Statement by IMF Staff Mission to the Democratic Republic of the CongoPress Release No. 07/222
October 5, 2007
A mission from the International Monetary Fund (IMF) headed by Mr. Brian Ames visited Kinshasa from September 19 to October 3 and issued the following statement today:
"The mission met with President Joseph Kabila, Prime Minister Antoine Gizenga, Minister of State in charge of the Interior Denis Kalume, Minister of State in charge of Public Works and Infrastructure Pierre Lumbi, Minister of Finance Athanase Matenda Kyelu, Minister of Budget Adolphe Muzito, Central Bank Governor Jean-Claude Masangu, and other ministers and senior government officials. The mission held discussions to assess progress in implementation under the staff monitored program (SMP), review economic and financial policies for the rest of the year, and discuss the preliminary draft 2008 budget. The mission would like to thank the authorities for their warm hospitality and excellent cooperation during the visit.
"Performance under the SMP has been broadly satisfactory, and most of the program's macroeconomic objectives remain in place. Economic growth for 2007 has been revised slightly downward to 6 percent. Good performance in the services and mining sectors is being partially offset by weaker manufacturing and construction activities due to power and cement shortages. The new government's fiscal tightening has corrected the budgetary overruns observed in late 2006 and early 2007. This has contributed to a more stable Congolese Franc and a decline in annual inflation to 14 percent at end-September. International reserves of the Central Bank of Congo have also risen. Moreover, delays that were observed at end-June in the implementation of several structural measures have been corrected, with only one measure still awaiting full implementation.
"In discussing economic policies for the remainder of 2007, the mission and authorities agreed that maintaining prudent monetary and fiscal policies and giving impetus to structural reforms should take priority. The mission was encouraged in this regard by the authorities' resolve to maintain budgetary execution on a cash basis to address an anticipated revenue shortfall and spending pressures arising from the recent wage increases and higher defense spending on account of the security situation in the eastern provinces. Measures to revitalize reforms were also discussed.
"For 2008, the mission and the authorities discussed the need for realistic revenue forecasts and strict control over expenditures in order to preserve macroeconomic stability. Finalization of the budget awaits the policy decision to be taken by the government regarding the decentralization process. The mission stressed that implementation of decentralization should be gradual, in line with the institutional capacity in the provinces, particularly regarding public financial management. Discussions on the 2008 budget will continue during the upcoming weeks, including during the Annual Meetings of the IMF and World Bank in Washington.
"The mission reaffirmed the IMF's commitment to assist the new government in its efforts towards higher growth and poverty reduction. The implementation of prudent economic and financial policies, agreement on a 2008 budget consistent with macroeconomic stability, and the revitalization of the structural reform program should support the authorities in their endeavor to achieve these objectives and pave the way for discussions on a medium term program that could be supported by a new arrangement under the Fund's Poverty Reduction and Growth Facility."