(Ecofin Agency) - The country, which was already affected by the coronavirus pandemic, had to cope without aid from some donors. According to the IMF, with international prices still on the rise, its economic outlook is deteriorating.
In the Central African Republic, the 2023 economic outlook has worsened due to the Covid-19 crisis and soaring international prices, which led to accelerating inflation, the IMF indicates in a press release dated January 26, 2023.
According to the institution, 2022, which was supposed to mark CAR's post-Covid economic recovery, was shaken by fuel shortages and soaring food prices, following the war in Ukraine, leading to a "record double-digit inflation - the highest in the Central African Economic and Monetary Community (CEMAC)." "As a result, forecasts for growth prospects have been revised downward and near-stagnation is now expected in 2022, given the generalized increase in production and import costs due to the country’s landlocked situation and the decline in domestic demand caused by the slowdown in public spending," the IMF wrote.
The forecast comes at a time when the country has very "little room to maneuver" with some partners suspending budget assistance amid acute food insecurity, which will rise to 49% this year up from 44% in 2022 (according to the World Food Program).
Last May, Central African authorities announced budget cuts to alleviate the cash flow situation, which was deemed "very worrisome" following the non-disbursement of some external budgetary support after the World Bank, the IMF, and several other foreign partners conditioned their aid to greater transparency, particularly in the country's security spendings.
Despite these challenging economic conditions, the efforts made by the government have had a positive impact, according to the IMF. "The authorities’ prudent implementation of current expenditures and the under-execution of the investment budget helped partially offset the underperformance of public revenues and contain the increase in the public deficit," it indicates.
For 2023, the Fund calls on the authorities to "intensify the dialogue with the international community to secure concessional financing in 2023 and beyond, meet external financing needs and ensure public debt sustainability." The intensified dialogue, coupled with "efforts to strengthen the management and transparency of public finance and improve governance, as well as fuel market reforms, could support a recovery in 2023," it adds.
Moutiou Adjibi Nourou