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Tunis, 15 October 2008 – The Central African Republic will receive 9.5 million Units of Account (UA*), about US$ 14.79 million grant in support of the country’s economic reform programme approved by the Boards of Directors of the African Development Bank (AfDB) Group.
The balance of payments support program comprises a UA 6.5 million (US$ 10.12 million) African Development Fund (ADF) grant and a UA 3 million (US$4.67 million) AfDB surplus account grant, approved by the Boards on Wednesday in Tunis, to finance the country’s second Economic Reform Support Programme (ERSP II), from 2008-2009 and to contribute to the Bank’s response to the food crisis in CAR.
The ERSP II has two components: (i) Improving public finance management; and (ii) the consolidating public sector economic governance.
The expected outcomes of ERSP II with respect to the improvement of public finance management component are:
The consolidation of public sector economic governance component will involve:
The resources from the AfDB Surplus Account will specifically be used to purchase agricultural inputs such as fertilizers, improved seeds and agricultural tools in order to boost food crop production in CAR.
The ERSP II is an extension of ERSP I, and aims at improving public financial management and enhanced public sector economic governance thereby consolidating growth and poverty reduction.
The reforms are also expected to ease inflationary pressure, improve the mobilization of government resources and help alleviate the country’s debt burden. GDP growth is estimated to increase at a rate of 5% over 2008-2010 while government revenue will move up to 11.7% of GDP in 2009 compared to 10.2% in 2007.
Domestic debt is expected to improve significantly with debt-service- to-exports ratio dropping from 23.1% in 2007 to 16.8% in 2008 and the outstanding debt to GDP ratio from 68.1% in 2007 to 61.7% in 2008.
The ERSP II is in keeping with the 2007-2008 Joint Interim Strategy Note (JISN) of the Bank Group and the World Bank. It is also consistent with the orientations of the Bank’s 2008-2012 Strategic Plan concerning the strengthening of economic and financial governance in Regional Member Countries.
The African Development Bank Group started operations in CAR in 1972. To date, the Group’s cumulative commitment in the country stands at US$ 215 million for 46 operations.
* 1 UA = US$ 1.55722 as at 15/10/2008