Central African Republic
Synthesis
major macro economic indicators
2021 | 2022 | 2023 (e) | 2024 (f) | 2025 (f) | ||
---|---|---|---|---|---|---|
GDP growth (%) | 1.0 | 0.5 | 0.9 | 1.4 | 1.9 | |
Inflation (yearly average, %) | 4.3 | 5.6 | 3.2 | 4.7 | 4.6 | |
Budget balance (% GDP) | -6.0 | -5.3 | -3.6 | -3.1 | -1.8 | |
Current account balance (% GDP) | -11.1 | -12.7 | -9.0 | -8.2 | -7.0 | |
Public debt (% GDP) | 48.6 | 54.2 | 57.7 | 57.3 |
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(e): Estimate (f): Forecast
STRENGTHS
- Agricultural (cotton, coffee), forestry and mining (diamonds, gold) potential
- Importance of international financial support
- Member of the Economic and Monetary Community of Central Africa (CEMAC) and the Economic Community of Central African States (CEEAC)
- CFA franc backed by the euro, but limited common reserves of the Bank of Central African States (BEAC)
WEAKNESSES
- Political and institutional fragility in an extremely unstable post-civil war security environment, with much of the country still outside government control
- Poor economic diversification and dependence on few raw materials (wood, gold and diamonds)
- Illegal mining damaging public revenues
- Inadequate transport, ICT and energy infrastructures
- Landlocked
- Dependence on food and oil imports
- Majority of the population living in extreme poverty (65.7% in 2023)
RISK ASSESSMENT
Timid upturn in growth hinges on fragile peace process
In 2025, for the third year running, economic growth in the Central African Republic (CAR) is set to pick up, albeit at a rate still well below its potential, still dependent on an improvement in the extremely unstable security situation and on fuel deliveries, whose recurrent shortages are holding back development. Exports of timber, gold and diamonds - their share of GDP is rising (from 13.7% in 2021 to 14.8% in 2023) - are contributing to this modest recovery, as the forestry industry recovers from the severe floods of 2022 and the diamond sector benefits from a relaxation of the partial embargo imposed by the Kimberley Process, the tripartite conference in charge of controlling the diamond trade. However, a significant proportion of the country's natural resources continue to be exploited illegally, in particular by armed militias present throughout the country. CAR, one of the poorest and least developed countries in the world, still relies heavily on agriculture (36.3% of GDP and 70% of employment in 2023), essentially for food production, while food insecurity affects almost one Central African in two. The opening-up of the country, thanks in part to the modernisation of the multimodal river-road transport corridor linking Pointe-Noire (Republic of Congo) to Bangui (CAR) and N'Djamena (Chad), should enable the country to better secure its supplies of agricultural inputs, food and hydrocarbons. Nevertheless, CAR remains dependent on international aid (6% of GDP in 2023), notably from the IMF, which recently disbursed an additional USD 25 million in July 2024, bringing total disbursements to USD 65 million out of the USD 200 million planned under the Extended Credit Facility (ECF) signed with Bangui in 2023. Despite the tightening of BEAC's monetary policy initiated in 2023, inflation is expected to stagnate at a moderately high level, similar to that of 2024, as the government plans to remove several tax exemptions on import goods (rice and flour) and trade with Cameroon, CAR's main import gateway, fluctuates in line with stability in the region. As a result, household consumption, an essential component of growth (93.9% of GDP in 2023), will grow less rapidly in 2025.
Public finances on an IMF drip
Supported by the IMF, CAR's fiscal situation should improve in 2024 and 2025, under the combined effect of the government's efforts to mobilise tax revenues (only 7.3% of GDP in 2023), backed by increased international support, and the strength of revenues from forestry and mining. The IMF's commitment to Bangui that is characterised by the signing in 2023 of a reform program worth USD 197 million (FEC) spread over 38 months is encouraging foreign institutional donors (almost exclusively multilateral or regional) to gradually reinvest in the country, which has been bled dry after two decades of civil war, so that the amounts disbursed are set to increase from 2025 onwards. The assurance of such support is enabling the government to pursue its fiscal consolidation drive, by modernising the VAT collection system, reforming the tax framework for the tobacco and telecommunications sectors, abolishing VAT exemptions on a number of imported commodities (rice, flour) and even introducing new taxes (domestic gas), and adjusting fuel prices to limit imports on the parallel market. At the same time, public spending will remain relatively stable (17.9% of GDP in 2023). As a result, the public deficit (-9.6% of GDP in 2023, excluding foreign aid) should fall in 2024, and again in 2025, as should public debt, 56.5% of which is held by foreign creditors (mainly the IMF and the World Bank) in 2023, whose weight as a percentage of GDP should lighten. Nevertheless, the risk of an explosion in violence and insecurity could slow the implementation of structural reforms and hamper the healthy momentum of public finances despite a moratorium on foreign debt agreed in 2020 by the G20 and Paris Club countries.
Despite the encouraging progress, the CAR will still have a large current account deficit in 2025 (most international aid will be recorded on the capital account). The cause is a trade balance (goods and services) in the red (-14.4% of GDP in 2023), due to the country's chronic dependence on imports of basic products (fuel, rice, flour, domestic gas, etc.) and on Cameroon's expensive technical assistance to deliver them, not to mention the exorbitant cost of deploying foreign mercenaries on its soil. Against this backdrop, buoyant exports and falling world prices for petroleum products which account for a large part of the bill (5.2% of GDP in 2023) will, despite everything, help to reduce the imbalance in the balance of goods. As in the case of services, the primary income deficit will remain more or less stable as foreign exchange reserves increase, offsetting the rise in profit repatriation by foreign mining companies. Conversely, IMF support and the growing mobilisation of international aid will help to consolidate the surplus in the secondary income balance by 2025.
Safety the core of political and economic issues
The CAR has been enmeshed in a particularly precarious political and security situation since the outbreak of civil war in 2013. Despite a fragile peace agreement signed in February 2019 between the government and the various rebel groups, designed to better integrate them into the government while allowing the regular army to regain control over the entire territory (on paper but not in practice), instability prevails in an extremely deteriorated domestic environment. The fraudulent re-election of President Faustin-Archange Touadéra in 2020 further aggravated dissension, while frequent clashes continue to pit government supporters against the Coalition des Patriotes pour le Changement (CPC), an insurrectionary movement formed from the merger of six rebel groups the same year but weakened by its own divisions. The adoption of a new constitution by referendum in July 2023, extending presidential terms from 5 to 7 years and allowing for indefinite renewal, should enable Faustin-Archange Touadéra to establish himself permanently in power, supported by the mercenaries of the Africa Corps (ex-Wagner) group under Moscow's supervision. The head of state is also consolidating his grip on major economic issues by taking over the allocation of mining permits. With the opposition muzzled, the outcome of the next municipal elections, which have been postponed several times but were finally scheduled for late 2024 or early 2025, is hardly in doubt, as the presidential party, Mouvement Cœurs Unis, is expected to win by a wide margin.
On the international front, the CAR is consolidating its economic and military ties with Russia, while maintaining tense relations with the West, and damaged by the permanent presence of Russian militia assisting and training the regular army in exchange for privileged access to the country's resources (mines, timber, agriculture). In February 2024, Bangui even took a further step by allowing Moscow to set up its first-ever military base in Africa on its own soil, with room for up to 10,000 soldiers. Against this backdrop, MINUSCA, the UN-led peacekeeping operation in the Central African Republic since 2014, is nonetheless being maintained, despite the tensions pitting it against the government and local populations. France is trying to re-engage with the CAR – Emmanuel Macron hosted his counterpart twice in Paris in September 2023 and April 2024 – so as not to leave the field open to Russia. Moreover, since 2023, the CAR has had to cope with an influx of refugees fleeing Sudan, a neighbouring country in the throes of civil war, which is further destabilising the country already beset by numerous domestic difficulties.
Last updated: July 2024