Central African Republic - Reforming Public Finances to Support Growth

Bangui — new World Bank report released today calls for urgent structural reforms in the public finance sector and the mobilization of domestic resources in the Central African Republic (CAR) to consolidate macroeconomic stability and support human development, boost growth, and create the conditions for job creation.

Entitled "Strengthening the Transparency, Sustainability and Efficiency of the Public Sector", the CAR Public Finance Review highlights that, despite a window of opportunity opened by the relative improvement in security and recent progress in public finance reform, the country still faces deep structural fragilities that limit its ability to finance its development. Domestic revenue mobilization remains below 10% of GDP, while the wage bill absorbs up to 73% of public resources, severely limiting the state's investment capacity. These constraints are compounded by a persistent dependence on external aid, as well as insufficient investment in key sectors of human capital, including education and health.

"By strengthening domestic revenue mobilization and public financial management, CAR can generate the fiscal space needed to invest in its human capital, public services, and lay the foundation for inclusive and sustainable growth," said Cheick Fantamady Kante, World Bank Country Director for Cameroon, Congo, Gabon, the Central African Republic and Equatorial Guinea.

Keep up with the latest headlines on WhatsApp | LinkedIn

The report identifies significant potential for resource mobilization, particularly in the forestry and mining sectors, as well as through the modernization of tax administration and the strengthening of transparency in public governance. It formulates a reform agenda structured around five key priorities:

Strengthen domestic revenue mobilization, including through broadening the tax base and digitizing the administration;

Improve cash and debt management to restore fiscal discipline;

Increase transparency and accountability, including through reforms of public procurement and public enterprises;

Redirect spending towards priority social sectors;

Strengthen international assistance coordination.

The report concludes that, through better domestic resource mobilization and more effective management of public spending, CAR can gradually reduce its dependence on external aid, finance its development priorities, and create an environment conducive to private sector growth and job creation.