Via IMF (Den Internationale Valutafond)

IMF Executive Board Approves a US$368.4 Million Disbursement Under the Rapid Credit Facility for the Democratic Republic of the Congo

December 17, 2019

On December 16, 2019, the Executive Board of the International Monetary
Fund (IMF) approved a disbursement to the Democratic Republic of Congo
under the Rapid Credit Facility (RCF) [1] in the amount equivalent
to SDR266.5 million (about US$368.4 million, 25 percent of quota) to enable
the authorities to meet their urgent balance of payment needs.

In addition, the Board was informed about the IMF Managing Director’s
approval of a staff-monitored program (SMP)
[2] running up to May 2020.
The SMP is intended to guide policy implementation, provide authorities
with more time to identify, prioritize, and implement reforms aimed at
boosting revenue, tackling corruption, and improving governance.

The economic environment remains challenging and vulnerable to shocks. Real
GDP growth is projected to decelerate to 4.5 percent in 2019 from 5.8
percent in 2018. The recent fall in commodity prices, new spending
initiatives, and looser spending oversight during the political transition
period have led to a weaker fiscal position mostly financed by the central
bank. In this context, international reserves have fallen to critically low
levels creating urgent balance of payment needs.

The new government is committed to implementing measures and reforms that
would strengthen macroeconomic stability, reinforce international reserves,
address issues related to poor governance, a difficult business
environment, and pervasive poverty. Authorities also intend to boost
domestic revenue by restoring the functioning of the VAT and enforcing the
personal income tax, while improving mining revenue forecasting. In
addition, the government intends to introduce strict spending caps,
increase the effectiveness of monetary policy, and foster inclusive growth
and private sector development including through infrastructure projects
and free basic education.

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Following the Executive Board discussion, Mr. Mitsuhiro Furusawa, Deputy
Managing Director and Acting Chair, made the following statement:

“The Democratic Republic of Congo (DRC) faces a difficult balance of
payments situation triggered by the recent fall in commodity prices, new
spending initiatives, and looser spending oversight during the recent
political transition period. Although macroeconomic policies have succeeded
in restoring elements of macroeconomic stability in recent years, DRC
remains a fragile state with precarious economic conditions and pervasive
poverty, massive development needs, and prone to conflicts and humanitarian

“The new government is working on an ambitious medium-term economic and
reform program. Addressing DRC’s deep-rooted challenges will take time and
will require coordinated support from the international community. A key
focus should be on reforms aimed at restoring fiscal discipline by
strengthening spending controls and discontinuing central bank financing of
the deficit. To help fulfill the government’s ambitious developmental and
social plans in a sustainable way, decisive domestic revenue mobilization
measures will need to be taken.

“Other key measures are aimed at reinforcing international reserves and
improving governance, transparency and the business environment. They
include a commitment to publish all new mining contracts. An ongoing
governance assessment mission will help with the formulation of measures to
tackle corruption and improve governance, and an updated safeguards
assessment of the central bank is planned for next year.

“The IMF is supporting the efforts of the country with resources from the
Rapid Credit Facility. In addition, the strong policy commitments under the
Staff-Monitored Program will provide an opportunity for the authorities,
with assistance from their partners, to develop an ambitious, yet
realistic, structural reform agenda that will form the basis for deeper
structural reforms to promote sustained and inclusive growth, and pave the
way for a possible financial engagement with the Fund in 2020.’’

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[1] The RCF (

) is a lending arrangement that provides rapid financial support in a
single, up-front payout for low-income countries facing urgent financing

[2] An SMP is an informal agreement between country authorities and Fund
staff, whereby the latter agree to monitor the implementation of the
authorities’ economic program. SMPs do not entail financial assistance or
endorsement by the IMF Executive Board.