Country Report Central African Republic

Outlook for 2008-09

The political outlook for the Central African Republic (CAR) remains uncertain, although prospects for resolving the country's crisis have improved following the signature of a ceasefire agreement with the rebel group operating in the north-west of the CAR, Armee populaire pour la restauration de la republique et la democratie (APRD), and its agreement to join the national political dialogue. The outcome of the talks, scheduled to start in June, will be crucial for re-establishing stability and reducing banditry in the northern region. Although the president, Francois Bozize, will maintain a firm grip on the capital, Bangui, he will need international assistance to bring some stability to the remote border regions, notably through the EU peacekeeping force, EUFOR. The IMF's approval of a new poverty reduction and growth facility (PRGF) has led to the resumption of donor aid, which will be vital for the government's survival. The resumption of donor support should assist the economic recovery, driving real GDP growth of 4.6% in 2008 and 4.8% in 2009. However, inflationary pressures will persist and inflation is forecast to average 5.4% in 2008 and 3.8% in 2009.

The political scene

The government and the APRD have signed a ceasefire agreement, bringing the third main rebel group into the peace process. This followed the appointment of Jean-Jacques Demafouth as the new APRD leader, and his announcement that the group will participate in national political dialogue. The committee charged with preparing the groundwork for this process has recommended starting talks by June 8th. In the meantime, violence has continued to affect the remoter regions of the CAR, with rising incidences of banditry and kidnapping.

Economic policy

Following a mission to Bangui, the IMF has expressed broad satisfaction with the government's macroeconomic performance, but has urged greater efforts to keep up with repayments on the country's external debt. A committee has been set up to draw up plans for the definitive settlement of public-sector salary arrears. The authorities have announced increases in fuel prices from June.

The domestic economy

South African mining company, Pan African Resources, has signed a mining convention for the Dekoa gold project. A Qatar-based investment company, IAS International, has announced the launch of a US$750m project to construct a Special Economic Zone on an island in the Oubangui River.

Foreign trade and payments

The EU has announced that the CAR will receive €137m (US$214m) in funding under the tenth European Development Fund, covering the period 2008-12.