Economic news: IMF authorizes disbursement for the Democratic Republic of Congo
The Executive Board of the International Monetary Fund (IMF) recently took an important decision regarding the Democratic Republic of Congo (DRC). Due to the high downside risks to the economic outlook and the need to continue building up reserves, the IMF authorized an immediate disbursement of $203.3 million for the DRC’s international reserves.
This decision comes against a backdrop of significant macroeconomic pressures and looming risks, which call for prudent fiscal policy to safeguard fiscal sustainability and macroeconomic stability. To this end, it is planned to mobilize domestic revenue, reduce non-priority spending and improve the efficiency of spending. Moreover, building up reserves will play a crucial role as a buffer against economic fluctuations, and it is essential to formulate adequate policies while strengthening governance.
This IMF decision is an important step for the DRC as part of its fiscal consolidation program. Indeed, it will make it possible to support the needs of the balance of payments and to continue to promote economic growth in the country. Despite the challenges facing the DRC, such as the armed conflict in the east of the country and the next elections scheduled for the end of 2023, macroeconomic performance remains resilient.
Real GDP growth in 2022 is estimated at 8.9%, mainly due to higher than expected mining production. However, inflation reached 13% at the end of the year, fueled by spending pressures and the depreciation of the exchange rate. In addition, the current account deficit has widened and gross international reserves stand at around two months of imports.
Despite these challenges, the DRC is continuing its efforts under the ECF program with the support of the IMF. The results achieved so far are broadly satisfactory, with observance of performance criteria and indicative targets. Progress has been made in mobilizing revenue and improving the efficiency of spending. However, there are still challenges to overcome, particularly with regard to the publication of mining contracts.
In conclusion, the IMF’s decision to authorize a disbursement in favor of the DRC is good news for the country. This demonstrates the IMF’s confidence in the DRC’s efforts to consolidate its public finances and preserve its macroeconomic stability. It is essential that the DRC continues to pursue its economic reforms and strengthen its governance to ensure sustainable and inclusive growth.