Overview

After a gradual economic recovery in 2004 once political peace returned, the country experienced internal and external shocks that disrupted prospects for growth. Real gross domestic product (GDP) advanced by an estimated 2% in 2009.

Despite the shocks, which also increased inflation and eroded the current account, the Central African Republic (CAR) maintained steady macroeconomic management. The 2007-09 poverty reduction and growth facility (PRGF) agreed with the International Monetary Fund (IMF) produced satisfactory results and helped lay the basis for gradual medium-term economic recovery, which appeared to be starting in 2010. GDP growth should improve to 3.4% in 2010 and 4% in 2011. Inflation fell to 3.8% in 2009 (from 9.3% in 2008) and should be about 2.6% in 2010 and 2.3% in 2011. The current account deficit began to ease a little in 2009, to 9.2% of GDP (from 10% in 2008), but a return to pre-crisis figures will take time.

 

 

 

Figure 1: Real GDP growth and per capita GDP (USD/PPP at current prices)

The government made significant public sector reforms, especially in public finance management. It continued its budget policy of raising domestic revenue, curbing expenditure, clearing debt arrears and strengthening confidence in public finance management. The tax burden, 7.7% in 2009, was still well below the 12.9% target set in the government’s 2008-10 poverty reduction strategy paper (PRSP). The main obstacles to raising more revenue are the weak and complicated tax system, which is poorly run with inadequate inspections and collection. The government and its development partners drafted an overall public finance reform programme in 2009 with a priority of collecting more revenue. The IMF-backed tax reform will be a key structural aspect of the sixth PRGF review in 2010.

The country’s long-term development will depend on how the structural obstacles of poor institutional capacity, infrastructure, public security and business climate are tackled. The government should encourage the private sector and spend more on modernising economic infrastructure, especially concerning energy supply.

Table 1: Macroeconomic indicators

 2008200920102011
Real GDP growth2.82.03.44.0
CPI inflation9.33.82.62.3
Budget balance % GDP-0.40.10.50.0
Current account % GDP-10.0-9.2-9.1-9.4

Recent Economic Developments and Prospects

Figure 2: GDP by sector, 2008 (percentage)

The modest slowdown in the primary sector in favour of the tertiary (services) sector in recent years continued in 2009, but raw materials were still more than half (50.2%) of GDP in 2009 and comprised food crops (28.3% of GDP) and livestock (12.7%). The tertiary sector (31.7% of GDP) was mainly trade (12.2% of GDP) while the secondary sector (12.3%) was based on manufacturing and construction.

The 2% overall growth in 2009 was largely due to higher food crop production and robust construction and commercial services (mostly trade and telecommunications). These three sub-sectors accounted for 2.5 percentage points of GDP growth. Export crops (coffee and cotton) did very well (up 13.5%) but their contribution to growth was small because they contributed little to GDP. But a 33.3% slump in the timber sector and in mining (down 24.9%) caused a -2.1 points contribution to growth, even though they accounted for less than 5% of GDP. A 3% decline in manufacturing also had a negative effect on growth.

The 2009/10 harvest produced 1 124 600 tonnes of food crops (3% up on 2008/09) and a further increase (2.5%) is expected in 2010/11. Main crops are the staple of manioc (55.1% of the total in 2009/10), peanuts (15.1%) and maize (13.4%). Livestock rose from 14 638 000 animals in 2008 to 15 024 800 in 2009 and is expected to reach 15 602 000 in 2010 (up 3.8%). These better all-round results in 2009 were due to good rainfall, return of security in some production areas and adequate supply of seeds and other intrants for farmers. The 2009/10 harvest also benefited from resumption of aid from the International Fund for Agricultural Development (IFAD) and support from the African Development Bank (AfDB) and the World Bank, which supplied seeds and intrants to ease the food crisis.

The two main export crops, cotton and coffee, also did well, with higher volume output and exports, stable prices to growers but lower export prices. Cottonseed production was up 20% in the 2008/09 harvest while the price to farmers stayed at 152 CFA francs BEAC (XAF) a kilo. Cotton fibre exports rose 28.4% by volume in 2009 while the export price fell 10.8%, resulting in a 14.5% increase in value. Cotton fibre exports should rise 45.2% in value in 2010 owing to much greater volume (+47.5%) despite a slight (1.6%) fall in the export price.

The country’s agricultural potential is underused because of poor rural transport, marketing infrastructure and organisational capacity. The AfDB approved funding in December 2009 for infrastructure work that could open up isolated production areas and improve marketing.

Forestry and mining have suffered from the crisis in the world timber and diamond markets since 2008. Log production dropped 30% and sawn wood and plywood output by 26%, despite tax-breaks to soften the crisis for timber firms, the start of two new felling operations and application of the new forestry law. Diamond output was also lower, partly because of suspension of Gem Diamond, which had been due to start mining in 2009, and government closure of 8 of the 11 diamond-buying offices and other operators.

Construction’s share in growth increased in 2009, though less than expected because of the fall in public and private investment, including postponement of the building of a plant by the French nuclear group Areva and work on the Bouar-Garoua-Boulai road, which should now start in 2010. Manufacturing was down in 2009 and slightly weighed on GDP growth while the energy sector boosted it. Medium-term prospects are better, with China funding expansion of production and distribution capacity of the power company Enerca in 2010 and 2011.

The main sources of tertiary sector growth are trade, telecommunications and non-commercial services. Their strength is partly due to growing domestic demand, especially private consumption, helped by more money in circulation due to payment of government salary arrears and more hiring in the priority sectors of education, health care and security.

Domestic consumption’s contribution to growth declined because of the effect of the world economic crisis on rural household income, especial in mining and forestry areas. It was offset by urban household contributions to private consumption due to more wages in circulation and income from trade and commercial services. Overall investment rose to 10.9% of GDP in 2009 (from 9.8% in 2008) but gross investment contributed less to GDP growth owing to a slower increase in private investment because of delays in major mining investments by Areva, Aurafrique and Gem Diamond. Public investment’s contribution to growth was slightly up, with higher capital spending in the budget and more foreign funding, notably for the emergency project to upgrade infrastructure and urban services, improvements at Galabadja, the emergency energy project and renovation of the Hôpital de l’Amitié. Net external demand pulled down real GDP growth by 2.7 percentage points in 2009 because of a 1.8 point drop in the contribution of goods and services exports.

Table 2: Demand composition

 20012008200920102011
Gross capital formation10.211.61.60.50.5
Gross capital formation - Public3.84.51.10.40.3
Gross capital formation - Private6.57.10.50.10.2
Consumption95.298.73.12.32.9
Consumption - Public14.07.80.6-0.10.5
Consumption - Private81.290.92.52.42.4
Solde extérieur-5.4-10.3-2.70.60.6
External sector - Exports17.211.5-1.81.21.3
External sector - Imports-22.6-21.9-0.9-0.7-0.6
Real GDP growth rate--2.03.44.0

Macroeconomic Policy

Despite the economic crisis, the country maintained steady macroeconomic management and obtained satisfactory results from the reform programme backed by the IMF-sponsored PRGF for 2007-09. This overall policy also laid the foundation for a gradual medium-term recovery. The fourth and fifth IMF reviews of the PRGF results in June and December 2009 were positive and the programme was extended to 30 June 2010 with added funding of 38.7 million dollars (USD). When it is complete, the Fund plans to sign another programme under its Extended Fund Facility.

Fiscal Policy

Because of the economic crisis, budget priorities in 2009 were (i) to increase domestic revenue; (ii) boost government credibility by paying for all domestic commitments and settling domestic arrears under arrangements made in December 2008; (iii) continuing the pace of public finance structural reform; and (iv) stimulating the economy with public investment and tax measures to soften effects of the crisis in the worst-hit sectors (timber and diamonds), all within a cautious budget policy.

Budget execution was generally satisfactory, with more domestic revenue collected, spending better controlled, a sizeable part of domestic arrears settled and borrowing from commercial banks reduced. Tax reform also made progress, despite delays.

Total government revenue (including grants but excluding debt relief after the Heavily Indebted Poor Countries [HIPC] Initiative completion point) was an estimated 14.9% of GDP in 2009. Tax revenue – 7.7% of GDP (7.9% in 2008) – rose because of higher tax on goods and services and higher income tax, along with a good performance by the central tax authorities (DGI), whose awareness campaign among taxpayers produced results. This was offset by tax breaks granted to the timber industry, including a 30% lowering of the market-value tax base for exports and granting of more time to pay tax on 2009 rental income from sub-letting of forestry concessions.

Government spending was 14.8% of GDP in 2009 (down from 15.5% in 2008) because of limiting current outlays through keeping wages and salaries at about 4% of GDP and deferring some spending related to the political peace process. Investment spending was slightly up, though less than projected because of delayed release of foreign funding. The primary surplus was 0.8% of GDP.

The country qualified for full HIPC Initiative aid and for relief under the Multilateral Debt Relief Initiative (MDRI) when it reached the completion point of the Enhanced HIPC Initiative on 30 June 2009. External public debt servicing only posed a modest risk to the country in 2009. The government also complied with the first-rank convergence criteria of the Central African Economic and Monetary Community (CEMAC) concerning level of debt and accumulation of external and domestic payment arrears. However the external public debt could be affected in the long term by even a modest increase in external borrowing. A rise in external soft loans amounting to 2% of GDP a year could push the debt/GDP ratio above sustainability level. The government began settling domestic debt arrears in 2009 under a plan approved in 2008 and XAF 13.251 billion of an earmarked XAF 15 billion was included in the 2009 budget, later reduced to XAF 10 billion in the supplementary budget. Salary arrears dating back to 2003 were reduced to three months in September 2009 and should be cleared completely in 2010. The government also significantly reduced its borrowing from commercial banks and consolidated existing loans so as to reduce interest payments.

The 2009 budget (basic commitments, excluding grants) had a deficit of 4.6% of GDP, much better than expected and smaller than the 2008 deficit. Needed government funding was about XAF 435.8 billion, taking account of external debt depreciation, reimbursement of debts to banks and of non-bank loans, and reduction of domestic and external arrears. This was supplied by external funds, especially the money released by the external debt relief triggered by reaching the HIPC Initiative completion point and grants from leading development partners. The AfDB provided balance of payments support of 9.5 million units of account (UA) at the end of 2008, the World Bank granted budget support of USD 5 million in March 2009, the European Union (EU) provided 5.5 million euros (EUR), France EUR 2 million and the IMF released funds after the fourth successful review of the PRGF.

The increase in revenue is a key medium-term factor in maintaining budget discipline and viability of public finances. The goal of the 2010 budget is to continue reforms to raise more revenue, encourage domestic demand and pay for the cost of strengthening political peace (demobilisation, reintegration and presidential and parliamentary elections). Budget revenue should stabilise at 10.2% of GDP and spending at 14.8%. The domestic primary surplus should rise from 0.8% of GDP in 2009 to 1.1% in 2010.

Table 3: Public finances

 2001200620072008200920102011
Total revenue and grants12.822.914.415.114.915.314.6
Tax revenue7.67.97.37.97.77.87.7
Grants3.513.44.14.74.75.14.4
Total expenditure and net lending (a)13.713.913.115.514.814.814.6
Current expenditure8.99.09.511.09.59.39.1
Excluding interest7.58.18.09.18.88.88.6
Wages and salaries4.34.84.54.14.04.03.9
Goods and services2.12.01.82.52.32.32.3
Interest1.40.91.41.90.60.60.5
Capital expenditure4.84.93.64.55.35.55.5
Primary balance0.59.92.71.50.81.10.5
Overall balance-0.99.01.3-0.40.10.50.0

Monetary Policy

After a big increase (to 9.3%) in 2008, inflation was down to 3.8% in 2009, owing to lower oil prices, only a modest rise in food prices and by slight appreciation of the US dollar to the euro (to which the CFA Franc BEAC is pegged). Inflation should continue falling, to 2.6% in 2010 and 2.3% in 2011, if oil and food prices settle down as expected.

The country is a member of CEMAC and its real exchange rate is considered generally in tune with the basic elements of the economy, so concern about its external competitiveness are due more to the poor business climate than the real exchange rate. The Bank of Central African States (BEAC) continued its policy (begun in 2008) of easing borrowing rules to encourage economic recovery in BEAC member states. The bank also twice lowered its intervention rate (adding liquidity to the money market) by 25 base points, in March and July 2009, bringing it down to 4.25%. The bank seems more worried in this period of crisis by economic revival than price stability.

External Position

The current account deficit improved slightly to -9.2% of GDP in 2009 (from -10% in 2008) and was expected to be -9.1% in 2010. This was due to better foreign trade and revenue figures, and in 2010 to expected higher revenue and current transfers.

The foreign trade deficit was also slightly down, at -7.3% of GDP (from -7.7%) despite the impact of the crisis on timber and diamond exports, because of lower imports of oil products which more than offset the lower timber and diamond exports. Oil product imports were less, not just because of falling prices but because substantial imported stocks left over from 2008 were drawn on. The revenue deficit shrank 63% in 2009 owing to less interest on the external public debt. The current transfers surplus and the services deficit held steady. The capital and financial operations surplus rose to 10.3% of GDP, mainly owing to increased grants and government transfers and allocation of special drawing rights (SDR). The balance of payments was thus in surplus, at 1.5% of GDP, and official foreign exchange reserves rose from the equivalent of 3.3 months of imports (2008) to 5 months in 2009.

Foreign demand for (and exports of) timber and diamonds should rise in 2010. Imports are also expected to go up because of more oil imports, the government investment programme and government spending on the peace process and elections. The trade deficit should therefore ease a little. The revenue deficit and the current transfers surplus are both expected to improve, while the services deficit should be about the same. The capital and financial operations surplus is projected to shrink with the fall in foreign direct investment (FDI). So the balance of payments is expected to go into deficit and could lead to exchange reserves falling to the equivalent of 4.4 months of imports and a residual financing deficit of XAF 13.5 billion that will have to be covered by raising more funds at home and abroad.

The country participates in regional integration efforts as a member of the Economic Community of Central African States (ECCAS) and CEMAC. Its trade and customs policies complied with regional accords in 2009 and it continued talks, along with CEMAC members, to reach an economic partnership agreement between CEMAC and the EU. But access to foreign markets is still limited because of lingering conflict and poor transport facilities to neighbouring countries.

The CAR reached completion point under the Enhanced HIPC Initiative in June 2009, triggering a reduction of the country’s debt of some USD 578.2 million (in end-2006 net current value) and further relief under the MDRI of about USD 342.79 million in nominal value. This cut the ratio of debt to GDP (net current value) from 43% (end-2008) to 8.3% (end-2009) and the ratio of debt service to budget revenue from 383.5% to 79%. The long-term risk of increased external debt is tied to meagre real GDP growth, an export growth slowdown and less donor funding. So the external sector needs to boost exports by diversifying them, improve the business climate, maintain grant-based funding and improve institutional capacity and policy effectiveness.

Aid co-ordination is provided by the PRSP structure but does not work very well mainly because of lack of government capacity and inadequate co-ordination between the government and its aid partners, and also between the aid partners themselves. To improve co-ordination and orderly priority-based action by partners, the United Nations (UN) office for consolidating peace in the country (BINUCA) has drafted a list of resources and funding needs to maintain peace. The World Bank, the AfDB, the EU and the UN Development Programme (UNDP) are also trying to get aid partners to work together in their budget support projects. An agreement between government and partners to do this was drafted in 2009 along with a list of steps to co-ordinate budget support starting in 2010.

Table 4: Current account

Figure 3: Stock of total external debt (percentage of GDP) and debt service (percentage of exports of goods and services)

Structural Issues

Private Sector Development

The CAR ranks last in the index of 183 countries in the World Bank’s 2010 Doing Business report, reflecting the wide range of obstacles to investment and private sector growth. These include: weak regulation and transparency in business operations; poor management capacity of small and medium-sized businesses (SME) and their problems of market and credit access; significant government debt to private firms; bad communication between government and private firms; and inadequate electricity supply which increases production costs. A one-stop shop for business formalities and a permanent public-private co-operation framework (CPC) have been set up to improve the business climate but they do not work well and government-business relations are still often tense. The Bangui office of the World Bank’s International Finance Corporation (IFC) is working with the government to improve the one-stop shop and the business climate in 2010.

Inadequate financial institutions are a major block to growth of the private sector and financial intermediation is very small. Bank loans are 12.5% of GDP and deposits 8.5%. The bond market planned by CEMAC is not yet in place. To encourage financial sector growth, the government now pays all civil servant salaries directly into banks and will gradually replace cash and cheque payments with bank transfers.

Belonging to the CFA franc zone and prudential monitoring by the Central African Banking Commission (COBAC) helps sector stability. The financial crisis did not directly affect the financial system and the banking sector has remained stable. But the quality of bank portfolios is unsatisfactory, with bad loans representing 30% of all credits and only 52% of them funded. COBAC thus put the Commercial Bank Centrafrique (CBCA) under temporary administration in November 2009 after COBAC inspectors recommended substantial funding for bad loans made in 2008 which were undermining the bank’s prudential ratios.

Access to financial services is very small, with only 1% of the population having a bank account, 0.5% taking out loans and just over 1% using microfinance institutions. The government is the main borrower from commercial banks, which increases sovereign risk exposure and the private sector eviction effect. Loans to the private sector are only 42% of the money supply, well below the sub-Saharan average of 75%. Growth of bank loans is hampered by a weak legal and regulatory structure and the short-term nature of most deposits. Banks impose strict loan conditions and very high interest rates (averaging 15%). Plans to increase private sector credit access and develop the financial sector include: (i) improving the legal and judicial system to guarantee property rights and speeding up commercial dispute resolution and application of guarantees; (ii) boosting bank capital and their funding of bad loans and continuing to reduce government recourse to bank loans; (iii) expanding use of banks to pay taxes and handle government spending; and (iv) adopting a national strategy to encourage microfinance and granting licences to certified public accountants.

Other Recent Developments

The government has made good progress in reforming the public sector, especially public finance management, and has taken major steps to increase transparency and competition through a new system of public procurement with stricter rules to fight corruption. Reform of the civil service has also begun. Budget and accounting reforms have been under way since 2005, chiefly modernising the legal framework of public finances, improving budget management by using new budget nomenclature and reorganising the spending chain, improving budgetary oversight, reorganising and improving government accounting, increasing government revenue and controlling expenditure, and computerising financial departments.

The reforms have made notable but limited progress. The government and its development partners are therefore drafting a public finance reform programme to replace the hitherto fragmented approach with an overall one and co-ordinate foreign aid. The programme will be strengthened by putting the Finance and Budget Ministry in charge of its implementation.

A large majority of people have no access to basic infrastructure. The roads are in a bad state and often impassable during the rainy season, and the Oubangui and Congo rivers are only navigable four months of the year. This helps to raise the cost of transport and price of staple items, which are more expensive than in non-landlocked neighbouring countries. Infrastructure and transport policy is based on linking the country to ports to move its raw material and manufacturing exports and imports, diversifying access routes and improving and linking up centres of development. The main partners in this are the AfDB, the World Bank and the EU, which are funding the 2007 Regional Transport Facilitation Programme involving the CAR, Cameroon and Chad.

The CAR has a chronic shortage of electricity, with only 1% of the population connected to the grid of the state power firm Enerca. The government plans to upgrade the Boali 1 and Boali 2 hydro-electric plants and supply network, increase production by equipping Boali 3 and extending Boali 2, restructure the sector and improve management of Enerca. The upgrading of Boali 1 and 2 and the supply network began in 2008 with funding from the French Development Agency (AFD) and the World Bank. The government signed a funding agreement with China in January 2010 for equipping Boali 3.

Telecommunications and basic information and communication technology (ICT) are very limited, with only 145.74 mobile phone subscribers per 1 000 habitants in 2007, compared with the continental average of 284.35. The country has 2.65 fixed phone lines per 1 000 (African average 31.75) and only 8.18 Internet users per 1 000 (African average 54.22). Phase one of the regional optic fibre project between the CAR, Cameroon and Chad (funded by the World Bank in 2009) should help expand the telecommunications network and establish broadband connections between Bangui and Maédougou (Cameroon), following the line of the oil pipeline from Kribi (Cameroon) to Doba (Chad). The CAR would then be able to link up more cheaply to the intercontinental SAT- 3/WASC undersea cable.

Only 32% of people in urban areas (26% in the countryside) have access to clean water and only 31% to sanitation services, the lowest rates in Africa. Solid-waste collection does not operate. The AfDB approved funding in 2009 for a feasibility study to upgrade such facilities in Bangui, for a clean water and sanitation project (AEPA) in three major towns and their surrounding areas, and for institutional support for water and sanitation. The AfDB and the World Bank co-financed in 2009 the PDCAGV project for community development and support for vulnerable citizens, which will increase basic social services through renovating and equipping clinics and schools and strengthening capacity.

A new forestry law was introduced in October 2008 and a revised mining law in April 2009 to bring management of these important sectors up to international standards. The government wants to comply with the African Forest Law Enforcement and Governance Process (AFLEG) to ensure it can export its timber to EU countries. The government applied in November 2008 to join the Extractive Industries Transparency Initiative (EITI) and issued its first report on compliance in March 2009. Mining is still however affected by events such as the world economic crisis and the government cancelling licences of 8 of the 11 diamond-buying offices and other diamond operators. The sector needs clear and well-established rules if it is to recover. The government is to review the diamond industry in more detail in 2010 to see how competitive its taxation is under the new mining law and how the sector can contribute more to the country’s growth.

The CAR has a diverse ecosystem and copious water sources, but they are mostly unused, with only 12.5% of arable land cultivated. Agricultural growth has stagnated since 1980 and the country is not food self-sufficient even though food crops occupy three-quarters of cultivated land. More than 80% of the rural population is engaged in livestock farming but traditional village rearing of small animals dominates production. Rural areas also lack basic infrastructure and 84% of the 15 000 km or so of rural and agricultural roads are in bad condition. The government’s rural development programme plan (DSDSR) is hampered by lack of funds and institutional capacity. The AfDB financed a 3.5 million Units of Account (UA) rural infrastructure improvement project in 2009 and provided USD 400 000 for surveys, including a food vulnerability study.

Public Resource Mobilisation

Government tax revenue has risen, from 7.1% of GDP in 2005 to 8.6% in 2009 and should be 9.1% in 2011. Non-tax revenue varied greatly but has also increased since 2005. Tax revenue has stabilised at about 60% of total revenue and has risen mainly owing to regular audits of big firms, introduction of numbered taxpayer identification and an integrated system for customs and taxes, cutting subsidies for the oil sector, curbing tax exemptions and strengthening the customs department. Indirect taxes are 77% of tax revenue and 7% of GDP and 30% of them are taxes on foreign trade.

Tax policy comes under the 1962 overall tax law, as amended by annual budgets, laws about taxes such as value added tax (VAT), by CEMAC and ECCAS rules and directives, and by the African Business Law Harmonisation Organisation (OHADA) treaty. The institutional, organisational and regulatory framework of the two tax bodies, the DGID (the main one) and the DGDDI (for customs and indirect taxes), has been changed several times since 2005. Four departments – for big firms, SMEs, tax audits and tax inspection – were set up in the DGID, operational and procedural handbooks were produced, tax rules adopted and a modern declaration-based VAT introduced. The tax base was also enlarged and anti-fraud measures taken, with registration of 6 000 taxpayers and introduction of numbered taxpayer identification (NIF). A computerised tax management system (Systemif) was installed. Many training sessions were held for employees and publicity campaigns were directed at taxpayers.

Customs and indirect taxes were brought in line with CEMAC and World Trade Organization (WTO) directives and the DGDDI set up regional offices. A one-stop shop was opened in 2006 in Douala (Cameroon), the main port for the landlocked CAR’s trade. An inter-ministerial committee on exemptions (CICEFD) was created in 2007. Introduction of the computerised “Sydonia ++” system improved collection and security of customs revenue and linking it with Systemif helped fight evasion and fraud.

Despite some progress, tax collection remains below potential. The tax burden (7.7% in 2009) is still well below the 12.9% target of the 2008-10 PRSP and the CEMAC average of about 15%, because of the complicated tax system, poor supervision and lack of skills, all undermining management, inspection and tax collection.

After consultations in September 2009 under the IMF’s Article IV, the government and the IMF agreed that generating more revenue should be a priority and, with IMF technical support, tax system reforms were drafted, to be completed in March 2010 and be a structural highlight of the sixth PRGF review later in the year. The reforms include enlarging the tax base, making taxation more effective and transparent and improving collection. The government also plans an overall reform of tax policy, with IMF help, before the 2012 budget. The new tax auditing department will develop risk-based methods of detecting fraud, audit areas where the most revenue is likely to be lost and more systematically monitor collection arrears. VAT management and exemptions will continue to be a focus in 2010, with turnover as a basis for determining liability for the tax and changing the rules to further limit exemptions. These measures should increase the ratio of tax revenue to GDP by an annual average of 0.3% over the next few years.

Political Context

Implementation of the recommendations of the peace conference (Assises du Dialogue politique inclusive) began in January 2009 with formation of a new government. CEMAC granted XAF 8 billion the same month to fund disarmament, demobilisation and reintegration (DDR). But violence resumed in February with attacks on Bossembélé and Batangafo, while the rebel Front démocratique du peuple centrafricain (FDPC) and Mouvement des libérateurs centrafricain pour la justice (MLCJ) accused the government of breaking the agreement to pay the disarmed rebels and threatened to resume fighting. The situation improved slightly in May after the adoption by the UN Peacebuilding Commission of the 2009-11 Strategic Framework for Peacebuilding in CAR, focusing on reforming the public security sector, good governance and the rule of law. The government signed an agreement during the African Union summit in July 2009 with the FDPC, which promised to take part in disarmament that had begun in August. A round table on reforming the security sector was held in October.

President François Bozizé’s term of office ends in June 2010. A presidential decree on 25 February announced parliamentary and presidential elections for 25 April. The opposition, the Collectif des forces du changement, called for the decree to be cancelled, saying peace had not yet been restored and an electoral census was needed first. It also challenged the legality of the independent elections commission (CEI) which organises elections.

Social Context and Human Resource Development

The CAR ranks 179th out of 182 countries on the 2009 UN Human Development Index (HDI). In 2003 (the last year of available data), 67.2% of the population lived below the poverty line of adult income of USD 312 a year. The education sector is one of the worst off in central Africa, with some 41% of adults illiterate. A quarter of all children have never attended school and only 31% of those who do complete primary education. These figures are due to lack of investment, destruction or dilapidation of school buildings, shortage and poor qualifications of teachers and lack of educational equipment. On average, there are 111 pupils per teacher, 100 pupils per class and 1 textbook for every 10 pupils. The World Bank catalyst fund for Education for All has contributed USD 38 million for urgent implementation of the government’s strategic education plan.

Life expectancy at birth is estimated as 45.1 years, 10 years less than the continental average. About 86% of the population has no access to health care. The rate of HIV/AIDS, estimated in 2006 as 6.2% of those aged between 15 and 49, is the highest among CEMAC countries. Gender disparity is very high (especially in access to education and literacy) and the CAR ranks 153rd out of 177 countries in the HDI for this. Primary and secondary schools have 65 girls enrolled for 100 boys, and 67 girls are literate for every 100 boys in the 15-24 age group. Few women are involved in management and control of the country’s resources or in politics at local or national level. Only 11% of members of parliament are women and the last government had only 4 women among its 32 ministers.

Table 5: Summary results

 20012002200320042005200620072008200920102011
Real GDP growth (incl.Stk)2.60.4-4.72.82.05.13.82.82.03.44.0
CPI inflation3.82.34.2-2.02.96.61.39.33.82.62.3
GDP (scaled $)683.1685.8653.6671.9685.3720.3747.6768.6783.8810.0841.7
RGDP0.91.01.11.31.31.51.72.02.12.32.5
Exchange rate732.5696.0580.6528.0527.8522.6479.2448.7471.4440.8440.8

Figure 1: Real GDP growth and per capita GDP (USD/PPP at current prices)

Table 1: Macroeconomic indicators

 2008200920102011
Real GDP growth2.82.03.44.0
CPI inflation9.33.82.62.3
Budget balance % GDP-0.40.10.50.0
Current account % GDP-10.0-9.2-9.1-9.4

Figure 2: GDP by sector, 2008 (percentage)

Table 2: Demand composition

 20012008200920102011
Gross capital formation10.211.61.60.50.5
Gross capital formation - Public3.84.51.10.40.3
Gross capital formation - Private6.57.10.50.10.2
Consumption95.298.73.12.32.9
Consumption - Public14.07.80.6-0.10.5
Consumption - Private81.290.92.52.42.4
Solde extérieur-5.4-10.3-2.70.60.6
External sector - Exports17.211.5-1.81.21.3
External sector - Imports-22.6-21.9-0.9-0.7-0.6
Real GDP growth rate--2.03.44.0

Table 3: Public finances

 2001200620072008200920102011
Total revenue and grants12.822.914.415.114.915.314.6
Tax revenue7.67.97.37.97.77.87.7
Grants3.513.44.14.74.75.14.4
Total expenditure and net lending (a)13.713.913.115.514.814.814.6
Current expenditure8.99.09.511.09.59.39.1
Excluding interest7.58.18.09.18.88.88.6
Wages and salaries4.34.84.54.14.04.03.9
Goods and services2.12.01.82.52.32.32.3
Interest1.40.91.41.90.60.60.5
Capital expenditure4.84.93.64.55.35.55.5
Primary balance0.59.92.71.50.81.10.5
Overall balance-0.99.01.3-0.40.10.50.0

Table 4: Current account

Figure 3: Stock of total external debt (percentage of GDP) and debt service (percentage of exports of goods and services)

Table 5: Summary results

 20012002200320042005200620072008200920102011
Real GDP growth (incl.Stk)2.60.4-4.72.82.05.13.82.82.03.44.0
CPI inflation3.82.34.2-2.02.96.61.39.33.82.62.3
GDP (scaled $)683.1685.8653.6671.9685.3720.3747.6768.6783.8810.0841.7
RGDP0.91.01.11.31.31.51.72.02.12.32.5
Exchange rate732.5696.0580.6528.0527.8522.6479.2448.7471.4440.8440.8

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