Statement at the Conclusion of an IMF Staff Visit to the Democratic Republic of the CongoPress Release No. 10/103
March 20, 2010
An International Monetary Fund (IMF) mission led by Mr. Brian Ames visited the Democratic Republic of the Congo between March 2-20, 2010, to conduct the first review of the Extended Credit Facility (ECF).1 It also took stock of progress in observing the triggers for reaching the completion point under the Heavily Indebted Poor Countries (HIPC) debt relief initiative. The mission met with Prime Minister Adolphe Muzito, Minister of Finance Matata Ponyo Mapon, Minister of Budget Jean-Baptiste Ntahwa, Central Bank Governor Jean-Claude Masangu, and other senior government officials.
The mission assessed macroeconomic performance at end-2009 and discussed the status of implementation of the 2010 budget and key structural reforms, including the HIPC triggers. It also held workshops with the Economic and Financial Commissions (ECOFINs) of the Senate and the National Assembly and with representatives of labor unions and non-governmental organizations on the role of the IMF in low income countries.
At the conclusion of the mission, Mr. Ames issued the following statement in Kinshasa:
"Macroeconomic performance during the second half of 2009 was satisfactory. Economic growth is estimated to have slowed from 6.2 percent in 2008 to 2.8 percent in 2009 owing to the effects of the global financial and economic crisis on the country. After continuing to decline in August, inflation increased in September and October on account of increases in the money supply and the depreciation of the Congolese franc vis-à-vis the U.S. dollar. At the end of the year, inflation declined to about 53 percent, slightly above the government’s target of 49 percent. Gross international reserves rose from a historic low of US$25 million in February 2009 to US$1 billion at end-December (10 weeks of non-aid import cover) following the disbursement of emergency assistance from the IMF and other development partners, the disbursement of the first tranche of the signature bonus under the Sino-Congolese Cooperation Agreement, and the general and special allocations of special drawing rights (SDRs) from the IMF to member countries.
“The authorities successfully implemented their 2009 economic program and observed all the quantitative performance criteria and all the indicative targets with the exception of that related to base money, owing to a lack of timely coordination between the Treasury and the Central Bank, which resulted in excess liquidity in the economy. Although only 2 of the 9 structural benchmarks were observed as programmed, the remaining seven are expected to be met by end-April.
“The authorities continued to implement their Treasury Plan on a cash basis with zero net credit to government from the banking system in January and February 2010. However, the level and composition of spending deviated from the program, but was financed by higher one-off oil tax revenues. The mission reached understandings with the authorities on a revised Treasury Plan for 2010 that is consistent with the authorities’ macroeconomic objectives.
“The mission, in collaboration with World Bank staff, reviewed the status of the HIPC triggers, whose observance is a condition for reaching the completion point and receiving substantial debt relief from external creditors. There has been good progress on all fronts, but observance of the seven triggers will require steadfast actions by the government. This will be facilitated by the monitoring committee which has been created under the authority of the Prime Minister. If all goes well on the authorities’ part, the IMF and World Bank staffs expect to submit the request for debt relief under the HIPC Initiative and the Multilateral Debt Relief Initiative to their respective Boards before end-June. Looking ahead, additional donor budget support would help maintain macroeconomic stability and protect pro-poor spending.
“The mission would like to thank the authorities for their warm hospitality and excellent cooperation during the visit.”
1 The Extended Credit Facility (ECF) has replaced the Poverty Reduction and Growth Facility (PRGF) as the Fund’s main tool for medium-term financial support to low-income countries by providing a higher level of access to financing, more concessional terms, enhanced flexibility in program design, and more focused, streamlined conditionality. Financing under the ECF currently carries a zero interest rate, with a grace period of 5½ years, and a final maturity of 10 years. The Fund reviews the level of interest rates for all concessional facilities every two years.