CAR - Emergency Post-Crisis and Economic Recovery Support … · 2019-06-29 · April 2014 Currency...
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Translated Document
AFRICAN DEVELOPMENT BANK GROUP
CENTRAL AFRICAN REPUBLIC
EMERGENCY POST-CRISIS AND ECONOMIC RECOVERY SUPPORT PROGRAMME (PUASCRE)
APPRAISAL REPORT
OSGE DEPARTMENT
June 2014
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TABLE OF CONTENTS
I. PROPOSAL ........................................................................................................................... 1
II. COUNTRY AND PROGRAMME CONTEXT .................................................................... 2
2.1 Recent Political, Economic and Social Developments .......................................................... 2
2.2 Government’s Strategy and Priorities .................................................................................... 5
2.3 Status of Bank’s Portfolio ...................................................................................................... 5
III. RATIONALE, KEY DESIGN ELEMENTS AND SUSTAINABILITY .............................. 6
3.1 Linkages with CSP and Analytical Underpinnings ................................................................ 6
3.2 Collaboration and Coordination with the Other Donors ........................................................ 8
3.3 Results and Lessons from Similar Operations ....................................................................... 9
3.4 Relationship to Other Bank Operations ............................................................................... 10
3.5 Bank’s Comparative Advantages and Added-Value ............................................................ 10
3.6 Good Practice Principles for the Application of Conditionality .......................................... 10
IV. PROPOSED PROGRAMME ............................................................................................... 10
4.1 Programme Goal .................................................................................................................. 10
4.2 Components, Objectives and Expected Outcomes ............................................................... 11
4.3 Financing Requirements and Modalities .............................................................................. 13
4.4 Programme Beneficiaries ..................................................................................................... 14
4.5 Social Impact ........................................................................................................................ 14
4.6 Gender Impact ...................................................................................................................... 14
4.7 Environmental Impact .......................................................................................................... 15
V. IMPLEMENTATION, MONITORING AND EVALUATION .......................................... 15
5.1 Implementation Arrangements ............................................................................................. 15
5.2 Monitoring and Evaluation Arrangements ........................................................................... 16
VI. LEGAL DOCUMENTATION AND LEGAL AUTHORITY ............................................ 16
6.1 Legal Documents: ................................................................................................................ 16
6.2 Conditions Associated with Fund’s Intervention ................................................................. 16
6.3 Compliance with Bank Group Policies ................................................................................ 17
VII. RISK MANAGEMENT ....................................................................................................... 17
VIII. RECOMMENDATION ....................................................................................................... 18
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Tables
Table 1 – Crisis Response Budget Support Eligibility Conditions ..................................................... 7 Table 2 – CAR – Financing Requirements for 2014 ........................................................................ 13
Table 3 – Risks and Mitigation Measures ........................................................................................ 17
List of Figures and Boxes
Box 1- Roadmap Priorities ................................................................................................................ .5
Figure 1 – Bank’s Active Portfolio in CAR…………………………………………………………6
Annexes
ANNEX 1 – Letter of Development Policy ........................................................................................ I ANNEX 2 – Programme Matrix of Measures ................................................................................... X ANNEX 3 – Note on Relations with IMF ..................................................................................... XIII
ANNEX 4 – Key Macroeconomic Indicators ................................................................................. XV ANNEX 5 – Donor Interventions in CAR (USD million) ............................................................. XVI ANNEX 6 – Measures relating to the Fiduciary Framework in the Exceptional
Period of the Crisis ...................................................................................................................... XVII
ANNEX 7 – Administrative Map of CAR .................................................................................. XVIII
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Fiscal Year
1 January - 31 December
Currency Equivalents
April 2014
Currency Unit CFAF
UA 1 USD 1.54563 UA 1 EUR 1.12100 UA 1 CFAF 735.328
This report was prepared following discussions with the Central African Authorities in Yaoundé from 24-28 February 2014,
and in Douala from 24 March to 2 April 2014, by a team led by Mr. Alain EKPO, Principal Economist, OSGE.1 and
comprising Messrs. L. KEVIN, Senior Macroeconomist in OSGE; S. KEITA, Regional Financial Management Coordinator,
ORPF.2; J. BISSANKONOU, Social Development Specialist, OSHD and K. DIALLO, Senior Country Economist, ORCE.
Questions on this report should be referred to Mr. N. LOBE, Director, OSGE (Extension 2077) and Mr. A. COULIBALY,
Ag. Division Manager, OSGE.1 (Extension 2536).
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i
Acronyms and Abbreviations
ADF African Development Fund
AfDB African Development Bank
BEAC Bank of Central African States
CAR Central African Republic
CCIMA Chamber of Commerce, Industry, Mines and Crafts
CFA African Financial Community
CNLC National Anti-Corruption Committee
CPIA Country Policy and Institutional Assessment
CS-REF Economic and Financial Reforms Monitoring Unit
DDRR Disarmament, Demobilization, Reintegration and Repatriation
DGB General Directorate of the Budget
DGDDI General Directorate of Customs and Indirect Taxes
DGID General Directorate of Taxation and State Land
DGTCP General Directorate of the Treasury and Public Accounts
DSP Country Strategy Paper
DSRFP Public Finance Reform Global Strategy Paper
EITI Extractive Industries Transparency Initiative
EU European Union
FSF Fragile States Facility
GBSF General Budget Support Framework
GESCO Public Finance Management Information Support System
IMF International Monetary Fund
MDG Millennium Development Goals
MFB Ministry of Finance and Budget
MINUSCA United Nations Multidimensional Integrated Stabilization Mission in CAR
MoU Memorandum of Understanding
OAP Program-Based Operations
OCHA United Nations Office for the Coordination of Humanitarian Affairs
PARCGEF Economic and Financial Management Capacity Building Support Project
PARE Economic Reform Support Programme
PFM Public Finance Management
PUASCRE Emergency Post-Crisis and Economic Recovery Support Programme
PURD Emergency Programme for Sustainable Recovery in CAR
RCF Rapid Credit Facility
TFP Technical and Financial Partner
TOFE Government Financial Operations Table
UA Unit of Account
UNDP United Nations Development Programme
USD United States Dollar
WB World Bank
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ii
Grant and Loan Information
Client Information
DONEE: Central African Republic
EXECUTING AGENCY: Ministry of Economy and Finance
Financing Plan
Source Amount
(in UA million) Instrument Disbursement
Period
ADF Grant UA 2.3 Crisis Response Budget Support July 2014
FSF Grant 12.7 million
including 5.87
under
restructuring
Crisis Response Budget Support July 2014
ADF and FSF Financing Information
Currency of ADF and FSF Grants
Unit of Account
Interest Rate Type NA
Base Rate NA
Interest Rate Spread NA
Financing Margin NA
Commitment Fee None
Other Charges None
Tenor NA
Grace Period NA
Indicative Timeframe
Activities Date
1. Negotiation of ADF and FSF
Grant Agreements
May 2014
2. Board Presentation 18 June 2014
3. Effectiveness 25 June 2014
4. Single Tranche Disbursement 15 July 2014
5. Supervision September 2014 ; March 2015
6. Last disbursement date 31 Mars 2015
7. Completion Report December 2015
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iii
Programme Summary
Programme
Overview
Programme Name / Number: Emergency Post-Crisis and Economic Recovery Support Programme
(PUASCRE) / SAP Id. P-CF-KZ0-002.
Geographic Scope: Countrywide
Total Period: 15 months, from 1 July 2014 to 30 September 2015.
Financing: ADF Grant: UA 2.3 million and FSF Grant (Pillar I): UA 12.7 million, including UA 5.87 million
from the restructuring portfolio.
Operational Instrument: Crisis Response Budget Support (CRBS)
Sector: Economic Governance
Programme
Description
The Emergency Post-Crisis and Economic Recovery Support Programme (PUASCRE) is the Bank’s
contribution to the International Community’s joint effort, announced at the Brussels Conference in February
2014, to help the new Transitional Authorities to address the social and economic impact of the crisis on the
population and foster economic recovery in the country. The Central African Republic has faced a serious
crisis since the overthrow of François Bozizé’s regime in March 2013 and the ensuing intercommunity
violence. This military/political crisis has seriously affected social cohesion and dislocated public institutions.
The economic and humanitarian consequences are very severe, especially as the country was already struggling
to recover from over two decades of socio-political instability arising from coups d’état and recurring armed
conflicts. The aim of the proposed programme is to support this inclusive dialogue initiated by the authorities
by contributing to the return to normal functioning of institutions and the recovery of economic activities. The
Programme is in keeping with the priorities of the Government’s Roadmap and the Bank’s Interim Assistance
Paper for the 2014-2016 period. PUASCRE will also provide assistance for the redeployment of civil servants
and rehabilitation of their working tools. Furthermore, it will help the authorities to lay the foundations for the
recovery of economic activities by supporting the resumption of private sector/government dialogue as well as
measures aimed at helping enterprises to renew their production tools destroyed by the crisis. The programme
comprises two components: (i) restoration of the functioning of the financial administrations and basic social
services; and (ii) creation of the conditions necessary to ensure economic recovery. PUASCRE will be
implemented over a 15-month period. It is linked to the ongoing Economic and Financial Management
Capacity Building Support Project (PARCGEF), which has been restructured accordingly. Expected
Programme
Outcomes
and
Beneficiaries
The programme’s main expected outcomes are: (i) a reduction in the number of vulnerable people; (ii) recovery
of economic growth; (iii) the redeployment of at least 60% of civil servants following the resumption of regular
salary payments; and (iv) a reduction in central government debt owed to suppliers in order to facilitate the
recovery of private sector activities required for the reintegration of ex-combatants into active life.
Needs
Assessment
and
Relevance
The Roadmap adopted by the authorities in October 2013 and updated in February 2014 presents the priority
activities to be implemented to ensure a return to constitutional order and mitigate the negative impacts of the
crisis on the population. In view of the country’s multidimensional fragility, the international community’s
strong commitment is essential to ensure implementation of urgent actions. This Crisis Response Budget
Support operation, which is in line with the first pillar of the Fragile States Facility (FSF), is justified by the
fragility of CAR’s economy and sociopolitical systems. It is consistent with the International Community’s
efforts to provide the country with financial and technical support. The assessment of the country’s urgent
needs was the subject of discussions between the authorities and technical and financial partners (TFPs) at joint
meetings held in Bangui, Brussels, Yaoundé and Douala.
Bank’s
Comparative
Advantages
and
Additionality
In the past, the Bank has provided support to CAR and other fragile countries experiencing crises, such as Mali
and Côte d’Ivoire. The lessons from these experiences have provided the Bank with expertise that was
capitalized on in preparing this operation. Furthermore, the programme’s alignment with an institutional
support project, namely, PARCGEF, restructured to adapt it to the needs arising from the crisis gives the Bank
a comparative advantage in terms of support to economic and financial reforms. It should also be noted that, in
addition to the cyclical measures, which are usual for this type of programme, PUASCRE also tackles the root
causes of the country’s fragility. The programme also supports the revival of the EITI and Kimberley processes
with a view to strengthening governance in these sectors, which have very often fueled the military/political
crises in the country. Institutional
Development
and
Knowledge
Building
The main objective of PUASCRE is to restore the normal functioning of public institutions in CAR by
supporting the redeployment of government services and through the adoption of economic and financial
measures. In this regard, PUASCRE contributes to the institutional development of public administration and
the private sector. Furthermore, its alignment with the restructured PARCGEF will have a positive impact on
knowledge building by providing the Government with international experts in different areas of public finance
and private sector management.
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iv
RESULTS-BASED LOGICAL FRAMEWORK
Programme Country and Name: CAR– Emergency Post-Crisis and Economic Recovery Support Programme (PUASCRE)
Project Goal: Contribute to the return to normal functioning of the administration and the creation of the necessary
conditions to ensure economic recovery.
RESULTS CHAIN PERFORMANCE INDICATORS
MEANS OF
VERIFICATIO
N
RISKS/
MITIGATION
MEASURES Indicator
(incl. CSIs) Baseline
Situation Target
IMPACT
Restoration of
basic social
services and
economic
recovery
Proportion of
vulnerable people 35% of the
population by
end 2013
30% of
population by
end 2015
OCHA Report
Real GDP growth
rate - 36% in 2013 +1.5% en
2014 IMF RCF
Review
OUTCOME
S
Outcome I :
The normal
functioning of
public
administration
is restored and
central
government’s
capacity to
provide basic
social services
(health,
education) is
rebuilt
Proportion of civil
servants in public
administration who
have resumed duty
< 20% by end
2013 > 60% by end
2014 IGF Report Major risk:
Political
instability and
persisting
insecurity in
Bangui and in
the provinces
Mitigation
Measure:
Formation in
January 2014 of
a Government of
consensus and
UN Resolution
in April 2014
authorizing the
deployment of
12 000 peace-
keepers to
strengthen
security in the
country and
support MISCA
and the French
troops
Number of months
of current salaries
paid to civil
servants during the
year
9 out of 12
months in
2013
12 months in
2014
CS-REF Report
Outcome II :
Conditions for
economic
recovery are
met
Rate of reduction of
government
commercial debt
audited in 2012
0% of stock
cleared in 2013
At least 4% of
stock cleared in
2014
Cash flow plan
OUTPUTS
Component 1: Rebuild the Capacity of Financial Administrations and Basic Social
Services
Risk 1: Weak
capacity of the
administration to
implement
reforms and the
emergency
programme
Mitigation
measure: TFP
assistance for the
resumption of
salaries of civil
servants and
technical
assistance to
public services
Macroeconomic
risk: this risk is
I.1. Capacity of
economic and
financial
administration
s are rebuilt
I.1.1 Redeployment
of economic and
financial
administrations
(Customs, Tax,
Treasury and
Budget)
Less than 10 %
of personnel
deployed by
end 2013
At least 50%
of personnel
deployed by
end 2014
CS-REF Report
I.1.2. Reactivation
of the institutional
framework for
budget and cash
flow management
(*)
Decree
establishing
the Cash Flow
Committee
and Public
Finance
Monitoring
and
Management
Committee not
adopted
Adoption by
the Council
of Ministers
of the
Decrees
establishing
the two
committees
signed and
published
before end
April 2014
Copies of
Decrees
forwarded by
CS-REF
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v
I.1.4 Reactivation
of public finance
management
system (GESCO)
(structural
benchmark)
Malfunctioning
of GESCO
preventing
reconciliation
between
payment
authorizations
and actual
payments
Restoration of
the connection
between
GESCO-
Budget and
GESCO-
Accounts by
end
September
2014
CS-REF Report related to the
serious
destruction of
assets and
pillaging of
businesses
during the crises.
Mitigation
measures:
Government
commitment to
resume dialogue
with the private
sector, assess the
losses suffered
and capacity
building for
private sector
support
structures; IMF
and TFP support
to restore a
viable
macroeconomic
framework.
I.2 Social
services are
provided with
human and
financial
resources
I.2.1 Redeployment
of health personnel
and teachers
Less than 25%
of medical
personnel and
teachers
deployed at end
2013
60% of
medical
personnel and
teachers
deployed by
end 2014
CS-REF Report
I.2.2 Ensuring the
security of budget
appropriations
allocated to the
social sectors
(education, health,
infrastructure and
social affairs and
rural development)
Only 20% of
CFAF 4.7
billion of
appropriations
executed in
2013.
At least 40%
of budget
appropriations
totaling CFAF
4.2 billion
executed in
2014
CS-REF Report
Component II: Support for the Establishment of Conditions Necessary to Ensure
Economic Recovery Conditions met
for the
resumption of
activities
II.1. Revitalize the
Joint Government/
Private Sector
Committee with a
view to the joint
evaluation of
damage suffered by
private enterprises,
the auditing of
domestic debt,
adoption of private
sector support
measures and
continuing
clearance of
government
commercial debt.
Joint
Committee
meetings
suspended in
2013
Resumption of
Joint
Committee
Meetings
CS-REF Report
II.2 Measures
necessary to lift the
suspension of CAR
from the Kimberley
Process and EITI
CAR was
suspended
from the EITI
and Kimberley
Process in
2013
Implementa-
tion of
measures and
request to lift
the suspension
submitted to
the EITI
Committee by
end 2014
-Mining GD
Report; -Report
of Permanent
Secretariat of
Kimberley
Process and EITI
Technical
Committee
Resources:
ADF Grant of UA 2.3 million
FSF Grant of UA 12.7 million (*): Condition precedent to presentation of the programme to the Board
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1
REPORT AND RECOMMENDATION OF THE MANAGEMENT TO THE BOARDS OF
DIRECTORS CONCERNING A PROPOSAL TO AWARD A GRANT TO THE CENTRAL
AFRICAN REPUBLIC FOR THE EMERGENCY POST-CRISIS AND ECONOMIC
RECOVERY PROGRAMME (PUASCRE)
I PROPOSAL
1.1. This proposal submitted for approval by the Board concerns an ADF grant of UA 2.3
million and an FSF (Pillar I) Grant of UA 12.7 million to finance an Emergency Post-Crisis and
Economic Recovery Support Programme (PUASCRE). This is an emergency budget support
operation in response to the urgent needs of the Central African population now faced with an
unprecedented humanitarian crisis following the military coup perpetrated in March 2013 by an armed
rebellion that overthrew the regime in power for ten years. It is in keeping with the joint effort
announced by the international community at the Brussels Conference in February 2014 to help the
new transitional authorities to restore the normal functioning of public administration, mitigate the
socio-economic impact of the crisis on the population and foster economic recovery.
1.2. PUASCRE’s design is based on an assessment of the social, economic and humanitarian
situation now prevailing in the country, characterized by: (i) the disorganization of public services;
(ii) the collapse of the health system and the rising number of people affected by food insecurity; (iii)
the partial destruction of economic and social infrastructure; (iv) the displacement of the population,
especially women and children (80%, 60% of whom are children); (v) insecurity affecting assets and
individuals; (vi) collapse of agricultural production and food supplies to the population; (vii)
tremendous difficulties encountered by the new transitional authorities in restoring order and security in
the country, especially in Bangui, the capital; and lastly (viii) the worrisome rise in armed
confrontations based on religious beliefs between communities, resulting in the massive exodus of
250,000 Central Africans seeking refuge in neighbouring countries. To address this new socio-political
and economic context and all types of pressing needs expressed, it has become necessary to establish a
new programme to support CAR that differs from the previous one (PARE III) approved in 2012,
which was focused on reforms but whose implementation was disrupted by the recent events.
PUASCRE appears to be an appropriate response by the Bank to support the country’s dialogue and
recovery processes embarked upon by the new transitional authorities appointed on 28 January 2014.
1.3. In the current situation, the TFPs and the new Government have agreed on the establishment
of an ad hoc framework for implementing external support operations and public finance management.
This mechanism entails, in particular: (i) the establishment of a Cash Flow Committee under the
authority of the Minister of Finance to improve cash flow management; and (ii) the establishment of a
Public Finance Management Committee to ensure joint monitoring with the TFPs of both budget
support and national budget resources.
1.4 Linked in its implementation to the institutional support programme (PARCGEF) approved by
the Bank in December 2010, and restructured to better address immediate needs, PUASCRE, at the end
of its 15-month implementation period, should achieve the following outcomes: (i) a reduction in the
number of vulnerable people; (ii) recovery of economic growth; (iii) the redeployment of at least 60%
of civil servants following the resumption of regular salary payments; and (iv) a reduction in central
government debt owed to suppliers in order to facilitate the recovery of private sector activities
required for the reintegration of ex-combatants into active life.
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2
II COUNTRY AND PROGRAMME CONTEXT
2.1 Recent Political, Economic and Social Developments
Political Context
2.1.1 The Central African Republic faces one of the most serious crises in its history in terms of
scale, duration and social and humanitarian impact on the population as well as the ensuing
weakening of central government capacity. The coup perpetrated by an armed rebellion from the
North of the country against the existing regime resulted in the seizure of power by the rebels in March
2013, followed by the establishment of a National Transition Council comprising all vital elements of
the nation. The said Council appointed the rebel leader as Transitional President. However, faced with
the upsurge in violence fueled by uncontrolled elements of the new authorities and the Government’s
inability to restore security and the functioning of institutions, the Transitional President and rebel
leader was forced to resign on 10 January 2014. The Transition Council, at its meeting of 20 January
2014, appointed Mrs. Catherine Samba-Panza, Mayor of Bangui, as the new Transitional President and
a new Government, expanded to include the different political movements was formed on 28 January
2014. With the support of the international community, the new Transitional Government has begun to
implement the urgent measures and actions contained in the Transition Roadmap adopted in October
2013 and updated in February 20141, namely: (i) rapidly restore the security of goods and persons
nationwide; (ii) rapidly guarantee access by the vulnerable segments of the population to humanitarian
assistance; and (iii) create the conditions for the organization of free, democratic and transparent
elections aimed at ensuring a return to constitutional order. The intervention of the French forces and
the AU contingent (MISCA) on the ground, and the deployment from 15 September 2014 of the
MINUSCA peacekeepers following the Security Council Resolution, should help to restore peace and
security in the country.
Economic Context
2.1.2 Economic Growth and Inflation: Following a period of stable growth of about 3.2% of
real GDP in 2011 and 2012, CAR’s economy contracted sharply in 2013 with a drop of about
36% in real GDP. This recession was due to the following factors: (i) the widespread pillaging and
destruction of public and private assets as the rebellion moved towards the capital; and (ii) the
slowdown in agricultural production as a result of large-scale population displacement. Mainly
dependent on agriculture (50% of GDP and over 40% of export earnings), the Central African economy
shifted from a pre-crisis situation of food self-sufficiency to one of food insecurity. In the primary
sector, which was hardest hit by the crisis, production fell by 36.9% as a result of the pillaging of seeds
and the suspension of agricultural sector support projects. The fall in production throughout the secondary
sector was 23% as a result of the destruction of the production tools and 67% in 2013 for mining
production, in particular, compared to an increase of 10.7%, in 2012, due to the occupation of production
areas by the Seleka rebellion. Lastly, the tertiary sector was affected by transport difficulties and the
massive departure of petty traders as a result of insecurity and the malfunctioning of public
administration, resulting in an estimated 14.3% drop in activities. The crisis also had significant impacts
on the country’s financial system comprising 4 banks and 7 micro-finance establishments. Financial
losses of micro-finance establishments were estimated at CFAF 1.3 billion and virtually all bank branches
in the provinces remain closed. Inflation, fuelled by a shortage of essential foodstuffs, rose to 7.2% in
2013 compared to 2.7% in 2012.
1 These events that took place in December 2013 ushered the country into a second phase of the transition and led the new authorities to
review the Roadmap to take new needs into account, especially the inclusion of the “anti-balaka” in the DDR process.
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3
2.1.3 The public finance recovery measures implemented by the authorities in 2011 and 2012
which had begun to produce tangible results (level of taxation up from 9.5% of GDP in 2012 to 9.9% of
GDP in 2013, reduction in arrears) have given way to bad management practices. The perceived
consequences of the crisis on public finances have included: (i) a drop of about 52% in revenue actually
collected by the Treasury due to the occupation of the customs corridors by the rebellion; (ii) a
contraction in taxable assets as a result of the pillaging and destruction of the production tools of the
majority of taxpayers, in particular, large enterprises established in Bangui and in some of the country’s
provinces; (iii) the loss of control of budget expenditure by the Chief Authorizing Officer for the
central government budget (iv) paralysis of government revenue services; (v) the government’s
inability to pay the totality of salaries and pensions in 2013; (vi) rising domestic debt owed to
government suppliers; and (vii) an accumulation of new arrears equivalent to about 2.3% of GDP.
Overall, the crisis has dealt a fatal blow to the progress made in public finance management.
Governance
2.1.4. Overall, CAR has made little progress in the area of corruption over the past two years.
Transparency International’s Corruption Perceptions Index shows that between 2012 and 2013, the
country stagnated at the 144th
position out of the 175 countries assessed. The Government had taken
measures to combat corruption with the establishment of a National Anti-Corruption Committee
(NACC) in 2008. However, the successive crises prevented the achievement of significant results in
that area. The Government also initiated measures in the aimed at strengthening natural resource
management transparency within the EITI context. CAR was accepted as an EITI Candidate Country
in November and achieved EITI-compliant status in March 2011. The country was temporarily
suspended from the EITI process on 10 April 2013 and the Kimberley System Certification Process
mainly as a result of smuggling that has blighted the diamond trade. To lift this suspension, the country
must submit a request and provide evidence of the implementation of measures to kick-start the
process, including a work plan for the publication of the 2011 EITI report.
Social Context
2.1.5. CAR’s 2010 Poverty Profile estimated the incidence of monetary poverty at 62% of the
population. Well before the outbreak of the current crisis, the country’s humanitarian situation was
already highly critical. The North and North-East regions as well as those in the East were already
seriously affected by the conflicts triggered by successive rebellions. By the end of 2012, almost the
entire CAR territory was affected by an acute humanitarian crisis and especially by severe malnutrition
in children below five years of age. Social infrastructure (nursery schools, Support Centres for
Orphans and Vulnerable Children, hospitals, health centres and schools) and government service
buildings (town halls, sub-prefectures, police stations and gendarmerie posts) were pillaged, resulting
in the flight of social and administrative service personnel. The humanitarian agencies2 operating in the
country have made the following assessment of the situation: about 1.6 million highly vulnerable
people urgently require protection; 1.3 million people require foodstuffs; 3.2 million people require
adequate health care; 1.4 million do not have access to clean water, sanitation and hygiene; 1.7 million
children have been left to their own resources, 3,500 of whom have been conscripted by armed forces
and groups. Lastly, over 250,000 inhabitants of the Central African Republic have purely and simply
fled their country to seek refuge in neighbouring countries, in particular, the Democratic Republic of
Congo. The population is exposed to famine, endemic and sexually transmitted diseases (STI and HIV).
In addition to this already bleak picture, intercommunity quarrels have widened the social divide
2 According to OCHA reports as of 25 October 2013.
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between Muslim and Christian communities. Thus, the migration of the Muslim community, the
mainstay of the country’s economy, has exacerbated the food and humanitarian crisis due to a lack of
supplies of essential products.
Short and Medium-Term Prospects
2.1.6 Since the formation of the new Transitional Government in January 2014, mobilization
of the international community to support the country’s emergence from the crisis has been
significantly stepped up. There are ongoing measures to reinforce security and restore the smooth
functioning of the public administration. Furthermore, with the planned arrival of a contingent of
12,000 United Nations peacekeepers in September 2014, the existing security mechanism comprising
French SANGARI forces, African Union forces (MISCA) and probably also the forthcoming support
of the European Union, will be strengthened. These different foreign forces will ensure the security of
assets and persons, and the restoration of public order, facilitation of access to humanitarian services,
human rights monitoring and the fight against impunity. Already, actions to ensure the security of the
Douala-Bekolo-Bangui corridor by MISCA troops have resulted in the resumption of supplies of
essential products to the capital. With the financial support of some neighbouring countries, two
months’ salaries have been paid to civil servants, which have facilitated their gradual resumption of
duty. Under these conditions, the prospects for the recovery of economic activity are promising since a
slight increase in economic growth of about 1.5% of real GDP is expected in 2014. However, the
public finance situation is not expected to improve in the short-term. Significant structural measures
will have to be implemented to increase tax revenue and control expenditure, especially the wage bill
which, in 2013, represented 135% of the country’s own revenue. Only in 2015 will the growth rate
reach pre-crisis levels. With an improvement in the country’s security situation and the recovery of
agricultural production as well as diamond exports, the real growth rate in 2015 is expected to be 5.3%
and the fiscal deficit should narrow from 8.3% in 2014 to 5.3% in 2015.
Constraints and Challenges
2.1.7 The country’s main constraints relate to its situation of fragility. These main factors
of fragility are:
(i) The serious undermining of social cohesion due to inter-community conflicts, resulting in
violence of dreadful atrocity;
(ii) Central government’s weak capacity to ensure its core functions (general administration,
socio-economic infrastructure, security and justice) and provide the population with basic social
services (education, health, sanitation and clean water);
(iii) The country’s landlocked situation, which has always affected the economy’s
competitiveness;
(iv) The lack of dialogue between central government and the private sector, which weakens the
latter’s involvement in the design of, and contribution to, implementation of development
strategies and policies;
(v) The country’s very heavy dependence on international aid due to weak mobilization of
domestic resources; and
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(vi) Poor governance of natural resources, especially of diamonds, which seems to be one of the
main reasons for the country’s political instability because of covetousness.
The military/political crisis that has serious affected these factors of fragility and hastened the massive
exodus of the inhabitants of the different production areas for reasons of security has plunged one-
quarter (¼) of the population into a situation of food and physical insecurity.
2.1.8 The near-term challenges may be summarized as follows: (i) the countrywide restoration of
security; (ii) social cohesion and restoration of the normal functioning of public services to enable
central government to address major humanitarian needs and prepare the return to constitutional order;
(iii) implementation of the Disarmament, Demobilization, Reintegration and Repatriation (DDRR)
process, the success of which depends on the integration of ex-combatants into economic activities; (iv)
the regular payment of civil servants’ salaries and rehabilitation of infrastructure and their working
tools destroyed during the crisis; (v) economic recovery through the initiation of dialogue with the
different private sector actors to encourage them by all available means, (fiscal incentives,
compensation, reduction of arrears in accordance with an agreed upon timetable etc.) to resume
activities so as to gradually provide job opportunities to unemployed youths, victims of conscription
into armed militia. The medium-term challenges are to (a) engage in inclusive national political
dialogue in order to seek ways of creating the conditions of political stability in the country to prevent
the constant undermining of the democratically established order; and (b) boldly implement the reform
of the national army and public security forces (gendarmerie, police).
2.2 Government’s Strategy and Priorities
2.2.1 In October 2013, the Transitional Government of National Unity adopted a Roadmap for an 18-
to 24-month period aimed at laying the foundations of a new Central African Republic. Box 1 presents
the Roadmap’s priorities. In order to strengthen the relationship between response to the humanitarian
situation and development during the transition,
the authorities have also prepared an Emergency
Programme for Sustainable Development in CAR
(PURD) for the 2014-2016 period. The 2014-
2016 PURD is focused on 4 Pillars: (i) restoration
of security, peace and strengthening of
governance and the rule of law; (ii) strengthening
of civil protection, restoration and re-organization
of the administration nationwide; (iii) recovery of
activities in the key social sectors, intensification
of HIV/AIDS control and environmental
protection; and (iv) continuation of economic and financial reforms to promote robust and sustainable
growth. It is expected that implementation of this Roadmap will help CAR to return to stability and
constitutional order in 2015 through free, credible and transparent elections. The total estimated cost of
financing the Roadmap is CFA 490 billion (about USD 1 billion). The Government’s contribution is
estimated at CFAF 50 billion, leaving a gap of CFAF 440 billion. Several TFPs, including the Bank,
have undertaken to provide support to the Roadmap’s implementation.
2.3 Status of Bank’s Portfolio:
2.31 The March 2012 pre-crisis Portfolio Performance Review deemed the portfolio satisfactory
with an average score of 2.22 on a scale of 0 to 3. The portfolio comprised eleven (11) national projects
and two (2) regional projects, representing total net commitments of UA 127.1 million (i.e. about USD
196 million). Figure 1 on the following page gives the portfolio’s sector distribution. The portfolio’s
Box 1- Roadmap Priorities
1) Rapidly ensure the security of citizens and the State, the protection
of the right to life, peace and justice for all;
2) Rapidly guarantee access by the vulnerable population to
humanitarian assistance (education, health, water, sanitation and food
security);
3) Strengthen the presence of central government authority
(rehabilitation of public infrastructure and redeployment of public
officials, regular payment of salaries);
4) Build up central government’s financial capacity (ensuring the
security of customs corridors, redeployment, equipment and cleaning
up of the taxpayer database, etc.); and
5) Resumption of public/private sector dialogue (revitalization of the
public-private consultation framework, assessment of company losses,
revision of the investment charter, implementation of measures.
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Agric. 3%
Energy 23%
Social 7%
Transport 25%
Multisect.
20%
Water and
Sanitation
22%
Figure 1 - Status of Bank Assets in CAR Breakdown of Commitments
(in volume) by Sector
average disbursement rate is estimated at about 26%, while the average project age is approximately 3
years. An evaluation carried out by the Bank’s services in November 2013 after the outbreak of the
crisis shows that the 11 ongoing projects have
suffered asset losses estimated at over CFAF 300
million (i.e. about USD 600,000). Following the
Bank’s evaluation and dialogue missions, it was
recommended that the portfolio be restructured to
address the priorities of the Transition Roadmap.
Thus, in the governance sector which concerned
two operations in the portfolio (PARCGEF and
PARE III), only PARCGEF will be maintained in
the portfolio. PARCGEF’s objectives remain
consistent with the country’s priorities. However,
this project has been restructured to take the new
priorities into account. About UA 800,000 out of a
total estimated project cost of UA 4.5 million has
been allocated to increased support to the financial authorities and structures in charge of private sector
development. Therefore, PARCGEF will help to equip the Treasury’s Central Accounting Agency,
currently being established, as well as the financial authorities (Customs and Taxes). PARGEF will
also provide technical assistance to the structures responsible for the revival of business activities, in
particular the One-Stop-Shop for Business Formalities (GUFE) and the Government/private sector
Permanent Consultation Framework (CPC). Technical Annex 1 provides greater detail on the
PARCGEF. PARE III has been cancelled and undisbursed resources (UA 8 million) have been
allocated to a new operation, in the context of portfolio restructuring.
III. RATIONALE, KEY DESIGN ELEMENTS AND SUSTAINABILITY.
3.1 Linkages with CSP and Analytical Underpinnings
3.1.1 Linkages with CSP: PUASCRE is the first emergency operation planned under the Bank’s
Interim Assistance Paper covering the 2014-2016 period. This strategy, which is aligned with the
Government’s Roadmap priorities and PURD, is focused on the following two priority thrusts: (i)
rehabilitation of socioeconomic and public interest facilities with a view to improving basic service
delivery; and (ii) rebuilding of institutional capacity and promotion of good governance. The first
thrust aims to help the Government to meet the population’s urgent socio-economic demands with
special emphasis on the equitable and sustainable accessibility of the vulnerable segments to the
following essential goods and services: education, health, social protection, rural roads and productive
activities (with special emphasis on agricultural activities and other job-creating activities for youth
employment and the economic reintegration of ex-combatants. The specific objective of the second
thrust is to assist the rapid resumption of central and devolved administrative services to ensure the
delivery of essential basic services to the population and especially vulnerable communities in the rural
areas worst affected by the conflict.
3.1.2 PUASCRE contributes to the achievement of the outcomes of the second thrust of the Interim
Strategy. The programme is also in line with the Bank’s Ten-Year Strategy (2013-2022) regarding its
priorities in fragile States, and is consistent with the Governance Strategic Framework and Action Plan
for the 2014 – 2018 period (GAP II) which pays special attention to fragile States with the Bank’s
interventions aimed at contributing to lasting peace and the establishment of resilient, stable States with
adequate capacity.
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3.1.3 Prerequisites for the Implementation of a Programme-based Operation: the proposed
operation - which is a Crisis Response Budget Support (CRBS) - is in keeping with the Bank Group
Policy on Program-Based Operations adopted in March 2012 (ADF/BD/WP/2011/38). The Country
Readiness Assessment presented in Table 1 below shows that CAR meets the CRBS eligibility
conditions. Especially with regard to the fiduciary framework and in consultation with the other TFPs,
the Bank carried out a fiduciary assessment and agreed with the government and the TFPs on the
minimum arrangements that would, in the very near-term, mitigate the risks and create an acceptable
framework for the implementation of TFP operations. The authorities have undertaken to very rapidly
resume their weekly treasury meetings and revitalize the Budget Management Monitoring Committee
expanded to the TFPs. Furthermore the Treasury’s Central Accounting Agency (ACCT) will be
operationalized following the appointment of its chief officer and his/her deputy, based on a
competitive process. While the political stability component is linked to the country’s overall security
situation, there has been an improvement in confidence in the transitional authorities since the
appointment of the new Transitional President in January 2014.
Table 1 – Crisis Response Budget Support Eligibility Conditions Conditions Assessment of the Fulfilment of Conditions Government
Commitment to
Poverty
Reduction
In 2013, the Transitional Government of National Unity adopted a Roadmap and an
Emergency Programme presenting the priorities of the 2014-2015 transitional period. The
Government priorities are defined as follows: (i) restoration of security and peacebuilding; (ii)
provision of emergency humanitarian assistance to the population; (iii) ensuring the return to
constitutional order and consolidating good institutional governance; and (iv) creation of
conditions for the recovery of the productive sector to achieve the MDGs. Preparation of the
Roadmap and the Emergency Programme is carried out in accordance with a participatory
process. The donor community has undertaken to support the Government in implementing
these priorities, especially during the meeting organized in Brussels by the United Nations and
the European Union on 20 January 2014. Macroeconomic
Stability The macroeconomic situation deteriorated considerably in 2013 as a result of the crisis. The
growth rate fell by about 36% and the Government accumulated significant arrears of
payment, including on the salaries and pensions of government employees. Structurally, the
Government’s own resources are insufficient to cover the wage bill. The country remains
dependent on external aid to meet its recurrent and investment expenditure. The crisis has
increased this dependency with its negative impacts (contraction of the economy and drop in
tax revenue). With the gradual rehabilitation of public institutions and support of the
international community, especially the financial programme supported by the IMF’s Rapid
Credit Facility (RCF) and this operation, growth should improve slightly in 2014. The
macroeconomic framework will improve from 2015. A 1.5% increase in real GDP is
expected as well as a 4.9% drop in inflation compared to 7.2% in 2013. The transitional
authorities have demonstrated strong commitment to reforms implementation and a return to a
normal economic situation by succeeding in concluding a RCF arrangement within six (6)
months despite the current difficult context. Satisfactory
Fiduciary Risk
Assessment
In accordance with the provisions of the PBO policy document, the Bank carried out a
fiduciary assessment, a summary of which is presented in Annex 6 and the detailed analysis in
Technical Annex 2. The country’s situation of institutional fragility caused by its repeated
crises has led to the deterioration of the fiduciary environment. Although the fiduciary risks
are high, failure of the development partners to take action would have even greater
consequences on CAR’s economic and social situation. Aware of this situation, the authorities
have agreed with the TFPs on emergency and operational actions to be taken to mitigate these
risks. The reform programme supported by the IMF’s Rapid Credit Facility and measures
contained in this programme as well as in the World Bank programme will help to
significantly mitigate the fiduciary risks. The main measures are: (i) operationalization of the
Cash Flow Committee and the Public Finance Management Committee expanded to the TFPs;
(ii) operationalization of the Treasury’s Central Accounting Agency (ACCT) for the
centralization of accounts as well as updating and keeping records of the State accounts; (iii)
operationalization of the Integrated Public Finance Management System (GESCO); and (iv)
fine-tuning of the civil service database with the technical and financial support of the
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development partners. All these measures are jointly monitored by all TFPs. Political
Stability CAR has experienced a fairly difficult situation since the triggering of the military/political
crisis in 2012. Under the mediation of ECCAS Heads of State and with the support of the
international community, the country has gradually embarked on the path of political
normalization. Following the overthrow of the regime of President Bozizé on 24 March 2013,
and the ensuing unrest, the new authorities have endeavoured to restore democratic
institutions. A National Transitional Council (CNT) was established and a Constitutional
Charter prepared and promulgated in July 2013. The swearing in of the former Transitional
President, Michel Djotodia, on 18 August 2013, was the starting point for the 18-month
transitional period following which free and transparent presidential and legislative elections
would be organized. The new government of broad consensus formed in January 2014 in the
wake of serious intercommunity violence in December 2013 and the resignation of Michel
Djotodia is striving hard to restore social cohesion and security in order to adhere to the
electoral timetable. Harmonization Despite the situation of insecurity and its impact on the presence of TFPs in the country, the
partnership between the government and donors has been maintained. This led to joint
missions in November 2013 to Bangui and to other meetings in 2014 to Brussels and
Yaoundé. The preparation of the different CAR support missions benefited from close
collaboration between various donors in terms of joint missions and document sharing. TFP
support to the restoration of the functioning of the administration, security and for
humanitarian assistance are complementary. The main structural benchmarks for monitoring
progress in these different areas are widely shared by all the TFPs. Annex 5 presents the main
TFP interventions and the complementarity between the different operations.
3.1.4 Analytical Underpinnings: This report draws on the report of the High Level Panel on
Fragile States3, the Transitional Government’s Roadmap and various working documents submitted by
the authorities following the joint TFP missions. The High Level Panel report recommended that
several factors be taken into account when providing support to countries in situations of fragility like
CAR, especially State building, implementation of inclusive policies, restoration of security and justice,
building of basic economic management capacity, and establishment of legitimacy through public
service delivery. The report also recommends taking advantage of the resilience displayed by African
companies by supporting private sector activities. Action will also have to be taken at regional level to
curb illicit arms and mineral trading, both of which fuel wars. Measures under this programme, aimed
at restoring public institutions and recovery of economic activities, have taken these different aspects
into account.
3.2 Collaboration and Coordination with Other Donors
3.2.1 Before the recent crisis, a Global Budget Support Framework (GBSF) and Memorandum of
Understanding (MoU) signed by all the parties in December 2010 defined the donors’ intervention
framework in CAR. Following the overthrow of the regime in March 2013, CAR’s main TFPs
including, in particular, the Bank, the World Bank, IMF and the European Union had to suspend their
operations in the country as a precautionary measure. With the gradual improvement in the security
situation, virtually all TFPs have renewed dialogue with the country and resumed their operations.
Consultations are held during joint missions and by regular exchanges of information. Pending an
improvement in the security situation in Bangui, UNDP is trying to formalize monthly TFP meetings in
Yaoundé for exchanges on the evolution of the situation in CAR and to help harmonize interventions.
3.2.2 PUASCRE was entirely designed in close collaboration with all the above-mentioned TFPs
during joint missions. Because of insecurity in the country and the urgency, the Bank was unable to
3 Ending Conflicts and Building Peace in Africa – A Call to Action (ADB/BD/IF/2014/13 – ADF/BD/IF/2014/11), 23 January 2014
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have direct contact with the Central African Republic’s population during the programme’s appraisal.
However, the Bank was kept regularly informed of social developments through exchanges with the
humanitarian agencies of the United Nations on the ground. The measures supported under this
programme were the subject of consensus between the TFPs and the authorities to ensure
complementarity between the different operations and meet the country’s most pressing needs. The
emergency operations of the World Bank and the European Union (EU) contribute directly to the
payment of civil servants’ salaries and the rehabilitation of their working tools. The EU is also
contributing to the DDRR Programme and to improving security in the country. The IMF, through its
RCF supported programme, provides support to measures aimed at a return to orthodoxy in financial
and budget management. In the social sector, the United Nations Development Programme (UNDP)
and several humanitarian agencies are already carrying out targeted actions in the education, health,
gender, food security and drinking water sectors. It is worth noting that, in addition to this operation,
the Bank has initiated the preparation of an Emergency Programme for the Rebuilding of Grassroots
Communities (PARCB), which will complement ongoing actions. PARCB will seek to facilitate social
cohesion and intercommunity dialogue, rehabilitate social structures and infrastructure, community
reintegration of displaced persons and refugees as well as reintegration of ex-combatants. Psycho-
medical and legal assistance will be provided to women victims of rape and other forms of physical
abuse.
3.3 Results and Lessons from Similar Operations
3.3.1 The lessons learned from the preparation of the Emergency Economic Recovery Support
Programme in Mali (PUARE) were reflected during preparation of this programme. Mali
experienced a political/military crisis in 2012 that fragilized public institutions, making it difficult to
provide basic social services in the country’s northern regions. The social fabric greatly deteriorated
and the population was displaced, the education and health systems were highly disorganized, the
economic fabric seriously affected and infrastructure destroyed. PUASCRE has also drawn on Côte
d’Ivoire’s experience during the implementation of the Emergency Programme for the restoration of
Basic Social and Administrative Services (PURSSAB) in the wake of the 2010 post-electoral crisis.
These two experiences (Mali and Côte d’Ivoire) show that priority was given to the rebuilding of
central government capacity both from the standpoint of the functioning of public administration and
the population’s access to basic social services, as well as the creation of conditions for inclusive
dialogue and economic recovery.
3.3.2 This programme in favour of CAR shares the same logic and draws on the following lessons:
(i) Adaptation of the programme to the context of fragility and urgency of a post-crisis
situation. Given the nature of the crisis, the proposed programme aims to help the State to regain
its sovereignty and restore its presence throughout the national territory. This is essential in order
to mitigate the impacts of the crisis on the population. The programme has only retained a limited
number of well-targeted, mainly cyclical, measures given the limited capacity of CAR
government services;
(ii) The maintenance of ongoing dialogue with the authorities on programme objectives. The Bank took part in the different dialogue missions on CAR. This dialogue was maintained
throughout the programme preparation process and will be strengthened during the
implementation phase by regular missions to CAR with the other TFPs;
(iii) Collaboration with the other partners in the operation’s formulation and
implementation: The Bank has maintained close collaboration with the other TFPs in preparing
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this programme. The programme’s key measures were discussed with France, EU, the World
Bank, UNDP and IMF during joint missions in CAR and to Cameroon.
3.4 Relationship to Other Bank Operations
The Bank’s ongoing portfolio comprises one institutional support operation (PARCGEF), which was
restructured during the preparation of this programme. This restructuring made it possible to adapt
PARCGEF to the country’s urgent requirements and to ensure its complementarity with PUASCRE.
Thus, the financial administrations and private sector support structures will receive increased
assistance for training, the rehabilitation of their working tools and their supervision. Technical Annex
1 presents details of PARCGEF’s restructuring.
3.5 Bank’s Comparative Advantages and Added-Value
The Bank’s comparative advantages stem from the experience it has acquired in implementing reform
support programmes in emergency contexts and post-crisis situations (particularly in Mali and Côte
d’Ivoire). The Bank has proven experience in the design of this type of near-term targeted operation
aimed at helping countries to gradually emerge from situations of fragility and meet the population’s
urgent needs. The Bank’s value added consists in its responsiveness that allows it to rapidly design
crisis response budget operations, and its flexibility to adjust its project portfolio to meet immediate
priorities. Thus, the alignment of the programme with the ongoing PARCGEF gives the Bank a
comparative advantage for reform support operations in the economic and financial areas.
3.6 Good Practice Principles for the Application of Conditionality
The programme design has taken into account good practice principles for the application of
conditionality especially concerning the selection of key measures to be implemented over the
transitional period. In agreement with other TFPs, only the most relevant measures have been retained.
Most of these measures are not new and are aimed at channeling domestic and international aid
resources towards the most pressing humanitarian needs as well as the private sector for the recovery of
economic activities. The authorities have expressed a strong commitment to implement these measures
to restore a calm social climate and preserve the country’s macroeconomic fundamentals. In light of
these efforts and because of the urgency attached to emergency humanitarian requirements, no
condition precedent to disbursement of the programme’s single tranche has been retained except for the
opening of two special accounts for the payment of the ADF and FSF grant resources. Only the
conditions precedent to presentation of the operation to the Board of Directors has been retained in
order to maintain the authorities’ commitment to implement the priority reforms.
IV. PROPOSED PROGRAMME
4.1 Programme Goal
The overall goal of PUASCRE is to contribute to the rebuilding of central government capacity to
provide basic social services and to create the necessary conditions for the rapid recovery of economic
activities.
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4.2 Components, Objectives and Expected Outcomes
4.2.1 PUASCRE is broken down into two main components: (i) rebuilding of government financial
and social services; and (ii) support to the creation of conditions necessary to ensure economic
recovery.
Component I – Rebuilding the Capacity of Financial and Social Administrations
4.2.2 This component comprises two sub-components: (i) restoration of the normal functioning of
financial administrations; and (ii) rebuilding central government capacity to provide basic social
services.
Subcomponent I-1 Restoration of the Normal Functioning of Financial Administrations
4.2.3 Context and Challenges: The generalization of the military/political crisis has resulted in the
paralysis of almost all financial administrations. The government estimates that 95% of buildings and
offices in the regions have been sacked and pillaged. In Bangui, the capital, pillaging has affected over
60% of government financial services. The computerized Budget and Cash Management system
(GESCO) has been almost completely destroyed as a result of the theft and pillaging of computer
equipment and networks. The customs offices in Bangui and in the provinces were ransacked and
occupied by various armed groups who replaced customs officers to collect taxes and duties. In
addition to the destruction of its buildings and working tools, the Financial Control Department lost
two senior officials during the crisis. The Government’s immediate challenges are to rapidly ensure the
security of the country’s main customs corridors and rebuild the capacity of the customs authority and
the Treasury. The other administrations will be gradually rehabilitated. Rebuilding the capacity of the
customs authority will help to rapidly boost domestic resources. For its part, against a backdrop of
dwindling resources and institutional weaknesses, the public treasury will play a key role in ensuring
efficient government cash flow management. To that end, the new authorities intend to operationalize
the Treasury Central Accounting Agency (ACCT) established in 2012 to ensure budget execution, cash
management, centralization of accounts and production of government accounts. The establishment of
this agency was backed by all the TFPs including the Bank, to resolve the persistent issues regarding
weaknesses in budget execution and cash flow problems. It is expected that the TFPs will support the
establishment of this agency through technical assistance. In addition to the ACCT, the Government
has undertaken to establish a Cash Flow Committee and a Public Finance Monitoring and Management
Committee to ensure transparency in the management of all public resources.
4.2.4 Programme Measures include: (i) redeploy financial administration (Customs; Taxes;
Treasury; Budget) personnel; (ii) ensure the payment of 12 months civil servants’ salaries in 2014; (iii)
ensure the presence of the customs authority on the Beloko-Bangui and Gamboula-Bangui road
corridors; (iv) prepare a 12-month work programme for the customs authority; (v) operationalize
ACCT by recruiting the accountant and his/her deputy through calls for candidacy (September 2014);
(vi) operationalize the public finance management system, GESCO (September 2014); and (vii)
operationalize the Cash Flow Committee and the Public Finance Monitoring and Management
Committee through the signature of the Decree establishing these committees (trigger).
4.2.5 Expected Outcomes: At least 50% of the personnel of the financial administrations (Customs,
Taxes, Treasury and Budget) have assumed duty and are deployed by the end of 2014; and tax revenue
is up by 10.3% compared to 2013.
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Sub-Component I-2 Rebuilding Government Capacity to Provide Basic Social Services
4.2.6. Context and Challenges: The crisis has disorganized and considerably reduced public service
delivery capacity, in particular in the areas of health, basic education and sanitation. Access to them
remains very limited due to the destruction of many public, religious and cooperative facilities, and the
theft of drugs and medical equipment in Bangui and in the hinterland. Fearing for their safety, most
health officers have had to abandon their posts and fall back to Bangui, thus making health centres
inoperative, with far-reaching consequences – especially, high risks of morbidity and mortality related
to the resurgence of cholera, measles and even leprosy. The crisis has also aggravated the drinking
water supply situation. Even before December 2012, only 32% of the population had access. In urban
and semi-urban areas, only 4 out of 11 centres of the water distribution utility are operational. The 7
other centres are regularly affected by water distribution cuts. It is now estimated that over 85% of
villages and 45% of urban areas do not have access to drinking water. The crisis has also led to the
suspension of several borehole drilling projects. Conditions of cleanliness and hygiene which were
already precarious have seriously deteriorated. In 2012, the country’s sanitation coverage rate was
estimated at below 11%. Solid waste management by the municipal sanitation services, limited to
Bangui alone, remains very inefficient and is responsible for the high prevalence of vector-borne
diseases such as malaria. With regard to education, the re-opening of schools is difficult not only
because of the absence of teachers at their place of employment, but also because of a lack of furniture
and benches/tables which were destroyed or used as firewood by the warring parties during the crisis.
Some school roofs were also removed or deliberately destroyed by the belligerent forces. The most
pressing challenges are the following: (i) redeployment of health personnel and teachers; (ii) supply of
foodstuffs and other items to the vulnerable population who have mainly taken refuge in Bangui; (iii)
supply of emergency medical kits to health centres; and (iv) rehabilitation of health facilities in Bangui
and other refugee reception localities.
4.2.7 Programme Measures: To help the Government to address these challenges, the programme
proposes to support the following measures (i) redeploy health and education personnel in the different
regions as security is restored; (ii) increase the execution rate of social expenditure in the 2014 budget
in order to rehabilitate and equip health centres and schools; and (iii) re-launch the borehole
programme.
4.2.8. Programme Expected Outcomes: (i) at least 60% of health personnel and teachers are
redeployed by the end of 2014; and (ii) the budget provision execution rate for the social sectors
(excluding personnel expenditure) is at least 40% in 2014.
Component II – Support to the Creation of the Necessary Conditions for Economic Recovery
4.2.9 In its Roadmap, the Government dedicates the fourth pillar to economic recovery and identifies
the following intervention thrusts: (i) implementation of the suspended economic reforms; (ii)
rehabilitation of infrastructure; and (iii) private sector promotion. PUASCRE is focused solely on the
most urgent actions and measures for economic recovery. These measures will foster the restoration of
confidence at private sector level and the resumption of activities.
4.2.10 Context and Challenges: the recurring crises in CAR have made the business environment in
the country one of the least attractive in the world (188th
out of 189 countries according to the 2014
Doing Business Index). The country is structurally constrained by the lack of infrastructure (transport
and electric energy), instability of the legal and institutional framework, the absence of appropriate
financing systems and support policy for financing the economy (guarantee fund, lease financing, etc.)
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for SMEs, and the distrust that characterizes relations between the administration and the private sector.
In addition to these structural factors, the crisis has created a climate of insecurity and led to the
suspension of official diamond exports under the Kimberley Process. This is compounded by the
destruction and pillaging of companies’ production tools and the accumulation of central government
arrears owed to the private sector and banks. A 2012 audit of the arrears over the 2008-2012 period
resulted in the government’s validation of commercial debts estimated at CFAF 11.7 billion. These
debts have been partly cleared, but the crisis has created new arrears amounting to an estimated 2.3% of
GDP. The government’s main near-term challenge is to restore government/private sector dialogue to
assess the damage suffered by businesses, audit central government domestic arrears and agree upon
support measures to facilitate the resumption of business activities. It will be necessary to revitalize the
Joint Committee and the Permanent Framework for Government/Private Sector Consultation. The
second near-term challenge consists in implementing actions that will lead to the lifting of CAR’s
temporary suspension from the Kimberley Process and EITI. Indeed, the lifting of this suspension is
contingent on the recovery of diamond exports. Under the emergency programme, the Government has
also included other measures, in particular rehabilitation of some main roads, the dismantling of illegal
roadblocks countrywide, the strengthening of the judicial governance framework and the revision of the
mining and investment codes.
4.2.11 Programme Measures: in view of the limited duration of PUASCRE, only the most urgent
measures will be retained, i.e.: (i) revitalization of the Joint Committee and the Permanent Framework
for Government/Private Sector Consultation with a view to a joint assessment of the damage suffered
by private enterprises; (ii) auditing of domestic debt and private sector support measures; (iii)
continuation of government commercial debt clearance; and (iv) implementation of the necessary
measures to lift CAR’s temporary suspension from the EITI and Kimberley processes.
4.2.12. Programme Expected Outcomes: the expected outcomes from the implementation of these
measures are: (i) a reduction of the commercial debt audited in 2012 by at least 4% in 2014; (ii) an
agreement between the Government and private sector representatives on the actions and measures to
be taken over the 18-month transitional period to facilitate the resumption of business activities; and
(iii) the lifting of CAR’s temporary suspension from the EITI and Kimberley processes by end-2014.
4.3 Financing Requirements and Modalities
The respective financing requirements for 2014 and
2015 are CFAF 83.5 and 52.2 billion. These
requirements are due to the underlying weakness of the
country’s own resources in relation to the level of
irreducible expenditure. Priority expenditure allocated
for the 2014 and 2015 period, estimated at CFAF 341.8
billion (about USD 221 million) in the Roadmap has
increased pressure on central government finances. The
Government intends to make efforts to mobilize more
own resources with the redeployment of the customs
authority on the country’s different corridors, and to
rebuild the capacity of the financial authorities
(Customs, Taxes and Treasury). Tax revenue which
dropped to 5.2% of GDP in 2012, is expected to rise to
5.4% of GDP in 2014 and 6.9% of GDP in 2015. On
the expenditure front, measures will be taken to ensure
Table 2 – CAR – Financing Requirements 2014
(In billions of CFA francs) Budget
2014
Budget
2015
TOTAL 1. Total revenue and grants 75.3 111.9 187,2
Tax Revenue 43.9 61.7 105,6 Nontax Revenue 8.0 17.9 25,9 Grants 23.4 32.3 55,7
2. Expenditures 142.3 159.1 301,4 2.1. Current expenditures 107.8 99.9 207,7
Salaries 57.3 53.7 111 Goods and services 23.6 22.3 45,9 Other current expenditures 26.9 23.9 50,8
2.2. Capital expenditures 28.9 53.2 82,1 Domestically financed 5.5 8.0 13,5 Externally financed 23.4 45.2 68,6
3. Overall balance (Order basis) -67.0 -47.2 -114,2
Net change in arrears -16.5 -5.0 -21,5
4. Overall Balance (cash basis) -83.5 -52.2 135,7
5. Financing 2.4 2.2 4,6 5.1. External Financing -5.4 7.7 2,4
Of which project loans 0.0 12.9 12,9 Programme loans 0.0 0.0 0,0
6.2. Domestic financing 7.8 -5.4 2,4 Errors and omissions / financing need -81.1 -50.0 -131,1 Financing capacity 81.1 0.0 81,1
IMF 10.0 WB 13.5 10,0 EU 19.7 13,5 FRANCE 7.9 19,7 ECCAS 20.0 7,9 AfDB 10.0 20,0
Residual Financing need 0.0 -50.0 10,0
Source: CAR authorities, February 2014
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tighter control of the wage bill by cleaning up the civil servants’ database. TFP support is essential to
enable the Transitional Government to implement the priority measures of the Roadmap. Several
TFPs have pledged assistance in different forms for 2014 and 2015. For 2014, the IMF approved
financial assistance on 14 May 2014 equivalent to SDR 8.355 million (approximately USD 12.9
million) under the Rapid Credit Facility (RCF). It plans to renew the financing by year end provided
CAR meets the policy requirements for repeated use, especially the establishment of a track record of
adequate macroeconomic policies for a six-month period. The World Bank has awarded a grant of
USD 30 million to contribute to the payment of civil servants’ salaries to the tune of USD 27 million
(CFAF 13.5 billion). Other financing has been approved by ECCAS member countries and the
European Union. Taking into account the Bank’s budget assistance (UA 15 million), total financing
assistance has closed the entire financing gap for 2014. For 2015, IMF is envisaging another support
under the RCF or the Extended Credit Facility. The Bank will contribute through the above-mentioned
Reconstruction Programme.
4.4 Programme Beneficiaries
In general, programme beneficiaries are the population of the Central African Republic as a
whole, i.e. about 4.3 million inhabitants and, in particular, people displaced by the conflict. More
specifically, these are people living in precarity due to the absence of basic public services in the
affected areas and the congestion of public services in the reception areas. The main beneficiary
structures comprise the school network, public health services and generally, the public administration
which must resume normal functioning.
4.5 Social Impact
The restoration of social, administrative and security services will provide the population with
renewed hope and create a feeling that the central government has returned to the localities. The
rehabilitation of administrative infrastructure and reorganization of the health and education systems
will facilitate the return of health care workers, teachers and personnel of the other public
administrations to the localities, disease management and access to health care with a view to reducing
maternal and child mortality. The resumption of classes will dissipate the specter of a lost year, which
entails financial cost for government, parents and the students themselves. The presence of
administrative clerks in the localities will also encourage the return of displaced people and refugees to
their areas of origin as well as the recovery of economic activity, seriously disrupted by the crisis. The
economic recovery, backed by the revival of private sector activities, will foster job creation
particularly in labour intensive sectors like BPW.
4.6 Gender Impact
The scale of the crisis has not spared the different segments of the CAR population (women,
youths, men and the disabled). Women and children have suffered psychological trauma due to the
tragic deaths of their relatives. The same applies to child soldiers conscripted into the rebellions and
traumatized by the events. PUASCRE measures will help to mitigate the impact of the crisis on the
most vulnerable segments of the population, including women and children. Indeed, the restoration
of basic social services and rehabilitation of basic infrastructure will enable displaced people, the
majority of whom are women and children, to return to their regions and gradually resume their
activities. Women, girls and children who were victims of gender-based violence will be able to receive
moral and psychological assistance. An assessment of their situation will allow the subsequent
organization of targeted support in terms of social assistance and economic recovery.
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4.7 Environmental Impact
The proposed programme is a Crisis Response Budget Support. It will have no environmental impact
and is classified in Category III.
V. IMPLEMENTATION, MONITORING AND EVALUATION
5.1 Implementation Arrangements
5.1.1. Institution Responsible: the Ministry of Finance and Budget which chairs the Public
Finance Reform Steering Committee (CPR), will be responsible for PUASCRE’s implementation. The CPR comprises officials from the action plan implementation structures (Ministry of Finance and
Budget, National Assembly Finance Commission, the Court of Auditors, the State Inspectorate
General, Public Procurement Regulatory Authority), a representative of civil society and
representatives of technical and financial partners. The Ministry of Finance and Budget will ensure that
the administrative structures concerned fully play their roles in implementing specific measures falling
within their respective areas of competence. The routine monitoring and evaluation of the programme
will be the responsibility of the Economic and Financial Reforms Monitoring Unit (CS REF). The
proposed programme will be implemented over a 15-month period starting from its effectiveness date.
5.1.2 Disbursement: the UA 15 million financing will be disbursed in a single tranche subject to
fulfilment by the Borrower of the related general and specific conditions as mentioned in § 6.2
below. The option of a single tranche disbursement is mainly justified for the following reasons: (i) the
need to cover the most urgent financing requirements in a watershed year to mitigate the impacts of the
crisis on the population and foster the rapid recovery of the economy; (ii) a firm commitment by the
Government to implement urgent measures, supported by the international community’s combined and
urgent effort to restore the State’s legitimacy, foster economic recovery and help the country to address
the deteriorating humanitarian situation; and (iii) measures to mitigate the country’s fiduciary risks. At
the Borrower’s request, the Bank will disburse funds into a Treasury account opened at the BEAC.
5.1.3 Procurement of Goods and Services: the assessment of the national public procurement
framework carried out by the Bank in May 2012 concluded that overall, the national procurement
procedures for national competitive bidding were compliant with the Bank’s Rules and Procedures.
This assessment also revealed the existence of an adequate institutional mechanism based on the
separation of procurement, control and regulatory functions as well as the introduction of an appeal
mechanism for bidders. It was also confirmed that National Standard Bidding Documents are, on the
whole, similar to those of the Bank. Notwithstanding the quality of the legal, regulatory and
institutional framework, these organs are not operational because of the military/political crisis in the
country. Consequently, this budget support aimed at rebuilding the capacity of CAR administrations
will contribute greatly to restoring the functioning of the organs responsible for public procurement,
ensuring the de facto mitigation of the fiduciary risk. Therefore, the use of Bank resources through a
budget support to achieve these objectives seems appropriate.
5.1.4 Financial Management and Auditing: since this programme is a budget support, the
resources allocated to it will pass along the entire public expenditure circuit (resource allocation,
expenditure chain, control). The Ministry of Finance and Budget will assume responsibility for the
administrative, financial and accounting management of the said resources. As pointed out in Table 1
of paragraph 3 on the analysis of pre-requisites for PBOs, PUASCRE will be implemented in an
exceptional fiduciary environment with a high fiduciary risk, combined with the weak capacity of the
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fiduciary and control institutions and the absence of budgetary orthodoxy. The fiduciary framework
was assessed based on the following principles: (i) an exceptional context of crisis and insecurity for
the duration of the transitional period; (ii) the Ministry of Finance and Budget will be responsible for
the fiduciary framework monitoring process; and (iii) the traceability of funds will be assured by the
establishment of key controls in the revenue/expenditure cycles/circuits. Therefore, the fiduciary
framework will be strengthened by the combined efforts of the government and all CAR’s technical
partners, since no individual action or institution can alone achieve global visibility of the fiduciary
framework or any significant reduction of the fiduciary risk. The detailed analysis of the fiduciary risk
is presented in Technical Annex 2. It was carried out in compliance with the policy on the financial
management of projects financed by the Bank Group. Hence, it was performed based on the four (4) pillars
of Budget (I), Financial Reporting and Auditing (II), Procurement (III), and Corruption (IV)
recommended by the Policy on Program-Based Support in a crisis situation and in compliance with the
policy on the financial management of operations financed by the African Development Bank Group.
An audit of the flow of funds will be carried out by an independent audit firm .Annex 6 and Technical
Annex 2 present the measures related to the fiduciary framework, taking into account the exceptional
nature of the crisis in CAR.
5.2 Monitoring and Evaluation Procedures
5.2.1. Programme implementation will be monitored through the Matrix of Measures and the
cash flow table. The Results-Based Logical Framework will be the common framework for
evaluating programme outcomes. The Ministry of Finance will be responsible for data collection and
coordination of monitoring/evaluation, and make the information available to the Bank. The operation
will be monitored by ongoing dialogue between the authorities and the Bank in collaboration with the
other TFPs, and during regular supervision missions. This mechanism will be used to assess the
progress made on the basis of indicators agreed upon, in accordance with the new results monitoring
framework established by the Bank.
VI. LEGAL DOCUMENTATION AND LEGAL AUTHORITY
6.1 Legal Documents:
The legal documents that will be used for the programme are: • An ADF Grant Agreement for an amount not exceeding UA 2.3 million will be signed
between ADF and the Central African Republic;
• A Letter of Agreement for FSF resources in an amount not exceeding UA 12.7 million will
be signed between the President of the Bank Group and the Central African Republic.
6.2 Conditions Associated with Fund’s Intervention
6.2.1 Conditions precedent to presentation of PUASCRE to the Board of Directors: based on
dialogue with the Government, it is envisaged that the Government will implement measures prior to
the programme’s presentation to the Board of Directors. These conditions are:
• The signing of an agreement with the IMF under the Rapid Credit Facility;
Evidence: Copy of IMF Press Release on the Agreement under the RCF submitted by the Minister of
Finance and Budget;
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• Government decision to establish the cash flow and public finance monitoring
committees;
Evidence: Copies of the Decrees establishing the Cash Flow Committee and the Public Finance
Monitoring Committee submitted by the Minister of Finance and Budget.
6.2.2. Effectiveness: effectiveness of the ADF Grant and FSF Grant will be subject to the signing of
the ADF and FSF Grant Agreements by the Bank Group and the Donee.
6.2.3. Conditions Precedent to Grant Disbursement: in addition to the conditions precedent to
effectiveness as stipulated in paragraph 6.2.2 above, disbursement of the ADF Grant resources and
those of the grant awarded from FSF Pillar 1 resources shall be subject to the following condition
precedent:
• Provide evidence of the opening in the BEAC books in Bangui of two special accounts
into which the ADF and FSF grant resources will be paid.
6.3 Compliance with Bank Group Policies
PUASCRE is in keeping with the strategic directions of the Bank’s long-term strategy, in particular, the
pillar relating to governance. It is also consistent with the Bank Group’s Policy on Program-Based
Operations, in particular the instrument concerning Crisis Response Budget Support. No waiver request
has been made in this proposal regarding these Guidelines.
VII. RISK MANAGEMENT
Table 3 below presents an overview of the risks that could affect the implementation of the programme
or the achievement of its outcomes.
Table 3 – Risks and Mitigation Measures
Risks Mitigation Measures Political and Security Risk: this risk is related to the fragility of public institutions and the
climate of insecurity prevailing in Bangui and
in several of the country’s provinces.
This risk is mitigated by the formation of a new Transitional Government and increased support from international forces to restore security. The recent decision of the United
Nations Security Council on 10 April establishing the United Nations Multidimensional
Integrated Stabilization Mission in CAR (MINUSCA) and scheduling its deployment from 15 September 2014 will contribute to the improvement of security conditions nationwide.
Macroeconomic Risk: this risk is linked to the
serious destruction of assets and pillaging during the crisis. This situation has a
significant impact on the productive sectors,
economic growth and public finances.
This risk is mitigated by the Government’s undertaking to resume dialogue with the private
sector and modalities for assistance mainly through private sector support strategies. The TFPs will provide financial support to re-establish a viable macroeconomic framework.
MINUSCA, MISCA and the SANGARIS forces will ensure the country’s security,
especially in the production areas and customs corridors. The restructured PARCGEF will provide support to the recovery of economic activities through technical assistance to the
structures responsible for promoting business activities. Risk of limited capacity to implement
emergency measures: the limited capacity of
government services exacerbated by the
malfunctioning of the public administration could prevent implementation of the
emergency measures.
Through this programme and the PARCGEF, the Bank contributes alongside the other
TFPs to the rebuilding of central government’s administrative capacity. With these support
operations, the Government will be able to ensure the regular payment of civil servants’
salaries and renew the working tools destroyed by the crisis.
Fiduciary Risks: the crisis has seriously
distorted the budget circuit and control systems.
The fiduciary risks were jointly analyzed by the TFPs and minimal mitigation measures
adopted, taking into account the limited capacity of the public administration at programme start-up. A cash-flow plan has been discussed with the Government as well as budget
management and cash flow monitoring modalities. Therefore, regular meetings of the cash
flow committee and public finance monitoring committee will, therefore, be held with TFP participation. Annex 6 and Technical Annex 2 provide further details on the fiduciary risk
mitigation measures
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VII. RECOMMENDATION
Given the foregoing, it is recommended: (i) the Boards of Directors of the Bank and the Fund approved
a grant not exceeding UA 12.7 million from the resources under the Pillar I of the Fragile States
Facility (FSF); and (ii) the Boards of Directors approved an ADF grant not exceeding UA 2.3 million
to finance the Emergency Post-Crisis and Economic Recovery Support Programme (PUASCRE) in
favour of the Central African Republic.
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I
ANNEX 1
Letter of Development Policy
Ministry of Economy, Planning and International
Cooperation
**********
Office of the Minister
**********
N0._______/2014/MEPCI/DIRCAB
CENTRAL AFRICAN REPUBLIC
Unity – Dignity – Labour
TRANSITIONAL GOVERNMENT
2014 – 2015
I. INTRODUCTION
1. The Transitional Government’s Economic Programme is focused on the strategic directions determined by the
Heads of State of the Economic Community of Central African States (ECCAS), through the resolutions of
the Extraordinary Summits of Heads of State and Government on 3 and 18 April and recalled in the message
from the President of the Republic at the first Council of Ministers in which she expressed her strong
determination to commit her Government to adhere to the Transition Roadmap and her determination to
implement the measures and actions of the Emergency Programme for Sustainable Development (PURD) in
order to address the challenges facing the country as a priority.
2. The different crises experienced by the country have jeopardized implementation of the PRSP II (2011-2015)
focused on the following three (3) pillars, namely: (i) the strengthening of Security and Peace, Governance and
the Rule of Law; (ii) economic recovery and regional integration; and (iii) the development of human capital
and essential social services, and resulted in the breakdown of dialogue between CAR and its development
partners. The Transitional Government has redefined its priorities to support the protection of communities and
the country’s recovery during this phase in a document entitled Emergency Programme for Sustainable
Development in CAR (PURD-CAR 2014 – 2016). The urgent needs linked to the crisis are aligned on the
strategic directions determined by the ECCAS Heads of State and Transitional Authorities. This
Programme, accompanied by a matrix of measures, has made it possible to: (i) carry out a comprehensive
analysis of the socio-economic and political context; and (ii) identify the challenges to be addressed in order to
provide a response to the population’s urgent needs, stabilize the security situation, consolidate social peace,
achieve economic stability and revive growth.
3. In accordance with Article 43 of the Constitutional Charter adopted and promulgated on 18 July 2013, and
drawing on the main thrusts of PURD, the Government prepared a Roadmap which was presented to the
National Transitional Council (CNT) following validation by the Monitoring Committee for Implementation of
the Libreville Agreements and the International Contact Group in October 2013. This Roadmap, which takes
into account the country’s urgent requirements, is aligned on the four PURD Pillars. The events of December
2013 brought the country into a second transitional phase prompting the new authorities to revise the Roadmap
to take into account the new needs, in particular integration of the anti-balakas into the DDR process.
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4. Accompanied by Priority Action Matrices, the Roadmap and PURD will serve as a dialogue framework and
facilitate mobilization of the development partners including the provide sector around CAR’s humanitarian
assistance requirements and recovery.
5. Political stability and peacebuilding have been consolidated by the adoption of the Constitutional Charter and
effective mobilization of the soldiers of the International Support Mission to CAR led by the African Union (MISCA) and the French SANGARIS support force. Under the implementation of the United Nations
Security Council Resolution 2121 and in compliance with the decisions of the African Union’s Peace and
Security Council, two consultation frameworks have been established for Disarmament, Demobilization and
Reintegration (DDR) and Security Sector Reform (SSR) with two (2) levels of responsibility: Strategic and
Technical. A DDR pilot programme covering 2000 ex-combatants is already operational. The Confidence-
Building Measures signed by FOMAC/MISCA and the SANGARIS force have helped to: (i) reverse the
military balance which is expected to become gradually favourable to rapid adherence to the DDR process; (ii)
ensure the gradual neutralization of armed groups whose security activities will become increasingly limited;
and (iii) bring about the gradual stabilization of the security situation which could make it possible to carry out
activities on the ground. Similarly, implementation of confidence-building measures by the SANGARIS force
has contributed to the assembly of armed groups corresponding to the effective launching of a preliminary
phase of the future DDR Programme, starting with the pilot phase.
II. MACROECONOMIC AND FISCAL FRAMEWORK IN 2013 AND PROSPECTS FOR 2014
2.1 Economic Framework
2.1.1 Situation in 2013
6. The economic and financial situation in 2013 evolved against a backdrop of widespread insecurity. The
political and social crisis, and the ensuing deterioration of the security situation had very severe economic,
financial and administrative impacts. Economic activity slumped due to the destruction of almost the entire
productive fabric, massive population displacement, food precarity, the destruction of infrastructure, pillaging
of natural resources and the freezing of project financing.
7. Real GDP growth contracted by 36.7% in 2013 following a 4% rise in 2012. This sharp downturn in growth
was mainly due to domestic demand affected by a sharp fall (-68.6%) in final consumption. Public and private
consumption slumped by 85% and 57.4%, respectively, linked to the delays in the payment of civil service
salaries, the drop in agricultural revenue and the paralysis of the administration.
8. In 2013, the primary sector growth rate fell by 41.5% in volume due to insecurity, the lack of finance, ageing
of the main plantations, a fall which is attributed to food crop farming (-46.4%) and cash crops (-46%). The
pillaging of seeds and the brutal suspension of the agricultural sector support projects (PRAP, PREVES…) led
to a 46.4% contraction of agriculture sector and food production. The decline in cash crop growth is partly due
to the absence of financing and the ageing of the main plantations.
The forestry sector growth rate fell by 18.2% in 2013 mainly due to the suspension of production by companies, the
impassibility of roads and paralysis of the Bangui-Béloko corridor.
9. The secondary sector performed poorly, down by 23% in 2013, mainly due to the occupation of mining
production areas by armed men, the destruction of the Ndassima gold mine and the suspension of CAR from
the Kimberley and EITI processes.
10. There was a 13% downturn in water and energy sector activities in 2013 due to the destruction of the Boali
hydro-power facilities, the suspension of the project to rehabilitate drinking water supply systems in Berberati,
Bouar and Bossangoa on AfDB financing in the water sub-sector and the temporary suspension of financing
for the main energy sub-sector recovery projects.
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III
11. Manufacturing sector output fell by 13.3% in 2013 as a result of pillaging and theft.
12. The tertiary sector growth rate fell by 28% in 2013 as a result of a drop in merchant (-24.1%) and non-
merchant services (-45.9%). This situation was mainly due to road transport difficulties, the closure of several
businesses, the destruction of mobile phone facilities and fuel supplies in the country’s interior, internal and
external population displacements and the destruction of administrative infrastructure.
13. Fanned by price hikes in the last quarter of 2013, inflation accelerated to an annual average of 3.9% in 2013.
14. The external position deteriorated sharply in 2013 despite a strong contraction in imports of about 28%. The
external current account deteriorated considerably because of a sharp contraction in exports (-57.5%), affecting
all export sectors.
15. At the end of November 2013, an analysis of money supply component trends revealed, on the one hand, an
increase in fiduciary money (+10.9%) and, on the other, a fall in both bank money (-10.9%) and quasi-money
(-7%). The external coverage rate of money was 68.68%, credits to the economy contracted by 15.2% and net
claims on government rose by 4.4% as a result of cash flow problems which prompted the central government
to turn to the primary banks.
16. In 2013, there were serious budget execution problems chiefly resulting from the slump in tax revenue.
Because of the difficult economic situation and the pernicious political/military climate, domestic revenue only
represented 6.1% of GDP in 2013, a sharp drop mainly due to the collapse of economic activities and the
paralysis of the government revenue services in the performance of their core functions to be able to assess and
collect taxes and duties, similar to the operating difficulties of the customs network.
2.1.2 Prospects for 2014
17. The economic recovery in 2014 is expected to begin with a projected real GDP growth rate of 1.3%. These
growth projections are based on the assumption of the restoration and maintenance of security and political
stability, the return of displaced communities to resume agricultural activities, the distribution of seeds and
processing tools, the resumption of activities at the Bossangoa cotton ginning plant, the lifting of the embargo
on diamond exports and the countrywide resumption of government services.
18. The primary sector growth rate could reach 0.5% in 2014. Food crop production is expected to benefit from the
resumption of Government and development partner support through the supply of seeds, agricultural inputs
and small implements. Cash crop production will also be boosted by the recovery of the cotton sub-sector,
especially through Chinese support and the resumption of activities at the Bossangoa plant. The coffee sector is
expected to improve as a result of the strategies implemented to increase yield and because of expected good
distribution of rainfall. Forestry activities are expected to increase by 0.6% in 2014.
19. The secondary sector growth rate is expected to be -2.1% in 2014, a significant improvement on 2013.
20. There is expected to be an upturn in the water/energy sector to 2.8% in 2014 due to several operations aimed at
building production capacity such as the coupling of the Boali 2 generators and the installation of a turbine at
the Mbali dam (Boali 3).
21. Manufacturing output is expected to increase slightly in 2014 (1.2%), depending on the reduction of
production costs and possible improvement of water and energy production. In the wake of all the destruction
perpetrated in 2013 (-17.2%), a recovery (1.3%) of BPW activities is expected in 2014, subject to external
financing (development assistance in particular, in favour of road and air infrastructure).
22. The tertiary sector growth rate is expected to increase steadily to 4.8% in 2014. The transport sub-sector, after
the lean period in 2013 (20%), is expected to grow by 1% in 2014. Lastly, following the strong contraction of
2013, non-merchant services will recover significantly as a result of the different external pledges made and
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IV
the resumption of government services throughout the territory of the Central African Republic with a view to
forthcoming elections.
23. The sharp rise in prices in the last quarter of 2013 and in the first semester of 2014 will fuel inflation during
the second semester of 2014 before it starts to fall during the second semester of 2014 to approach the CEMAC
convergence criterion (3%).
Public Finances
2.2.1 Measures taken by the Government
24. Under the 2014 fiscal policy, some bold measures will be taken: (i) establishment of the Treasury Central
Accounting Agency which represents a strong commitment by the Government to clarify the functioning of the
Treasury, improve transparency and accounting traceability; (ii) the establishment of a Cash Flow Committee
under the authority of the Minister of Finance to improve cash flow management; and (iii) the establishment of
a public finance management committee aimed at ensuring joint monitoring with the technical and financial
partners of all budget support operations and public financing. The establishment of the Treasury Central
Accounting Agency (ACCT), planned for mid-July, will ensure budget management on an informed basis
aimed at streamlining the public expenditure circuit. The objective will be to create the conditions to improve
the linkages between budget commitment and accounting treatment using the GESCO computer application
and to facilitate decision-making by producing reliable financial information.
25. Following submission of the Draft 2006 Budget Review Law to the National Assembly in December 2011, the
Government is working on the other fiscal years. Thus for the 2009 fiscal year, all the required documents, i.e.
the management account, the administrative account, the general finance and administration account as well as
the draft Budget Review Law, have already been submitted to the Court of Auditors. The Directorate-General
of Treasury is currently working to compile the support documents to accompany the documents already
submitted. For the 2010 fiscal year, there are only four outstanding commitments before inputting all the
accounting entries. Inputting this information will give the different accounts to be produced before tackling
the preparation of the Budget Review Law. The most serious constraint concerns the 2011 fiscal year. Indeed,
given the political change that occurred in 2013 characterized by the systematic pillaging of working tools in
government services, the Directorate-General of Treasury has lost all its IT equipment, including the server for
the GESCO computer application, and is suddenly faced with database access difficulties. However, efforts are
being made to make this application operational again.
26. The trimming of the number of Ministerial portfolios to twenty in the current Transitional Government is a
major achievement to be capitalized on in order to ensure the sincerity of the 2015 budget programming.
Depending on resource availability, the strengthening of the already initiated participatory process will aim to
cover all sector departments.
27. To improve budget execution, measures have been taken, especially in the area of budget execution
monitoring. The Liquidity Monitoring Commission established by Decree No. 08.317 of 29 August 2008 has
been strengthened by a Budget Management Monitoring Committee established by Order No. 002 of 11
January 2012. The holding of regular meetings organized by these structures contributed to the effective
focusing of budget execution in 2012. To take into account the impact of the crisis on the 2014 budget
execution and in the following years, a new Order was recently issued establishing the Cash Flow Committee
and confirming its attachment to the Office of the Minister of Finance. A draft decree establishing the Budget
Support Monitoring Committee is being prepared.
2.2.2 The Main Thrusts of the 2014 Budget and Medium-Term Policies
28. In implementing the Roadmap and PURD, the Government will attach priority to: (i) building the population’s
resilience capacity and the recovery of grassroots communities; (ii) the restoration of essential public and
social services (through development poles); and (iii) human and institutional capacity building.
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V
29. The Government must remain consistent in implementing its development projects. To this end, the draft 2014
Budget Law earmarks, under investment expenditure, a budget allocation of CFAF 83.62 billion corresponding
to a 19% increase on 2013 linked to the increase in resources allocated to the following priority sectors:
• Justice, security and DDR for the financing of the justice and police sector reform programme as
well as the community integration project;
• Economy and finance development pole whose components concern: (i) support to the global
public finance reform programme; (ii) the financing of projects identified in the area, namely
technical assistance, support to the national EDF payment authorization officer, economic and
financial management capacity building, strengthening statistical capacity in CARA, monitoring
and evaluation, and accelerated growth to achieve the MDG, support to livelihood stabilization,
community protection and resilience in conflict-affected areas in CAR and programmes for
micro-projects, improving access to the development poles as well as support to the coordination
and monitoring of the SDP programme;
• Education to support projects relating to the education/training sector strategy in CAR, support to
the educational system, increased access to and use of user-friendly services by teenagers and
EDUCA study funds;
• Health and social affairs with a view to improving health care service delivery through the
rehabilitation and equipping of health posts, procurement of equipment and drugs, support to
health care programmes (management of malaria at home, national leprosy control programme) as
well as a health system in CAR; building capacity to promote gender equality and support
vulnerable groups for community development;
• Infrastructure and access facilitation by financing the following projects: institutional support to
road maintenance (Bouar-Garoua-Mboulaï), preliminary design for, and construction work on the
Sapéké bridge, labour intensive work (LIW), urban development programme and the Emergency
Urban Services Infrastructure Rehabilitation Programme (PIRUSU);
• Energy, mining and water with a view to financing drinking water supply projects in some of the
country’s towns, the Boali 3 Hydro-Power Plant, the Emergency Energy Crisis Programme as
well as the financing of programmes in the water and sanitation sector;
• Rural development and livestock, to finance the Food Crop and Small Livestock Recovery Project
in Savannah Areas (PREVES), the Emergency Food Crisis Response and Agriculture Recovery
Project (PURCARA), the Poultry Production Support Project in CAR and support to rural
infrastructure rehabilitation;
• Forestry, hunting and fishing to build institutional capacity with a view to reducing emissions
resulting from deforestation and forest degradation to ensure sustainable management, the
financing of Ecofauna Programmes and the conservation of biodiversity in Central Africa.
2.2.3. Domestic Resource Mobilization Efforts
30. To improve mobilization of its own resources, the Government is planning to define and implement the
reforms of the financial authorities. Such an initiative should ensure the comprehensive reform of the tax
services and reorganization of the customs administration as recommended by the IMF technical assistance
missions. At the level of the tax administration, with the assistance of IMF and the European Union, two types
of measures will be implemented. These are measures of a legislative and administrative nature. The legislative
measures concern strategies to broaden the tax base and to provide tax incentives for investment prepared
under the 2014 Budget Law. The legislative measures will entail the creation of two levels for action. The tax
base broadening strategy will entail the re-introduction of contributions from licenses, the revision of the
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VI
personal income tax scale applicable to wage earners, the introduction of deduction at source of the Single
Fixed Tax at the customs post and streamlining of tax exemptions by measures to restrict the granting of tax
relief and exemptions, and by suppressing exemptions that are not legally justified.
31. In the second phase, action will focus on investment strategies through tax incentives and measures to improve
the business climate. At this level, action will be focused on a series of measures aimed at mobilizing domestic
tax resources, designed and assigned to the General Directorate of Taxes and State Land.
32. With regard to customs services, the reform will focus mainly on the continuation of the customs
modernization plan carried out with the assistance of the World Customs Organization (WCO), the
establishment of a customs clearance centre at Beloko and the use of two scanners donated by China, the
continuing fight against fraud and the strict control of exemptions. During the 2014 fiscal year, special
emphasis will be placed on the mobilization of customs revenue. The actions underpinning these measures aim
to control the supply and customs clearance chain after ensuring the security of the main corridors, especially
the Bangui-Béloko corridor, assisted by the international forces in the country to ensure the deployment of
customs officers to the different posts. There will also be a series of sensitization sessions for operators on the
resumption of their activities. Action will be taken to improve the flow by alleviating the customs clearance
system through the operationalization of the Beloko platform and the establishment of partnerships with
credible operators. A large-scale operation will focus on the combat against fraud especially in regions that
have become oil product smuggling centres. Lastly, to mitigate fiduciary risks, adequate measures such as the
re-opening of banking establishments in the provinces, the recruitment of tax receipt officers for the customs
services and periodic controls will be applied. The withdrawal of SODIF from the customs service system will
enable the General Directorate of Customs and Indirect Taxes to improve its performance. Consequently, and
in agreement with the technical and financial partners, the National Directorate of Customs Investigations will
be strengthened with human and material resources in order to produce the expected results.
2.3 Other Government Efforts
33. The recent crisis has aggravated the fragile nature of the Central African Republic’s judicial system by placing
all citizens in a situation of judicial insecurity. The absence of judicial administration in the different towns of
the interior places the population and economic operators in a situation of judicial insecurity and non-
assistance.
34. To gain the confidence of operators, improve the business environment and promote private investment, the
Government will implement measures and actions to speed up improvement of the business environment in
order to restore the confidence of the private sector and attract foreign direct investment. It will: (i) strengthen
the judicial governance framework; (ii) carry out a joint assessment of the damage suffered by private
enterprises; (iii) prepare measures to assist firms that have suffered damage; (iv) revitalize the Joint Committee
responsible for Improving the Business Climate and the Permanent State-Private Sector Consultation
Framework; (v) finalize the revision of the Investment Charter; (vi) build the capacity of Chambers of
Commerce (CCIMA, CAAEEFPCT); (vii) strengthen the overall business environment; (viii) lower the cost of
credit and improve access to financing; and (ix) strengthen the private sector promotion and support
mechanism.
35. Following the institutional change of 24 March 2013, the Central African Republic was temporarily suspended
from the Kimberley Process (KP) and the Extractive Industries Transparency Initiative (EITI) on 23 May
2013. Diamond production fell sharply to 44,000 carats (approximately CFAF 4.6 billion) in 2013 compared to
366,000 carats (about CFAF 33 billion) in 2012 and 302,000 carats (about CFAF 25.8 billion) in 2010. The
Government’s reaction was to meet the KP Working Group on Monitoring during a mission, following which
it was tasked with implementing a series of measures aimed at streamlining the diamond sub-sector circuit and
rationalizing the security environment with a view to lifting the suspension. These measures concern: (i) the
promulgation of new text on the restructuring and reorganization of SPPK taking into account the tripartite
participation of the public sector, private sector and civil society as well as the strengthening of its
decentralized structure established in all the diamond production areas; (ii) the establishment of a diamond
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VII
sub-sector support mechanism able to provide technical and financial assistance to control and monitor
production with the participation of central government, private mining operators and technical and financial
partners with a view to ensuring the security of production as required under the KP; (iii) the introduction of
specific taxation for activities relating to the production, collection and export of artisanal gold; (iv) the
harmonization of the local gold trade with that of neighbouring countries; (v) the rapid deployment to the
hinterland of both national and international security forces to ensure the security of mining activities; (vi)
stepping up the combat against fraud by the redeployment of the mining police (USAF) in the mining and
border areas; (vii) preparation of taxation on mineral substances; and (viii) provision of adequate equipment.
36. The forest sector, which contributes an annual average of almost 10% to GDP and accounts for almost 50% of
CAR’s export earnings, remains the country’s biggest employer i.e. over 4,000 direct and 6,000 indirect jobs
prior to the recent crisis. The brutal repercussions of the military/political crises exacerbated by the persisting
insecurity connected to the change in constitutional order of 24 March 2013 have ruined all the sector’s assets:
(i) pillaging of production tools and the sector’s economic fabric have created a sharp increase in forestry tax
arrears; (ii) the risk of non-compliance with the implementation schedule of the Voluntary Partnership
Agreement, in particular, the VPA/FLEGT with the European Union due to lack of adequate resources for
forest governance; (iii) the scarcity of financing for the procurement of more modern wood processing tools to
create more value-added; (iv) a non-conducive business environment; and (v) weak human, institutional and
technical capacity. The Government intends to mobilize the necessary support to accelerate implementation of
the Voluntary Partnership Agreement (VPA) signed with the European Union in the context of the FLEGT
process. It will be responsible for implementing the different measures and actions planned, in particular: (i)
implementation of priority activities under the operational action plan of the study on the marketing of wood
and development of the wood sub-sector in CAR; (ii) building the operational capacity of the Wood Sector
Economic Observatory in CAR regarding the revision of market and FOT values; (iii) establishment of an
optimal management mechanism for the Special Allocation Account for Forestry Development; and (iv)
implementation of a recovery mechanism for all unpaid forest taxes.
III. PRESENTATION OF THE GOVERNMENT’S PROGRAMME
37. The Government has prepared an Emergency Programme for Sustainable Recovery (2014 – 2016 PURD)
whose Vision 2016 is based on its will to fulfil the commitments made before ECCAS Heads of State. Its
determination to create the conditions for the restoration of peace, security and constitutional order and good
governance is clear. Implementation of the strategies defined in PURD will allow CAR to be on track to
achieve the MDGs after 2015. These strategies are focused on four (04) interdependent strategic thrusts. The
first three (3) will enable the Government to meet the priorities of the Roadmap set by ECCAS. The last thrust
will enable it to lay the foundations for the stabilization of the macroeconomic framework, especially the
restructuring of public finances, and kick start the country’s recovery to place it on the path of real
development. This intervention strategy combines humanitarian assistance and early recovery actions by
rebuilding the capacity of national institutions and communities to recover from a crisis. It is necessary for the
Government to lay the foundations for sustainable recovery and development. The PURD strategy is designed
as an instrument to enhance the effectiveness of the humanitarian-development relationship during the
transition. Its four strategic thrusts are:
• Restoration of Security, Peace and Strengthening of Governance and the Rule of Law
38. Through this first area of concentration, the Government intends to implement rapid measures and actions with
the support of the international community to stabilize security. It will be necessary to take effective action
concerning the disarmament, demobilization, reintegration and repatriation (DDRRR) of ex-combatants of the
Seleka movement and the new anti-balaka militia. Implementation of the strategy to reform the security sector
will contribute to the restoration and re-establishment of the Defence and Security Forces. The strategy
concerning governance and the rule of law will enable the Government to conduct the electoral process to
restore regular republican institutions in the country.
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VIII
• Strengthening of Civil Protection, Re-establishment and Reorganization of the Administration
throughout the National Territory
39. This Pillar is the second focal area and is entirely dedicated to general humanitarian assistance. To improve
coordination of humanitarian assistance, the Government intends to implement all possible measures that will
foster the return of internally displaced persons and refugees. Therefore, the focus will be on access to basic
social services (education, health, water and sanitation). Along with MISCA backed by the ‘SANGARIS’
forces of the French mission, the Government is determined to implement all actions aimed at contributing to
extensive protection for civilians and promoting human and humanitarian rights. Implementation of the
measures and actions relating to administrative governance and public services will enable the Government to
restore and reorganize the Administration countrywide.
• Revival of activities in the Key Social Sectors, Intensification of HIV/AIDS Control and
Environmental Protection
40. T hrough this strategic thrust, the Government will pursue the main actions embarked upon in the area of human
capital and initiate the implementation of reforms concerning: (i) rehabilitation of education; (ii) revitalization
of the health system; (iii) intensification of HIV/AIDS control; (iv) involvement of young people; (v) water
and sanitation; (vi) gender promotion; (vii) employment and social protection; and (viii) environment and
climate change.
• Strategic Thrust 4: Pursuit of Economic and Financial Reforms and Promotion of Robust and
Sustainable Growth
41. The success of all the Government’s actions will depend on improvement of the country’s economic and
financial performance. Thus, this thrust concerns all the main areas for action that will enable the Government
to leverage external resources with the assistance of the International Contact Group and initiate actions for the
country’s recovery. These main areas for action concern: (i) economic assistance; (ii) improvement of the
business climate; (iii) promotion of growth; (iv) promotion of growth support infrastructure; (v) pursuit of
global public finance reforms; and (vi) strengthening of regional economic integration.
42. The Transition Roadmap prepared pursuant to Article 43 of the Constitutional Charter is not only aligned on
the four PURD strategic thrusts but has also contributed to the identification of the main areas of action that
represent the Transitional Government’s top priorities focused on the following four pillars:
• Restoration of security and peace consolidation;
• Humanitarian assistance;
• Policy and governance;
• Economic recovery.
43. The Action Matrices track the investments that will enhance the visibility of actions that will contribute to the
achievement of these objectives. They are based on the priority strategic thrusts retained for PURD and are
placed in a multi-year perspective.
IV PROGRAMME IMPLEMENTATION INSTITUTIONAL FRAMEWORK
44. The existing structures which have been effective previously in programme management will be tasked with
the programme’s implementation, monitoring and evaluation. These include the Reforms Monitoring Unit (CS-REF)
and the PRSP National Technical Secretariat. They are under the umbrella of an international steering committee
composed of ministers involved in the programme’s implementation.
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IX
45. Central to the institutional mechanism for public finance reform is the Public Finance Reform Steering
Committee (CPR). It is the organ for strategic directions, arbitration and monitoring of the public finance
reform strategy. The Steering Committee is chaired by the Minister of Finance or his/her representative. It
comprises officials from the action plan implementation structures (Ministry of Finance and Budget, National
Assembly Finance Commission, Court of Auditors, the State Inspectorate General, Public Procurement
Regulatory Authority), a representative of civil society and representatives of the technical and financial
partners.
46. Regarding programmes and projects, the Government has an institutional mechanism comprising the following
bodies: (i) The National Strategic Council (CNS) chaired by the Prime Minister; (ii) the National Technical
Committee (CNT) chaired by the Minister of Planning and International Cooperation; (iii) the PRSP National
Technical Secretariat (STN); (iv) the PRSP Thematic Groups (TG); the Ministerial Technical Committees
(CTM); and (v) the Regional Committees (RC). Emphasis will be placed on the already initiated
decentralization of the implementation and monitoring/evaluation mechanism in order to involve all the
Ministerial Departments in programme management. Since PURD will be implemented in a context marked by
a clearly defined transitional period, the Government will establish a Monitoring Committee to oversee the
implementation indicators defined for each programme, project and activity under PURD and informed by the
institutional mechanism. This Committee will be chaired by the Prime Minister and composed of members of
government and representatives of the actors involved (development partners, grassroots communities, civil
society and religious faiths).
V. CONCLUSION
47. With these two documents, the PURD and the Roadmap, the Government has advocacy instruments for the
mobilization of resources required to implement them. The Government undertakes, through the programme
timeframes, to adhere to the transitional period and provide the new post-2015 election authorities with a
rolling programme.
48. The main focal areas of the government’s priorities are marked by the will to restore security, provide social
protection and implement the DDR in order to reassure the population, rebuild a credible army, improve public
finance performance and put the Administration back to work.
49. To achieve these objectives, the government requires significant domestic and external resource mobilization.
Weak mobilization of domestic resources during the periods of crisis compels the government to count on the
support of its bi-and multilateral partners. Also, given the economy’s structural weakness, the government will
endeavour to demonstrate to its partners its strong resolve to improve the efficiency of its financial services,
improve revenue levels and public finance management, and mitigate the fiduciary risks to which the different
external financing operations might be exposed.
50. The performance of the different government actions will be measured by an improvement in public finance
management on both the budget and accounting fronts, as well as the national budget execution control and
monitoring. Control of public expenditure and increased domestic revenue will be necessary to ensure the
revitalization of socioeconomic activities.
Minister of Economy, Planning and International Cooperation responsible for Development Poles
Florence LIMBIO.-
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X
ANNEX 2
Programme Matrix of Measures
EMERGENCY POST-CRISIS AND ECONOMIC RECOVERY SUPPORT PROGRAMME
(PUASCRE)
Objective Government Priorities
Defined in the
Emergency
Programme
Programme
Measures
Output
Indicators
Outcome
Indicators
Component I - Re-establishment of Fiscal Discipline and Restoration of Basic Social Services I. 1 – The
capacity of the
economic and
financial
administrations
are rebuilt
Resumption of the
normal functioning of
public administrations
• Ensure security in
the country, in
particular, on the
Bangui-Béloko,
Bangui-Gamboula
and Sido-Kabo-
Kaga-Bandoro-
Bangui corridors
• Redeploy tax
administrations to
secure areas
• Pay all civil
servants regularly
• Continue to
implement the
reforms already
embarked upon for
resource
mobilization
(improving the
monitoring of oil
taxation,
exemptions, tariff
values, cleaning up
taxpayer database)
• Reactivation of the
Cash Flow
Committee and
establishment of a
public finance
monitoring
committee
• Re-establishment of
the public
expenditure circuit
and reduction of
off-budget
expenditure
• Operationalization
of ACCT
established on
3012/2012
• Ensure the start-up
General Measures
• Redeploy
financial
administration
personnel
(Customs;
Taxes;
Treasury;
Budget)
• Ensure the
payment of 12-
months’ civil
servants’
salaries in 2014
Mobilization of tax
revenue
• Ensure the
effective
presence of the
Customs
Authority in the
secured
corridors
(Bangui-
Béloko,
Bangui-
Gamboula) and
strengthen the
control system
• Ensure the
payment of 12-
months salaries
in 2014
• Prepare a work
programme for
DGDDI and
DGID
Public Expenditure
Execution • Operationalize
ACCT through
• Tax
administration
employees
have resumed
work in the
secure areas of
the country
• Civil servants’
salaries are
paid regularly
• There are
sufficient
customs
officers with
working
resources in
the Bangui-
Béloko,
Bangui-
Gamboula
corridors. A
system is put
in place to
control
employees and
goods.
• The customs
and tax
administration
s have a work
programme
covering at
least 12
months
• The Decrees
on the
appointment of
the Accounts
Officer and
his/her deputy
are adopted by
end September
2014
• Technical
assistants to
the Treasury
At least 50% of
the financial
administration
personnel
(Customs,
Taxes, Treasury
and Budget)
have resumed
duty and are
deployed by end
2014;
10.3% increase
in tax revenue
compared to
2013 ;
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XI
of the GESCO
application at the
Treasury
• Adoption of a
domestic debt
treatment
mechanism
the appointment
of the Accounts
Officer and
his/her deputy
by calls for
applications
(structural
benchmark);
• Restore the
functionality of
GESCO
Treasury and
GESCO Budget
(structural
benchmark)
• Operationalize
the Cash Flow
Committee
and Public
Finance
Management
Monitoring
Committee
(trigger)
and Budget are
recruited by
end September
2014
• The functional
link between
GESCO
Treasury and
GESCO
Budget is re-
established by
end September
2014
• The Decrees
establishing
the Cash
Flow
Committee
and Public
Finance
Management
Monitoring
Committee
are adopted
by end April
2014
(measures
precedent to
presentation
of the
programme
to the Board)
I.2 - The social
services are
provided with
adequate human
and financial
resources to
provide a
minimum
service
• Redeploy health
personnel and
teachers to already
secure areas
• Rehabilitate health
facilities in Bangui
and in other refugee
reception localities
• Supply health
centres with
emergency medical
kits;
• Provide vulnerable
refugee
communities
mainly in Bangui
with food and non-
food products
• Re-launch the
borehole
programme in the
worst crisis affected
areas
• Redeploy
health and
education
personnel to the
different
regions of the
country as
security is
restored;
• Increase the
social
expenditure
execution rate
in the 2014
budget in order
to rehabilitate
and equip
health centres
and schools;
• Re-launch the
borehole
programme
• Health
personnel and
teachers have
effectively
resumed duty
in the different
areas where
security has
been restored
• The social
expenditure
execution rate
has improved
• Dialogue has
resumed with
the TFPs with
a view to re-
starting the
borehole
programme
financing
At least 60% of
health workers
and teachers
have resumed
duty by end
2014.
The social
expenditure
execution rate
(excluding
salaries) is 40%
in 2014
compared to
only 20% in
2013
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XII
Component II Support the Creation of Conditions Necessary for Economic Recovery Improve the Business
Environment
• Revitalize the Joint
Committee and
Permanent
Framework for
Government-
Private sector
consultation
• Request the lifting
of CAR’s
temporary
suspension from the
Kimberley and
EITI processes
• Joint assessment of
damage suffered by
private enterprises;
• Auditing of
domestic debt;
• Adoption of an
option for the
treatment of arrears
owed to central
government
suppliers
• On-going clearance
of central
government
commercial debts;
• Promotion of high
growth potential
sectors (agriculture,
mines, forests)
• Promotion of
growth support
infrastructure
• Rehabilitation and
strengthening of
Chambers of
Commerce
(CCIMA,
CAAEEFPCT)
• Revitalize the
Joint Committee
and Permanent
Framework for
Government-
Private sector
consultation.
Assess damage
suffered by
private
enterprises.
• Continue the
clearance of
commercial debt
audited in 2012
• Implement
measures with a
view to lifting
CAR’s
temporary
suspension from
the Kimberley
and EITI
processes
• The meetings
of the joint
committee
and CPC
resume by
end
September
2014
The damage
suffered by
enterprises is the
subject of an
independent
assessment by 30
June, 2015.
Commercial debt
accumulated in
2012 and 2013 by
the central
government is
audited by June
2015
• Commercial
debt
clearance has
resumed
depending on
the cash
margins
• Measures
with a view
to lifting
CAR’s
temporary
suspension
from the
Kimberley
and EITI
processes are
implemented
by end 2014
Agreement
between the
Government and
private sector
representatives
on actions to be
carried out
during the 18-
month
transitional
period to
facilitate the
recovery of
business
activities and
treat new
government
arrears
The lifting of
CAR’s
temporary
suspension from
the Kimberley
and EITI
processes is
effective by end
2014
At least 4% of
the commercial
debt audited in
2012 is cleared
by 2014
.
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XIII
ANNEX 3
Note on Relations with IMF
Press Release No. 14/226
15 May 2014
The Executive Board of the International Monetary Fund (IMF) approved on May 14, 2014 financial
assistance under the Rapid Credit Facility (RCF) in the amount equivalent to SDR 8.355 million (about
US$12.9 million) for the Central African Republic (C.A.R.) in support of the authorities’ emergency economic
recovery program. The financial assistance from the IMF will help the Transitional Authorities of the C.A.R.
to implement a set of economic and structural policies and measures aimed at restoring progressively
macroeconomic stability and strengthening the capacity of the C.A.R. government. The Executive Board’s
approval of the RCF will also enable the authorities to engage in discussions with development partners
regarding further assistance. The Executive Board’s approval enables the immediate disbursement of the full
amount, which is equivalent to 15 percent of C.A.R.’s quota in the IMF.
The Executive Board noted the authorities’ cancellation of the Extended Credit Facility (ECF) arrangement for
C.A.R. that was approved on June 25, 2012 (Press Release No. 12/237). The Executive Board can consider
renewal of financing under the RCF before the end of the year, provided the C.A.R. meets the policy
requirements for repeated use under the RCF, including the establishment of a track record of adequate
macroeconomic policies for a period of normally six-months prior to a new request for financial assistance
under the RCF. Timely provision of pledged financial and technical assistance is crucial to sustain the
momentum for the recovery, strengthen the capacity of the C.A.R. government and exit from the emergency
situation.
The RCF provides rapid concessional financial assistance with limited conditionality to low-income countries
with an urgent balance of payments need. In this context, the economic policies of a member receiving RCF
financing are expected to address the underlying balance of payments difficulties and support policy
objectives including macroeconomic stability and poverty reduction. Financing under the RCF carries zero
interest, has a grace period of 5 ½ years, and a final maturity of 10 years. The Fund reviews the level of
interest rates for all concessional facilities every two years.
Following the Executive Board’s discussion of the C.A.R.’s request for financial assistance under the RCF,
Naoyuki Shinohara, Deputy Managing Director and Acting Chair, stated:
“The political and security crisis that followed the seizing of power by a rebel coalition in March 2013 has
produced large-scale economic dislocation in the C.A.R. and exacerbated an already fragile situation. The new
transition government is strongly committed to restoring security, mobilizing humanitarian assistance,
reviving the economy, and rebuilding democratic institutions, but faces daunting challenges.
“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 mobilization, return to normal budgetary procedures, clear domestic
arrears, and ensure regular payments of salaries and pensions to civil servants. Transparent management of
public resources including external support, better prioritization of spending, and improving treasury
management will be critical for the success of the program. Preserving debt sustainability will also be
important.
“The Fund will continue to play a key role in coordinating international efforts in the provision of much
needed financial support and technical assistance to rebuild key financial functions of the government.”
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XIV
Central African Republic: Prior Actions and Structural Benchmarks, 2014
Measures Timeframe Macroeconomic Fundamentals Signing of the Decree establishing the Treasury
Monitoring Committee (CST) and the effective
establishment of that body.
Prior Action Improve cash flow monitoring and
management
Signing of the Decree establishing the Public Finance
Monitoring Committee (CST) and the effective
establishment of that body.
Prior Action Improve public resource monitoring and
management
Adoption of the draft 2014 budget by the government
and submission to CNT Prior Action Normalize public finance management
Finalization of the first stage of the cleaning up of the
payroll database.
Structural
Benchmark
(June 2014)
Streamline the payroll database and
improve civil service efficiency
Reconnection of GESCO-Budget and GESCO-
Accounts computer applications Structural
Benchmark
(September
2014)
Strengthen the budget procedure and
accounting traceability
Recruit the Treasury’s Chief Accounting Officer and
his/her authorized representative. Structural
Benchmark
(September
2014)
Improve cash flow management as well as
account centralization and monitoring
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XV
ANNEX 4
Key Macroeconomic Indicators
Indicators Unit 2000 2008 2009 2010 2011 2012 2013
(e)
National Accounts
GNI at current market prices USD Million 1,036 1,780 1,943 2,068 2,109 ... ...
GNI per capita USD . 280 420 450 470 470 ... ...
GDP at current prices USD Million . 917 1,981 1,985 1,984 2,186 2,010 2,213
GDP at current 2000 prices USD Million . 917 1,010 1,028 1,061 1,094 1,128 1,165
GDP growth in real terms % 1.9 2.0 1.7 3.3 3.1 3.1 3.2
GDP growth per capita in real
terms % 0.0 0.2 -0.2 1.4 1.1 1.1 1.2
Gross Domestic Investment % of GDP 10.0 12.7 13.2 14.3 12.4 14.8 15.3
Public Investment % of GDP 4.9 5.2 6.1 7.2 2.6 6.2 6.8
Private Investment % of GDP 5.1 7.5 7.0 7.1 9.8 8.6 8.5
National Savings % of GDP 8.6 2.8 4.0 4.1 3.6 7.3 9.5
Prices and Money
Inflation (CPI) % 3.2 9.3 3.5 1.5 0.7 3.5 2.4
Exchange Rate (annual average) Local currency
/US$. 712.0 447.8 472.2 495.3 471.9 510.5 ...
Money Supply, annual changes
(M2) % -6.0 16.9 13.8 15.5 11.8 ... ...
Velocity of Broad Money (GDP /
M2) % 15.6 12.8 13.8 15.2 16.2 ... ...
Government Finance
Total Revenue and Grants % of GDP 14.3 15.2 16.1 17.9 14.5 15.7 16.4
Total Expenditure and Net Loans % of GDP 16.2 16.2 16.2 19.3 17.4 19.2 19.8
Overall Deficit (-) / Surplus (+) % of GDP -1.9 -1.0 -0.1 -1.4 -2.9 -3.5 -3.4
External Sector
Change of Volume of Exports
(goods) % 17.6 -15.5 -21.9 9.7 5.1 11.6 4.9
Change of Volume of Imports
(goods) % -5.2 -2.2 13.3 3.6 -19.6 18.7 9.1
Change in Terms of Trade % -2.9 -20.5 40.6 -6.0 11.6 -3.4 7.6
Current Account Balance USD Million -13 -195 -160 -197 -156 -141 -119
Current Account Balance % of GDP -1.4 -9.9 -8.1 -9.9 -7.2 -7.0 -5.4
International Reserves Months of
imports 6.9 3.2 5.9 4.5 3.6 3.9 ...
Debt and Financial Flows
Debt Service % of exports 18.8 20.0 12.4 5.1 4.2 9.7 8.5
Total External Debt % of GDP 87.0 54.2 16.7 18.6 16.2 19.3 16.9
Total Net Financial Flows USD Million . 50 234 247 230 292 ... ...
Net Official Development
Assistance Million US$. 75 257 242 261 272 ... ...
Net Foreign Direct Investment USD Million . 1 117 121 92 109 ... ...
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XVI
ANNEX 5 Donor Interventions in CAR (USD million)
Donor Project General
Support Sector
Support Scope Observations
World
Bank
Education Project 23
Construction and rehabilitation of
classrooms.
Higher quality of learning and teaching
conditions.
These two operations cover the social
sectors in the areas of infrastructure
rehabilitation and emergency health
care delivery. These operations
complement PUASCRE, which
supports the redeployment of teachers
and health personnel. Health Project 15
Emergency health care
Institutional support to the Ministry of
Health
FCP Project concerning public
finance
management
5
Improvement of revenue collection and
budget preparation and execution procedures; improvement of central
government and public administration
presence These two operations complement the
support operations of the Bank
(PUASCRE) and other TFPs Emergency Public
Services Response
Project 27
3
Payment of salaries to be made in 2014.
Technical Assistance provided to the
Ministry of Finance
United Nations
United Nations Peacebuilding Fund
12 An emergency stopgap measure intended to finance the police/gendarmerie
The UN support complements that of
the other TFPs to cover both the general administrations and armed
forces.
IMF Budget Support
20
Budget support through the Rapid Credit
Facility; the IMF mainly supports the
return to fiscal orthodoxy and cash flow
management with a view to restoring
macro-economic stability in the longer
term: improving cash flow monitoring
and management; public resource monitoring and management; normalizing
public finance management; rationalizing
the payroll database and enhancing civil
service efficiency; strengthening the
budget procedure and accounting
traceability; improving cash flow
management as well as the centralization and monitoring of accounts.
The programme measures are also supported by the World Bank, EU,
France and AfDB (PUASCRE)
France Budget Support /
Technical
Assistance
6
1
Budget support amounting to USD 6
million to be disbursed no later than June 2014. French technical assistance aims to
build the technical capacity of the
Customs Authority and the Directorate of
Public Accounting.
France’s budget support aims to help
the country to meet its external commitments to multilateral creditors.
The technical assistance component is
implemented jointly with the other
TFPs.
EU Budget Support /
Technical
Assistance 30 9
Technical assistance targets public finance
structures
TA to CS REF; TA Public Finance
Reform Plan
TA to ACCT; TA to CUSTOMS
(SYDONIA, oil taxation, Surveillance Brigade).
Technical assistance coordination is
carried out with the other TFPs to
prevent overlapping.
ECCAS Budget Support 40
The Republic of Congo, Angola and
Gabon have already disbursed their contributions. Angola has pledged a
supplementary loan of USD 10 million
and the other ECCAS countries are also
planning to disburse at least USD 5
million each
ECCAS support is helping to close the
financing gap and consolidate the
macroeconomic framework.
AfDB
Budget Support /
20
Budget support operation. Support to
redeployment of the administration,
improvement of tax revenue, public
finance management and economic
recovery
Coordination is carried out with the
IMF, WB, EU and France which also
support public finance management
structures. The Bank is involved in equipment and the provision of experts
in various areas PFM and Private Sector Assistance
(PARCGEF) 7
Technical assistance provided to several
Directorates in connection with the expenditure chain (Taxes, Customs,
Treasury, Budget, Chambers of
Commerce, One-Stop-Shop for Business
Formalities…)
Total 155 63
Source: Donor Roundtable and CAR Authorities
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XVII
ANNEX 6
Measures relating to the Fiduciary Framework in the Exceptional Period of the Crisis
Measures Bank
Triggers Structural
Benchmark Lead Partner
Adoption of the draft 2014 budget by the transitional government
and submission to CNT to normalize public finance management Yes IMF / AfDB /
WB / France /
EU The establishment and operationalization of a cash flow committee
to improve cash flow monitoring and management Yes * IMF / AfDB /
WB / France /
EU The establishment and operationalization of a Public Finance
Management and Monitoring Committee to improve public
resource monitoring and management
Yes * IMF / AfDB /
WB / France /
EU Finalization of the first stage of the payroll database operation to
streamline the payroll database and improve civil service
efficiency
No WB / UNDP
Reconnection of GESCO Budget and GESCO Accounts IT
applications to strengthen the budget procedure and accounting
traceability
No Yes France,
ADB/IMF
Recruitment of the Chief Accounting Officer of the Treasury and
his/her authorized representative No Yes EU,
AfDB/IMF Auditing of program-based support operations to ensure
independent external control No AfDB
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XVIII
ANNEX 7
Administrative Map of CAR
This map has been provided by the staff of the African Development Bank exclusively for the use of readers of the report to which it
is attached. The names used and the boundaries shown on the map do not imply on the part of the Bank Group or/and its Members
any judgment on the legal status of any territory or any endorsement or acceptance of such boundaries.