Economic Overview
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The precarious political and security situation that characterises Central African Republic (CAR) since 2013 negatively impacts economic growth. Since 2020, the adverse economic effects of the Covid-19 pandemic and then the war in Ukraine further deepened the many challenges faced by the country. After contracting by -1% in 2021, GDP growth nearly stagnated in 2022 (0.4%) according to the IMF’s revised figures. The increase in production and import costs and the decline in domestic demand caused by the slowdown in public spending negatively impacted activity (IMF). Economic growth, forecasted at 2.5% in 2023 and 3.8% in 2024, will depend on financing conditions and the continuation of reforms (IMF).
In 2022, the economic recovery, that began after a COVID-19 crisis coupled with the deterioration of the security situation, was disrupted by fuel shortages and soaring food prices following the war in Ukraine. Since 2021, the postponement of budgetary support from donors has put pressure on the budget situation. Fiscal reforms nonetheless allowed public finances to slightly improve. The budget deficit that rose to -6% GDP in 2021 decreased to -5.6% GDP in 2022, and it is expected to further reduce to 3% GDP in 2023 (IMF). Budget execution in 2022 was severely disrupted by the economic downturn and the collapse of public revenues, particularly from the taxation of fuel (IMF). However, prudent implementation of current expenditures and under-execution of the investment budget helped contain the increase in the public deficit (IMF). The CAR is highly dependent on an external aid that enables the country to limit its budget deficit. More than half of public spending is covered by external multi- or bilateral financing, much of it in the form of grants (Coface). The public debt to GDP ratio increased from 47.6% GDP in 2021 to 52.1% GDP in 2022, and is expected to follow a downward trend and reach 47.6% GDP in 2023 and 45.2% GDP in 2024 (IMF). It is below the 70% ceiling imposed by the CEMAC, but more than three quarters of public debt is external, exposing CAR to a high risk of debt distress. Inflation increased from 4.3% in 2021 to 6.5% in 2022, and record double-digit inflation (the highest in the CEMAC) was recorded in 2022 (IMF). It is expected to remain high at 6.3% in 2023 before decreasing to 2.7% in 2024 (IMF). The government priorities remain supporting economic recovery and poverty reduction and pursuing the program of structural reforms supported by the IMF (Extended Credit Facility of about 115.1 million USD) approved in December 2019 but suspended due to its poor implementation and the intensification of the domestic conflict. The 2023 budget aims at stabilizing public finances, while continuing efforts to mobilize domestic revenues through new measures. The IMF declared to be ready to support authorities in their reform of the fuel price structure. CAR remains in a very fragile situation, with an unstable security environment, limited administrative capacity, tight financial conditions, poor governance and lack of social cohesion.
According to the World Bank, more than 70% of CAR's population lives below the poverty line and there is considerable inequality. According to the 2021 Human Development Index published by the UNDP, the Central African Republic was ranked 188th (out of 191 countries). Unemployment is high, despite misleading official statistics (6.5% of the population in 2021 according to the World Bank). The security crisis that the nation has recorded in the past years deepened social inequalities as well as the deficit in basic social infrastructures. The country has more than 630,800 internally displaced persons, and 632,000 Central African refugees have found shelter in neighbouring countries (World Bank). The United Nations peace mission (Minusca) has suffered losses in its ranks and does not seem to have sufficient resources. The food crisis that was already affecting the country has worsened after the war in Ukraine.
| Main Indicators | 2020 | 2021 | 2022 (E) | 2023 (E) | 2024 (E) |
| GDP (billions USD) | 2.39 | 2.59 | 2.46 | 2.74 | 2.91 |
| GDP (Constant Prices, Annual % Change) | 1.0 | 1.0 | 0.4 | 2.5 | 3.8 |
| GDP per Capita (USD) | 495 | 525 | 491 | 534 | 556 |
| General Government Gross Debt (in % of GDP) | 43.4 | 47.6 | 50.7 | 49.1 | 48.5 |
| Inflation Rate (%) | 0.9 | 4.3 | 5.8 | 6.3 | 2.7 |
| Current Account (billions USD) | -0.20 | -0.29 | -0.33 | -0.24 | -0.21 |
| Current Account (in % of GDP) | -8.2 | -11.0 | -13.3 | -8.8 | -7.4 |
Source: IMF – World Economic Outlook Database , October 2021
Country Risk
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