Central African Republic Economic Update, November 2019 : Strengthening Domestic Revenue Mobilization to Sustain Growth in a Fragile State

The Central African Republic (CAR) economy continues on a downward path. With an average GDP growth per capita of -0.8 percent, CAR has not experienced an episode of sustained growth since its independence. Economic growth in CAR slowed to 3.7 percent in 2018 as renewed insecurity inhibited economic activity, disrupted agricultural, forestry, and mining production, and delayed investment projects. Inflation declined to 1.6 percent in 2018 and should reach the CEMAC convergence criterion in the medium term as manufacturing and food prices dropped. The debt-to-GDP ratio continues to decrease and should reach 49 percent in 2018, with an overall balance including grants of 0.4 percent of GDP. However, government revenue remains below its pre-crisis level. The current account deteriorated slightly at 7.8 percent of GDP in 2018 as imports continue to soar. CAR’s external position should improve in the medium-term. CAR’s economic prospect is positive with the signing of the Political Agreement for Peace and Reconciliation in the Central African Republic in February 2019 and projected to grow at 4.8 percent in the medium-term. The primary risk for CAR is the possible escalation of violence that will undermine the government’s ability toprovide basic services. This is the second edition in a series of Central African Republic Economic Updates. The series will analyze evolving economic trends in CAR on an annual basis to assist the government and its development partners to identify emerging opportunities and address persistent challenges. The editions are prepared for the World Bank Spring Meetings in April. Each edition presents an overview of CAR’s evolving macroeconomic position, followed by a detailed exploration of a specific topic. The objectives of the series are to strengthen the analytical underpinnings of development policy in CAR and contribute to an informed debate on policy options to enhance macroeconomic management and accelerate progress on the twin goals of eliminating extreme poverty and promoting shared prosperity in a context of state fragility.