Central African Republic - Public finance

A rapidly expanding civil service, nationalization of enterprises, and expensive short-term borrowing in the 1970s led to large budget deficits, which were made even worse in the early 1980s by falling commodity prices. The Central African Republic and the IMF have worked together since 1980 to attempt to better manage the economy. The 1980 austerity plan focused on stabilizing budget and foreign deficits by concentrating on agricultural production. The 1982 Recovery Plan, also conducted within IMF frameworks, led to a formal structural adjustment plan in 1987.

A second structural adjustment plan was agreed to in 1990, at a time when political instability began to affect the government's ability to reach its targets. Goals of the IMF-sponsored program were a reduction of the number of government employees and their salaries, price-policy reforms, and privatization of the parastatal sector. In 1999, the IMF loaned the Central African Republic $11 million to fund unpaid government salaries and continue economic reforms that were launched in 1998. The government owed about nine months of unpaid salaries to 20,000 civil servants and army soldiers, and was behind in payments of grants for students and retirement benefits for pensioners.

The US Central Intelligence Agency (CIA) estimates that in the mid-1990s the Central African Republic's central government took in revenues of approximately $638 million and had expenditures of $1.9 billion including capital expenditures of $888 million. Overall, the government registered a deficit of approximately $1.3 billion. External debt totaled $881 million.

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