Central African Republic - Economic And Financial Reforms Support Programme (PAREF) - Phase II

The proposed operation is the second phase of the Economic and Financial Reform Support Program, Phase II (PAREF-II). It intervenes in a context of standardization of the country's institutions, with the adoption of a new constitution in December 2015 and the election of a new president in February 2016. The Program is part of the continuation of the measures supported by the two CARs that accompanied the Transitional Government in restoring the capacity of financial and social administrations. PAREF-II will include more structural measures to help revive the economy and improve public finance management. It is expected that the program's measures will be implemented: (i) an increase in tax revenues from 7.1% of GDP in 2015 to 8.7% of GDP in 2018; (ii) a reduction in direct contract procurement from 90% in 2015 to less than 50% in 2018; (iii) a reduction in the number of days for business creation, from an average of 22 days in 2015 to an average of less than 14 days in 2018; and (iv) lowering the cost of starting businesses from 204 percent of per capita income in 2015 to less than 150 percent of per capita income in 2018. The total cost of the program is estimated at UA 7 million for a planned execution period from December 22, 2017 to December 31, 2018. The Program has two components: (i) Component 1: Improved tax revenue mobilization and public expenditure management; (ii) Component 2: Improving the business environment and governance of the productive sectors. The two components are complementary. The mobilization of tax revenues and the improvement of public expenditure management will enable the Government to progressively release fiscal space to consolidate the recovery of the economy.