Funding is part of last review of DRC financial policies under IMF’s three-year Extended Credit Facility plan.
The Democratic Republic of Congo is looking forward to securing an additional $200 million financing from the International Monetary Fund (IMF) to strengthen its foreign exchange reserves and stabilise the exchange rate after a successful review of its economic and financial policies.
The funding is part of the sixth and last review of Kinshasa’s economic and financial policies under the IMF’s three-year Extended Credit Facility (ECF) programme that was approved in July 2021 for a total funding of SDR 1.06 billion (about $1.52 billion).
If the latest reviews by the IMF staff are approved by the management and later by the board, in early July, Kinshasa will access SDR 152.3 million (slightly over $200 million) to shore up its reserves estimated at $5.5 billion (equivalent of two months of import cover) by December 31, 2023.
The IMF’s ECF programme provides medium-term financial assistance to low-income countries (LICs) with protracted balance of payments problems.
The Resilience and Sustainability Facility (RSF), on the other hand, provides affordable long-term financing to countries undertaking reforms to reduce risks to prospective balance of payments stability, including those related to climate change and pandemic preparedness.
The IMF is satisfied with the efforts that the Congolese government has taken to improve the country’s economic and financial position, despite the security threats triggered by the escalating conflicts in the Eastern part of the country, which have slowed down the reform process.
The IMF staff led by Calixte Ahokpossi, who visited the country from April 25 to May 8, said the Central African nation has met most of the quantitative objectives under the programme but key reforms have been bogged down by the volatile security situation in the country.
“The security situation in the East and the pre-and post-electoral period have impacted the implementation of the ECF-supported program,” said Mr Ahokpossi.
“While most quantitative programme targets have been met, the performance criterion on the public deficit was missed, mainly due to higher-than-expected exceptional security spending. The structural reform programme advanced, but at a slower pace than anticipated.”
Spending on security and the General Election last year put a strain on the nation’s finances resulting in an increased budget deficit that exceeded projections to stand at 1.3 percent of Gross Domestic Product, despite good performance for revenue in the last quarter of 2023.
“Strengthening public finance management remains essential to continue to mobilise revenues and improve the quality and efficiency of public spending,” said Mr Ahokpossi.
“Improving the expenditure chain is critical, as it continues to suffer from major deficiencies and major governance risks.”
The mineral rich nation which joined the East African Community (EAC) in April 2022 is grappling with insecurity as a result of escalated violence in the Eastern part of the country.
Severe clashes between the military and insurgent, have continued to weigh heavily on eastern DRC, leading to more than six million internally displaced people in the resource-rich region.