Central African Republic - Economic development



The 1981–85 five-year plan called for CFA Fr233,117 million in expenditures, including CFA Fr83,363 million for rural transport and CFA Fr54,935 million for agriculture and livestock raising. The 1986–90 plan called for CFA Fr261.4 billion in spending (86% from foreign sources), with 53% for infrastructure and 35% for rural and regional development. Development expenditures are financed almost exclusively by foreign donors. The World Bank extended a $30-million loan in 1986.

In 1986, the government began a structural adjustment program (SAP) to improve agricultural production, to encourage early retirement among government workers, and to privatize government enterprises. Phase two of this program began in 1988, and phase three in 1990. The goals of phase three— particularly in privatizing utilities and fuel distribution—had not been met by the mid-1990s. Although the state-owned water company had been privatized, no changes were accomplished with either the electric utility or fuel distribution monopoly.

The 1994 devaluation of the CFA (Communauté Financière Africaine) franc made products such as coffee, timber, cotton, and diamonds more attractive on the world market. On the other hand, prices for imports also rose, creating a period high inflation in 1994. By 1995, the inflation rate had dropped to levels near the prevailing rate prior to devaluation.

As of 2000, the estimated external debt was $881.4 million. The International Monetary Fund (IMF) and World Bank have encouraged the Central African Republic to privatize state-owned business enterprises, address corruption, and streamline labor and investment codes. Economic reforms are tailored to alleviate poverty. In 2000–01, the government set annual targets of 5% growth and 2.5% inflation. The inflation rate increased to 4% in 2001, however, and the growth rate fell below 2%. An IMF Poverty Reduction and Growth Facility (PRGF) Arrangement, approved in 1998 expired in January 2002. The Central African Republic introduced a value-added tax (VAT), and the state-owned petroleum company (PETROCA) was liquidated. At the beginning of 2002, wage payments fell approximately 20% short of commitments, and many civil servants were owed 16 months of pay during the Patasse administration, and for 14 months of pay during the Kolingba administration.

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