Central African Republic - AfDB Group Supports Economic Reform
Tunis, 15 June 2007 – Efforts by the government of the Central African Republic to improve the country’s economic performance and reduce poverty received major support on Friday, 15 June 2007 in Tunis, following the approval of a grant of UA 6.5 million (US$ 9.8 million) by the Board of Directors of the African Development Fund, to finance the country’s 2007-2008 Economic Reform Support Programme (ERSP).
The programme broadens ongoing reforms essentially aiming at improving the living conditions of the people by alleviating poverty in a sustainable way through increased economic growth of 4-5% by 2009 that should raise per capital income by 2% and reduce the inflation rate below the CEMAC (Central Africa Economic and Monetary Union) convergence criterion fixed at an average of 3%. It also aims at achieving a balance surplus of 1 % of GDP, a tax ratio of 10.6% of GDP as well as an increase in investment of about 11.6% in 2007 compared to 10.9 in 2006 following the recovery of activities in the productive sectors.
The four pillars of the programme are: consolidating peace and security; improving governance and building the institutional capacity of the public sector; promoting macroeconomic stability and economic growth and improving the population’s access to basic social services as well as rehabilitating and reconstructing basic infrastructure in the rural and urban areas.
The external financing for the 2007-2008 period is estimated at US$ 315.2 million and will be used to close the current account deficit amounting to US$ 230.4 million (73.1%); debt repayments of US$ 53.7million (17.0%); and the replenishment of reserves to the tune of US$ 31.1 million (9.8%).
The financing identified over the programme period amounts to US$ 301.7 million, covering nearly 95.7% of the amount required and mainly comprising US$ 129.6 million representing official transfers; US$ 68.8 million for exceptional financing; US$ 83.9 million for the financing of programmes/projects (including the ADB financing); and US$ 19.4 million to other financing including private capital. The government is expected to mobilize supplementary resources to finance the gap estimated at US$ 13.5 million.
The ADF grant will be used to support the balance of payments. Other contributors in 2007 include US$26.2 million from the IMF and 7.7 million dollars from the European Union.
The Bank Group’s operations in the Central African Republic commenced in 1972. To date, the institution has committed a total of US$ 198.4 million in 28 Projects.
* UA 1 = US$ 1.51286 as at 15 June 20077
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