VZCZCXRO4533
PP RUEHBZ RUEHGI
DE RUEHGI #0104/01 1480803
ZNR UUUUU ZZH
P R 280803Z MAY 09
FM AMEMBASSY BANGUI
TO RUEHC/SECSTATE WASHDC PRIORITY 0906
INFO RHMFISS/AFRICOM
RUEHBZ/AMEMBASSY BRAZZAVILLE 0161
RUEHKH/AMEMBASSY KHARTOUM 0264
RUEHKI/AMEMBASSY KINSHASA 0274
RUEHLC/AMEMBASSY LIBREVILLE 0175
RUEHNJ/AMEMBASSY NDJAMENA 0452
RUEHFR/AMEMBASSY PARIS 0437
RUEHYD/AMEMBASSY YAOUNDE 0431
RUEHGI/AMEMBASSY BANGUI 1135

UNCLAS SECTION 01 OF 03 BANGUI 000104 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR AF/C 
PARIS FOR RKANEDA 
LONDON FOR PLORD 
AFRICOM FOR KOCH 
 
E.O. 12958: N/A 
TAGS: EFIN ECON PGOV EAID
SUBJECT: 2009 CAR BUDGET ANALYSIS 
 
¶1. (SBU) SUMMARY: The National Assembly of the Central African 
Republic adopted the 2009 national budget on February 2, 2009 
during a special session. A final copy of the budget is now 
available to the public. The 2009 budget increased by 14.2 
percent compared to 2008. The CARG resources are estimated at 
USD 334.9 million. The total expenditures are estimated at USD 
362.1 million with an estimated deficit of USD 27.3 million. 
This budget, like in 2008, is built to take into account the 
Central African Government's Poverty Reduction Strategy Document 
priorities. Post believes its assumptions to be unrealistic 
considering the global financial crisis and the internal 
economic weaknesses of the CAR itself. END SUMMARY. 
¶2. (SBU) 2009 budget's assumptions and general trends - Economic 
prospects for CAR will depend on the country's stability and the 
recovery of some key economic sectors that have been disrupted 
by the various mutinies, coup attempts and rebellions that the 
CAR has faced over last ten years. The Ministry of Economy and 
Planning estimated the country's GDP for 2009 at USD 1.9 billion 
and its economic growth at 3.9 percent. Post believes these 
estimates to be exaggerated when taken in the context of the 
international economic and financial crisis as well as the CAR's 
own internal political, social and economic crises. 
¶3. (SBU) Overall, the 2009 budget is built to sustain the 
implementation of the Poverty Reduction Strategy Document. The 
Central African Government's assumptions are: 
- The 2009 budget implementation will take place in a context of 
restored security and peace throughout the country as result of 
the Inclusive Political Dialogue. Unfortunately, the Inclusive 
Political Dialogue has not yet resulted in peace and stability 
and if anything, the rebellions appear to be once again 
increasing. 
- An effective return of the foreign direct investment 
especially in the sectors of mining, forestry and construction 
works - difficult to foresee considering global conditions. 
- The reinforcement of relationships with international 
partners, especially with Word Bank and IMF through the reaching 
of the Initiative for Heavily Indebted Poor Countries decision 
point. (NOTE: in discussion with Post, the World Bank and the 
IMF have been cautiously optimistic with the performance of the 
Central African Ministry of Finance and Budget.) 
- This budget was built to promote the fight against poverty as 
well as the strengthening of economic growth through the 
mobilization of additional resources in the framework of the 
Poverty Reduction Strategy Document's (PRSD).  Its 
implementation gives priorities to key development sectors such 
as the building/rebuilding of infrastructure, farming and 
fisheries among others. 
¶4. (U) On the public finance management side, the CARG intends 
to pursue some stabilization measures through: 
- Improvement in tax collection by various services of the 
Ministry of Finance and Budget. 
- Priority given to the fight against poverty as stated in the 
PRSD. 
¶4. (U) The CARG expects its internal resource mobilization 
efforts to be complemented by a significant external resources 
disbursement within the framework of the Poverty Reduction and 
Growth Facility Program supported by IMF. This should amount to 
USD 20.2 million of committed resources. 
¶5. (U) On the expense side, the 2009 budget increased sharply, 
by 20 percent, compared to 2008. Overall, budget expenses 
related to the fight against poverty amount to USD 63.6 million. 
Out of this amount USD 54.2 million are earmarked for investment 
expenses covering the government following priorities: 
- Restoration of security, peace consolidation and conflict 
prevention. 
- Promotion of good governance and state of law, targeting 
corruption in particular. 
- Rebuilding and diversification of the economy by promoting the 
country's exploitation of its various natural resources in 
agriculture, tourism and mining. 
- Promotion of the human resources by improving education and 
health services provided by the government. 
¶6. (U) The 2009 budget details are as follows in USD million 
 
                                2008 budget             2009 budget 
Percent Change 
Total resources                 269.37                  334.88 
24.3 
Domestic resources              194.33                  221.96 
 
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        14.2 
Budgetary assistance              12.10                  33.96 
        180.6 
External resources                62.93                  78.96 
        25.2 
 
Total expenses          301.83                  362.14 
20.0 
Operational expenses            171.30                  197.41 
        15.2 
Total Investment                85.89                   106.58 
24.1 
Government                      22.96                     27.63 
20.3 
Donors                          62.93                    78.95 
25.4 
Debt Service                    44.63                    58.14 
30.3 
Deficit                         32.55                   27.25 
(19.4) 
¶7. (U) Budget resources: As shown by the above table, the total 
2009 CARG budget resources are estimated at USD 334.9 million, 
an increase of 24.3 percent year over year. The domestic 
resources are estimated at USD 222.0 million, an increase of 
14.2 percent year over year mainly due to new measures including 
the restoration of the full value added tax affecting imported 
construction materials such as cement and metal sheet. As in 
2008, significant tax exemption beneficiary's number decreased 
(In 2008, many NGOs and churches involved in development 
activities lost substantial tax exemption for their equipment 
purchases). As a result, an increase of 14.2 percent in the 
domestic resources can be noted. An expected increase of 25.4 
percent of external resources compared to 2008 will support 
public investment in priority sectors including infrastructure, 
security, health and education. With a 180 percent increase, 
budgetary assistance amounted to USD 34.0 million. Budgetary 
assistance comes from France, China and European Union. 
¶8. (U) Budget expenditures: The total estimated 2009 budget 
expenditures are USD 362.1 million, an increase of 20 percent 
year over year. The major expenditure rubrics are as follows: 
- Wage bill: The bill is estimated at USD 80 million, which is 
an increase of 6.7 percent, mainly due to the slight increase in 
the number of recruited civil servants in the education, health 
and security sectors. The general increase of civil servants' 
salaries in the 2009 budget contributed to this increase as well. 
- Goods and Services: Goods and services are estimated at USD 80 
million, which is an increase of 26.3 percent compared to 2008 
budget. This substantial increase is attributable to resources 
devoted to the payment of Government's bills for telephone, 
electricity and water consumption as well as payment of arrears 
for previous years. 
- Investment budget: Total investment expenses are estimated at 
USD 106.6 million, against USD 85.8 million in 2008, 
representing an increase of 24.1 percent. 
- Internal resources: Internal resources devoted to investment 
are estimated at USD 27.6 million up from USD 23.0 million in 
2008, an increase of 20.3 percent. 
- External resources: External resources were USD 79.0 million, 
as increase of 25.4 percent compared to 2008. This increase is 
due to the funding of development projects in energy, waste 
disposal, communication, education and health sectors. 
- In general, the related expenses in the ``fight against 
poverty'' programs are estimated at USD 63.6 million, including 
USD 54.2 million in related investment expenses. 
¶9. (U) Debt Service 
The debt service is estimated at USD 78.0 million. The breakdown 
is as follows: 
- Internal debts: USD 28.2 million 
- External debts: USD 49.8 million 
¶10. (U) Deficit : The 2009 deficit is estimated at USD 27.2 
million, representing 1.4 percent of the GDP, as opposed to 1.8 
percent in 2008. The Central African Government plans to fund 
this deficit through the mobilization of internal as well as 
external resources in the form of grants, loans, budgetary 
support and/or debt cancellation. 
¶11. (SBU) COMMENT: On the positive side, the prospects for 
external resources to be mobilized in the framework of the 
Poverty Reduction Strategy are possible. It should also be note 
that the CARG recently reached the goals of the initiative for 
 
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heavily indebted countries, meaning that a substantial portion 
of the country's international debt service may be reduced. Yet, 
Post still believes this budget has many more problems than 
solutions: 
- It is too optimistic in its assumption of the revival of 
economic activities throughout the country. The December 2008 
inclusive political dialogue was supposed to bring peace and 
disarm rebel groups, but it has not reached these objectives. 
Indeed, the CAR has seen a resumption of violence since its 
signing. 
- In terms of budgeted tax collection, although some 
organizational efforts are notable, the closure of several 
companies operating in forestry and mining sectors will likely 
limit the level of potential tax receipts collected. 
-  No money budgeted for the 2010 elections. 
As noted above, the international financial crisis, coupled with 
the economic crisis affecting the Central African export 
markets, and the lack of stability in the country, will hinder 
greatly the optimistic assumptions of the 2009 budget. END 
COMMENT 
COOK