By Judith Ugwumadu | 16 May 2014
The Central African Republic is set to receive a $12.9m loan from the International Monetary Fund under a programme intended to tackle the economic crisis in the country.
The loan agreement was approved on May 14 under the IMF’s Rapid Credit Facility, which provides quick financial help for poor countries recovering from economic shocks, natural disasters or humanitarian crisis. The approval enables the immediate disbursement of the full amount, which is equivalent to 15% of CAR’s quota in the IMF.
Following a surge in violence that overwhelmed the country in March, the IMF acknowledged that the new transition government was strongly committed to restoring security, mobilising humanitarian assistance, reviving the economy, and rebuilding democratic institutions, ‘but [faced] daunting challenges’, it said.
Naoyuki Shinohara, deputy managing director and acting chair of the IMF Executive Board, said: ‘Transparent management of public resources including external support, better prioritisation of spending, and improving treasury management will be critical for the success of the programme. Preserving debt sustainability will also be important.’
He said that the IMF would continue to play a key role in coordinating international efforts in the provision of financial support and technical assistance to rebuild key financial functions of the government.
Shinohara continued: ‘With support under the fund’s Rapid Credit Facility, the transition authorities aim to implement macroeconomic policies and structural reforms to restore macroeconomic stability, rebuild basic state functions, improve domestic revenue mobilisation, return to normal budgetary procedures, clear domestic arrears, and ensure regular payments of salaries and pensions to civil servants.’
The board’s approval of the loan will also enable the authorities to engage in discussion with development partners regarding further assistance.
Last month, the World Bank released emergency funds to help CAR restore its public financial management systems.
