Country Report Central African Republic March 2009

Outlook for 2009-10

The political outlook for the Central African Republic (CAR) remains uncertain, although prospects for resolving the country's crisis have been enhanced by the inclusive political dialogue (IPD), which took place in December and resulted in the creation of a new government and preparations for launching the demobilisation process. Although the president, Francois Bozize, will maintain a firm grip on the capital, Bangui, he will need international help to bring stability to the remote border regions, notably from the UN peacekeeping force, MINURCAT, which is due to take over from the EU peacekeeping force, EUFOR, in March, and the regional force, Micopax. The successful implementation of the IMF's poverty reduction and growth facility (PRGF) has led to the full resumption of donor aid, which will be vital for enabling the government to pay public-sector salaries. The resumption of donor support and the ongoing agricultural recovery should drive real GDP growth of 4.8% in 2009 and 5.2% in 2010, while inflationary pressures should subside as result of lower international prices, reducing average inflation to 3.5% in 2009 and 5.3% in 2010.

The political scene

The inclusive political dialogue (IDP) took place in Bangui from December 8th to 20th, resulting in a political roadmap and the creation of committees to oversee the political and demobilisation processes. The prime minister, Faustin Archange Touadera, has been reappointed at the head of a new government of national unity, although its most senior figures remain close allies of the president. The UN Security Council has voted to bolster MINURCAT and to extend its mandate to March 2010.

Economic policy

The IMF executive board has completed its third PRGF review, noting progress with improving revenue collection and expenditure management in 2008, despite strong exogenous shocks. The focus of policy in 2009 will be to preserve fiscal discipline and strengthen government finances in order to finance ongoing expansion in priority-sector spending.

The domestic economy

The World Bank has approved an US$8m loan to fund an emergency power project, which will rehabilitate the country's two hydroelectric power stations in Boali and improve the financial and operational performance of the sector.

Foreign trade and payments

According to data from the IMF, the CAR's foreign-exchange reserves fluctuated sharply throughout 2008, rising from US$109.7m in May to a peak of US$162.6m in July, before falling back to US$105.3m in November.

This report covers the following industry codes:
SIC Code: 60;20
NAICS Code: 52;311