Central African Republic - Joint World Bank-IMF Debt Sustainability Analysis - Risk of External Debt Distress - High

Jul 19, 2026

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Central African Republic remains at high risk of external debt distress and overall high risk of debt distress, despite projections that public debt is sustainable. The assessment highlights substantial liquidity risks driven by potential donor support shortfalls and limited domestic/regional market access, particularly after the September 2022 expiration of the staff monitored program. Solvency indicators for external debt stay below thresholds, while liquidity indicators breach for five years starting in 2023, mainly due to obligations to the Fund. Sensitivity tests and contingent liabilities support the high-risk conclusion.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages21

Reading Time53 min

Executive Risk Summary

External and overall debt distress risk

Liquidity risk drivers and time horizon

Key assumptions and judgment application

Debt Coverage and Contingent Liabilities

Public sector debt coverage and gaps

SOE oversight reforms and audit objectives

Contingent liabilities stress test design

Sensitivity and Assessment Basis

Stress tests and macro/financing uncertainty

Grant financing priorities and spending needs

Implications of treasury pressures

Public Disclosure Pub lic Disc losure Authorized Approved by: Abebe Adugna and Manuela Francisco (IDA) and Kenneth Kang and Vitaliy Kramarenko (IMF) Prepared by the staff of the International Development Association (IDA) and the International Monetary Fund (IMF) . | CENTRAL AFRICAN REPUBLIC: JOINT BANK-FUND DEBT SUSTAINABILITY ANALYSIS | | | --- | --- | | Risk of external debt distress | High | | Overall risk of debt distress | High | | Granularity in the risk rating | Sustainable | | Application of judgment | No | The Central African Republic (CAR) remains at high risk of external debt distress and overall high risk of debt distress. Public debt is projected to be sustainable, though there exist substantial liquidity risks, as shown by relevant debt indicators, stemming from possible shortfalls in donor support and domestic/regional market access. Following the expiration of the staff monitored program (SMP) in end-September 2022, the CAR has faced an increasingly difficult external environment, high uncertainty regarding financing amidst geopolitical tension and increased risks due to the uncertainties created by the introduction of the cryptocurrency law, which represented a major policy setback under the SMP, compounded by rising international food and fuel prices. Compared to the previous DSA, 1 domestic debt has increased in the absence of donor budget support. While solvency indicators for external debt are below thresholds, liquidity indicators for external debt (debt service-to-exports and debt service-to-revenue) exhibit breaches for 5 years starting in 2023, largely on account of obligations to the Fund falling due. Sensitivity of debt indicators to standard stress tests, increased macroeconomic and financing uncertainty, and sizeable contingent liabilities are all considerations supporting the high-risk assessment. This assessment is predicated on the authorities’ continued prioritization of and the ability to secure grant financing for essential current spending and developmental projects.2 1 The current DSA follows the revised Debt Sustainability Framework (DSF) for LICs and Guidance Note (2017) in effect as of July 1, 2018. The previous DSA, is available here. 2 CAR’s CI score based on the October 2022 World Economic Outlook (WEO) and the 2021 World Bank Country Policy Institutional Assessment (CPIA) data is 2.25, corresponding to a weak debt-carrying capacity (Text Table 3) . 1. The coverage of public sector debt includes external and domestic contractual obligations of the central government, unchanged from the previous DSA. State and local governments do not borrow, there are no social security funds guaranteed by the public sector , and the government has not guaranteed other debt (Text Table 1) . The coverage of public sector debt exhibits some gaps, notably non-guaranteed SOE debt and supplier arrears. 2. The implementation of the new legal framework governing SOEs would improve their financial oversight, which, along with other steps, should lead to better debt coverage going forward. Under the World Bank Sustainable Development Financing Policy (SDFP), the government has completed and published in 2021 the audits of the three largest state-owned enterprises operating in the energy, telecommunications, and water sectors (ENERCA, SODECA, SOCATEL) . The objective of the audit was to assess their financial viability, increase the transparency in contingent liabilities reporting, and clarify the status of unaudited domestic arrears.3 The government prepared and approved a cross-debt settlement plan for these SOEs based on these recent audits.4 3. The DSA includes a combined contingent liabilities stress test, which assumes a tailored shock at 15 percent of GDP aimed at capturing the public sector exposure to arrears, SOEs, and financial market shock. This amount reflects the uncertainty about non-guaranteed SOE debt and arrears, potential additional domestic arrears, and financial mark

FAQs

What is the Central African Republic’s assessed risk level for external debt distress?

The analysis rates the risk of external debt distress as High, with overall debt distress risk also assessed as High.

Why do liquidity indicators breach thresholds starting in 2023?

Liquidity indicators for external debt breach for five years starting in 2023, largely due to Fund-related debt service obligations falling due.

How does the DSA handle contingent liabilities in its stress testing?

It uses a combined contingent liabilities stress test with shocks calibrated to capture exposure to arrears, SOEs, and financial market risks, including higher assumed percentages of GDP for SOE debt and domestic arrears.

Jul 19, 2026

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