|Select Economic and Financial Indicators||2014||2015||2016||2017e||2018f|
|Real GDP (% change)||1.0||4.8||4.5||4.7||5.0|
|GDP (USD bn)||1.7||1.6||1.8||2.0||2.2|
|Fiscal Balance (% GDP)||3.0||-0.6||1.6||-0.3||0.6|
|Broad Money (% change, end period)||14.6||5.3||5.8||8.7||10.8|
|Exports (USD bn)||0.2||0.2||0.2||0.3||0.3|
|Imports (USD bn)||0.6||0.6||0.5||0.6||0.7|
|Current Account Balance (% GDP)||-5.6||-9.0||-9.1||-9.7||-6.5|
|FX Reserves (USD bn, end period)||0.3||0.2||0.2||0.3||0.3|
|Exchange Rate (average)||496.16||594.11||597.41||588.92||565.09|
Real GDP: The deterioration of the security situation in areas outside of the control of the central government continues to pose hurdles to economic activity. Though mining exports from government controlled areas are likely to continue rising over 2018 following the removal of restrictions, the non-mining sector of the economy is likely to remain under pressure from the tense security situation. In a similar vein, attacks on trade routes and farming regions outside the capital and related areas will continue to delay the start of significant construction of public infrastructure projects. In all, we remain pessimistic towards real GDP growth in 2018 which we forecast at 3.5% (2017e: 4.0%).
Inflation: An improved security situation along government controlled areas has helped drive a recovery in agricultural production which has ensured subdued food prices. Alongside a largely stable currency picture, as we expect the EUR to strengthen over 2018, we see prospects for inflationary expectations to remain largely contained. However, fiscal commitments to a plan to adjust domestic fuel prices to reflect changes in international price poses upside risks to inflation. On balance, while we see disinflation over 2018, we continue to see the headline reading remaining above the CEMAC average at 3.5% (2017e: 3.8%).
Fiscal balance: In line with the pattern of fiscal consolidation across the CEMAC region, President Faustin Touadera has proposed an 11.6% y/y slash in fiscal spending to XAF209bn in the 2018 budget. The cutback reflects a reduction in capital expenditure (down 16.6% y/y to XAF60.3bn) and intervention funds (down 58.6% y/y) while personnel expenses rise 4% y/y to XAF60.6bn. Fiscal revenues are projected to decline 20% y/y to XAF161.7bn on account of lower external funding (down 34.5%) and forecast tax receipts (down 13%). Consequently, the budget projects a fiscal deficit of 4.1% of GDP (excluding grants) in the 2018 up from 2.9% estimated in 2017.
Current account: We expect higher diamond output from government controlled areas to boost mining exports over 2018. Nonetheless, higher oil imports and construction linked imports from ongoing repair work on damaged infrastructure continues to drive a large current account deficit in 2018.
The fragile political and security situation remains the key risk to economic activity in the near to medium term. These risks stem from the continuous presence of armed militias on both sides of the religious divide and withdrawal of UN peacekeepers raises prospect of a breakdown in the security situation. A resumption in unrest could drive a re-instatement on the global ban on mining exports from CAR as well as a breakdown in agricultural activity and trade commerce with adverse impact on growth.
Exchange Rate Structure
|Target||XAF655.957 to EUR1|
|Type of intervention||Via Central Bank|
|Market participants||Corporate (24%); Interbank (32%); Local asset managers (12%); Insurance companies (2%); Foreign investors (3%); Others (27%)|
|FX Products||Spot||Forwards||Non-deliverable Forwards||Options||Swaps|
|Daily trading volume (USD mn)||n/a||n/a|
|Average trade size (USD mn)||n/a|
|FX Market Structure||BEAC’s exchange regime is free of restrictions on payments and transfers for current international transactions, apart from restrictions maintaned for security.|
|Non-resident FX Regulations||Spot||Forwards||Non-deliverable Forwards||Options||Swaps|
|Trade and FDI flow||No restrictions||n/a|
|Resident FX Regulations||Spot||Forwards||Non-deliverable Forwards||Options||Swaps|
|Trade and FDI flow||No restrictions||n/a|
|Primary Market||Treasury bills||Treasury notes||Treasury bonds||Central Bank bills||OMOs|
|End use||Government financing|
|Maturity structure||91- to 182-days|
|Daily trading volume||n/a||n/a|
|Average trade size||n/a|
|Ecobank local affiliate contact details:|
Ecobank Central African Republic, Place de la République, Bangui
Tel: +236 21 61 00 42
|Central Africa Republic Debt||2014||2015||2016||2017e||2018f|
|Government debt (% GDP)||54.8||51.1||44.3||38.8||33.4|
|External debt (official creditors, % GDP)||21.4||20.1||17.9||17.1||15.3|
|External public debt stock (USD bn)||0.4||0.3||0.3||0.3||0.3|
|Share of total sub-Sahara debt (%)||0.1||0.1||0.1||0.1||0.1|
Hydrocarbon & mineral production
Central African Republic is a small-scale diamond producer, but given widespread political instability, the 2013 embargo on the export of conflict gems from the region and the prevalence of informal diamond miners, the true scale of production is uncertain. The Kimberley Process estimated total production at 11,000 carats in 2016, most of which were exported to Belgium, Italy and the UAE. The country also produces an estimated 60kg of gold from artisanal production in the Haute-Kotto, Haute-Sanghe and Barberati regions. A number of mining companies are looking to identify and develop new gold deposits which could substantially increase output. The country has known deposits of uranium and iron ore, but there has been little progress with developing these.
Central African Republic (CAR) has no oil production or known oil reserves. Given that the country is surrounded by oil producing countries – Cameroon, Chad, Sudan, South Sudan, DRC and Republic of Congo – it is likely that it has hydrocarbon reserves. However, to date exploration efforts have been limited given the high level of political instability. Central African Republic consumes over 50,000 tonnes of petroleum products per year, comprising mostly diesel and gasoline. With no refinery of its own but surrounded by countries that have refineries (Cameroon, Gabon, Congo-Brazzaville and Sudan), CAR imports most of its products from its neighbours.
Soft commodity production
Central African Republic has an underdeveloped agricultural sector, reflecting prolonged political instability. The country’s key soft commodity production is timber, with estimated output of 100,000 tonnes per year. The country is also a tiny producer of cotton, with estimated output of 2,000 tonnes of cotton lint per year.
Trade data for Central African Republic is unreliable, given the disruption to trade flows caused by prolonged political instability. According to official data, the country’s imports totalled US$401mn in 2016, 12% lower than the previous year. Central African Republic is heavily dependent on imports of vehicles & machinery, worth US$159mn in 2016, along with pharmaceuticals (US$42mn), electronics (US$41mn) and furniture (US$8mn), reflecting the absence of a local manufacturing sector. Given limited agricultural output, the country is also dependent on food imports, notably cereals, flour, sugar and vegetables (together worth US$24mn in 2016).
According to official data, the Central African Republic’s exports totalled just US$88mn in 2016, 8.6% lower than the previous year. This decrease reflects the continued disruption of trade flows resulting from political instability. Official exports of diamonds were recorded as totalling US$2mn, but large volumes were smuggled out of the country via its lengthy and porous borders. Central African Republic also exported US$29mn of timber in 2016, which went to Germany, China and France, and re-exported US$55mn worth of vehicles, machinery & aircraft.