Press Release: IMF Executive Board Approves US$551 Million PRGF Arrangement for the Democratic Republic of the Congo and US$73 Million in Interim HIPC Assistance

IMF News, December 11, 2009

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Press Release: IMF Executive Board Approves US$551 Million PRGF Arrangement for the Democratic Republic of the Congo and US$73 Million in Interim HIPC Assistance

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Bibliographic details

• Published: December 11, 2009

IMF approvals and financing

• Approved a three-year PRGF arrangement for the Democratic Republic of the Congo (DRC) of SDR 346.45 million (about US$551.45 million).
• Approved additional interim HIPC assistance of SDR 45.66 million (about US$72.68 million) under the enhanced HIPC Initiative to reduce the DRC’s debt service payments to the IMF.
• Satisfactory completion of the first review of the PRGF-supported economic program is a key requirement for the DRC to reach the HIPC completion point and benefit from the Multilateral Debt Relief Initiative (MDRI).

Program objectives and quantitative targets (three years to June 2012)

• Average real GDP growth target: 5.5 percent.
• End-period inflation target: 9 percent by 2012.
• Gross reserves target: equivalent to 10 weeks of nonaid imports by 2012.
• External current account deficit (including grants) target: limited to an average of 25 percent of GDP.

Recent economic developments (summary)

• Socioeconomic conditions remain dire after a decade-long conflict; per capita income and human development indicators among the lowest in Africa.
• Projected economic growth in 2009: 2.7 percent.
• The Congolese franc depreciated by 35 percent against the U.S. dollar between December 2008 and September 2009.
• Reserves declined to US$30 million in February 2009 before rising to US$894 million at end-September 2009 following emergency assistance and SDR allocations (SDR 424.5 million).
• DRC is in debt distress with an external debt stock of about US$13.1 billion and debt service amounting to about one-fourth of total expenditure.
• At end-2008, publicly contracted or guaranteed external debt was an estimated 93 percent of GDP, 150 percent of exports, and 502 percent of government revenue, excluding foreign aid.
• IMF staff received financing assurances in November 2009 regarding rescheduling of DRC’s Paris Club debts.

Key policy priorities and reforms

• Fiscal policy: bolster domestic revenue, strengthen expenditure management, implement a prudent wage policy, avoid recourse to bank financing over the medium term.
• Monetary policy: focus on reducing inflation; improve liquidity forecasting, strengthen coordination with the Treasury, complete restructuring and recapitalization of the central bank to enhance credibility and independence, and strengthen central bank supervision of commercial banks.
• Exchange rate policy: maintain a flexible exchange rate; limit foreign exchange intervention to smoothing short-term volatility and achieving gross official reserve targets.
• Structural reforms: public enterprise reform, improving governance, streamlining the business regulatory environment, protecting foreign investment, and improving transparency in natural resource management.
• Debt management: meet enhanced HIPC requirements and triggers to reach the completion point and receive MDRI relief as early as possible; continued highly concessional donor assistance required.

Program structural reform focus areas

• Improving domestic revenue mobilization by expanding the tax base and improving its management.
• Strengthening public financial management through improved budget preparation, execution and accountability.
• Reforming the central bank to restore independence of the Banque Centrale du Congo and strengthen supervisory capacity with IMF technical assistance.
• Developing the private sector, including reform of public enterprises and streamlining government regulations.
• Improving transparency in natural resource management.

Selected economic and financial indicators (highlights from Table 1)

• Real GDP (annual change): 2007: 6.3; 2008: 6.2; 2009 (Prel. Est.): 2.7; 2010 (Projections): 5.4; 2011: 7.3; 2012: 6.8; 2013: 8.1; 2014: 7.0.
• Consumer prices, period average: 2007: 16.7; 2008: 18.0; 2009: 45.0; 2010: 24.7; 2011: 13.5; 2012: 10.5; 2013: 9.0; 2014: 8.8.
• Consumer prices, end-of-period: 2007: 10.0; 2008: 27.6; 2009: 48.7; 2010: 15.0; 2011: 12.0; 2012: 8.5.
• Exports, f.o.b. (U.S. Dollars, annual percent change): 2007: 109.6; 2008: 7.2; 2009: -42.5; 2010: 18.3; 2011: 27.8; 2012: 13.2; 2013: 17.2; 2014: 16.4.
• Imports, f.o.b. (U.S. Dollars, annual percent change): 2007: 81.8; 2008: -21.7; 2009: 21.6; 2010: 26.1; 2011: 0.5; 2012: 4.5.
• Broad money (annual change): 2007: 49.5; 2008: 55.7; 2009: 33.8; 2010: 27.0.
• Total government revenue (percent of GDP): 2007: 14.8; 2008: 18.5; 2009: 17.9; 2010: 19.0; 2011: 20.8; 2012: 21.2.
• Total government expenditure (percent of GDP): 2007: 18.8; 2008: 22.7; 2009: 29.1; 2010: 36.2; 2011: 35.3; 2012: 34.6; 2013: 32.1.
• Overall fiscal balance (payment order basis, incl. grants, percent of GDP): 2007: -2.5; 2008: -2.3; 2009: -3.2; 2010: -12.2; 2011: -10.1; 2012: -8.7; 2013: -6.4; 2014: -5.3.
• Gross national saving (percent of GDP): 2007: 5.8; 2008: 5.6; 2009: 7.4; 2010: 11.2; 2011: 14.4.
• Investment (percent of GDP): 2007: 22.0; 2008: 33.5; 2009: 37.3; 2010: 32.5; 2011: 30.0.
• Exports of goods and services (percent of GDP): 2007: 65.5; 2008: 61.3; 2009: 41.8; 2010: 42.7; 2011: 49.0; 2012: 50.8.
• Imports of goods and services (percent of GDP): 2007: 68.9; 2008: 76.4; 2009: 66.4; 2010: 71.1; 2011: 81.1; 2012: 76.0.
• Current account balance, incl. transfers (percent of GDP): 2007: -1.5; 2008: -15.9; 2009: -16.4; 2010: -27.7; 2011: -31.7; 2012: -25.1.
• Gross official reserves (weeks of nonaid-related imports): 2007: 9.9; 2008: 8.7; 2009: 9.2; 2010: 11.5.
• External public debt, total stock including IMF (Millions of U.S. dollars): 2007: 13,425; 2008: 13,149; 2009: 12,785; 2010: 4,329; 2011: 5,386; 2012: 6,434; 2013: 6,882; 2014: 7,761.
• Net present value (NPV) of debt (Millions of U.S. dollars): 2007: 10,820; 2008: 10,729; 2009: 10,603; 2010: 4,106; 2011: 5,255; 2012: 6,248; 2013: 6,599; 2014: 7,326.
• NPV of debt (percent of exports of goods and services): 2007: 264.5; 2008: 189.7; 2009: 175.5; 2010: 73.8; 2011: 98.9; 2012: 100.8; 2013: 90.9; 2014: 88.0.
• Scheduled debt service (Millions of U.S. dollars): 2007: 739.6; 2008: 891.2; 2009: 815.5; 2010: 252.1; 2011: 346.6; 2012: 430.4; 2013: 355.7; 2014: 350.8.
• Exchange rate (Congo franc per U.S. dollar), period average: 2007: 516.0; 2008: 563; end-of-period: 2007: 503.0; 2008: 639.
• Memorandum: Nominal GDP (billions of Congo francs): 2007: 5,148; 2008: 6,526; 2009: 8,729; 2010: 11,361; 2011: 13,746; 2012: 16,117; 2013: 18,869; 2014: 21,877.

Institutional and historical notes

• DRC became an IMF member on September 28, 1963; quota in the Fund: SDR 533 million.
• Previous PRGF arrangement (approved June 2002): SDR 580 million (US$924 million), almost fully drawn (SDR 553.47 million) and expired March 2006 without completion of the sixth review.
• On March 12, 2009, the Executive Board approved a disbursement equivalent to SDR 133.25 million (about US$212 million) under the Rapid-Access Component of the Exogenous Shocks Facility (RAC-ESF).

Press Release No. 09/455, December 11, 2009.

References

• Democratic Republic of the Congo and the IMF
• Press Releases
• PRESS CENTER
• Heavily Indebted Poor Countries (HIPC) Initiative
• Multilateral Debt Relief Initiative (MDRI)
• Poverty Reduction and Growth Strategy (PRGS)
• http://www.imf.org/external/mmedia/view.asp?eventID=1696
• http://www.imf.org/external/mmedia/view.asp?eventID=1673
• http://www.imf.org/external/mmedia/view.asp?eventID=1674
• IMF’s general and special SDR allocations
• Press Release No. 02/27
• Press Release No. 09/74
• https://www.imf.org/en/home