Democratic Republic of Congo wants to negotiate a new program with the IMF

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The question to ask is whether these schemes will help improve the economic situation in the country.

Gaston Mutamba Lukusa

On July 15, 2021, the Executive Board of the IMF (International Monetary Fund) agreed to conclude an Extended Credit Facility (ECF) in the amount of $1.5 billion. After the successful completion of the FEC, the Congolese government is currently seeking to complete another program. This follows from the information of the Resilience and Sustainability Facility (FRD). This is a long-term financing aimed at strengthening the resilience and sustainability of the economy. It is a question of supporting reforms to reduce the risks associated with climate change and pandemics, which have a significant impact on the macroeconomic level, and to increase the room for maneuver of public actions and fiscal reserves to mitigate the risks posed by these long-term structural difficulties. . On August 23, 2021, the country benefited from a new general allocation of Special Drawing Rights, which helped to increase the foreign exchange reserves of the Central Bank of Congo. The question to be asked is whether these programs have helped to improve the economic situation in the country. This has led to a relative stability in the exchange rate. As of December 31, 2021, the dollar was trading at 2,000 francs on the parallel market, while today it is 2,850 francs, a depreciation of 30%. Inflation is 5.3% in 2021, rising to 13.1% in 2022 and 23.8% in 2023. In addition to imported inflation, the country continues to resort to monetary value financing of the budget deficit. In addition, GDP growth remains sustained. GDP growth was 6.2% in 2021, 8.9% in 2022 and 8.6% in 2023. Growth is expected to be 4.7% in 2024. The country’s economic growth is not inclusive. It does not create enough jobs. In addition, this is mainly due to the increase in the mining of mineral products. Copper exports increased from 1,802,897 tons in 2021 to 2,394,630 tons in 2022 and then to 2,842,022 tons in 2023. In the same period, cobalt exports were 93,114 tons in 2021, 115,376 tons in 2022 and 139,838 tons in 2023. It is compiled as 31,803 tons in 2021, 32,337 tons in 2022 and finally 34,526 tons by 2023. Foreign trade and IMF financing and the World Bank have allowed the reorganization of foreign reserves, which as of August 21 amounted to $5.9 billion, or 14 months of imports of goods and services. Overall, the country continues to suffer from a governance crisis. Bottlenecks affect the economy. On August 23, the Council of Ministers, on the advice of the Ministry of Finance, adopted a series of measures aimed at cleaning up the national economy. In addition, two budgetary supports of $500 million each from the World Bank are expected. These structural reforms will involve the creation of a single treasury account, the digitization of public procurement, the rationalization of payrolls and the automation of the creation of a single window for enterprises. In addition to this, there is the reorganization of special economic zones, the strengthening of judicial security, the improvement of governance of financially non-viable public companies, the revitalization of climate finance and carbon markets and the improvement of the financial situation of SNEL and REGIDESO. We are therefore back to the same reforms that never bore fruit due to a lack of political will.

Gaston Mutamba Lukusa