IMF Executive Board Completes Second Review Under the ECF Arrangement with the Democratic Republic of the Congo and Approves US$77 Million DisbursementPress Release No. 11/35
February 9, 2011
The Executive Board of the International Monetary Fund (IMF) today completed the second review of the Democratic Republic of Congo’s (DRC) economic performance under a three-year Extended Credit Facility (ECF) arrangement. The completion of the review enables the disbursement of SDR 49.493 million (about US$77 million), which would bring total disbursements under the program to SDR 148.479 million (about US$232 million).
The three-year ECF arrangement for the DRC was approved on December 11, 2009 (see Press Release No. 09/455) in an amount equivalent to SDR 346.45 million (about US$541 million, or 65 percent of the country’s quota in the Fund). In mid-2010, the Executive Boards of the IMF and the World Bank’s International Development Association supported US$12.3 billion in debt relief for the Democratic Republic of the Congo under the Heavily Indebted Poor Countries (HIPC) initiative and the Multilateral Debt Relief Initiative (MDRI—see Press Release No. 10/274). The country has been a member of the Fund since September 1963.
After the Executive Board’s discussion of the Democratic Republic of the Congo, Mr. John Lipsky, First Deputy Managing Director and Acting Chair, made the following statement:
“Macroeconomic performance has improved markedly in the Democratic Republic of the Congo (DRC), after uneven growth and cycles of inflation and exchange rate depreciation. Economic activity is expanding at a strong pace, inflation has decelerated, the exchange rate has stabilized, and debt relief has reduced the external debt burden that weighed heavily on the economy.
“These positive developments have been supported by satisfactory policy implementation. The program’s quantitative targets were comfortably met through end-June 2010 and progress was made in structural reform.
“The government’s resolve to maintain fiscal discipline and constrain the expenditure envelope is noteworthy. It kept spending in check and scaled back the budget in 2010 and 2011 in the face of lower external financing. Ongoing fiscal discipline will be essential to stay within the budget ceilings in the run-up to the national elections later this year. At the same time, stronger effort to raise more domestic revenue will help achieve the government’s fiscal objectives, while strengthened public financial management will ensure that HIPC debt relief is used to boost social spending and increase reserves.
“The decline in inflation has been accompanied by a fall in interest rates but the central bank should maintain a tight monetary policy, until low inflation is firmly entrenched. Its job will be facilitated by continued fiscal discipline, which will enhance the independence and capacity of the central bank to fight inflation. Reform of the central bank, including through its recapitalization, is an important element to achieve this goal.
“The DRC’s wealth and long-term growth potential could be increased through efforts to boost investment and activity in extractive industries. The expeditious implementation of the broad range of reforms in these industries recently developed with the assistance of the IMF, World Bank, and donors, will provide a solid foundation in this regard,” Mr. Lipsky added.