Description:
Central African Republic (C.A.R.) continues to be assessed at high risk of external debt distress. This rating is unchanged from the previous analysis and consistent with the staff report of December 2017. Under the baseline scenario, one debt burden indicator breaches its threshold. And stress tests show that both external and total public debt sustainability is vulnerable to slower gross domestic product (GDP), export, and revenue growth. For total public and publicly guaranteed (PPG) debt (external plus domestic), the debt-to-GDP indicator remains below its prudent benchmark. However, the existence of large arrears to suppliers and unpaid public-sector wages in the domestic debt stock justifies the assessment of a heightened overall risk of debt distress. Contingent liabilities can further exacerbate vulnerability concerns. To safeguard debt sustainability, the government’s investment program requires grant financing, with highly concessional debt financing to be considered only in exceptional cases