated document
P
ub
lic
Dis
clo
sure
Au
tho
rize
d
P
ub
lic
Dis
clo
sure
Au
tho
rize
d
TABLE OF CONTENTS
ACRONYMS AND ABBREVIATIONS………………………………………………………………… ..i PROGRAMME BRIEF…………………………………………………………………………………….ii LOAN/GRANT INFORMATION………………………………………………………………………….ii
I. PROPOSAL ............................................................................................................................. 1
II. COUNTRY AND PROGRAMME CONTEXT ........................................................................... 2 2.1 Political Situation and Governance Context ............................................................................... 2 2.2 Recent Economic Trends, Macro-economic and Budgetary Analysis ............................................ 4 2.3 Economic Competitiveness ........................................................................................................ 6 2.4 Public Finance Management ..................................................................................................... 6 2.5 Inclusive Growth, Poverty Situation and Social Context .............................................................. 6
III. GOVERNMENT’S DEVELOPMENT PROGRAMME. ............................................................ 7 3.1. Government’s Global Development Strategy and Short-term Priorities ........................................ 7 3.2 Obstacle to Implementation of the National Development Programme.......................................... 8 3.3 Consultation and Participatory Process ..................................................................................... 8
IV. BANK SUPPORT FOR GOVERNMENT’S STRATEGY. ......................................................... 9 4.1. Linkage with Bank Strategy ....................................................................................................... 9 4.2. Compliance with Eligibility Criteria ........................................................................................... 9 4.3. Collaboration and Coordination with Other Partners ............................................................... 10 4.4. Linkage with Other Bank Operations ....................................................................................... 10 4.5. Analytical Underpinnings ........................................................................................................ 12
V. PROPOSED PROGRAMME. ................................................................................................. 12 5.1. Programme Goal and Objective ............................................................................................... 12 5.2. Components, Objectives and Expected Outcomes ...................................................................... 12 5.3. Policy Dialogue ...................................................................................................................... 15 5.4. Conditions for Awarding the ADF and the TSF Grants .............................................................. 15 5.5. Good Practice Principles for the Application of Conditionality .................................................. 15 5.6. Financing Needs and Mechanism ............................................................................................. 15 5.7. Application of Bank Policy on Accumulation of Non-Concessional Debts .................................. 16
VI. PROGRAMME IMPLEMENTATION. ................................................................................... 17 6.1. Programme Beneficiaries ........................................................................................................ 17 6.2. Social Impact .......................................................................................................................... 17 6.3. Impact on Climate Change ...................................................................................................... 17 6.4. Implementation, Monitoring and Evaluation ............................................................................. 17 6.5. Financial Management and Disbursement ................................................................................ 18
VII. LEGAL DOCUMENTATION AND LEGAL AUTHORITIES ................................................. 19 7.1. Legal Documents .................................................................................................................... 19 7.2. Conditions Associated with Bank Intervention .......................................................................... 19 7.3. Compliance with Bank Group Policies ..................................................................................... 20
VIII. RISK MANAGEMENT .......................................................................................................... 20
IX. RECOMMENDATION .......................................................................................................... 20
Tables
Table 1 – Main Outcomes of PUASCRE-1 ........................................................................................ 2
Table 2 – Key Macro-economic Indicators ........................................................................................ 5 Table 3 – Projected Financing Needs and Sources (CFAF Billion) ................................................. 16
Table 4 - Risks and Mitigation Measures ......................................................................................... 20
List of Figures and Boxes
Box 1 - Roadmap Emergencies........................................................................................................... 7
Figure 1 - CAR – Bank Portfolio as at 30 April 2015 ...................................................................... 10
CURRENCY EQUIVALENTS
(30 April 2015)
Currency Unit CFAF (XAF)
UA 1 = XAF 822.603
UA 1 = EUR 1.25405
UA 1 = USD 1.40642
FISCAL YEAR
[1 January – 31 December]
i
ACRONYMS AND ABBREVIATIONS
ACCT Central Accounting Agency of the Treasury
ADF African Development Fund
AfDB African Development Bank
BEAC Bank of Central African States
CAR Central African Republic
CCIMA Chamber of Commerce, Industry and Crafts
CFAF Franc of the African Financial Community
CMCAA Joint Consultation Framework for Improvement of Business
CNLC National Anti-Corruption Committee
CRBS Crisis Response Budget Support
CSP Country Strategy Paper
CS-REF Economic and Financial Reforms Monitoring Unit
DDRRR Disarmament, Demobilization, Re-integration and Repatriation
DGB General Directorate of the Budget
DGDDI General Directorate of Customs and Indirect Duties
DGID General Directorate of Taxes and State Land
DGTCP General Directorate of the Treasury and Public Accounts
ECCAS Economic Community of Central African States
EITI Extractive Industries Transparency Initiative
EU European Union
FSF Fragile States Facility
GBSF General Budget Support Framework
GDP Gross Domestic Product
GESCO Public Finance Management Information Support System
IMF International Monetary Fund
MDG Millennium Development Goals
MFB Ministry of Finance and Budget
MINUSCA United Nations Multidimensional Integrated Stabilization Mission in CAR
MoU Memorandum of Understanding
NGO Non-Governmental Organization
PARCGEF Economic and Financial Management Capacity Building Support Project
PBO Programme-Based Operations
PFM Public Finance Management
PUASCRE Emergency Post-Crisis and Economic Recovery Support Programme
PURD Emergency Programme for Sustainable Recovery in CAR
RCF Rapid Credit Facility
TFP Technical and Financial Partner
TOFE Table of Government Financial Operations
TSF Transition Support Facility
UA Unit of Account
UNDP United Nations Development Programme
USD United States Dollar
WB World Bank
ii
PROGRAMME BRIEF
INSTRUMENT : Crisis Response Budget Support (CRBS)
PBO DESIGN MODEL : Single Operation
LOAN/GRANT INFORMATION
Client Information
DONEE : Government of the Central African Republic
EXECUTING AGENCY : Ministry of Finance and Budget
Financing Plan
Source Amount (UA) Instrument
ADF-13 5,000,000 Grant
TSF (Window 1) 2,3600,000 Grant
TOTAL COST 7,360,000
Key AfDB/ADF Financing Information
Grant Currency
Euro
Interest Rate Type* NA
Interest Rate Spread* NA
Commitment Fee* NA
Other Charges* NA
Tenor NA
Grace Period NA
*If applicable
Implementation Timeframe – Main Milestones (expected)
Concept Note Approval
NA
Programme Approval 23 September 2015
Effectiveness Date 30 September 2015
Completion 31 December 2016
Last Disbursement 30 June 2016
iii
Programme Summary
Programme Overview
Programme Name / Number: Emergency Post-Crisis and Economic Recovery Support Programme –
Phase 2 (PUASCRE-2) / SAP Id. P-CF-KZ0-002.
Geographic Spread: Nationwide
Total Period : 15 months, from 1 October 2015 to 31 December 2016
Financing: ADF Grant UA 5.00 million; TSF Grant, UA 2.36 million
Operational Instrument: Crisis Response Budget Support (CRBS)
Sector: Economic Governance
Expected Programme
Outcomes and Direct
Beneficiaries
In 2014, the Central African Republic (CAR) benefited from a CRBS of UA 15 million through the
Emergency Post-Crisis and Economic Recovery Support Programme (PUASCRE-1) with a view to
mitigating the impacts of the political/military crisis triggered in March 2013 after the regime in
power was ousted by an armed rebellion. Most PUASCRE-1 measures were implemented by the
authorities. However, the country’s socio-political situation remains fragile and its macro-economic
framework is still in dire need of stabilization to enable the Government to finance primary
expenditure and the post-crisis process. Administrative capacity also remains weak and working tools
destroyed by the crisis have only partially been rebuilt.
This programme (PUASCRE-2) aims to consolidate the outcomes of PUASCRE-1 and prepare the
country for more structuring post-crisis reforms. The programme’s main expected outcomes are the
following: (i) Increase in tax receipts from 4.5% of GDP in 2014 to 6.7% of GDP in 2015; (ii)
Increase in the rate of implementation of primary sector budgets from 11.98% to over 50% of
earmarked allocations; and Reduction in domestic arrears of about 1% of GDP in 2015.
The programme’s direct beneficiaries are Government departments and private sector support
structures. Its end beneficiaries are the population of CAR.
Compliance with Bank
Priorities
PUASCRE-2 continues the first emergency operation (PUASCRE-1) and is aligned on the Bank’s
Interim Assistance Paper for the Transition 2014-2016. This strategy rests on Government’s Roadmap
priorities and the Emergency Programme for Sustainable Recovery in CAR (PURD), and has two
priority areas: (i) Rehabilitation of socio-economic and public interest infrastructure with a view to
improving basic service delivery; and (ii) Rebuilding of institutional capacity and promotion of good
governance.
Needs Assessment and
Rationale
The urgency of continuing technical and financial support to the country is justified by the country’s
fragile situation and extension of the transition period by a few additional months, which consequently
create a need for supplementary resources to maintain social peace.
In view of the country’s current context, especially the insufficiency of internal resources to finance
the administration’s functioning, basic social services and general elections, a Crisis Response Budget
Support is the best instrument for providing CAR with significant support.
Harmonization Due to the March 2013 political/military crisis and the departure of some TFPs, the cooperation
framework hitherto in place collapsed. However, with the gradual resumption of financing, TFPs
succeeded to harmonize their interventions during joint missions in CAR and through the exchange of
documents.
Despite the departure of its Resident Representative and international staff in the country, the Bank
maintained dialogue with the Government and other TFPs through its Field Office staff and dialogue
missions in the country. The Bank’s presence in CAR was also strengthened in February 2015 with
the recruitment of an international consultant.
Bank’s Value Added The Bank’s comparative advantage lies in its experience in implementing PUASCRE-1 in CAR and
through similar operations undertaken in Mali and Côte d’Ivoire. Its value added lies in its
responsiveness, which enables it to rapidly design post-crisis budget support operations, as well as its
flexibility and ability to adjust its project portfolio to priorities at hand. Thus, this programme is
consistent with the Economic and Financial Management Capacity-Building Support Project
(PARCGEF) that was restructured in 2014 to meet the additional needs stemming from the crisis.
Contributions to Gender
Equality and Women’s
Empowerment
The programme will have a positive impact on the humanitarian situation, including women who had
fled from production zones because of violence. The redeployment of health personnel and social
welfare staff will enable them to gradually return to these zones and improve their living conditions. The formulation of a strategy to assist women and girl victims of violence will allow the Government
and TFPs to better coordinate their actions targeting women and girls who are victims of the crisis.
Policy Dialogue and
Related Technical
Assistance
Dialogue will be maintained on public finance management and fiduciary risk mitigation measures.
Dialogue on social issues and economic recovery will also be pursued by the Bank staff present in
CAR and during Bank missions in the country.
PARCGEF will lend technical assistance during the implementation of PUASCRE-2, especially
through support to financial authorities and private sector support structures.
iv
RESULTS-BASED LOGICAL FRAMEWORK
Country and Operation Name: CAR – Emergency Post-Crisis and Economic Recovery Programme - Phase 2
Operation Goal: Contribute to restore the normal functioning of Government departments and create necessary conditions for economic recovery.
Results Chain Indicators Means of
Verification
Risks/
Mitigation
Measures Indicator Baseline Target
Imp
act
Contribute to restore
basis social services and
revive the economy
% of functional basic
social services
Real GDP growth rate
55% in 2014
1% in 2014
>= 65% in 2016
> 5.5% in 2015 and
5.7 % in 2016
CS-REF report
IMF report
Ou
tco
mes
Outcome 1:
Improvement of tax
revenue
Outcome 2:
Improvement of the
provision of basic social
services
Outcome 3:
Improvement of the
business environment
Rate of tax pressure
Expenditure
commitment rate in the
social sectors
(education, health,
social affairs)
Reduction of internal
arrears
4.5% of GDP in 2014
11.98 % of budget
allocation in 2014
Reduction of 2.1% of
GDP in 2014
> 5.7% in 2015 and
2016
> 50% of budgetary
allocation in 2015
Reduction of 1% of
GDP in 2015
TOFE (IMF)
Cash Flow Plan
TOFE (IMF)
Political and
security risk linked
to the fragility of
public institutions
and the climate of
insecurity in some
parts of Bangui and
the provinces.
This risk will be
mitigated by the
outcome of the
political dialogue
held in Bangui
from 4 to 11 May
2015 and the
capacity building of
MINUSCA troops
since early 2015.
Macro-economic
risk linked to the
persistent embargo
on diamond exports
and the fragile
situation of the
private sector.
Mitigation
measures: Partial
lifting of the
embargo on
diamonds;
continuing efforts
to update the public
service database
Fiduciary risks:
Strong distortion of
the budgetary
circuit and control
systems.
Mitigation
measures:
Continuation of
measures adopted
in 2014, namely,
Cash Flow
Committee
meetings enlarged
to TFPs,
improvement of
GESCO
functionalities;
operationalization
of ACCT
Ou
tpu
ts
COMPONENT I : Improvement of Public Finance Management and Basic Social Service Delivery
1.1 Taxpayers’ census
1.2 Implementation of
public revenue payment
bulletin
1.3 Design of budget
commitment plan
consistent with the cash
flow plan (*)
1.4 Operationalization of
ACCT through
appointment and effective
taking up of office by
accounting officers (*)
1.5 Continue deploying
teachers and health staff in
the regions
1.6 Design of an assistance
strategy targeting women
and girl victims of violence
1.1 Taxpayers’ census
report
1.2 Payment bulletins
filled by banks
1.3 Budget
commitment plan (*)
1.4 Decree to appoint
the ACCT accounting
officer (*)
1.5 Rate of deployment
of teachers and health
staff in the regions
1.6 Assistance strategy
1.1 Census not
conducted since 2012
1.2 Absence of
payment bulletins
indicating the origin
and nature of sums
received by banks
1.3 Absence of the
budget commitment
plan
1.4 Accounting officer
not yet appointed
1.5 60% in 2014
1.6 Absence of
strategy
1.1 Report available
before December
2015
1.2 Implementation
of payment bulletin
in 2015
1.3 Commitment
plan prepared
before June 2015
1.4 Accounting
officer appointed
before June 2015
1.5 At least 80% in
2015
1.6 Strategy
adopted before end-
2016
Copy of the
report (CS-
REF)
Copy of the text
(CS-REF)
Copy of the
commitment
plan (CS-REF)
Copy of the
decree (CS-
REF)
Copy of the
strategy
submitted by
CS-REF
Ou
tpu
ts COMPONENT II : Improvement of Conditions for Reviving Economic Activities
v
Country and Operation Name: CAR – Emergency Post-Crisis and Economic Recovery Programme - Phase 2
Operation Goal: Contribute to restore the normal functioning of Government departments and create necessary conditions for economic recovery.
Results Chain Indicators Means of
Verification
Risks/
Mitigation
Measures Indicator Baseline Target
2.1. Simplification of
procedures for the payment of taxes and levies (drafting
of instrument)
2.2 Definition of processing modalities of State
arrears/liabilities for the
2012-2014 period 2.3 Operationalization of
the Joint Consultation
Framework for the Improvement of Business
(CMCAA) by setting up a
permanent technical secretariat.
2.4 Assessment of losses
and damages suffered by businesses during the 2013
crisis
2.5 Continued implementation of measures
for the partial lifting of the
country’s suspension from the Kimberley Process.
2.6 Partial settlement of
arrears owed cotton farmers
2.1 Instrument laying
down the new procedures
2.2 Instrument laying down processing
modalities of
arrears/liabilities
2.3 Instrument to
appoint members of the TS of CMCAA
2.4 Report on losses and damage incurred by
enterprises during the
2014 crisis
2.5 Report of Kimberly
Process Sanctions Committee
2.6 Rate of settlement of arrears
2.1 Current procedures
deemed too complex
2.2 : Current
modalities incomplete
2.3 : Members of the
CMCAA Technical Secretariat not yet
appointed
2.4 Losses not yet
assessed
2.5 Sanctions not yet
lifted
2.6 Arrears estimated
at CFAF 1.32 billion
in 2014 not yet settled
2.1 New
instruments
prepared in 2015
2.2 Instrument
prepared in 2015
2.3 Members
appointed in 2015
2.4 Assessment
conducted in 2015
2.5 Sanctions
partially lifted in
2015
2.6 Arrears reduced
by half in 2016
Copy of
instruments
(CS-REF)
Copy of
appointment
instruments
Report
submitted by
CS-REF
Copy of
Committee’s
report
Cash flow plan
Acti
vit
ies
Resources (UA Million)
ADF Grant: 5.00
TSF Grant: 2.36
(*): Condition precedent to presentation of the programme to the Board of Directors
1
REPORT AND RECOMMENDATION OF MANAGEMENT TO THE BOARDS OF
DIRECTORS CONCERNING A PROPOSAL TO AWARD A GRANT TO THE
CENTRAL AFRICAN REPUBLIC FOR THE EMERGENCY POST-CRISIS AND
ECONOMIC RECOVERY SUPPORT PROGRAMME – PHASE 2 (PUASCRE-2)
I. PROPOSAL
1.1. This proposal submitted for approval to the Boards concerns an ADF grant of UA
5.00 million and a TSF grant of UA 2.36 million to finance the second phase of the
Emergency Post-Crisis and Economic Recovery Support Programme (PUASCRE-2). It
involves supplementary financing of the emergency budget support operation that the Bank
granted to the Central African Republic in June 2014, to help address the serious humanitarian
crisis caused by the March 2013 military coup perpetrated by an armed rebellion that toppled
the decade-old regime. This supplementary support is a follow-up to the international
community’s joint effort to help the transition authorities mitigate the socio-economic impact
of the crisis on the population, foster economic recovery and restore public institutions
through peaceful, inclusive general elections.
1.2. PUASCRE-2 objectives are a continuation of those of the initial Programme
(PUASCRE-1) and aim to strengthen its outcomes. It will be recalled that PUASCRE-11
aimed to restore the normal functioning of public administration to improve tax collection,
restore basic social services and revive production activities. A Bank review conducted in
March 2015 during a joint mission in CAR with other TFPs revealed that the bulk of
objectives have been achieved. In fact, the proportion of civil servants having resumed work
was estimated at 70% at end-2014, exceeding the programme’s 60% target. This outcome was
mostly attributable to the resumption of regular salary payment. The State’s commercial debt
to suppliers was partially settled to facilitate the revival of private sector activities. Some
improvements were also noted in public finance management with the regular holding of
meetings of the Cash Flow Committee enlarged to TFPs. However, given the country’s
persistent fragility and the extension of the transition period beyond the end-August 2015
deadline envisaged in the Roadmap, it was absolutely necessary to pursue measures aimed at
consolidating the outcomes obtained. Economic growth is still weak, making it impossible for
Government to collect sufficient tax revenue to cater to the country’s primary needs and
finance the post-crisis process. Furthermore, although redeployed at over 70%, public
administration is still not operational in several localities due to the absence of working tools.
Consequently, the country continues to depend heavily on financial aid and international
humanitarian assistance.
1.3. Based on this observation and major risks that might engender a wait-and-see
attitude in the international community, TFPs decided to pursue their assistance, including in
the form of budget aid to the Government. They were comforted in their decision by
Government’s avowed will to accelerate the post-crisis process by organizing peaceful
inclusive elections within a reasonable time. The Bank’s additional financing is aligned on
this joint effort of the international community and aims at contributing to the stabilization of
the country’s macro-economic framework and improvement of the humanitarian situation.
The pursuit of the crisis response budget support (CRBS) in CAR is in conformity with Bank
Group’s Policy on Programme-Based Operations (PBO). This instrument suits countries like
CAR in a crisis situation. The capacity of government services and the context of political
transition make the optimal implementation of development policies and structural reforms
impossible for the country. Like the previous support operation, PUASCRE-2 will mainly
1 Table 1 in the following page presents the main outcomes of PUASCRE-1 while Technical Annex -1 is an exhaustive presentation of the
status of implementation of PUASCRE-1 as at end-March 2015.
2
focus on short-term measures to mitigate the impacts of the crisis. However, some policy
measures will be included in the programme to prepare the country for more structuring
reforms once it exits the crisis.
Table 1
Main Outcomes of PUASCRE-1
RESULTS CHAIN
PERFORMANCE INDICATORS RECENT SITUATION
(JUNE 2015) Indicator
(including CSIs)
Baseline
Situation Target
IMP
AC
T
Restoration of basic social
services and economic
recovery
Proportion of
vulnerable persons
35% of the
population as at
end-2013
30% of the
population as at
end-2015
Information not
available
Real GDP growth rate - 36% in 2013 +1.5% in 2014 1% estimated in June
2015
OU
TC
OM
ES
Outcome I:
Tax receipts have
improved
Proportion of civil
servants of government
services having
resumed work
< 20% as at end-
2013
> 60% as at end-
2014
70% in September 2014
Number of current
month’s salaries paid to
civil servants during
the year
9 out of 12
months in 2013
12 months in
2014
11 current months and 1
month arrears paid in
2014
Outcome II: Conditions
for economic recovery are
in place
Rate of reduction of
audited State
commercial debts in
2012
0% of debt stock
settled in 2013
At least 4% of
stock settled in
2014
CFAF 1.7 billion paid,
representing 24% of
arrears
KE
Y M
EA
SU
RE
S
Revival of the Cash Flow Committee and the Public Finance Management Monitoring Committee
Revitalization of public finance management system (GESCO)
Launching of the process to recruit the Treasury Central Accounting Officer and his/her assistant
Redeployment of staff of tax departments and social sectors from 60 to 70%
Resumption of Government/private sector dialogue through the permanent consultation framework whose powers
will be consolidated
Partial lifting of the export embargo on CAR diamonds
1.4. Like PUASCRE-1, PUASCRE-2 is consistent with the institutional support project
(PARCGEF) approved by the Bank in December 2010 and restructured in September 2014 to
better address the urgent needs of the country. On its completion after twelve months,
PUASCRE-2 is expected to contribute to the achievement of the following outcomes: (i) an
increase of the proportion of functional basic social services from 55% in 2015 to 65% in
2016; (ii) an acceleration of economic growth from 1% in 2014 to over 5.5% in 2015 and 5.7
in 2016; (iii) an improvement of tax revenue collection with tax pressure that should increase
from 4.5% of GDP in 2014 to 5.7% of GDP in 2015; (iv) an increase in the implementation
rate of the priority sector budget from under 8% in 2014 to over 50% in 2015; and lastly (v)
the continued settlement of the State’s internal arrears in order to spur economic recovery.
II. COUNTRY AND PROGRAMME CONTEXT
2.1 Political Situation and Governance Context
2.1.1 CAR’s recent political context is marked by the progress in political dialogue, as
demonstrated in the organization and holding of the Bangui Forum. However, much still
remains to be done for a peaceful exit of the crisis. The Bangui Forum, which brought
3
together the country’s stakeholders in Bangui from 4 to 11 May 2015, enabled the signing of a
disarmament agreement by the main protagonists of the Central African crisis – the ex-Séléka
combatants and those of the Anti-Balaka movement. The agreement provides for the assembly
and identification of combatants within a short time at different indicated sites and their
empowerment by the Government with the support of the country’s Technical and Financial
Partners (TFPs). The Forum also enabled the parties to discuss in-depth the timetable for
organizing general elections. Initially scheduled for February 2015, the elections have already
been postponed to June-July 2015, with the transition period expected at the time to end in
August 2015. Meanwhile, based on a report of the National Electoral Commission (CEN)
which had fallen behind in its preparations, the Forum recommended a technical
postponement by a few additional months. The decision to extend the transition until
December 2015 was approved during the ECCAS Heads of State Summit held in N’Djamena
on 25 May 2015. However, given the financial constraints and accumulated organizational
delays, elections will very likely be deferred to early 2016.
2.1.2 It will be recalled that on 24 March 2013, CAR slipped into one of the most
serious crises of its history when an armed rebellion from the North of the country
toppled the decade-old regime. Thanks to the mediation of several ECCAS Heads of State,
in particular Congolese President Sassou Nguesso - appointed chief mediator of the Central
African crisis, a National Transitional Council comprising the nation’s stakeholders was put
in place to lead a transition until general elections were organized. Since 20 January 2014, the
Transition Chair is Ms. Catherine Samba-Panza, former Mayor of the capital, Bangui. With
the support of the international community, the Transitional Government strives to implement
the urgent measures and actions contained in the Transition Roadmap. These measures
include: (i) rapidly restore the security of persons and property nationwide; (ii) guarantee the
vulnerable population access to humanitarian assistance; and (iii) organize free, fair and
transparent elections to pave the way for a return to constitutional order by end-2015. At the
level of security, the significant improvement in the security situation in Bangui and several
other regions in the country observed since early 2015 is due to the surge in the number of
United Nations Multidimensional Integrated Mission (MINUSCA) troops, the gradual
redeployment of police and gendarmerie forces and the continued support of the French
“SANGARIS” and European “EUMAM-RCA” forces2.
2.1.3 Nevertheless, the situation remains fragile, with a persistence of sporadic
violence in the capital and tension in areas such as Dekoa, Vakaga, Kagabandoro and
Bambari. The main fragility-related challenges facing the country are: (i) the restoration of
security nationwide; (ii) social cohesion and restoration of the normal functioning of public
services to enable the State address the huge humanitarian needs and prepare the return to
constitutional order; and (iii) the implementation of the Disarmament, Demobilization,
Reintegration and Repatriation (DDRR) process, the success of which depends on the
reintegration of former combatants in economic activities. The country’s heavy dependence
on international aid due to the low internal resource mobilization and weak
Government/private sector dialogue are additional challenges that the Government must
tackle to ease social tension.
2.1.4 Over the last three years, CAR has made very little progress in governance,
except in the area of public finance management. Transparency International’s Corruption
Perception Index (CPI) and the Mo Ibrahim Governance Index in Africa show that the
situation rather deteriorated. In fact, CAR stagnates as 150th
of 175 countries on the CPI, with
2 EUMAM-RCA (EU Council’s Military Mission) took over from the European operational force in the Central African Republic
(EUFOR RCA), whose mission to secure the airport and certain parts of Bangui ended on 15 March 2015. EUMAM-RCA’s main
mission was to reform the Central African army.
4
scores declining from 26/100 in 2012 to 24/100 in 2014. Its score on the Mo Ibrahim Index in
2014 was 24.8/100 compared with the 41.4 average scored by Central African countries. The
situation of repeated crisis in the country makes it difficult to implement actions in fighting
corruption. Government had set up a National Anti-Corruption Committee (CNLC) in 2008
and also joined the Extractive Industries Transparency Initiative (EITI) the same year. The
country was admitted as candidate country in November 2008 and gained EITI-compliant
status in March 2011. However, due to the political instability, the EITI Board decided in
April 2013 to temporarily suspend its EITI compliant status. In May 2013, the country was
suspended from the Kimberly Process Certification System due to the entrenched smuggling
in the production and marketing of diamond. Since then, Government has embarked on
actions to secure one of the main diamond producing zones and to reorganize mineral
extraction, especially in localities to the West of Bangui where diamond mining is the main
activity of the population. These actions allowed for the partial lifting of the embargo on 26
June 2015 during a meeting of the Kimberley Process held in Luanda. Furthermore, one of the
resolutions of the Bangui Forum concerned the creation of a High Authority on good
governance.
2.2 Recent Economic Developments, Macro-economic and Budgetary Analysis
2.2.1 After its economy contracted sharply by 36.7% in 2013 following the crisis, the
country returned to the growth path in 2014 with a 1% rise in real GDP. This trend was
mainly attributable to the expansion of the tertiary sector, but also to a slight upturn of
agricultural and industrial activities. The tertiary sector growth rate – driven mainly by the
support of TFPs after their re-engagement in CAR – reached 17.6% in 2014 after falling by
28% in 2013. This TFP support is seen in the roughly CFAF 74 billion disbursed as budget
support in 2014. Commercial services improved to a lesser extent - by 1.3% - compared to the
24% deterioration observed in 2014. Persistent insecurity on some of the country’s corridors
leading to Cameroon and Chad continues to hamper commercial activities. In the agricultural
sector, the gradual return of farmers to production zones helped in 2014 to achieve a 1.2%
increase in agricultural production compared to the sharp 46.4% fall observed in 2013. This
slight performance is attributable to the implementation of the Emergency Food Crop
Revitalization Programme supported by several TFPs. The industrial sector also recorded
growth estimated at 1.2% in 2014, thanks to the revival of its manufacturing, construction and
energy sub-sectors, which grew by 5%, 4.5% and 2.1%, respectively. Nevertheless, the
constraint induced by CAR’s suspension from the Kimberley Process continues to negatively
affect the mining sector.
2.2.2 The upturn of growth in 2014 fuelled an inflationary pressure, particularly on
food products with the disorganization of staple products distribution circuits, and
demand pressure exacerbated by the presence of international forces on the national
territory. Inflation rose to an annual average rate of 11.6% in 2014. At the level of external
account, the current account transactions deficit deteriorated further to CFAF 52 billion (6.4%
of GDP) against CFAF 24.4 billion in 2013 (3.0% of GDP) due to the impact of the trade
deficit. Goods imports, over half of which is composed of humanitarian support, rose by
83.2% while goods exports continued their downward slide (-27.2%) with the embargo on
diamond exports and dwindling exports of all other products except coffee. However, the
overall balance in 2013 showed a surplus of CFAF 32.7 billion against CFAF 9.3 billion,
thanks to international aid granted by TFPs and NGOs, including the CFAF 74 billion budget
aid mentioned earlier. The country’s foreign currency reserves is enough to cover over 4
months of imports.
5
Table 2
Main Macro-economic Indicators
(as percentage of GDP, except otherwise indicated)
GDP (real) 2013 2014 2015 2016 2017
(preliminary)
Real GDP growth rate (%) -36.7 1 5.5 5.7 7.6
Inflation rate 4.4 11.6 9.4 3.6 3.1
Current account balance –
including grants -3.0 -6.4 -11.5 … …
Total money in circulation in
the broad sense (annual
variation as % of GDP)
-32.9 10.9 15.3 … …
Public debt 50.8 43.4 43.5 40.9 38.6
Including domestic debt 15.5 11.7 15.2 25.5 22.6
Gross official reserves (months
of imports) 3.9 4.3 4.3 … …
Fiscal balance, including grants -6.3 2.2 -4.9 -3.4 -2.4
Fiscal balance, excluding
grants -9.1 -11.1 -14.7 -11.2 -4.9
Source: Estimates by IMF and CAR authorities
2.2.3 Internal revenue stood at CFAF 41.8 billion in 2014 against a target of CFAF 51.9
billion, due to the persistence of insecurity in certain Bangui districts and regions. This
affected economic activities and the capacity of customs and tax administrations to collect tax
revenue. Thanks to external aid, including CFAF 11 billion from the Bank, the country was
able to take charge of core expenses, especially the payment of 12 months of civil service
salaries and the settlement of 2013 pension arrears. All quantitative targets agreed with the
IMF under the Rapid Credit Facility (RCF) were achieved, except for tax revenue which was
lower than expected. The Government cleaned up its payroll with support from the World
Bank and the European Union (EU), thanks to which it was able to make savings of about
CFAF 4 billion on the wage-bill. Overall, resources stood at CFAF 121.5 billion versus an
expenditure level of CFAF 106.4 billion, which helped to save CFAF 15.1 billion. However,
it is worth noting that the low level of expenditure (outside salaries) committed in the social
sectors (education, health, social affairs) is a cause for concern to the Government due to its
impact on vulnerable groups. Due to technical problems of the public finance management
system (GESCO) and suppliers’ lack of interest in public procurements given the State’s
arrears of payment, among others, expenditure commitment rates stood at about 8% of
allocated budgetary envelopes. Much remains to be done to improve tax revenue collection
and ensure that core expenses are paid from internal resources.
2.2.4 According to projections by CAR authorities, the real GDP growth rate in 2015
is expected to be 5.5%, driven principally by the upturn of agricultural activities and
commerce, and the resumption of public investments. This economic outlook for 2015 is
based on assumptions of a countrywide improvement of the security climate, political
stability, the continued restoration of public services and a more massive return of the
population to production zones. Specifically, growth acceleration will depend on the
rebuilding of the production tools of production units, the lifting of the embargo on diamond
exports, seed distribution and the resumption of operations at the Bossangoa cotton ginning
plant. In contrast, public finances will still come under strong pressure, fuelled mainly by the
financing of general elections scheduled for the second half of 2015 or early 2016. The
Government intends to redouble efforts to recover internal resources and keep the wage-bill
under control. Fiscal resources are projected at CFAF 64.3 billion against estimated
expenditure of CFAF 169.5 billion, including CFAF 99.2 billion of primary expenditure. Out
of financing needs of CFAF 60 billion, only CFAF 43.9 billion have been identified to date,
6
excluding the Bank’s support. This leaves a residual gap of CFAF 16.1 billion. With the UA
7.36 million (about CFAF 6.1 billion) Bank support, the gap will fall to CFAF 10 billion.
2.3 Economic Competitiveness
2.3.1 The country’s economy, which rests mainly on the agriculture and forestry
sector, became markedly less competitive since the start of crisis. Before the crisis, the
forestry sector which contributed about 10% of GDP and nearly 50% of export earnings was
affected by the scale of pillaging of production tools and population displacement. Mining
sector production also fell sharply due to the export embargo on the country’s diamonds.
Plagued by prevailing insecurity since the start of the crisis, the business environment
continued to deteriorate. According to the World Bank’s 2015 Doing Business Report, CAR
dropped from the 186th
position in 2013 to the 187th
position in 2014, out of a total of 189
countries. Although the country’s forestry and mining potential is still huge, the Government
should further strengthen security in the country and improve dialogue with the private sector
to make the business environment more attractive and improve the country’s competitiveness.
2.4 Public Finance Management
2.4.1 After the slippages observed in public finance management in 2013, the
situation improved slightly in 2014, thanks to measures adopted by the Government
with the support of TFPs, including the Bank. Before the crisis, the Government had
adopted measures to improve budget credibility and public accountability in line with the
conclusions of PEFA 20103, which revealed major weaknesses in the entire public finance
management chain. The crisis plunged the country in a spiral of malpractices in 2013,
especially the misuse of exceptional expenditure procedures. During the implementation of
PUASCRE-1 and the support programmes of other TFPs, the Government took urgent
measures to improve financial management and mitigate fiduciary risks. In particular, these
include the regular holding of meetings of the Cash Flow Committee and the Public Finance
Management Monitoring Committee, the revitalization of GESCO (Computerized Public
Finance Management System), the limitation of uncommitted expenditure to the barest
minimum and the operationalization of the Central Accounting Agency of the Treasury.
2.4.2 These measures will be continued and strengthened in 2015 with additional ones to
further facilitate budget execution and improve tax revenue collection. Specifically, these
measures include the design of commitment plans consistent with cash flow plans; the
streamlining of exemptions and better control of the taxable base. These measures are crucial
for restoring the country’s capacity to fund its core expenses with internal resources.
2.5 Inclusive Growth, Poverty Situation and Social Context
2.5.1 Two years after the outbreak of the crisis, the humanitarian situation remains
very preoccupying and attainment of the MDGs will be deferred. Already in 2010, CAR’s
poverty profile placed the incidence of monetary poverty at 62% of the population. Well
before the present crisis, the humanitarian situation in the country was already very
precarious. The North, North-West and East regions were hard hit by conflicts provoked by
rebellions. The results of MICS3 2010 show that 30% of children aged 6 to 11 years (or
26.4% for boys and 33.7% for girls) never had access to schooling. Overall, 30% of school
infrastructure was destroyed by the crisis. The under-5 infant mortality rate was 170.8 per
1,000 live births while the maternal mortality rate was 890 women per 100,000 births. At end-
2012, virtually the entire CAR territory was exposed to acute humanitarian crisis and
particularly severe malnutrition among under-5 children. Food insecurity is still rampant with
about 1.7 million persons (at least 30% of the population) in a critical situation. With the
3 CAR essentially obtained scores C and D in all dimensions of the PEFA assessment in 2010
7
disastrous consequences of the crisis which caused the loss of numerous lives, the Human
Development Index (HDI) in 2014 ranked the country 185th
out of 187 countries against 180th
out of 186 in 2013. According to recent World Bank statistics, the poverty rate in CAR rose
from 62% in 2010 to 67% in 2013. Close to half of urban dwellers are poor (49.6 %) but in
rural areas, this rate is evaluated at 69.4%, or slightly over two-thirds of the population. Life
expectancy at birth, which has continued to drop over the past 20 years, stands at around 40
years for men and 46 years for women. The low literacy rate (55.2%) corroborates the low
gross enrolment rates in primary school (87.2%), first cycle secondary (21.8%) and second
cycle secondary levels (8.9%). The lack of adequate response to various social challenges
highly contributed to fuelling the sources of political and military tensions in the country. In
August 2014, the number of CAR refuges was estimated at about 400,000, with 57% of them
living in Cameroon. The HCR and Red Cross in CAR estimated the number of internally
displaced persons at over 350,000. Over 7,000 children were recruited by rebellion groups
and at least 2,000 women were victims of rape and sexual violence.
2.5.2 The country’s employment situation was seriously disrupted by the displacement of
the population from agricultural production zones. The primary sector, essentially agricultural
and forestry, concentrates 82% of the labour force and contributes over 50% to GDP
formation. The revival of these two sub-sectors is indispensable to spur strong, inclusive
growth that can significantly reduce poverty and inequalities.
2.5.3 The 2015 Appropriations Act allocates CFAF 106.4 billion for capital expenditure in
the priority sectors, corresponding to an increase of 30.8% relative to 2014. These resources
will mostly finance drinking water supply and distribution projects in some towns of the
country, the Food Crop and Small Livestock Project in Savannahs (PREVES), the Emergency
Food Crisis Response and Agriculture Revival Project (PURCARA), and the Project to
Support the CAR Health System (rehabilitation, construction and equipping of health
institutions). It is important to stress that in the country’s current fragile situation, the
Government will not be able to finance these programmes without support from the
international community.
III. GOVERNMENT’S DEVELOPMENT PROGRAMME
3.1. Government’s Overall Development Strategy and Short-term Priorities
3.1.1 The Transition Government’s priorities flow from the Roadmap and Emergency
Programme for Sustainable Recovery in CAR (PURD) covering the 2014-2016 period. Box 1
below presents the Roadmap priorities that will pave the way to elections by end-2015 or
early 2016. Government’s strategy
consists in strengthening the
effective link between humanitarian
action and development during the
transition by restoring the capacity
of national institutions and
grassroots communities. The overall
estimated cost of financing the
Roadmap is CFAF 490 billion
(about USD 1 billion).
Government’s contribution is
estimated at CFAF 50 billion, which
leaves a gap of CFAF 440 billion.
Several TFPs, including the Bank, committed to support the implementation of the Roadmap.
3.1.2 Government’s Letter of Development Policy indicates that for 2015, priority will be
given to actions that help to obtain the following outcomes: (i) the effectiveness of civil
Box 1- Roadmap Emergencies
1) Rapidly ensure the safety of citizens, State security, and the protection of the right to life, peace and justice for all;
2) Rapidly guarantee access of the vulnerable population to humanitarian assistance (education, health, water and sanitation, and food security);
3) Strengthen the presence of State authority (rehabilitation of public infrastructure and redeployment of public workers, regular payment of salaries);
4) Strengthen the State’s financial capacity (protection of customs corridors, redeployment, equipment, update of taxpayers’ database…); and
5) Relaunch public/private dialogue (revitalization of the public/private consultation framework, assessment of losses incurred by businesses, revision of the investment charter, implementation of measures
8
protection and State authority nationwide; (ii) the restoration of basic social services to bring
relief to the population through development poles; and (iii) the resumption of economic
activities to support the country’s reconstruction and recovery. To do that, the authorities
undertook to improve the collection of internal revenue, continue the countrywide
redeployment of government services and strengthen dialogue with the private sector. Since
PUASCRE-2 is in line with these Government priorities, there is assurance that the policy
measures envisaged in 2015 will be fully implemented.
3.2 Obstacle to the Implementation of the National Development Programme
3.2.1 Most of the country’s constraints, identified during PUASCRE-1 and concerning its
fragile situation, remain relevant. It will be recalled that the main factors of fragility are:
Serious breach of social cohesion due to inter-community conflicts that caused
violence and many atrocities;
Weak State capacity to discharge its basic functions (general administration,
socio-economic infrastructure, security and justice) and provide basic social
services to the population (education, health, sanitation, drinking water);
The country’s inaccessibility, which has always impeded the competitiveness
of the economy;
Weak dialogue between the State and the private sector which hampers the
latter’s involvement in the design and contribution to the implementation of
development strategies and policies;
The country’s heavy dependence on international aid due to weak mobilization
of internal resources; and
Poor governance of natural resources, mostly diamonds, which seem to be one
of the main causes of political instability in the country due to greed.
3.2.2 Apart from the above-mentioned issues regarding security, national cohesion and the
DDRR, other challenges of an economic and social nature exist. These include: (i) the regular
payment of civil servants’ salaries and restoration of infrastructure and working tools
destroyed by the crisis; and (ii) economic recovery and job creation to absorb primarily the
unemployed youth who are easy prey to recruitment by armed militia. The medium-term
challenges are: initiating inclusive national political dialogue to explore avenues for creating
conditions of political stability in the country; preventing the constant challenging of the
democratically-established constitutional order; and ensuring the reform of the national army
and public security forces. The full analysis of the fragility factors considered in PUASCRE-2
is attached as Annex 4.
3.3 Consultation and Participation Process
3.3.1 The Transition Government in place since January 2014 adopted an Emergency
Programme for Sustainable Recovery in CAR (PURD), aligned on the Transition Roadmap.
The consultation process that led to the adoption of the programme was steered by the
National Transition Council (CNT), set up to transitionally ensure the functions of Parliament.
It is noteworthy that within the context of PURD’s implementation, Government regularly
consults the population (for instance before the Bangui Forum). In fact, virtually all members
9
of Government were designated as resident Ministers in their regions of origin and their
mission was to organize consultations with the population to learn about their aspirations.
3.3.2 The preparation of PUASCRE-2 was done through consultations with structures
directly involved in the implementation of measures. A wrap-up session was later organized
in the presence of the authorities to harmonize and approve the various measures.
IV. BANK SUPPORT FOR GOVERNMENT’S STRATEGY.
4.1. Linkage with the Bank Strategy
4.1.1 PUASCRE-2 is a continuation of the first emergency operation listed in the Bank’s
Interim Assistance Paper covering the 2014-2016 period. This strategy, which is in line with
the priorities of the Government Roadmap and PURD, hinges on the following two key areas:
(i) rehabilitation of socio-economic and public interest infrastructure to improve the supply of
basic services; and (ii) rebuilding of institutional capacity and promotion of good governance.
The first intervention area aims to help Government satisfy the population’s urgent socio-
economic demands, placing special emphasis on the equitable and sustainable access of
vulnerable groups to the following essential goods and services: education, health, social
protection, rural roads and production activities, as well as on agricultural activities and other
job creation initiatives for youths and the economic re-integration of ex-combatants. The
second intervention area aims at enabling the rapid resumption of the activities of central and
devolved Government services to ensure the delivery of essential basic services to the
population and mostly the vulnerable population of rural zones hardest hit by the conflict.
4.1.2 PUASCRE-2 contributes to the achievement of the outcomes of the second thrust of
the interim strategy and is in line with the Bank’s Ten-Year Strategy (2013-2022), as far as its
priorities in fragile States are concerned. It is in line with the thrusts of the Governance Action
Plan 2014-2018 (GAP II) and the Bank’s Strategy to remedy fragility and strengthen
resilience in its regional member countries during the 2014-2019 period. These two strategy
papers pay special attention to factors of fragility and recommend support for the restoration
of public institutions, revival of inclusive growth to contribute to lasting peace and
mainstreaming of specific measures for vulnerable groups (women, children).
4.2. Compliance with Eligibility Criteria
The proposed operation, which is a crisis response budget support (CRBS), is in line with the
Bank Policy on Programme-Based Operations adopted in March 2012
(ADF/BD/WP/2011/38). An analysis of the country’s readiness demonstrates that CAR fulfils
the conditions for use of CRBS. Although lacking a real development strategy paper, the
Transitional Government’s actions are guided by its revised Roadmap and the Emergency
Programme for Sustainable Recovery. These two documents outline Government’s priorities
in the transition period. Notwithstanding the unstable macro-economic framework, prospects
are bright. A slight upturn of economic growth was noted in 2014, but the situation remains
fragile and Government is still unable to pay for essential expenditure with internal resources.
TFP support provides minimum sustainability for the macro-economic framework. Prospects
for growth acceleration are bright, but still depend on the continued improvement of security
and social dialogue. The fiduciary framework posts a high risk with respect to the country
context which hampers the proper functioning of public finance audit systems. Nevertheless,
the Government, in agreement with the other TFPs, adopted and implemented measures to
mitigate the fiduciary risk, including the following: (i) operationalize the cash flow committee
and public finance management monitoring committee enlarged to TFPs; (ii) revive the
10
integrated public finance management system (GESCO); (iii) streamline the public service
database with the technical and financial support of UNDP and the World Bank; and (iv)
create a Central Accounts Agency of the Treasury (ACCT) which is being operationalized.
These measures will be pursued during PUASCRE-2 and completed by the effective
operation of ACCT. The complete analysis of the country’s readiness is attached as Annex 2
of this report.
4.3. Collaboration and Coordination with Other Partners
4.3.1. Before the recent crisis, a Global Budget Support Framework (GBSF) and
Memorandum of Understanding, signed by all the parties in December 2010, defined the
donor intervention framework in CAR. This framework, which ceased to function after
several TFPs suspended their interventions following the overthrow of the regime in March
2013, has not formally resumed its activities. However, with the gradual improvement of the
security situation, virtually all TFPs have resumed dialogue and their operations in the
country. Consultations are held during joint missions in Bangui and through regular
information swaps. UNDP also organizes regular meetings among TFPs in Yaoundé in which
most development aid organizations are represented, to discuss developments in CAR and to
help harmonize interventions.
4.3.2. PUASCRE-2 was designed in close collaboration with all TFPs during the joint
mission in CAR in March 2015 and by exchange of documents. Measures supported under the
programme were the subject of in-depth discussions with various implementation organs as
well as with the national authorities. They were shared with other TFPs for their comments
and suggestions, all with a view to harmonizing interventions. The World Bank and the
European Union (EU) plan to continue supporting the payment of civil servants’ salaries and
restoration of their working tools. The EU also participates alongside UNDP and several other
UN Agencies in financing the DDRR programme, organizing general elections and securing
the country. Through its RCF-backed programme, the IMF supports measures to improve
financial and budgetary management. In the social sphere, UNDP, humanitarian agencies and
NGOs carry out targeted actions in education, health, gender, food security and the drinking
water sector.
4.4. Linkage with Other Bank Operations
4.4.1 On 30 April 2015, the Bank’s portfolio in CAR comprised 8 national projects and 3
regional projects for a total net commitment of UA 100.2 million, including 22% for the
governance sector. Figure 1 gives
the sector distribution of the
portfolio. The latter was
restructured in 2014 to free up
resources for the financing of
urgent operations. The average
disbursement rate of the portfolio is
estimated at around 59.64% against
26% during the previous review
(2012). The average age of projects is
about 3.8 years. The March 2012
pre-crisis Portfolio Performance
Review had deemed the portfolio satisfactory, with an average score of 2.22 on a scale of 1 to
3. An update of that review is ongoing and preliminary data indicates that the portfolio quality
is deemed satisfactory.
Agri 1% Social
8%
Multisector 22%
Water and sanitation
5%
Energy 30%
Transport 32%
Environm. 2%
Figure 1 - CAR – Bank Portfolio on 30 April 2015
11
4.4.2 The governance sector has two operations (PARCGEF and PUASCRE-1), which are
in line with the country’s priorities. PUASCRE-1, worth UA 15 million, was fully disbursed
in September 2014 and its measures will continue to be monitored until end-June 2015. For its
part, PARCGEF was restructured to factor in the additional needs expressed by the national
authorities in terms of providing greater support to the financial revenue services, the Public
Treasury and private sector support structures. Financed by ADF and FSF resources for a
global cost of UA 4.5 million, PARCGEF has an implementation rate of over 50% and a
disbursement rate of 37.6%. Since the project fell behind schedule in the crisis period, it will
be the subject of a twelve-month extension in order for its objectives to be met. It will help to
equip the Central Accounts Agency of the Treasury being currently put in place and the
revenue services (Customs and Tax Departments). PARCGEF will also provide technical
assistance to structures tasked with reviving business activities, especially the One-stop Shop
for Business Formalities (GUFE) and the Joint State/Private Sector Consultation Framework
for the Improvement of the Business Climate (CMCAA4). It will also finance the
rehabilitation of the offices and working tools of several financial authorities and private
sector development structures (GUFE and CPC). PUASCRE-2 is not only consistent with
PARCGEF, but is also complementary with the support programme for the reconstruction of
grassroots communities (PARCB)5 which contains key social activities. This two-phased
programme aims to: (i) strengthen social infrastructure in order to raise the supply capacity of
social structures; (ii) promote the income-generating activities of vulnerable groups,
especially women, and ensure the socio-economic re-integration of youths; and (iii) contribute
to the strengthening of food security. Psychological, health and legal assistance will also be
provided to women victims of rape and physical abuse.
4.4.3 The lessons learned by the Bank during similar operations in CAR and other
countries were reflected in the design of PUASCRE-2. The previous programme, PUASCRE-
1, drew on experience from Mali (Emergency Economic Recovery Support Programme) and
Cote d’Ivoire during implementation of the Emergency Programme for the Restoration of
Basic Social and Administrative Services (PURSSAB) after the 2010 post-election crisis.
These two experiences (Mali and Côte d’Ivoire) show that priority was given to the rebuilding
of central government capacity both from the standpoint of the function of the public
administration and the population’s access to basic social services, as well as the creation of
conditions for inclusive dialogue and gradual economic recovery. The completion report of
PUASCRE-1 is being finalized. Its end-March achievements show that the programme
received national ownership and that measures retained were well targeted. The following
lessons flowing from the PUASCRE-1 achievements and the above operations were reflected
in the design of PUASCRE-2:
Adaptation of the programme to the country’s fragility context: the programme
retained only measures that are likely to be implemented in the short-term,
given the limited capacity of CAR Government services;
Maintenance of ongoing dialogue with the authorities on programme
objectives: through ongoing dialogue with the authorities, measures already
discussed over the last three years were included in the programme. These
measures, which are expected to have lasting impact on financial governance,
concern mostly the establishment of ACCT and design of expenditure
commitment plans;
4 CMCAA was created in replacement of the permanent consultation framework to give it greater autonomy and room for action.
However, all its organs are so far not yet in place to make it fully operational. 5 The Bank approved PARCB on 24 June 2015 (ADB/BD/WP/2015/86 - ADF/BD/WP/2015/61)
12
Collaboration with other partners in the operation’s design and
implementation: the Bank maintained close collaboration with the other TFPs
in preparing this programme. All measures supported under the programme
were shared with other TFPs for their feedback.
4.5. Analytical Underpinnings
This report draws on several reports and working papers: the Transitional Government’s
Roadmap; reports on the status of implementation of PUASCRE-1; the Concept Note of the
Grassroots Communities Reconstruction Support Project – Phase I; IMF and World Bank
reports and various working papers submitted by the authorities following joint TFP missions.
The report also took into account the recommendations of the High Level Panel on Fragile
States which recommended that several factors be considered when providing support for
countries in situation of fragility like CAR, especially State building, implementation of
inclusive policies, restoration of security and justice, building of basic economic management
capacity, and establishment of legitimacy through public service delivery. It is also worth
noting that PUASCRE-2 will contribute to knowledge building by supporting the conduct of
two studies on private sector revival: study with a view to establishing the National Private
Sector Guarantee and Support Fund; and study with a view to the creation of an approved
management centre within the Chamber of Commerce, Industry, Mines and Crafts (CCIMA).
V. PROPOSED PROGRAMME
5.1. Programme Goal and Objective
In continuation of the preceding programme, the general objective of PUASCRE-2 is to help
restore the normal functioning of Government services and create necessary conditions for
economic recovery. The programme objective is to consolidate the achievements of
PUASCRE-1 and prepare the country for measures with a deeper impact on economic
recovery and job creation at the end of the transition.
5.2. Components, Objectives and Expected Outcomes
PUASCRE has two main components: (i) improvement of public finance management and
supply of basic social services; and (ii) improvement of conditions for the revival of economic
activities. These two complementary components contribute to the programme goal of
restoring the normal functioning of government services and creating necessary conditions for
economic recovery. The improvement of public finance management and supply of basic
social services is essential to restore a climate of peace and confidence within the CAR
population and the private sector. Specific measures aimed at facilitating the resumption of
private sector activities will ensure growth acceleration and job creation to absorb some of ex-
combatants within the DDR framework.
5.2.1 Component I – Improvement of public finance management and supply of basic
social services
a) Problems and constraints: The military/political crisis had paralyzed virtually
all government services in 2013, seriously affecting the management of public
finances and the supply of basic social services to the population. In end-
February 2014, salary arrears had accumulated for over five months and only
20% of civil servants were at their duty stations. The computerized budget and
cash-flow management system, GESCO, was out of use and tax revenue fell by
13
half. The social services (education, health, social affairs) were virtually non-
existent in the regions.
b) Recent measures adopted by Government: With the support of TFPs,
including the Bank through PARCGEF and PUASCRE-1, considerable
progress was observed in Bangui and in several regions. At end-2014, over
70% of civil servants had resumed duty. Most schools and health-centres re-
opened. Customs staff were progressively redeployed on the main corridors of
the country, especially at the borders with Cameroon, the country’s main
source of supply of goods. The public finance management system, GESCO,
became functional again with the support of French Cooperation, which
significantly improved the tracking of public resource use. Despite this
progress, the country is still confronted by a fragile macro-economic
framework that depends heavily on international aid. Due to the persistence of
insecurity, some regions remain cut off from the capital, lacking central
government representatives. Without budget commitment plans aligned to
the cash-flow plan, the budget’s implementation pace remains quite slow,
particularly in the social sectors. Government’s short-term challenges mainly
concern the improvement of tax revenue collection especially through better
mastery of exemptions and the tax base, to reduce the country’s over-
dependence on international aid, improve fluidity and transparency in budget
implementation and continue the deployment of the administration nationwide
in order to improve the humanitarian situation, particularly among vulnerable
groups.
c) Programme measures: The following measures aim at improving tax revenue
and public finance management: (i) taxpayer census; (ii) review and broadening
of the duties of the Exemptions Monitoring Committee to include the
consideration of draft conventions in which provisions are made for
exemptions; (iii) update and dissemination of the General Tax Code (CGI); (iv)
implementation of the public revenue payment schedule to facilitate tax
revenue tracking and accounting; (v) revival of the activities of control
brigades; (vi) formulation of a budget commitment plan consistent with the
cash flow plan (condition precedent to the presentation of the programme
to the Boards); (vii) revision of instruments related to the designation of vote
holders and administrators; and (viii) operationalization of ACCT through the
appointment of the accounting officer and his/her assumption of duty
(condition precedent to presentation of the programme to the Boards).
With regard to improving the provision of basic social services, the programme
will support: (ix) the preparation of budget commitment plans in priority
sectors (education, health, social affairs); (x) increase in the budget
commitment rate in these social sectors; (xi) pursuit of the deployment of
teachers and health personnel in the regions; and preparation of an assistance
strategy for women and girl victims of violence.
d) Expected outcomes: The tax pressure ratio will increase from 4.5% of GDP in
2014 to 5.7% of GDP in 2015; the rate of deployment of teachers and health
staff in the regions will increase from 60% in 2014 to 80% in 2015, and the
social expenditure commitment rate will rise from 11.98% in 2014 to over 50%
in 2015.
14
5.2.2 Component II – Improvement of Conditions for a Revival of Economic Activities
a) Problems and constraints: Already constrained by the lack of economic
infrastructure, CAR was further weakened by the pillaging and the destruction
of production tools during the crisis. This was compounded by legal insecurity,
the shrinking of financing to the private sector and the mounting arrears owed
to State suppliers. An audit of arrears conducted in 2012 on the 2008-2011
period led to the State’s validation of its commercial debts estimated at CFAF
11.7 billion. These obligations were partially settled, but the crisis led to new
arrears estimated at 2.3% of GDP. The suspension of the country from the
Kimberley Process fuelled the disorderly exploitation of CAR minerals and
blocked the activities of a number of enterprises operating in the sector. The
result was a fall in GDP of about 36.7% in 2013.
b) Recent measures adopted by the Government: To help in the economic
recovery of the country, PUASCRE-1 had supported especially: (i) the
resumption of dialogue between the State and the private sector with a view to
the partial settlement of the commercial debt and assessment of the damage and
losses suffered by businesses; (ii) an audit of the internal debt amassed in 2013;
and (iii) the implementation of necessary measures for the lifting of CAR’s
temporary suspension from the Kimberley Process. The assessment conducted
in March 2015 revealed the progress made in dialogue with the private sector,
as evidenced in the creation of a new consultation framework with a broader
mandate; and the partial settlement of suppliers’ debt to the tune of CFAF 1.7
billion. The objective set for 2014 with respect to the lifting of CAR’s
temporary suspension from the Kimberley Process was finally met in June
2015. However, what remains is the total lifting of the embargo on the other
production zones. The support of the Bank and other TFPs contributed to
economic revival in 2014, with GDP growth estimated at 1%. Many challenges
remain to consolidate this economic recovery. Government must take short-
term measures to improve the private sector environment, provide greater
support to small- and medium-sized enterprises (SMEs), and facilitate the
resumption of activities in production sectors, especially mineral and timber
exploitation and agricultural production.
c) Programme measures: The following measures aim to consolidate the gains
of the political transition and prepare post-crisis growth revival: (i) adopt new
instruments with a view to simplifying tax/duty payment procedures; (ii) define
modalities for processing new State arrears/liabilities for the 2012-2014 period;
(iii) operationalize the Joint Consultation Framework on the Improvement of
Business (CMCAA) by putting in place a permanent technical secretariat; (iv)
assess losses and damage sustained by enterprises during the 2013 crisis; (v)
conduct a study to establish a national private sector guarantee and support
fund; (vi) continue the implementation of measures with a view to the partial
lifting of the country’s suspension from the Kimberley Process in 2015; and
(vii) continue the settlement of internal arrears, in particular debts owed cotton
producers estimated at CFAF 1.32 billion.
d) Expected outcomes: These measures are expected to foster the following
outcomes: (i) acceleration of economic growth from 1% in 2014 to 5.7% in
2015; (ii) reduction by half of the State’s debt to cotton growers; and (iii) total
lifting of CAR’s suspension from the Kimberley Process before end-2016.
15
5.3. Policy Dialogue
PUASCRE-2 is an emergency operation which aims to help the country mitigate the effects of
the crisis. However, some programme measures also aim at paving the way for post-election
structural reforms and a return to constitutional order. These include: operationalization of the
ACCT; adoption of expenditure commitment plans; reviewing and broadening the
Exemptions Monitoring Committee’s mandate to include consideration of draft conventions;
conducting studies with a view to establishing the national private sector guarantee/support
fund; and creating an approved management centre within the Chamber of Commerce,
Industry, Mines and Crafts (CCIMA). Since these measures will sustainably strengthen public
finance management and improve the business environment, the Bank will maintain ongoing
dialogue with Government on them.
5.4. Conditions for Awarding the ADF Grant and the TSF Grant
5.4.1 Preliminary Measures
Based on dialogue between the Bank and Government, it is expected that the Government will
undertake preliminary measures before the presentation of the programme to the Boards of
Directors. These conditions are:
(i) Appointment of the central accounting officer of the Treasury recruited
through a competitive bidding process;
Evidence: Copy of the decree appointing the central accounting officer of the Treasury;
(ii) Preparation of a 2015 budget commitment plan consistent with the cash
flow plan;
Evidence: Copies of the commitment plan submitted by the Minister of Finance and Budget;
These two measures, which had been amply discussed over the course of previous years, are
crucial to further strengthen public finance management and the fiduciary framework as well
as for enhancing the effectiveness of social and humanitarian spending.
5.4.2 Triggers
The programme is a CRBS and has no triggers. The disbursement of programme resources
will be contingent on the signature of the ADF Grant Protocol Agreement and the TSF Letter
of Agreement by the Bank Group and the Donee.
5.5. Good Practice Principles for the Application of Conditionality
In line with international consensus on best practices, reflected in the Bank Group’s Policy
Paper on Programme-Based Operations (PBO), the Bank’s financing is tied to conditionalities
that were discussed and shared with the other TFPs, given the absence of a common measures
matrix. All the selected programme measures were proposed by State structures and vetted by
the authorities after verifying their realism in light of the country’s crisis context.
5.6. Financing Needs and Mechanisms
5.6.1 The overall budget deficit (commitment base) in 2015 is projected at CFAF 69.7
billion. This deficit stems from the low level of tax revenue and the level of core expenditure
for financing elections and the entire post-crisis process. Budgetary resources, including
project grants, are projected at CFAF 107.8 billion against total expenditure estimated at
CFAF 169.5 billion, of which CFAF 99.2 billion as primary expenditure. Out of the CFAF 60
billion financing needs, CFAF 50 billion is covered by the supports declared by TFPs. The
Bank will contribute UA 7.36 million (approximately CFAF 6.1 billion). The gap of CFAF 10
16
billion will be covered by the third IMF support under RCF and eventually by reducing
internally-funded capital expenditure.
Table 3 Projected Financing Needs and Sources (in CFAF billion)
2014 2015 2016 2017
Prel. Projected
Total project receipts and grants 59.1 107.8 151.2 128.8
comprising:grants (outside budget support) 17.3 43.5 70.8 31.0
Total net expenditure and loans 107.3 169.5 204.6 159.3
comprising: interest payments 5.5 8.3 7.5 5.1
comprising: capital expenses 18.1 65.7 101.2 57.2
Overall balance (commitment base) -48.2 -61.7 -53.4 -30.5
Accumulated arrears -13.9 -8.0 -10.0 -10.0
Overall balance (settlement base) -62.1 -69.7 -63.4 -40.5
Net external financing (excluding Bank
support) 0.9 22.2 7.9 2.2
Internal financing (net) -12.6 -12.5 4.4 3.9
Bank’s contribution 11.4 6.1 0.0 0.0
Total financing -0.3 15.8 12.3 6.1
Financing need 62.4 53.9 51.1 34.4
Expected financing from other TFPs 62.4 43.9 15.7 0.0
World Bank 13.3 5.5
IMF 6.2 4.5
European Union 19.7 16.4
France 3.9 7.9
ECCAS Member Countries 16.9 9.1
Others (including UNDP) 2.4 0.5
Financing gap 0.0 10.0 -35.4 -34.4
Source: IMF, CAR Authorities and Bank estimates
5.6.2 In March 2015, the IMF disbursed the second tranche of aid under the Rapid Credit
Facility (RCF) for an amount equivalent to CFAF 4.5 billion, and in June 2015 engaged
discussions for its third and last RCF support. The World Bank also disbursed its support of
USD 10 million (about CFAF 5.5 billion) on 22 May 2015. Disbursement of other expected
TFP supports is being done progressively. The February 2015 European Union support
allowed especially for accelerating the organization of general elections.
5.7. Application of Bank Policy on Accumulation of Non-Concessional Debts
CAR falls in the category of countries having access exclusively to ADF resources. In 2014,
the World Bank and IMF services prepared a new Debt Sustainability Analysis (DSA) for the
country, taking the crisis into account. The analysis showed that the country’s debt
deteriorated significantly mainly because of the political crisis that seriously hurt economic
growth and the external and budget accounts. The risk of debt overhang rose from “moderate”
to “high”. Therefore, it is absolutely necessary for all TFPs to support the country with
financing in the form of grants or concessional loans. Since PUASCRE-2 is financed by an
ADF grant, it will have no impact on the country’s debt situation. As part of its RCF-
supported programme with the IMF, the Transitional Government implemented a prudent
debt policy involving resorting in priority to grants, and financing any residual needs through
concessional loans with a grant component of at least 35%.
17
VI. PROGRAMME IMPLEMENTATION
6.1. Programme Beneficiaries
The programme’s end beneficiaries are the same as those of the previous programme. These
are the population of the Central African Republic as a whole, or close to 4.3 million people
and the vulnerable populations in particular. The programme will directly benefit the
Government by helping to close the financing gap.
6.2. Social and Gender Impact
6.2.1 The programme will have a positive impact on the country’s humanitarian situation
by supporting the redeployment of education, health and social affairs workers. The
restoration of social, administrative and security services will rekindle considerable hope in
the population and create a sense of the return of the State in the localities. The rehabilitation
of administrative infrastructure and re-organization of health and education systems will
facilitate the return of nurses, teachers and staff of other Government services in the localities,
the treatment of diseases and access to health-care. This will help to reduce maternal and
infant mortality. In other respects, reducing the internal debt and lifting the suspension of
diamond exports will facilitate economic recovery and job creation. The programme will also
have a positive impact on women, thanks to the expected effects of the assistance strategy for
women and girl victims of violence.
6.2.2 PUASCRE-2 measures will help to mitigate the impact of the crisis on the most
vulnerable segments of the population, including women and children. The restoration of
basic social services and rehabilitation of basic infrastructure will enable displaced persons,
most of them women and children, to return to their region and gradually resume their
activities. With the complementary actions which will be implemented through the Bank-
financed Emergency Support Programme for Grassroots Communities (PARCB), women,
girls and child victims of gender-based violence will receive moral and psychological
assistance. An assessment of their situation will make it possible to organize targeted support
for them in terms of social accompaniment and economic recovery.
6.3. Impact on Climate Change
The proposed programme is a Crisis Response Budget Support (CRBS). Since it will not have
any environmental impact, it is classified in Environmental Category III.
6.4. Implementation, Monitoring and Evaluation
As the institution chairing the Public Finance Reform Steering Committee (CPR), the
Ministry of Finance and Budget will be responsible for the implementation of
PUASCRE-2. CPR comprises the heads of action plan implementation structures (Ministry of
Finance and Budget, the Finance Committee of the National Assembly, the Court of Auditors,
the General State Inspectorate, and the Public Procurement Regulatory Authority), one
representative from civil society and representatives of TFPs. The Ministry of Finance and
Budget will ensure that government structures concerned fully play their role in implementing
specific measures under their respective areas of responsibility. The Unit in charge of
monitoring economic and financial reforms (CS-REF) is tasked with the daily
monitoring/evaluation of the programme. The Bank provides technical assistance to CS-REF
through PARCGEF. Four consultants (experts in monitoring-evaluation, public finance,
macro-economic management and public accounts) were placed at CS-REF’s disposal to
18
support the monitoring of reforms. PUASCRE-2 implementation will span a 12-month period,
counting from its effectiveness.
6.5. Financial Management and Disbursement
6.5.1 Fiduciary Risk Assessment by Country
A fiduciary risk assessment (FRA) on CAR’s public finance management
system (GFP) was conducted during preparation of the Emergency Post-Crisis
and Economic Recovery Support Programme (PUASCRE, Phase 1) in
February 2014. This assessment was in line with the Policy on the Financial
Management of Operations financed by the African Development Bank
(AfDB) Group published in February 2014 and the Operational Guidelines for
programme-based support operations (PBO) of March 2014, and takes into
consideration the crisis situation experienced by CAR since the events of
March 2013. These events have caused a deep and near-total disorganization of
all systems in the country, including the public finance management system.
The assessment revealed that the overall residual fiduciary risk linked to the
use of the public finance management system is “significant” despite the
recommended mitigation measures, some of which were implemented during
the previous programme given the fragile context. Some actions will require a
relatively long time to mature. However, thanks to the dialogue engaged
between TFPs and the Transitional Government, a short-term fiduciary
framework was defined exceptionally for the transition period to restore
essential functions of the State and secure public finances with the support of
the international community. These include: setting up cash-flow monitoring
and public finance management committees with the involvement of
representatives of TFPs, operationalization of the Central Accounts Agency of
the Treasury (ACCT) as the pivotal institution for managing cash-flow and
tracking inflows and outflows at the accounting level, recruitment of the
accounting officer, interconnection of public finance management applications,
GESCO budget and GESCO, and opening of special accounts for programme
resources at the National Directorate of the Bank of Central African States
(BEAC). The Ministry of Finance and Budget will assume responsibility for
the administrative, accounting and financial management of resources allocated
to the programme. An audit of the flow of these resources will be performed by
an external audit firm.
6.5.2 Financial Management and Disbursement Mechanisms
Since this financial support is meant to cover the FY 2015 budget deficit, grant
disbursements are expected to be made into the two special accounts opened in
BEAC for the purpose. The budget and cash-flow committees which monitor
budget implementation and the Accounting Agency are responsible for
tracking and ensuring that transactions in programme accounts are also entered
in the public accounts. At the end of the fiscal year, a private external audit will
give its opinion on the level of compliance with agreements.
Disbursement: The financing of UA 7.36 million will be disbursed in a
single tranche, subject to fulfilment by the Borrower of the related general
and specific conditions mentioned in Section 7.2 below. The choice of
19
single-tranche disbursement is mainly for the following reasons: (i) the need to
cover the most urgent financing requirements in a pivotal year to mitigate the
impacts of the crisis on the population and foster the rapid recovery of the
economy; (ii) a firm commitment by the Government to implement urgent
measures, supported by the international community’s combined and urgent
efforts to restore the legitimacy of the State; and (iii) fiduciary risk mitigation
measures already implemented by Government as part of the previous support
operation. At the Borrower’s request, the Bank will disburse funds into the two
special accounts opened in the books of the National Directorate of BEAC in
Bangui.
6.5.3 Procurement
The Bank’s assessment of the national public procurement framework in May 2012 concluded
that overall, the national procurement procedures for national competitive bidding were
compliant with the Bank’s Rules and Procedures. This assessment also revealed the existence
of a suitable institutional mechanism respectful of the separation of procurement, control and
regulatory functions as well as the introduction of an appeal mechanism for bidders. It was
also confirmed that overall, National Standard Bidding Documents are similar to those of the
Bank. Notwithstanding the quality of the legal, regulatory and institutional framework, these
organs are not totally operational because of the military/political crisis in the country.
Consequently, this budget support aimed at rebuilding the capacity of CAR administrations
will contribute greatly to restoring the functioning of the organs responsible for public
procurement, ensuring the de facto mitigation of the fiduciary risk. Therefore, the use of Bank
resources through a budget support to achieve these objectives seems appropriate.
VII. LEGAL DOCUMENTATION AND LEGAL AUTHORITY
7.1. Legal Documents
The legal documents that will be used for the programme are:
A Protocol Agreement on ADF resources for an amount not exceeding UA 5
million signed by ADF and the Central African Republic;
A Letter of Agreement on TSF resources (Window 1) of an amount not
exceeding EUR 2.36 million, signed by the Bank and the Central African
Republic.
7.2. Conditions Associated with Bank Intervention
Condition precedent to effectiveness: effectiveness of the two grants is subject to the
signing of the Protocol Agreement (ADF) and the Letter of Agreement (TSF) by the
Central African Republic (“the Donee”) and the Bank.
Conditions precedent to disbursement of the two grants in a single tranche: apart from
the above condition for effectiveness, disbursements of the resources of the ADF grant
and the TSF grant shall be subject to the fulfilment of the following condition precedent:
Show proof of opening two special accounts in the books of the National Directorate of
BEAC in Bangui into which the resources of the ADF grant and the TSF grant shall be
paid.
20
7.3. Compliance with Bank Group Policies
PUASCRE-2 is in line with the guidelines of the Bank’s Ten-Year Strategy, in particular the
pillar related to governance. It is also consistent with the Bank Group’s Policy on Programme-
Based Operations, in particular the instrument concerning Crisis Response Budget Support.
No waiver request has been made in this proposal regarding these Guidelines.
VIII. RISK MANAGEMENT
Table 4 below presents an overview of the risks that could affect the implementation of the
programme or the achievement of its outcomes.
Tableau 4
Risks and Mitigation Measures Risks Mitigation Measures
Political and security risk: This risk
concerns the fragility of public
institutions and the climate of insecurity
prevailing in some districts of Bangui and
in the provinces.
This risk is mitigated by the outcome of the political dialogue held in Bangui
from 4 to 11 May 2015. The Bangui Forum ended in an agreement to disarm the
Séléka and Anti-Balaka ex-combatants. The strengthening of MINUSCA troops
with over 2,000 additional men since the start of 2015 also contributes to
improving the country’s security situation.
Macro-economic risk: This risk is
related to the persistence of the embargo
on diamond exports and the fragile
situation of the private sector. This
situation significantly affects the
production sectors, economic growth and
public finances.
This risk is mitigated by actions undertaken by the Government with a view to
the lifting of the partial suspension of the country from the Kimberley Process
and dialogue with the private sector. Government also has better control of the
wage-bill, thanks to a census of civil servants. It is also worth noting that
PARCGEF supports the revival of economic activities through technical
assistance to structures responsible for business development.
Fiduciary risks: The fiduciary risk
deemed high in 2014 remains at the same
level due to the weaknesses of the GFP
system and CAR’s fragile situation.
The fiduciary risk mitigation measures are attached as Annex 6 and Technical
Annex 2
IX. RECOMMENDATION
In light of the foregoing, it is recommended that the Boards of Directors approve an ADF
grant not exceeding UA 5.00 million and a TSF grant not exceeding UA 2.36 million in
favour of the Central African Republic to finance the Emergency Post-Crisis and Economic
Recovery Support Programme – Phase 2 (PUASCRE-2).
- 1 -
ANNEX 1
Letter of Development Policy
Ministry of Economy, Planning and
International Cooperation
**********
Office of the Minister
**********
N0. 1678/2015/MEPCI/DIRCAB
CENTRAL AFRICAN REPUBLIC
Unity – Dignity – Labour
Bangui, 2 June 2015
GOVERNMENT’S LETTER OF DEVELOPMENT POLICY
I. INTRODUCTION
1. The Transitional Government’s Economic Programme is focused on the strategic
thrusts defined by the Heads of State of the Economic Community of Central African States
(ECCAS), through the resolutions of the Extraordinary Summits of Heads of State and
Government on 3 and 18 April 2013 and recalled in the message from the President of the
Republic at the first Council of Ministers in which she expressed her strong determination to
commit her Government to adhere to the Transition Roadmap and her determination to
implement the measures and actions of the Emergency Programme for Sustainable
Development (PURD) in order to address the challenges facing the country as a priority.
2. The different crises experienced by the country jeopardized implementation of the
PRSP II (2011-2015), which focused on the following three (3) pillars: (i) strengthening of
security and peace, governance and the rule of law; (ii) economic recovery and regional
integration; and (iii) development of human capital and essential social services, and resulted
in the breakdown of dialogue between CAR and its development partners. The Transitional
Government has redefined its priorities to support the protection of communities and the
country’s recovery during this phase in a document entitled CAR Emergency Sustainable
Recovery Programme (PURD-CAR 2014 – 2016). The urgent needs linked to the crisis
are in line with the strategic thrusts defined by the ECCAS Heads of State and
Transitional Authorities. This Programme, accompanied by a matrix of measures, has made
it possible to: (i) carry out an in-depth analysis of the socio-economic and political context;
and (ii) identify the challenges to be addressed in order to provide a response to the
population’s urgent needs, stabilize the security situation, consolidate social peace, achieve
economic stability and revive growth.
3. Pursuant to Article 43 of the Constitutional Charter adopted and promulgated on 18
July 2013, and drawing on the main thrusts of PURD, the Government prepared a Transition
Roadmap which was presented to the National Transitional Council (CNT) following
validation by the Monitoring Committee for Implementation of the Libreville Agreements and
the International Contact Group in October 2013. This Roadmap, which only takes into
consideration the country’s urgent requirements, is aligned on the four PURD Pillars. The
events of December 2013 brought the country into a second transitional phase prompting the
- 2 -
new authorities to revise the Roadmap to incorporate new needs, in particular integration of
the Anti-Balaka into the DDR process.
4. Accompanied by Priority Action Matrices, the Roadmap and PURD will serve as a
dialogue framework and facilitate mobilization of the development partners, including the
private sector around CAR’s humanitarian assistance requirements and recovery.
5. Political stability and peace-building have been consolidated by the adoption of the
Constitutional Charter and effective mobilization of the soldiers of the International Support
Mission to CAR led by the African Union (MISCA) and the French SANGARIS support force.
During implementation of United Nations Security Council Resolution 2121 and in
compliance with the decisions of the African Union’s Peace and Security Council, two
coordination frameworks have been established for Disarmament, Demobilization and
Reintegration (DDR) and Security Sector Reform (SSR) with two (2) levels of responsibility:
Strategic and Technical. A DDR pilot programme covering 2000 ex-combatants is already
operational.
6. The transfer of MISCA peace-keeping operations to the United Nations
Multidimensional Integrated Stabilization Mission (MINUSCA), set up by decision under
Security Council Resolution 2149 of 10 April 2014, took place on 15 September 2014. This
transfer was followed by the progressive deployment of UN troops and European EUFOR
forces across the country. This synergy helped to create new pacification basins in the main
conflict zones and gradually deploy government services in the country.
7. The Confidence-Building Measures signed by international forces have helped to: (i)
reverse the military balance, which is gradually tilting in favour of rapid adherence to the
DDR process; (ii) ensure the gradual neutralization of armed groups whose security activities
will become increasingly limited; and (iii) bring about the gradual stabilization of the security
situation, which could make it possible to carry out activities on the ground. Similarly,
implementation of confidence-building measures by the SANGARIS force has contributed to
the assembly of armed groups corresponding to the effective launching of a preliminary phase
of the future DDR Programme, starting with the pilot phase. The recommendations of the
Brazzaville (Congo) Forum were materialized in the signing of the cease-fire agreement of 23
July 2014, the organization of popular consultations at the grassroots and the imminent
organization of the Bangui Forum in prelude to elections in July-August 2015
II. MACROECONOMIC FRAMEWORK IN 2014 AND PROSPECTS FOR 2015
2.1 Economic Framework
2.1.1. Situation in 2014
8. The economic and financial situation observed in 2014 was marked by a slight
upturn of economic growth reflecting a deterioration of economic activities of 2013 relative to
the widespread degradation of the security and socio-economic situation. Real GDP growth
rate is estimated at 1.3% after a contraction of 3.6% in 2013. This trend led to the rapid
development of the tertiary sector.
9. In 2014, the revival of primary sector activities made it possible to reduce the scale
of the decline recorded in 2013 while mitigating its growth rate after a 6.5% drop (compared
to 45.1% one year earlier). This trend stemmed from a combination of factors, especially the
return of displaced farmers to their land, favouring a revival of agricultural production (which
grew by 1.2% after the 46.4% drop observed in 2013) linked to the implementation of the
Emergency Programme to Revive Food Crop Production. The absence of agricultural field
supervision structures made it impossible to effectively mitigate the negative impacts of the
crisis on production. One of the constraints that seriously affected the primary sector is the
- 3 -
poor performance of the forestry sector (which declined by 33% against 18% in 2013) due to
the disorganization of its production system and fraud in product marketing.
10. With growth estimated at 1.2% in 2014, the secondary sector managed to perform
better than in 2013 thanks to the revival of its sub-sectors – manufacturing, construction and
energy, which grew by 5%, 4.5% and 2.1%, respectively. However, the constraint induced by
CAR’s suspension from the Kimberly Process (in 2013) continues to have tremendous
repercussions on the mining sub-sector, which declined by 49% against 68% in 2013.
11. Growth in the tertiary sector reached 17.6% in 2014 after declining by 28% in 2013.
It is especially comforted by very significant contributions of development partners following
their new commitment to finance the national economy. This external support was seen in the
disbursement of budget support of about CFF 74 billion. For their part, commercial services
improved to a lesser degree, driving growth of 1.3% against a drop of 24% observed in 2013.
12. Regarding demand, GDP use is still dominated by the weight of some components.
At the level of internal demand, final consumption is by far the main component of GDP,
creating 109% of wealth during the year whereas the share devoted to investments is around
13%. This state of affairs, which is characteristic of an emergency situation, must be rapidly
resolved to envisage a phase of economic recovery with large-scale investments in different
sectors. Net external demand will continue to decline due to the dual effect of a fall in goods
and services exports and an increase of imports.
13. Fanned by price hikes, inflation accelerated to an annual average of 17.8%.This
inflationary pressure stems from the disorganization of the staple products distribution
networks in markets and the demand pressure (exacerbated by the presence of international
forces on the national territory). Inflation is mainly driven by the item “food” due to its weight
in household needs. The contribution of the other items remained marginal throughout the
year.
14. At the level of external accounts, the current account deficit grew sharply, rising to
CFAF 52 billion (6.2% of GDP) compared to 24.4 billion in 2014 (3.3% of GDP) due to the
amplification of the commercial debt. This situation is induced mainly by the 83.2% increase
of imports of goods, over half of which is made up of humanitarian support, and the fall in
exports of goods (27.2%) justified by the export embargo on diamonds and the sharp fall in
the export of other products, except coffee. For their part, current account transfers posted a
surplus of CFAF 158 billion against CFAF 53.6 billion in 2013. The bulk of these routine
grants were to Government (about CFAF 74 billion received as budget support from
development partners and over CFAF 68 billion from NGOs).
15. The capital and financial operations account registered a higher surplus of CFAF
77.6 billion compared to CFAF 27.7 billion the previous year. This trend is linked to the
increase in project grants, estimated at CFAF 44 billion. In contrast, for the financial account,
direct investments are not yet distributed due to a still precarious security environment. In the
final analysis, the balance of payments still posted a surplus of CFAF 32.7 billion against
CFAF 9.3 billion in 2013. In addition to an accumulation of external arrears of CFAF 6.4
billion, this surplus of resources helped to rebuild official reserves of CFAF 39.2 billion.
16. As concerns the monetary account, the total money in circulation (M2) was CFAF
245.684 billion compared to CFAF 213.835 billion one year earlier, equivalent to an increase
of 14.9%. Over the period, the counterpart “net external assets” improved markedly,
illustrating a positive contribution of 20.1 points, just like the other component “internal
credit” which contributed positively to the growth of M2 by 3.3 points. The net external assets
- 4 -
of CAR’s system considerably improved between December 2013 and December 2014,
recording CFAF 51.7 billion against CFAF 8.6 billion one year earlier due to the positive
effects of external financing, in particular financing from CEMAC countries and development
partners.
17. The State’s net debt to the monetary system remained at virtually the same level
(+0.1%) over the period in review, standing at CFAF 128.034 billion against CFAF 128.2
billion in December 2013. The outstanding debt to the economy increased by 6.5% on 31
December 2014, standing at CFAF 119.3 billion against CFAF 112.1 billion one year earlier.
The period also witnessed significant financing of seasonal credits (especially oil and gas) and
a revival of medium-term loans. However, it is worth noting the significant portfolio of bad
debts as well as provisions previously constituted to address the risks of unpaid bills.
18. The situation of public finances improved slightly in 2014 with the mobilization of
internal resources of about CFAF 155.4 billion against a revenue target of CFAF 51.9 billion.
This situation denotes the existence of several constraining factors, including: the persistence
of insecurity and occupation of large swathes of national territory by irregular forces, the
wait-and-see attitude of business operators, the non-mastery of customs/tax exemptions and
oil royalties, and the desertion of customs and tax posts due to the crisis. The international
community’s contribution of about CFAF 82.5 billion enabled Government to address
expenditure executed to the tune of CFAF 136.3 billion. This expenditure includes CFAF 83.6
billion of recurrent expenditure, CFAF 47.2 billion of capital expenses and CFAF 5.5 billion
of interest. This management yielded a primary balance of CFAF 42 billion.
2.1.2 Prospects for 2015
19. Economic prospects in 2015 are based on assumptions linked to a nationwide
improvement of the security climate, political stability, the effective restoration of all public
services and the more massive return of the displaced population (mostly the agricultural
labour force). They are based more specifically on the rebuilding of the production tools of
production units, the lifting of the embargo on diamond exports, the distribution of seeds and
the resumption of the activities of the Bossangoa cotton ginning plant. In that perspective, the
lacklustre economic recovery observed in 2014 will accelerate at the real GDP growth rate of
5.7%.
20. In sector terms, the primary sector growth rate will accelerate to 4.2% due to the
effects of the revival of agricultural (4.7%), forestry (5.8%) as well as livestock and hunting-
fishery production. Food crop production is expected to benefit from the resumption of
Government and development partner support through the supply of seeds, agricultural inputs
and small implements. Cash crop production will also be boosted by the recovery of the
cotton sub-sector, especially through Chinese support and the resumption of activities at the
Bossangoa plant. The coffee sector is expected to improve as a result of the strategies
implemented to increase yield and because of expected good rainfall distribution. Forestry
activities are expected to increase by 5.8% as a result of new exploitation permits awarded in
2014 entering in production.
21. The secondary sector growth rate is expected to be 4.81% in 2015, a net
improvement on 2014. This performance is attributable to the expansion of all sub-sectors.
Mining extraction, where production rose by 3.1% (against a drop of 49% in 2014), is
expecting a boost with the probable lifting of the embargo after the mission of the PK
Secretariat scheduled for end-April 2015. Similarly, the Water-Electricity branch is expected
to grow from 2.1% in 2014 to 5% in 2015, thanks to the resumption of works aimed at
- 5 -
building production capacity such as the coupling of the Boali generators and the installation
of a turbine at the Mbali dam (Boali 3). Manufacturing output is expected to increase in 2015
with a 5% rise justified by lower production costs due to higher production of water and
power. For its part, the construction industry will continue to benefit from the effects of the
re-engagement of development partners, especially in the rebuilding of roads and rural paths
to open up the hinterland. The Transition Government’s desire to rehabilitate the public
edifices of decentralized departments to accompany the restoration of public services is
expected to help in strengthening the construction industry.
22. The tertiary sector growth rate is expected to increase steadily to 7.3% in 2015,
stemming from the robustness of commercial and non-commercial activities. The gradual
improvement of the security climate and the lifting of constraints on the main means of
communication (in the hinterland and the Bangui-Garoua-Boulai corridor) will be the
guarantee of the intensification of the revival of commercial activities, marked by a surge in
transport and communication (5%), trade (5.1%), and services to enterprises (4%). Lastly,
non-commercial services will pick up significantly in 2015, thanks to the contribution of
different development partners and the return of the administration throughout the national
territory ahead of elections.
23. The sharp rise in prices observed in 2014 is expected to be mitigated by the
resumption of activities and the regulation of the staple products distribution and supply
networks to local markets. Based on this, average annual inflation rate is expected to reach
5.7% according to IMF projections. The consumer price index trend (in Bangui) in the first
quarter of 2015 from which the inflation rate is deduced, shows a downward trend in prices:
from 18.2% in January 2015, the inflation rate dropped to 16% in February and 15.4% in
March.
2.2. Public Finances
2.2.1. Measures taken by the Government
24. Under the fiscal policy, some bold measures have been taken: (i) establishment of the
Central Accounting Agency of the Treasury (launched in December 2012), which represents a
strong commitment by the Government to clarify the functioning of the Treasury, improve
transparency and accounting traceability; (ii) the establishment of a Cash Flow Committee (by
Decree No. 14/094 of 29 March 2014) under the authority of the Minister of Finance to
improve cash flow management; and (iii) the establishment of a public finance management
committee (by Decree No. 14/093 of 29 March 2014) aimed at ensuring joint monitoring with
the technical and financial partners of all budget support operations and public financing. The
establishment of the Central Accounting Agency of the Treasury (ACCT) by June 2015, the
contracting process of which is ongoing, will ensure budget management on an informed
basis aimed at streamlining the public expenditure circuit. The objective will be to create the
conditions to improve the linkages between budget commitment and accounting treatment,
using the GESCO computer application, and to facilitate decision-making by producing
reliable financial information.
25. Following the submission of the Draft 2008 Audited Budget to the National
Assembly in December 2011, the Government is working on the other fiscal years. Thus for
the 2009 fiscal year, all the required documents, i.e. the management account, the
administrative account, the general finance and administration account as well as the draft
audited budget have already been submitted to the Court of Auditors. The Directorate-General
of Treasury is currently working to compile the support documents to accompany the
- 6 -
documents already submitted. For the 2010 fiscal year, there are only four outstanding
commitments before inputting all the accounting entries. Inputting this information will give
the different accounts to be produced before tackling the preparation of the audited budgets.
The most serious constraint concerns the 2011 fiscal year. Given the political change that
occurred in March 2013 characterized by the systematic pillaging of working tools in
government services, the General Directorate of Treasury has lost all its IT equipment,
including the server for the GESCO computer application, and is suddenly faced with
difficulties to access the database.
2.2.2 The Main Thrusts of the 2015 Budget and Medium-Term Policies
26. In implementing the Roadmap and PURD, the Government will always attach
priority to: (i) effectiveness of civil protection and State authority nationwide; (ii) the
restoration of basic social services to relieve the population (through development poles); and
(iii) the restoration of economic activities to support the country’s reconstruction and
recovery.
27. The Government must remain consistent in implementing its development projects.
To this end, the draft 2015 Appropriation Bill earmarks, under investment expenditure, a
budget allocation of CFAF 106.4 billion, corresponding to a 30.8% increase on 2014 linked to
the increase in resources allocated to the following priority sectors:
• Equipment, town planning and accessibility through the financing of the
following projects: construction of the Sapéké bridge, project to facilitate
transport and transit in the CEMAC zone, preliminary studies for the
construction of a bridge on the Oubangui-Zongo River, labour-intensive works
(THIMO IV), urban development project, support to the road maintenance and
water transport sector, technical, economic, environmental and social
feasibility study for the construction of the railway between Bangui and
Belabo, extension, modernization and alignment to IATA and OACI standards
of the Bangui and Mpoko airports;
• Energy and water, with a view to financing projects for inter-connecting the
electricity power grids in CAR-DRC from the Boali River system, the drinking
water supply project in some towns, the Boali 2 Extension Project, feasibility
studies for the rural drinking water development plan and feasibility studies for
the construction of the water station on the DIMOLI site;
• Development pole, economy and finance, whose components concern: (i)
support to the comprehensive public finance reform programme; and (ii) the
financing of projects identified in the area, namely Targeted Technical
Assistance, Support to the National EDF Payment Authorization Officer,
Technical Cooperation Facility, Economic and Financial Management
Capacity-Building, Technical Support for Statistics and PURD
Implementation, Support for Stabilization of Livelihoods, Protection and
Resilience of Communities in Conflict-Affected Zones in CAR and
programmes for micro-projects, Improving Access to Development Poles
Phase I;
• Rural development and livestock, to finance the Food Crop and Small
Livestock Recovery Project in Savannah Areas (PREVES), the Emergency
Food Crisis Response and Agriculture Recovery Project (PURCARA), the
- 7 -
South-West Regional Development Project (PDRSO), the Rural Development
Project in the Development Poles of Sibut, Bambari and the Peri-urban Zones
of Bangui;
• Justice, security and DDR, for financing the justice and police sector reform
programme as well as the project to rehabilitate and equip barracks and police
stations;
• Health and social affairs, with a view to strengthening health service through
the rehabilitation of immunization capacity in the provinces, project to support
the health system in CAR, rehabilitation, construction and equipping of health
institutions, response and strengthening of epidemiological surveillance,
integrated treatment of childhood diseases, project to support vulnerable groups
for community development;
• Education, to support projects relating to the national education sector strategy
and the rehabilitation, construction and equipping of school infrastructure;
• Forestry, hunting and fishing, to build institutional capacity with a view to
reducing emissions resulting from deforestation and forest degradation to
ensure sustainable management, the financing of Eco-fauna Programmes and
the sustainable management of the wildlife and bushmeat sector in Central
Africa.
2.2.3. Domestic Resource Mobilization Efforts
28. Government action rests on the public finance strategy, broken down into annual and
operational action plans. Its implementation benefits from the support of the main technical
and financial partners. Therefore, to improve the performance of revenue services in
mobilizing internal resources, there are plans to, among other things, implement a Tax-
Customs emergency action plan to simplify declaration procedures, secure and trace tax and
customs revenue, reduce exemptions, mobilize more internal resources and broaden the tax
base through a taxpayers’ census. In this context, the African Development Bank provides
multifaceted support through PARCGEF to build the capacity of all economic and financial
authorities and private sector development structures, and improve the business environment.
Similarly, World Bank’s support seen in the deployment of technical assistance to revenue
services (Tax and Customs administrations) to build their capacity is an asset for the
implementation of public finance reforms, the priority actions of which are geared towards
resource mobilization, expenditure control and financial governance. At the tax administration
level, the goal of mobilizing more resources will depend on the deployment of SYSTEMIF
application in all operational directorates along with IT equipment, and restoring regional and
prefectural services in secured zones. The African Development Bank is providing support for
setting up the application.
29. With regard to customs services, the reform will focus mainly on the continuation of
the customs modernization plan carried out with the assistance of the World Customs
Organization (WCO), the establishment of a customs clearance centre at Béloko and the use
of two scanners donated by China, the continuing fight against fraud, the reform of oil taxes
and the strict control of exemptions to increase customs revenue mobilization. The actions
underpinning these measures aim to control the supply and customs clearance chain while
ensuring the security of the main corridors, especially the Bangui-Béloko corridor.
International forces in the country will assist by ensuring the deployment of customs officers
- 8 -
to the different posts. There will also be a series of sensitization sessions for operators
following the resumption of custom service activities. Action will be taken to improve the
transit by lightening the customs clearance system through the operationalization of the
Béloko platform and the establishment of partnerships with credible operators. A large-scale
operation will focus on the combat against fraud especially in regions that have become oil
product smuggling centres. Lastly, to mitigate fiduciary risks, adequate measures such as the
re-opening of banking establishments in the provinces, the provision of receipt booklets to
customs services and periodic controls will be applied. Consequently, and in agreement with
the technical and financial partners, the National Directorate of Customs Investigations will
be strengthened with human and material resources to enable it to produce the expected
results.
2.3 Other Government Efforts
30. The recent crisis has aggravated the fragile nature of the Central African Republic’s
judicial system by placing all citizens in a situation of judicial insecurity. The absence of
judicial administration in the different towns of the interior places the population and business
operators in a situation of judicial insecurity and non-assistance.
31. To gain the confidence of operators, improve the business environment and promote
private investment, the Government will implement measures and actions to speed up
improvement of the business environment in order to restore the confidence of the private
sector and attract foreign direct investment. It will: (i) strengthen the judicial governance
framework; (ii) carry out a joint assessment of the damage suffered by private enterprises; (iii)
prepare measures to assist firms that have suffered damage; (iv) operationalize the newly
created Joint Consultation Committee for the Improvement of Business (CMCAA), which
replaces the Permanent State-Private Sector Consultation Framework; (v) finalize the revision
of the Investment Charter; (vi) build the capacity of Chambers of Commerce (CCIMA,
CAAEEFPCT); (vii) strengthen the overall business environment; (viii) lower the cost of
credit and improve access to financing; and (ix) strengthen the private sector promotion and
support mechanism.
32. Following the institutional change of 24 March 2013, the Central African Republic
was temporarily suspended from the Kimberley Process (KP) and the Extractive Industries
Transparency Initiative (EITI) on 23 May 2013. Diamond production fell sharply to 44,000
carats (approximately CFAF 4.6 billion) in 2013 compared to 366,000 carats (about CFAF 33
billion) in 2012 and 302,000 carats (about CFAF 25.8 billion) in 2010. The Government’s
reaction was to meet the KP Working Group on Monitoring during a mission, following
which it was tasked with implementing a series of measures aimed at streamlining the
diamond sub-sector circuit and rationalizing the security environment with a view to lifting
the suspension. These measures concern: (i) the promulgation of new text on the restructuring
and reorganization of SPPK, taking into account the tripartite participation of the public
sector, private sector and civil society as well as the strengthening of its decentralized
structure established in all the diamond production areas; (ii) the establishment of a diamond
sub-sector support mechanism capable of providing technical and financial assistance to
control and monitor production with the participation of central government, private mining
operators and technical and financial partners, with a view to ensuring the security of
production as required under the KP; (iii) the introduction of specific taxation for activities
relating to the production, collection and export of artisanal gold; (iv) the harmonization of
the local gold trade with that of neighbouring countries; (v) the rapid deployment to the
hinterland of both national and international security forces to secure mining activities; (vi)
stepping up the combat against fraud by the redeployment of the mining police (USAF) in the
- 9 -
mining and border areas; (vii) preparation of taxation on mineral substances; and (viii)
provision of adequate equipment.
33. The forest sector, which contributes an annual average of almost 10% to GDP and
accounts for almost 50% of CAR’s export earnings, remains the country’s biggest employer
i.e. over 4,000 direct and 6,000 indirect jobs prior to the recent crisis. The brutal repercussions
of the military/political crises exacerbated by the persisting insecurity connected to the change
in constitutional order of 24 March 2013 have ruined all the sector’s assets: (i) pillaging of
production tools and the sector’s economic fabric have created a sharp increase in forestry tax
arrears; (ii) the risk of non-compliance with the implementation schedule of the Voluntary
Partnership Agreement, in particular, the VPA/FLEGT with the European Union due to lack
of adequate resources for forest governance; (iii) the scarcity of financing for the procurement
of more modern wood processing tools to create more value-added; (iv) a non-conducive
business environment; and (v) weak human, institutional and technical capacity. The
Government intends to mobilize the necessary support to accelerate implementation of the
Voluntary Partnership Agreement (VPA) signed with the European Union within the
framework of the FLEGT process. It will ensure the implementation of the different measures
and actions planned, in particular: (i) implementation of priority activities under the
operational action plan of the wood marketing and wood sub-sector development study; (ii)
building the operational capacity of the Wood Sector Economic Observatory in CAR with
regard to the revision of market and FOT values; (iii) establishment of an optimal
management mechanism for the Special Allocation Account for Forestry Development; and
(iv) implementation of a recovery mechanism for all unpaid forest taxes.
- 10 -
III. PRESENTATION OF GOVERNMENT’S PROGRAMME
34. The Government has prepared an Emergency Sustainable Recovery Programme
(2014 – 2016 PURD) whose Vision 2016 is based on its will to fulfil the commitments made
before ECCAS Heads of State. Its determination to create the conditions for the restoration of
peace, security and constitutional order and good governance is clear. Implementation of the
strategies defined in PURD will allow CAR to be on track to achieve the MDGs after 2015.
These strategies are focused on four (04) interdependent strategic thrusts. The first three (3)
will enable the Government to meet the priorities of the Roadmap assigned by ECCAS.
Government relies on the last to lay the foundations for the stabilization of the
macroeconomic framework, especially the restructuring of public finances, and to kick start
the country’s recovery to place it on the path of real development. This intervention strategy
combines humanitarian assistance and early recovery actions by rebuilding the capacity of
national institutions and communities to recover from a crisis. It is necessary for the
Government to lay the foundations for sustainable recovery and development. The PURD
strategy is designed as an instrument to enhance the effectiveness of the relationship between
humanitarian and development work during the transition. Its four strategic thrusts are:
(1) Restoration of Security, Peace and Strengthening of Governance and the Rule
of Law
35. Through this first area of concentration, the Government intends to implement rapid
measures and actions with the support of the international community to stabilize security. It
will be necessary to take effective action concerning the disarmament, demobilization,
reintegration and repatriation (DDRR) of ex-combatants of the Séléka movement and the new
Anti-Balaka militia. Implementation of the strategy to reform the security sector will
contribute to the restoration and re-establishment of the Defence and Security Forces. The
strategy concerning governance and the rule of law will enable the Government to conduct the
electoral process to restore regular republican institutions in the country.
(2) Strengthening of Civil Protection, Re-establishment and Reorganization of the
Administration Nationwide
36. This Pillar is the second focal area and is entirely dedicated to general humanitarian
assistance. To improve coordination of humanitarian assistance, the Government intends to
implement all possible measures that will foster the rapid return of internally displaced
persons and refugees. Therefore, the focus will be on access to basic social services
(education, health, water and sanitation). Along with MISCA backed by the ‘SANGARIS’
forces of the French mission, the Government is determined to implement all actions aimed at
contributing to extensive protection for civilians and promoting human and humanitarian
rights. Implementation of the measures and actions relating to administrative governance and
public services will enable the Government to restore and reorganize the Administration
throughout the country.
(3) Revival of Activities in the Key Social Sectors, Intensification of HIV/AIDS
Control and Environmental Protection
37. Through this strategic thrust, the Government will pursue the main actions embarked
upon in the area of human capital and initiate the implementation of reforms concerning: (i)
rehabilitation of education; (ii) revitalization of the health system; (iii) intensification of
HIV/AIDS control; (iv) youth involvement; (v) water and sanitation; (vi) gender promotion;
(vii) employment and social protection; and (viii) environment and climate change.
- 11 -
(4) Strategic Thrust 4: Pursuit of Economic and Financial Reforms, and Promotion
of Robust and Sustainable Growth
38. The success of all Government action will depend on improvement of the country’s
economic and financial performance. Thus, this thrust concerns all the main areas for action
that will enable the Government to leverage external resources with the assistance of the
International Contact Group and initiate actions for the country’s recovery. These main areas
for action concern: (i) economic assistance; (ii) improvement of the business climate; (iii)
promotion of growth; (iv) promotion of growth support infrastructure; (v) pursuit of global
public finance reforms; and (vi) strengthening of regional economic integration.
39. The Transition Roadmap prepared pursuant to Article 43 of the Constitutional
Charter is not only aligned on the four PURD strategic thrusts but has also contributed to the
identification of the main areas of action that represent the Transitional Government’s top
priorities, focused on the following four pillars:
1. Restoration of security and consolidation of peace;
2. Humanitarian assistance;
3. Policy and governance; and
4. Economic recovery
40. The Action Matrices track the investments that will enhance the visibility of actions
that will contribute to the achievement of these objectives. They are based on the priority
strategic thrusts retained for PURD and are placed in a multi-year perspective.
IV PROGRAMME IMPLEMENTATION INSTITUTIONAL FRAMEWORK
41. The existing structures which have been effective previously in programme
management will be tasked with PURD’s implementation, monitoring and evaluation. These
include the Reforms Monitoring Unit (CS-REF) and the PRSP National Technical Secretariat.
They are under the umbrella of an international steering committee composed of ministers
involved in the programme’s implementation.
42. The Public Finance Reform Steering Committee (CPR) is central to the institutional
mechanism for public finance reform. It is the policy organ for strategic directions, arbitration
and monitoring of the public finance reform strategy. The Steering Committee is chaired by
the Minister of Finance or his/her representative. It comprises officials from the action plan
implementation structures (Ministry of Finance and Budget, National Assembly Finance
Commission, Court of Auditors, the State Inspectorate General, Public Procurement
Regulatory Authority), a representative of civil society and representatives of the technical
and financial partners.
43. Regarding programmes and projects, the Government has an institutional mechanism
comprising the following bodies: (i) The National Strategic Council (CNS) chaired by the
Prime Minister; (ii) the National Technical Committee (CNT) chaired by the Minister of
Planning and International Cooperation; (iii) the PRSP National Technical Secretariat (STN);
(iv) the PRSP Thematic Groups (TG); the Ministerial Technical Committees (CTM); and (v)
the Regional Committees (RC). Emphasis will be placed on the ongoing decentralization of
the implementation and monitoring/evaluation mechanism in order to involve all the
Ministries in programme management. Since PURD will be implemented in a context marked
by a clearly defined transitional period, the Government will establish a Monitoring
- 12 -
Committee to oversee the implementation indicators defined for each programme, project and
activity under PURD and informed by the institutional mechanism. This Committee will be
chaired by the Prime Minister, with membership drawn from members of government and
representatives of the stakeholders involved (development partners, grassroots communities,
civil society and religious faiths).
V. CONCLUSION
44. With these two documents (PURD and the Roadmap), the Government has advocacy
instruments for mobilizing resources required to implement them. The Government
undertakes, through the programme timeframes, to adhere to the transitional period and
provide the new post-2015 election authorities with a rolling programme.
45. The main focal areas of Government’s priorities are marked by the will to restore
security, provide social protection and implement the DDR in order to reassure the
population, rebuild a credible army, improve public finance performance and put the
Administration back to work.
46. To achieve these objectives, Government needs to mobilize significant domestic and
external resources. Weak mobilization of domestic resources during the periods of crisis
compels the Government to count on the support of its bilateral and multilateral partners.
Also, given the economy’s structural weakness, Government will endeavour to demonstrate to
its partners its strong resolve to improve the efficiency of its financial services, improve
revenue levels and public finance management, and mitigate the fiduciary risks to which the
different external financing operations might be exposed.
47. The performance of different government actions will be measured by an
improvement in the mobilization of domestic resources, public finance management on both
the budget and accounting fronts, as well as the State budget execution control and
monitoring. Control of public expenditure and increased domestic revenue will be necessary
to ensure the revitalization of socio-economic activities.
(Signed) Florence LIMBIO,
Minister of Economy, Planning and International Cooperation
in charge of Development Poles
- 13 -
ANNEX 2
Conditions of Use of Crisis Response Budget Support
Conditions Assessment of the Fulfilment of Conditions
Government
commitment to
reduce poverty
In 2013, the Transitional Government of National Unity adopted a Roadmap and
Emergency Programme, which present the priorities for the 2014-2015 transitional period.
The Roadmap and Emergency Programme were prepared in a participatory manner. The
donor community undertook to support the Government in implementing these priorities,
especially during the meeting organized by the United Nations and the European Union in
Brussels on 20 January 2014.
Macro-
economic
stability
The macro-economic situation deteriorated considerably in 2013 with a 36.7% contraction
of GDP, but improved slightly in 2014. The GDP growth rate stabilized at 1% with the
gradual improvement of security conditions in Bangui and a number of other localities in
the country. According to IMF projections, growth will accelerate in 2015 at a rate of 5.5%
thanks to the return of displaced persons in production zones and the partial lifting of the
embargo on CAR diamonds. However, the public finance situation remains fragile, since
the country lacks capacity to pay civil servants’ salaries with its own resources. In March
2015, the IMF granted a USD 7.63 million aid under the Rapid Credit Facility (RCF).
Several other TFPs, including the European Union, the World Bank, France and the Bank
announced support operations for the Government to help stabilize the macro-economic
framework.
Fiduciary risk
assessment
The military events that occurred in CAR in February 2013 caused a profound
disorganization of the public finance management (GFP) system. PEFA 2010 was the last
assessment of the GFP system. During PUASCRE 1 appraisal, the Bank conducted a
fiduciary risk assessment of the PFM system in CAR in February 2014 pursuant to the
Fiduciary Risk Management Framework for Reform Support Operations (RSO). Through
this exercise, short-term fiduciary risk mitigation measures were adopted in consultation
with the other Technical and Financial Partners (TFPs). Some of these measures have been
partially implemented today, especially: (i) operationalization of the cash-flow committee
and the public finance management monitoring committee enlarged to TFPs; (ii)
operationalization of the Central Accounting Agency of the Treasury (ACCT) to centralize
the accounts as well as update and keep State accounts; (iii) relaunching of the integrated
public finance management system (GESCO); and (iv) fine-tuning of the public service
database with the technical and financial support of UNDP and the World Bank. The level
of fiduciary risk remains significant in particular due to the current political and social
context of CAR. Pending the stabilization of this situation which is the condition for
carrying through reforms of the GFP system advocated before the political crisis, all the
above measures must be continued and consolidated under PUASCRE 2. Furthermore,
uncompleted measures must be implemented before the disbursement of PUASCRE 2.
These include especially the appointment of the Treasury’s central accounting officer and
the audit of the PUASCRE-1 financial flows.
Political
stability
CAR experiences a relatively stable political situation since the outbreak of the
military/political crisis in March 2013. However, the situation evolves progressively
towards an exit to the crisis. A dialogue forum held in Bangui in early May 2015 enabled
the parties to agree on actions with corresponding schedules for the organization of general
elections and the return to constitutional order by the end of 2015.
Harmonization The improvement of the security situation in Bangui allowed several TFPs to return to the
country. Unlike last year (2014) when some TFP meetings were held in Cameroon, TFP
missions are now held in Bangui. The preparation of various support operations for CAR
also benefited from close donor collaboration during joint missions and the sharing of
documents. Various support operations by TFPs to restore the functioning of the
administration, security and humanitarian assistance are complementary. The main
structural benchmarks for monitoring progress in these sectors are shared by all TFPs.
Annex 5 shows the main donor interventions and the complementarity of operations.
- 14 -
ANNEX 3
Programme Measures Matrix
Measures Responsibility Effectiveness Date
I. Improvement of Public Finance Management and Supply of Basic Social Services
1.1 Improvement of tax revenue
1.1.1 Taxpayers’ census General Directorate of Taxes March 2016
1.1.2 Update and dissemination of the General Tax Code (CGI) General Directorate of Taxes March 2016
1.1.3 Implementation of the public revenue payment voucher General Directorate of the
Treasury
December 2015
1.1.4 Review and broadening of the mandate of the Exemptions
Monitoring Committee to include the consideration of draft
conventions
Ministry of Finance March 2016
1.1.5 Relaunching of the activities of control brigades General Directorate of Customs June 2015
1.1.6 Interconnection of the CAR Customs services with those of
Douala
General Directorate of Customs December 2016
1.2 Improvement of budget implementation
1.2.1 Formulation of a budget commitment plan in line with the
cash-flow plan (condition precedent to presentation of the
programme to the Bank Board)
General Directorate of the
Budget
June 2015
1.2.2 Review of instruments related to the designation of vote holders
and managers
General Directorate of the Budget March 2016
1.2.3 Operationalization of ACCT through the appointment and
effective service of the accounting officer - (condition
precedent to presentation of the programme to the Bank
Board)
Ministry of Finance June 2015
1.3 Improvement of the supply of basic social services (education, health, social affairs)
1.3.1 Design of budget commitment plans in priority sectors Ministry of Education, Health and
Social Affairs June 2015
1.3.2 Increase of budget commitment rates Ministry of Education, Health and
Social Affairs December 2015
1.3.3 Continuation of the deployment of teaching staff and health
workers in the regions
Ministry of Education, Health and
Social Affairs
December 2015
1.3.4 Formulation of an assistance strategy for women and girl victims
of violence
Ministry of Social Affairs December 2016
II. Improvement of Conditions for the Revival of Economic Activities
2.1 Improvement of the business environment and support to SMEs
2.1.1 Simplification of tax and levy payment procedures (drafting of
instrument)
General Directorate of Taxes March 2016
2.1.2 Definition of modalities for processing State arrears/liabilities
for 2012-2014 (drafting of instrument)
Ministry of Finance December 2015
2.1.3 Operationalization of the Joint Consultation Framework for the
Improvement of Business (CMCAA) by establishing the
permanent technical secretariat
Ministry of Trade December 2015
2.1.4 Conduct of a study for the establishment of a National Private
Sector Guarantee and Support Fund
Ministry of Planning; Ministry of
Trade
March 2016
2.1.5 Assessment of losses and damages sustained by enterprises
during the 2013 crisis
Ministry of Planning, Ministry of
Finance, Ministry of Trade,
CMCAA
March 2016
2.1.6 Conduct of a study for the creation of an approved management
centre within the Chamber of Commerce, Industry and Crafts
(CCIMA)
Ministry of Trade; CMCAA June 2016
2.2 Revival of production sectors
2.2.1 Continuation of the implementation of measures with a view to
the total lifting of the country’s suspension from the Kimberley
Process
Ministry of Mines December 2016
2.2.2 Partial settlement of arrears owed cotton producers (CFAF 1.32
billion)
Ministry of Agriculture and
Ministry of Finance
December 2016
- 15 -
ANNEX 4
Consideration of Factors of Fragility
PUASCRE-2 aims to help to reduce fragility through the restoration of the normal functioning of
Government services and the creation of necessary conditions for economic recovery. The last
crisis of 2013 and 2014 was the most deadly in the history of CAR. It led to a cycle of conflicts
that dragged the country into a vicious cycle of fragility, conflict and poverty. This situation
stemmed from a combination of political, economic, social, security and humanitarian factors.
Although PUASCRE 1 contributed to reduce fragility through the deployment of government
services and payment of salaries that helped to significantly quell social tensions, the factors of
fragility identified during its appraisal remain the same. PUASCRE 2 is a continuation of efforts
aimed at the reduction of fragility and economic recovery. ORTS took part in the programme
study right from its first phase (PUASCRE 1). ORTS also led and contributed to several field
missions to identify and analyse CAR’s fragility factors: high-level dialogue mission led by the
ORTS Director in July 2014; multi-sector dialogue and supervision mission in November 2014;
PARCB appraisal mission in March 2015; and mission to participate in the Bangui National
Forum on reconciliation in May 2015. The factors of fragility identified are:
Weak State capacity to discharge its vital functions (general administration, socio-
economic infrastructure, security and justice) and furnish basic social services to
the population (education, health, sanitation, drinking water). The challenges the
country faces with respect to this factor of fragility are: (i) the restoration of
security nationwide; (ii) social cohesion and restoration of the normal functioning
of public services to enable the State address the significant humanitarian needs
and prepare the return to constitutional order; (iii) implementation of the
Disarmament, Demobilization, Re-integration and Repatriation (DDRR) process,
the success of which depends on the integration of ex-combatants in economic
activities; (iv) the regular payment of civil servants’ salaries and restoration of the
infrastructure and equipment of the public administration destroyed during the
violence of 2013 and 2014; (v) the national inclusive political dialogue to explore
avenues for creating the conditions of political stability in the country and prevent
the permanent challenging of the democratically established constitutional order;
and (vi) the reform of the national army and public security forces (Gendarmerie,
Police).
The country’s over-dependence on international aid due to weak mobilization of
internal resources and weak dialogue between the State and the private sector,
which hampers the sector’s involvement in the design of development strategies
and policies, and its contribution to their implementation. These factors entail a
major challenge to economic recovery, and requires dialogue with private sector
stakeholders to use all available means (fiscal, compensations, payment of arrears
based on an agreed schedule, etc.) to incite them to resume activities and
gradually offer employment opportunities to unemployed youths, victims of
manipulation and enrolments by armed militia.
The following table shows how these fragility factors are taken into consideration in PAUSCRE
2:
- 16 -
How PUASCRE-2 Contributes to the Reduction of Fragility
Sources/Factors of Fragility Measures Supported by the Programme and
Helping to Reduce Fragility
Indicators
Weak State capacity to
discharge its vital functions and
provide basic social services to
the population (education,
health, sanitation, drinking
water).
Component I: Support for improvement of
public finance management and delivery of
basic social services
Taxpayers’ census; review and broadening of
the mandate of the Exemptions Monitoring
Committee to include the consideration of
draft conventions which provide for
exemptions;
Update and dissemination of the General Tax
Code (CGI); implementation of the public
revenue payment voucher to facilitate the
tracking and accounting of tax revenue;
Relaunching of the activities of control
brigades; design of a budget commitment
plan in line with the cash-flow plan
(condition precedent to presentation of the
programme to the Bank Board);
Review of instruments related to the
designation of vote holders and managers,
and operationalization of ACCT through the
appointment and assumption of office of the
accounting officer - (condition precedent to
presentation of the programme to the Bank
Board).
Formulation of budget commitment plans in
priority sectors (Education, health, social
affairs); increase in budget commitment rates
in social sectors and continuation of the
deployment of teaching staff and health
workers in the regions.
All these measures aim at contributing to
improving the management of public
finances and the provision of basic social
services with the following expected
outcomes:
The tax pressure ratio increases from
4.5% of GDP in 2014 to 5.7% of
GDP in 2015;
The deployment rate of teachers and
health workers in the regions rises
from 60% in 2014 to 80% in 2015;
The commitment rate of social
expenditure increases from 8% in
2014 to over 50% in 2015.
The country’s over-dependence
on international assistance due
to weak mobilization of internal
resources and weak dialogue
between the State and private
sector, which hampers the
sector’s involvement in the
design of development
strategies and policies, and its
contribution to their
implementation
Component 2: Support for the implementation
of conditions for revival of economic activities
Adoption of new instruments to simplify tax
and duty payment procedures.
Definition of modalities for processing new
State arrears/liabilities for the 2012-2014
period.
Operationalization of the Joint Consultation
Framework for the Improvement of Business
(CMCAA) through the establishment of a
permanent technical secretariat.
Assessment of losses and damages sustained
by businesses during the 2013 crisis.
Conduct of a study for the establishment of a
national private sector guarantee and support
fund.
Continuation of the implementation of
measures aimed at the partial lifting of the
All these measures aim at contributing to
an improvement of conditions for a
revival of economic activities. The
expected outcomes are:
An acceleration of economic growth
from 1.3% in 2014 to 5.7% in 2015.
The reduction by half of the State’s
debt owed cotton farmers.
The partial lifting of CAR’s
temporary suspension from the
Kimberley Process by end-2015.
- 17 -
How PUASCRE-2 Contributes to the Reduction of Fragility
Sources/Factors of Fragility Measures Supported by the Programme and
Helping to Reduce Fragility
Indicators
country’s suspension from the Kimberley
Process in 2015 and continuation of the
settlement of domestic arrears, in particular
those owed cotton producers estimated at
CFAF 1.32 billion.
- 18 -
ANNEX 4
Relations between CAR and the IMF
Press Release No. 15/129
20 March 2015
IMF Executive Board Approves US$ 7.63 Million Disbursement Under the Rapid Credit
Facility for the Central African Republic
On March 18, 2015, the Executive Board of the International Monetary Fund (IMF) approved
financial assistance under the Rapid Credit Facility (RCF)6 in the amount equivalent to SDR 5.57
million (about US$7.63 million) for the Central African Republic (C.A.R.) in support of the
Transitional Authorities’ emergency economic recovery program.
The C.A.R. authorities’ overall fiscal response in 2014 to a very difficult situation was broadly
adequate. With revenue below target, due to several factors, including a stagnant economy, the
authorities rightly tightened non-priority spending to avoid further disruptions to macroeconomic
stability and the creation of additional financing needs. Even though the recovery was held back
by a difficult security environment, the prospects for 2015 remain favorable on condition that
there is a successful and timely completion of the political transition, improved security and
increased support from the international community in revitalizing the country’s economy.
Building upon the success of the policies implemented with the support of the previous RCF
disbursement approved by the IMF Executive Board in May 2014 (See Press Release No.
14/226), the new financial assistance will help the C.A.R. to continue with the implementation of
a set of economic and structural policies and measures aimed at restoring macroeconomic
stability, achieving fiscal consolidation and strengthening the capacity of the C.A.R. government.
The disbursement should act as a catalyst for further financial support and technical assistance
from C.A.R.’s development partners.
The Executive Board’s approval enables the immediate disbursement of the full amount, which
is equivalent to 10 percent of C.A.R.’s quota in the IMF.
At the conclusion of the Executive Board’s discussion, Mr. Mitsuhiro Furusawa, Acting Chair
and Deputy Managing Director issued the following statement:
“The Central African Republic remains in the midst of a crisis that is hindering an economic
recovery and basic government functions. Against this background, the transitional government
in place since August 2014 is stepping up efforts to boost social reconciliation, improve security,
and implement the authorities’ emergency program. In addition to financial support and targeted
technical assistance, international stakeholders are actively working to facilitate the domestic
political dialogue.
“The transitional government is making progress in implementing its economic program
supported by the Fund under the Rapid Credit Facility. The program objectives include
6 The RCF provides rapid financial support in a single, up-front payout for low-income countries facing urgent financing needs. Financial
assistance under the RCF is provided as an outright disbursement to Poverty Reduction and Growth Trust (PRGT)-eligible members that face an urgent balance of payments need, and where a full-fledged economic program is either not necessary or not feasible.
- 19 -
rebuilding government functions, restoring macroeconomic stability, improving governance and
institutions, and clearing domestic payments arrears.
“With the anticipated normalization of the security and political situation, the economic outlook
is favorable. Economic activity is expected to recover and inflation should be brought under
control. The fiscal position will improve as the authorities continue their efforts to strengthen
treasury management, boost revenue collection, implement normal budget procedures, and
enhance coordination with the donor community. A steadfast implementation of the economic
program will help minimize risks to the outlook.
“The Fund will continue to play a key role in coordinating international efforts in the provision
of policy advice, emergency financial support, and technical assistance to accelerate the shift to
policies in support of sustainable and inclusive growth.”
- 20 -
ANNEX 5
Indicators Unit 2000 2009 2010 2011 2012 2013 2014 (e)
National Accounts
GNI at Current Prices Million US $ 946 2 048 2 131 2 174 2 217 1 477 ...
GNI per Capita US$ 260 480 490 490 490 320 ...
GDP at Current Prices Million US $ 960 1 982 1 986 2 196 2 170 1 538 1 711
GDP at 2000 Constant prices Million US $ 960 1 077 1 110 1 146 1 193 763 771
Real GDP Growth Rate % 1,9 1,7 3,0 3,3 4,1 -36,0 1,0
Real per Capita GDP Growth Rate % 0,0 -0,2 1,1 1,3 2,1 -37,3 -1,0
Gross Domestic Investment % GDP 9,5 13,2 14,3 12,2 15,0 8,7 9,5
Public Investment % GDP 4,7 4,9 6,0 4,0 6,2 1,7 1,8
Private Investment % GDP 4,8 8,2 8,2 8,2 8,8 7,0 7,7
Gross National Savings % GDP 8,6 4,0 3,4 3,9 9,9 3,2 -0,6
Prices and Money
Inflation (CPI) % 3,2 3,5 1,5 1,2 5,9 6,6 11,2
Exchange Rate (Annual Average) local currency/US$ 712,0 472,2 495,3 471,9 510,5 494,0 493,9
Monetary Growth (M2) % 2,4 12,2 25,2 7,9 3,3 3,9 2,9
Money and Quasi Money as % of GDP % 16,2 19,5 23,2 23,8 23,0 34,8 32,2
Government Finance
Total Revenue and Grants % GDP 14,3 16,1 17,2 13,3 16,4 8,4 18,8
Total Expenditure and Net Lending % GDP 16,2 16,6 18,6 15,7 16,4 14,7 22,0
Overall Deficit (-) / Surplus (+) % GDP -1,8 -0,6 -1,4 -2,4 0,0 -6,3 -3,2
External Sector
Exports Volume Growth (Goods) % 17,6 -21,9 9,7 7,8 14,9 -49,4 -30,3
Imports Volume Growth (Goods) % -5,2 12,8 8,3 -10,8 16,9 -26,5 69,3
Terms of Trade Growth % -2,9 32,2 -8,0 21,6 -2,9 10,1 18,3
Current Account Balance Million US $ -13 -179 -202 -166 -100 -46 -88
Current Account Balance % GDP -1,4 -9,1 -10,1 -7,6 -4,6 -3,0 -5,2
External Reserves months of imports 6,9 5,9 4,5 3,5 3,7 ... ...
Debt and Financial Flows
Debt Service % exports 18,8 12,4 5,1 3,7 9,0 9,1 11,0
External Debt % GDP 87,0 16,7 20,0 22,1 25,8 38,8 34,7
Net Total Financial Flows Million US $ ... 253 239 307 231 ... ...
Net Official Development Assistance Million US $ ... 242 261 269 227 189 ...
Net Foreign Direct Investment Million US $ 1 42 62 37 71 1 ...
Source : AfDB Statistics Department; IMF: World Economic Outlook, October 2014 and International Financial Statistics, October 2014;
AfDB Statistics Department: Development Data Portal Database, March 2015. United Nations: OECD, Reporting System Division.
Notes: … Data Not Available ( e ) Estimations Last Update: March 2015
Central African RepublicSelected Macroeconomic Indicators
-40,0
-35,0
-30,0
-25,0
-20,0
-15,0
-10,0
-5,0
0,0
5,0
10,0
200
3
200
4
200
5
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
201
4
%
Real GDP Growth Rate, 2003-2014
-4
-2
0
2
4
6
8
10
12
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Inflation (CPI),
2003-2014
-12,0
-10,0
-8,0
-6,0
-4,0
-2,0
0,0
2 003
2 004
2 005
2 006
2 007
2 008
2 009
2 010
2 011
2 012
2 013
2 014
Current Account Balance as % of GDP,
2003-2014
- 21 -
ANNEX 5
Financing the 2015 Budget Deficit
TFP Expected Financing
in 2015
In CFAF
Billion Concentration Areas
European Union EUR 25.0 million 16.4 Elections; public finance management
World Bank EUR 10.0 million 5.5 Payment of civil servants’ salaries
AfDB UA 7.36 million 6.1
Budget aid to support public finance reforms, the
redeployment of government services and economic
recovery
IMF USD 8.1 million 4.5 Rapid Credit Facility
France EUR 12 million 7.9 Budget aid to settle arrears and support public finance
management
UNDP USD 0.8 million 0.4 Payment of salaries of the police forces
Congo –
Brazzaville CFAF 5 billion 5.0 Debt rescheduling
BEAC CFAF 3.9 billion 3.9 Debt rescheduling BDEAC CFAF 0.2 billion 0.2 Debt rescheduling
Total
50
Donor Interventions in CAR (USD Million)
Donor Project General
Support
Sector
Support Scope of Application Remarks
World
Bank
Education project X Construction and rehabilitation of classrooms.
Improvement of study and teaching conditions.
These two operations cover the social sectors
in terms of the rehabilitation of infrastructure and provision of emergency care to the
population. These support operations are
complementary with PUASCRE, which supports the redeployment of teachers and
health workers.
Health project X Emergency health care. Institutional support to the Ministry of Health.
FCP project in public finance
management
X
Improvement of revenue collection and budget
preparation and implementation procedures;
improvement of the presence of the State and government services.
The World Bank granted additional
financing of USD 10 million to help in the
payment of salaries in 2015. Emergency project
for the restoration
of public services
X X
Payment of salaries and technical assistance offered to the Ministry of Finance.
United
Nations
UN Peace-Building
Fund X
Urgent remedial measure aimed at financing
the police and gendarmerie forces.
The UN’s support is complementary with
those of other TFPs and takes into
consideration general administration and the armed forces.
IMF Budget support X
Budget support through the Rapid Credit
Facility; the IMF supports mainly the restoration of orthodox budget practice and
cash-flow management with a view to
ultimately restoring macro-economic sustainability: improve monitoring and cash-
flow management; monitoring and steering of
public resources; normalize the management of public finances; rationalize the payroll database
and improve public service efficiency;
strengthen budgetary procedure and the accounts trail; improve cash-flow management
as well as the centralization and monitoring of
accounts.
Programme measures are also supported by the World Bank, the EU, France and AfDB
(PUASCRE).
France
Budget support/
Technical
assistance
X
X
Budget support of USD 6 million disbursed before June 2014 latest. France’s technical
assistance will strengthen the technical
capacity of the Customs services and the Directorate of Public Accounts.
France’s budget support aims to help the country honour its external commitments to
multilateral lenders. The technical assistance
component concerns public finance management.
- 22 -
EU Budget support and
technical assistance X X
The technical assistance targets public finance
structures.
TA to CS REF; TA for public finance reform
plan.
TA to ACCT; TA to Customs (ASYCUDA, oil sector taxation, surveillance brigade).
The EU is the main contributor to the
financing of general elections in CAR.
AfDB
Budget support /
X
Budget support operation. Support for the
redeployment of the administration,
improvement of tax revenue, public finance management and economic recovery.
Coordination is conducted with the IMF,
WB, EU and France, which also support
structures charged with public finance management. The Bank steps in to supply
equipment and provide experts in various
fields.
Technical
assistance in PFM
and private sector (PARCGEF)
X
Technical assistance to several directorates on
the expenditure chain (Taxes, Customs,
Treasury, Budget, Chambers of Commerce, One-Stop Shop for Business Formalities…).
Source: of Donors/CAR Authorities’ Roundtable
- 23 -
ANNEX 6
Fiduciary Framework-Related Measures in Exceptional Crisis Period
Measures Bank Grant
Trigger
Structur
al
Trigger
Lead Partner
Continue meetings of the cash flow committee. No IMF / AfDB /
WB / France /
EU
Continue meetings of the public finance monitoring and
management committee to improve public resources management
No IMF / AfDB /
WB / France /
UE
Continue the audit of the payroll database with a view to its
rationalization and improve the efficiency of public service
No WB /UNDP
Maintain the functionalities of the GESCO-Budget and GESCO-
Accounts computer applications to strengthen budgetary
procedures and the accounting trail
No France,
AfDB/IMF
Appoint the Treasury’s accounting officer to improve cash-flow
management and accounts centralization and trail
Yes Yes EU,
AfDB/IMF
Audit financial flows No AfDB
- 24 -
ANNEX 7
Bank Portfolio in CAR as at 31 May 2015
Sector Project Name Approval
Date Signature
Effectiveness Date
Net Amounts
(UA Million)
Amounts Disbur-
sed
Ratio Disbur.
(%)*
Closing Date
A. NATIONAL PROJECTS
Agriculture Emergency Food Security Assistance 23-Jan.-14 22-May-14 22-May-14 0.71 0.71 100.00 23-Jan.-14
Sub-Total Agriculture
0.71 0.71 100.00
Social
Community Development and Vulnerable Groups Support Project (PDCAGV)
22-July-09 24-July-09 24-July-09 8.00 2.98 37.19 30-June-16
Sub-Total Social 8.0 3.0 37.2
Multisector
Economic and Financial Management Capacity-Building Support Project (PARCGEF)
31-Jan.-11 25-Feb.-11 25-Feb.-11 4.00 1.5 37.62 31-Dec.-15
Economic and Financial Management Capacity-Building Support Project (PARCGEF)
31-Jan.-11 25-Feb.-11 25-Feb.-11 0.50 0.15 30.76 31-Dec.-15
Emergency Post Crisis and Economic Recovery Support Programme (PUASCRE) (FSF Grant)
25-June-14 2-July-14 2July-14 12.70 12.70 100.00 31-Mar-15
Emergency Post Crisis and Economic Recovery Support Programme (PUASCRE) (ADF Grant)
25-June-14 2-July-14 2-July-14 2.30 2.30 100.00 31-Mar-15
Technical Support for Statistics and PRSP Implementation
1-Nov.-12 31-May-13 31-May-13 1.35 0.70 52.20 19-June-16
Sub-Total Multisector
22,1 17,9 80,8
Water and Sanitation
First Water and Sanitation Sector Sub-Programme for Bangui and Four Prefectures (ADF Loan)
24-Oct.-12 6-Dec.-12 17-May-13 1.04 0.08 7.46 31-Dec.-17
First Water and Sanitation Sector Sub-Programme for Bangui and Four Prefectures (FSF Grant)
24-Oct.-12 6-Dec.-12 6-Dec.-12 4.40 0.00 0.00 31-Dec.-17
Sub-Total Water and Sanitation
5.44 0.08 1.43
SUB-TOTAL NATIONAL PROJECTS 36.26 21.72 59.89%
B. MULTINATIONAL PROJECTS
Energy Project of Electricity Interconnection from the Boali Hydro-Electric Power Grid - Phase I
19-Sept.-12 17-Dec.-12 17-Dec.-12 29.73 0.01 0.05 31-Dec.-17
Sub-Total Energy 29.7 0.01 0.05
Transport
Transport Facilitation Programme in CEMAC Zone (PFTCEMAC)
5-July.-07 29-Feb.-08 29-Feb.-08 27.80 25.07 90.18
31-Dec.-12
Supplementary Grant Programme to Facilitate Transport on the Douala-Bangui/Douala N’Djamena Corridors
2-July-12 9-Aug-12 9-Aug-12 4.20 4.07 96.97 31-Dec.-14
Sub-Total Transport
32.0 29.1 91.1
Environment
Programme to Rehabilitate and Strengthen the Resilience of Lake Chad Basin Systems - CAR
17-Dec.-14 Not Yet Not Yet 2.19 0.00 0.00 0-Jan.-00
Bio-diversity Conservation Programme – CAR Component
22-July.-13 11-Nov.-13 11-Nov.-13 2.5 0.05 1.96
Sub-Total Environ. 2.19 0.0 0.0
SUB-TOTAL MULTINATIONAL PROJECTS 66.42 29.21 43.97%
Total 102.69 50.93 49.59%
- 25 -
ANNEX 8
Map of CAR
This map has been provided by the staff of the African Development Bank exclusively for the use of readers of the
report to which it is attached. The names used and the boundaries shown on the map do not imply on the part of the
Bank Group or/and its Members any judgment on the legal status of any territory or any endorsement or acceptance
of such boundaries.
