The country’s socio-political and institutional situation remains marked by chronic instability inherited from the previous political and military crises (the most recent of which was in 2003), and the disputed elections of 2005, which hampered national reconstruction efforts. However, relative stability has been observed since the signing of a Stability Pact in April 2007 and the appointment of a new government in April 2007. The country's military has, over the years, had a very strong influence on the functioning of the country's political institutions. Legislative elections were held in November 2008 and these are expected to be followed, in 2010, by presidential elections.

Development Policy

With regard to the economic situation, prospects for the economy's recovery have been promising, and this could produce great results if the government stays on track with its reforms, which are necessary for it to derive benefits from a Poverty Reduction Grant Facility (PRGF) and reach the Highly Indebted Poor Countries Initiative (HIPC-I) completion point under good conditions’ which remains an objective for 2010.  In 2008, GDP was expected to rise by 3.3%, driven by agricultural production which itself is rising, but also by investment (a 16% investment rate in 2008 compared with 14% in 2007). The first IMF Post-Conflict Facility Review, conducted from May 8-22, 2008, assessed progress made in public finance, which is a vital factor for operations by other partners and required for expediting budget execution in 2008 and 2009.

Bank Group Strategy

For the Bank Group’s programme, the 2005-2009 Strategy approved on July 6, 2005, aims at supporting:

• efforts at strengthening good governance
• efforts at improving the population's well-being (social services and food security). Under ADF-X, a single project took up the entire allocation, namely the Agricultural and Rural Sector Rehabilitation Project (UA 5.8 million).