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CAR Economic Update: A Call for Domestic Revenue Mobilization to Sustain Growth

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The second edition of the Central African Republic (CAR) Economic Update, which was published today by the World Bank, examines evolving economic trends in the country and proposes options to boost domestic revenue by improving tax and customs policy and administration.

Titled “Strengthening Domestic Revenue Mobilization to Sustain Growth in a Fragile State,” the report notes that the improved security situation is leading to brighter economic prospects, with the real GDP growth rate estimated at 4.8% for 2019. The authors indicate that although the country’s growth rate has outpaced that of countries in the Central African Economic and Monetary Community (CEMAC) and Sub-Saharan Africa, it continues to lag behind peer countries such as Burkina Faso, Malawi, Mali, Niger, and Uganda.

CAR has not experienced sustained growth since gaining independence in 1960. With the signing of the Political Agreement for Peace and Reconciliation in February 2019, the economic outlook is, however, positive,” states Wilfried A. Kouamé, World Bank economist and lead author of the report. “The successful implementation of the peace agreement is critical for jumpstarting growth. By implementing this agreement in the run-up to the elections, we are expecting growth of around 5% in the medium term.”

The report also reveals that while CAR is still at high risk for debt distress, its efforts to streamline public expenditure and clear domestic arrears are driving down the public debt level to below CEMAC and Sub-Saharan Africa averages and bringing it closer to the debt levels of its peers.

Han Fraeters, World Bank Country Manager for the Central African Republic, explains that “this report aims to help the government and its development partners identify opportunities and address challenges in order to move forward on combating extreme poverty. Domestic resources will therefore have to be mobilized to boost public revenue and enhance delivery of basic public services, which are pivotal to guiding the country into a virtuous cycle of peace and security. The upcoming elections will require sound fiscal discipline and provide a unique opportunity to place the country on a path of sustained growth.” 

The report presents a number of options to address the growing needs of Central Africans:

Strengthen the social contract: The social contract between the State and its citizens, which is vital to mobilizing tax revenue, was undermined by the recent crisis. To strengthen the social contract, the State must undertake to improve the efficiency and quality of goods and social services, while restoring the trust of taxpayers to encourage them to move out of the informal sector and pay their taxes.

Broaden the tax base: CAR’s tax revenue currently accounts for approximately 8% of GDP, which is below its potential and among the lowest in Sub-Saharan Africa. CAR could consider increasing the tax rates on alcohol and tobacco products in the short term, and reducing the number of tax brackets that hinder business creation and development in the long term. 

Improve property tax collection:  Legislation on property taxation has not been updated to reflect recent economic developments. Current revenue collection is inefficient and is based on a declarative system that narrows the tax base. New legislation could generate close to CFAF 12 billion (roughly $22 million).

Limit tax exemptions: In 2016, tax exemptions were a major source of lost tax revenue for the country (almost CFAF 2.4 billion or roughly $4 million). A significant share of these exemptions were granted to the private sector and related primarily to VAT. The adoption of the new investment charter in 2017 and the implementation of reforms aimed at curbing tax exemptions and improving the business environment to attract private investment require the firm commitment of the authorities and a formal legal system to institute legal proceedings in the event of abuse.

Modernize the tax system: Strengthening tax administration capacity is critical to improving the tax system. This requires heavy investment in the computerization of public administrations and the purchase of the equipment and software needed to improve revenue collection.  Computerization will help curb abuse and corruption, trace transactions related to taxes and duties, facilitate the sharing of information between tax and customs authorities, and enhance the efficiency of financial boards.

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Newsweek: “Putin scores a win in Turkey’s election”

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Putin erdogan sochi

Russian President Vladimir Putin secured a victory in Turkey’s presidential election results on Sunday, writes ‘Newsweek’.

Turkish President Recep Tayyip Erdoğan appeared to beat back a challenge from Kemal Kilicdaroglu, the head of the center-left Republican People’s Party (CHP), winning his third five-year term since taking office in 2014. Erdoğan claimed victory on Sunday, telling supporters in a speech, “I thank each member of our nation for entrusting me with the responsibility to govern this country once again for the upcoming five years,” the Associated Press reported.

He ultimately prevailed by roughly 5 percentage points, according to unofficial data from state-run Anadolu Agency. Turkey’s election has been defined by high voter turnout, but has also led to questions about the fairness of Turkey’s electoral system.

Erdoğan’s victory is viewed as good news for Putin, whose relations with many world leaders grew strained after he launched the invasion of Ukraine last February. Many governments viewed the “special military operation” as lacking justification and a violation of international norms, leading to swift backlash and economic sanctions against Moscow.

Turkey, however, has taken an important role in the conflict, often serving as a mediator between Kyiv and Moscow. Erdoğan himself has walked a fine line between support for Ukraine while also maintaining close diplomatic relations with Russia. Both countries lie along the Black Sea, so maintaining strong economic ties has remained a priority for both governments.

Erdoğan’s victory likely guarantees a continuation of the status quo.

Notably, Turkey’s actions in the North Atlantic Treaty Organization (NATO) have aligned with the interests of Russia. Turkey has previously blocked bids from Sweden and Finland to join NATO, which would bring the alliance to Putin’s doorstep. The Russian leader has also opposed the expansion of NATO, an issue that has sparked tensions with the West.

Putin congratulated Erdoğan on his victory, writing in a statement that he appreciates the Turkish president’s “personal contribution to strengthening friendly Russian-Turkish relations, mutually beneficial cooperation in various areas.”

“Winning the election was a natural result of your selfless work as head of the Republic of Turkey, evidence of the Turkish people’s support for your efforts to strengthen the state sovereignty and the pursuit of an independent, independent foreign policy,” the Russian leader wrote.

Erdoğan has previously touted his relationship with Putin during his reelection bid.

“We are not at a point where we would impose sanctions on Russia like the West have done. We are not bound by the West’s sanctions,” he told CNN earlier this month. “We are a strong state and we have a positive relationship with Russia.”

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Larry Johnson: The aftermath of Bakhmut and why the CIA is in trouble

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photo By Evhenii Maloletka via war.ukraine.ua

The West is desperate to avoid having any meaningful discussion or review of the Battle of Bakhmut because it was such a massive loss. Think about it — a small “private” paramilitary force backed by former Chef with no military experience, forced Ukraine’s NATO-trained and supplied Army to retreat, notes Larry C. Johnson, a veteran of the CIA and the State Department’s Office of Counter Terrorism.

This is a very important point. Conventional military doctrine stipulates that an army attacking an entrenched force will need at least three times more soldiers than the defending force. Looks like Russia is very unconventional.

The Wagner Group’s 50,000 fighters defeated a Ukrainian force that employed over 120,000 troops, inflicting 70% casualties on the Ukrainians. Russia is writing new chapters for military academies and war colleges on how to attack and defeat a numerically superior force entrenched in fortifications.

Russia was not fighting Afghan shepherds or Iraqi tribesmen armed with AK-47s. It faced off with a NATO proxy force, equipped with modern weaponry, and beat it.

…Even more, I chatted with a retired CIA buddy who filled me in on the personnel disaster that is transforming the CIA into a fully woke institution. Thirty years ago an aspiring employee had to pass a polygraph and had to be drug free. Prior use of marijuana or other recreational drugs could be a show stopper. That was then. Now?

The CIA only asks if the applicant has smoked pot or taken other illicit drugs in the year prior to applying to the Agency. I would not be surprised to learn that once a former drug user is brought on board that there is no obstacle for him or her to continue to indulge the guilty pleasure of getting buzzed (hopefully while not at work).

More disturbing is the current hiring practice — in a recent class for new analysts, 92% of the new hires came from one State. If you guessed Alabama or Virginia you would be wrong. 92% of the analysts hail from one of the most liberal states in the United States. The Agency hiring standard is welcoming the Woke crowd and eschewing men and women who profess traditional values. If you hold Conservative values you need not apply. You probably will not be hired.

I have written previously about the pressure CIA managers face when they write the yearly evaluation on their employees, which plays a key role in determining who gets promoted. If an employee is a minority or openly homosexual or transgender and does not get promoted the manager is required to write an explanation why he or she did not promote said person.

Guess what happens? People get promoted because of their social justice status rather than the quality of their work. Is it any wonder that the quality of the CIA analytical product is succumbing to political pressure, writes Larry C. Johnson.

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Drone attack on Moscow

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Image credit: © Alexander Shcherbak/TASS

The Russian Defence Ministry:

– This morning, the Kiev regime has launched a terrorist drone attack on the city of Moscow. Eight aircraft-type drones were employed in the attack, informs Russian MoD.

– All enemy drones were downed.

– Three of them were suppressed by electronic warfare, lost control, and deviated from the intended targets.

– Five more UAVs were shot down by the Pantsir-S SAM system in Moscow region.

TASS has gathered the main facts about the incident

– Moscow and the Moscow Region were attacked by drones early on Tuesday morning, TASS informs.

– Several buildings sustained minor damage, Moscow Mayor Sergey Sobyanin said.

– According to the authorities, there were no casualties and emergency services are continuing to work at the scene.

Initial reports

– Early on Tuesday morning, Russia’s Emergencies Ministry told TASS that ministry staff were investigating an incident in the Moscow suburbs, in which windows in a high-rise apartment building had been blown out. Fire and rescue units arrived at the scene. There were no signs of fire. According to eyewitnesses, the sound of an explosion was heard at the time of the incident.

– Emergency services told TASS that drone-like fragments were found around the house. The windows of apartments on three floors were shattered.

– It later became known that law enforcement personnel were verifying information about explosions in two other multi-story apartment buildings in the west and southwest of Moscow. There were also broken windows in some apartments.

Reaction of authorities

– Sobyanin confirmed the drone attack on Tuesday morning. As a result, according to him, several buildings sustained minor damage.

– According to the mayor, there are no casualties in the capital and all of the city’s emergency services are working at the scene.

– Emergency services evacuated the residents of two apartment buildings damaged by the drones. Once all necessary work is completed, the residents will be able to return to their homes. “According to information from municipal medical services, at this time, none of the residents of the buildings damaged by UAVs [unmanned aerial vehicles] have been seriously injured. Two individuals requested medical aid. Nobody had to be hospitalized and the necessary help was provided on site. Also, the emergency services and several ambulance crews continue to work at the sites of incidents,” the mayor wrote.

– Several drones were shot down as they approached the capital, Moscow Region Governor Andrey Vorobyov said.

Situation now

– Domodedovo, Vnukovo and Zhukovsky airports are operating as usual, representatives of two of the airports told TASS.

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