The Central African Republic (CAR) is a landlocked country embarking on a long path to recovery. In 2013, a security crisis unraveled its social fabric. Elections in 2016 brought hope for a gradual end to transition and turmoil. The CAR has a population of about 4.6 million (2016).
For the first time in its history, CAR has a democratically-elected president and parliament. In March 2016, Faustin Touadera was declared president after a run-off with his main rival, Anicet Dologuele. Legislative elections placed Abdoul Meckassoua, from the Muslim minority, at the head of the National Assembly. The elections concluded the two-year mandate of Catherine Samba-Panza’s transitional government.
CAR’s crisis began when President François Bozizé was overthrown in March 2013 by the Séléka rebel movement. Less than a year later, Séléka leader Michel Djotodia was forced to step aside after conflict between the mainly Muslim Séléka and Christian Anti-Balaka. A ceasefire in July 2014, and the Bangui Forum in May 2015, marked an end to all-out conflict, although sectarian tensions have continued to erupt since.
The French Sangaris force and the United Nations played major roles in restoring peace. France’s military mission ended in October 2016 but the UN Security Council extended the mandate of its MINUSCA force until November 2018, authorizing a force of 11,650 personnel, including military observers and staff officers, police and corrections officers. Its aim is more capacity to protect civilians.
Internal displacement in the CAR rose in 2017, the UN reports: by early 2018, about 688,000 Central Africans were internally displaced and 546,000 were refugees in neighboring countries. Clashes in December 2017 displaced about 78,000 people from Ouham-Pendé Prefecture’s Paoua town. At least 2.5 million people will need assistance in 2018, more than half the country’s population. The government and Country Team launched a $515.6 million (CFAF 275.7 billion) Humanitarian Response Plan in 2018.
Economic recovery in CAR continued in 2017 with 4.3% real GDP growth rate, slightly slower than 2016 (4.5%), but better than the forecast made at the beginning of the second half of 2017 (3.8%). Private consumption contributed the most, along with a slight contribution from government. Export growth decelerated to 5.2% in 2017, after picking up at 8.2% of GDP in 2016 on the back of key exports, such as timber, gold, coffee, and cotton. Imports, including food, increased as security along the Bangui–Garoua Boulai corridor improved.
On the supply side, industrial sector growth rose from 2% in 2016 to 7.2% in 2017 (led by construction, agri-industry, and green diamonds), while the service sector struggled amid volatile security. The primary sector dropped from almost 6% in 2016 to about 3% in 2017.
Inflation fell from 4.6% in 2016 to 4.1% in 2017. The current account deficit reached 8.5% in 2017, down from 9.0% in 2016, reflecting a deceleration in food aid and slightly stronger forestry, diamonds, and gold exports. Public debt, 56.2% of GDP in 2016, is projected to fall to 51.8% of GDP in 2017, driven by the clearance of domestic arrears. However, the CAR remains at high risk of debt distress.
The government continued its fiscal consolidation and took action to meet its revenue target for the end of 2017. The domestic primary fiscal balance improved—from a deficit of 3.0% of GDP in 2015 to 1.1% in 2016—which led to an overall fiscal surplus (including grants) of 1.6% of GDP. The balance is estimated to be 1.9% of GDP in 2017, translating to a budget surplus of 0.5% of GDP.
Poverty remains pervasive and elevated: the last household survey was in 2008, making it difficult to monitor recent trends. But projections based on GDP per capita indicate that in 2017 about 75% of the population lived below the international poverty line (US$1.90 per day, 2011 PPP)—up from 66% in 2008. And, as per the 2016 Human Development Index, CAR had the world’s lowest level of human development, ranking 188th out of 188 countries.
Protracted insecurity has left its mark. An escalation of conflict in 2017 triggered new waves of forced displacement not seen since 2014. Livelihoods of the poor are mostly in agriculture, and instability prevents farmers from tending their fields, undermines food security, and hinders the recovery of the agricultural sector.
Medium Term Outlook
The CAR’s positive macroeconomic and poverty outlook strongly hinges on stability, as well as on investment and export growth. A worsening security situation will impact growth, due to stabilize at about 4.0% over the medium-term—contingent on the implementation of the government’s investment plan. Poverty is expected to drop to 73% by 2019. Exports of diamond and wood could pick up, while cotton production and cotton exports may increase because the sector cleared its arrears in 2017. Imports of equipment are due to stay high as public and private investment resumes.
Fiscal consolidation will continue over the medium-term, with an average fiscal surplus of 0.7% for 2018–2020. While total expenditure will quicken as the CAR administration deploys beyond Bangui, total revenue is expected to return to its pre-crisis level of 9% of GDP.
Inflation is expected to fall to 3.6% in 2018, reaching the Central African Economic and Monetary Community convergence level of 3% by 2020. Strengthening debt management will reduce the debt burden, with total government debt declining to 39.6% of GDP in 2020. The current account balance is forecast to improve from a 8.4% deficit in 2018 to 6.7% in 2020.
Last Updated: May 16, 2018