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The fragile security environment has improved following the attempt by armed groups to seize power at the turn of the year 2021. The reopening of the Douala-Bangui corridor reinvigorated activity and curbed inflationary pressures. The third Covid-19 wave is receding, but vaccination has been slow. President Touadéra has launched the Republican dialogue peace initiative alongside the Luanda Road Map spearheaded by neighboring countries. The surrender of a key rebel leader to the International Criminal Court represents a key step in the peace process. Donors have delayed disbursing budget support pending greater transparency in the government’s security-related spending. This poses substantial fiscal and social risks given the heavy reliance on budget support. The sharp deterioration in terms of trade, reflecting food and fuel price shocks, compounded by geo-political spillovers, will exacerbate existing vulnerabilities and further erode policy space.

Central African Republic

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The fragile security environment has improved following the attempt by armed groups to seize power at the turn of the year 2021. The reopening of the Douala-Bangui corridor reinvigorated activity and curbed inflationary pressures. The third Covid-19 wave is receding, but vaccination has been slow. President Touadéra has launched the Republican dialogue peace initiative alongside the Luanda Road Map spearheaded by neighboring countries. The surrender of a key rebel leader to the International Criminal Court represents a key step in the peace process. Donors have delayed disbursing budget support pending greater transparency in the government’s security-related spending. This poses substantial fiscal and social risks given the heavy reliance on budget support. The sharp deterioration in terms of trade, reflecting food and fuel price shocks, compounded by geo-political spillovers, will exacerbate existing vulnerabilities and further erode policy space.

Central African Republic

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President Touadéra was reelected for a second term, despite attempts by armed groups to prevent the general and presidential elections from being held. While the security situation has improved since these groups’ attacks on Bangui were repulsed in January, the prolonged closure of the trade corridor with Cameroon had a substantial economic and fiscal impact, significantly affecting the growth prospects for this year and the cash position of the government. The government’s relations with development partners have deteriorated causing delays in grants disbursements. The number of Covid-19 cases and deaths temporarily increased in the Spring but has returned to a very low level. The three-year ECF arrangement approved in December 2019 is off track, with most performance criteria and structural benchmarks missed prior to the intensification of the domestic conflict, and the third review has not been completed.

Money and Monetary Policy --- International Economics --- Monetary Policy --- International Agreements and Observance --- International Organizations --- Monetary economics --- International institutions --- Monetary policy --- International organization --- International agencies --- Central African Republic

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The fragile security environment has improved following the attempt by armed groups to seize power at the turn of the year 2021. The reopening of the Douala-Bangui corridor reinvigorated activity and curbed inflationary pressures. The third Covid-19 wave is receding, but vaccination has been slow. President Touadéra has launched the Republican dialogue peace initiative alongside the Luanda Road Map spearheaded by neighboring countries. The surrender of a key rebel leader to the International Criminal Court represents a key step in the peace process. Donors have delayed disbursing budget support pending greater transparency in the government’s security-related spending. This poses substantial fiscal and social risks given the heavy reliance on budget support. The sharp deterioration in terms of trade, reflecting food and fuel price shocks, compounded by geo-political spillovers, will exacerbate existing vulnerabilities and further erode policy space.

Money and Monetary Policy --- International Economics --- Public Finance --- Budgeting --- Exports and Imports --- Macroeconomics --- Environmental Economics --- Monetary Policy --- International Agreements and Observance --- International Organizations --- National Budget --- Budget Systems --- Taxation, Subsidies, and Revenue: General --- National Government Expenditures and Related Policies: General --- Debt --- Debt Management --- Sovereign Debt --- International Lending and Debt Problems --- Monetary economics --- International institutions --- Public finance & taxation --- Budgeting & financial management --- International economics --- Environmental economics --- Monetary policy --- International organization --- Public financial management (PFM) --- Revenue administration --- Expenditure --- Public debt --- External debt --- International agencies --- Budget --- Revenue --- Expenditures, Public --- Debts, Public --- Debts, External --- Central African Republic

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This paper takes stock of unorthodox expenditure procedures in CEMAC and WAEMU countries and assesses their potential fiscal impact. “Unorthodox procedures” are defined as spending practices that bypass legal provisions governing public expenditure processes and circumvent regular controls or other budgetary rules, including those related to budget time limits, approved ceilings, or approved appropriations. The paper shows that despite PFM reforms, recourse to such procedures has persisted—resulting in the accumulation of arrears; inadequate fiscal reporting, including large stock-flow adjustments; and corruption vulnerabilities.

Macroeconomics --- Economics: General --- Public Finance --- Budgeting --- Accounting --- Monetary Policy --- Structure, Scope, and Performance of Government --- National Government Expenditures and Related Policies: General --- National Budget --- Budget Systems --- Economic History: Government, War, Law, and Regulation: Africa --- Oceania --- Public Administration --- Public Sector Accounting and Audits --- Economic & financial crises & disasters --- Economics of specific sectors --- Public finance & taxation --- Budgeting & financial management --- Financial reporting, financial statements --- Expenditure --- Budget execution processes --- Public financial management (PFM) --- Expenditure control --- Budget planning and preparation --- Currency crises --- Informal sector --- Economics --- Expenditures, Public --- Budget process --- Finance, Public --- Budget --- Central African Republic