Title: Faustin Luanga: Expert in economy, diplomat and adviser, his vision of raising interest rates in the DRC
Introduction :
Faustin Luanga is a renowned economist, university professor, senior civil servant and adviser to governments. Specialized in economic and financial issues, he takes a wise look at the economic challenges facing the Democratic Republic of Congo (DRC). In this article, we will focus specifically on his view of the recent interest rate hike to 25% by the Central Bank of Congo (BCC).
The impressive career of Faustin Luanga:
Faustin Luanga began his career by obtaining a degree in economics from the University of Kinshasa. He then continued his studies in Japan, where he obtained a master’s degree in international relations and then a doctorate in economics. His professional career has led him to hold important positions, both in international organizations such as the World Trade Organization (WTO) and in the government of the DRC. In addition to his academic expertise, he is also a prolific author in the field of economics, trade and development.
The monetary policy of the BCC and the increase in interest rates:
The Central Bank of Congo’s main mission is to maintain price stability by implementing a rigorous monetary policy. Recently, the BCC took the decision to raise its key rate to 25%, which raised many reactions and questions. According to Faustin Luanga, in a highly dollarized and less banked economy like that of the DRC, these measures should not lead to serious consequences.
Indeed, the BCC works with a small proportion of the money supply in Congolese francs, the majority of transactions being made in dollars. In addition, the country suffers from under-banking with a limited number of financial institutions and restricted access to banking services. In this context, raising interest rates could have a limited impact on the real economy and the Congolese population.
Possible repercussions of rising interest rates:
Although loans in Congolese francs will mechanically become more expensive with this increase in interest rates, this is only a small proportion compared to loans in dollars. This could potentially dampen spending and economic activity, but also help limit pressure on prices and contain inflation. However, Faustin Luanga points out that the depreciation of the Congolese franc against the dollar remains a worrying factor, as it leads to an increase in the prices of imported goods and affects the small savings of the Congolese who daily convert their Congolese francs into dollars..
Conclusion :
Renowned economist and economic policy expert Faustin Luanga offers an interesting perspective on rising interest rates in the DRC. His analysis highlights the specificities of the Congolese economy, highly dollarized and less banked, and underlines the possible repercussions of this measure on economic activity and inflation. Bearing in mind the particular context of the DRC, he calls for a more realistic and pragmatic vision of monetary policy, in order to promote the economic development of the country