IMF Executive Board concludes the first review of the Extended Facility Arrangement for the Republic of Congo

IMF News, June 24, 2022

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Canonical URL: IMF Executive Board concludes the first review of the Extended Facility Arrangement for the Republic of Congo

The Executive Board concluded the 1st review of the Republic of Congo’s SDR 324.0 million arrangement under the Extended Credit Facility (ECF), approved on January 21, 2022.
Conclusion of the review enables the Republic of Congo to draw the equivalent of SDR 64.80 million (about US$ 87 million) as a disbursement under the Extended Credit Facility arrangement.
Immediate disbursement of SDR 64.80 million (about US$ 87 million) will support implementation of development policies, maintain macroeconomic stability, and support economic recovery.

Economic recovery is gaining momentum but remains fragile against the backdrop of the COVID-19 pandemic and global consequences of the war in Ukraine.
Recovery is driven by improved oil revenues; the non-oil sector faces headwinds from inflationary pressures.
Rising inflation is holding back more vigorous economic activity amid surging global food and oil prices.
Key risks to the outlook include:
- lower oil prices and production,
- new pandemic waves,
- weak reform implementation,
- climate shocks.

Program performance has been satisfactory; all performance criteria were met.
Program-supported structural reforms are advancing, including:
- a new public financial management (PFM) medium-term strategy and action plan,
- adoption of a new anti-corruption law,
- good progress toward publication of a decree on conflict of interests.

Fiscal policy must balance supporting a robust recovery with safeguarding debt sustainability.
Part of the oil revenue windfalls should finance:
- increased social assistance,
- tax deferrals initiated during the pandemic to help vulnerable businesses and households cope with high inflation.
Part of the windfalls will finance arrears payments and increased social spending, and part will be saved to boost fiscal buffers and CEMAC regional reserves.
Recommended fiscal and debt management priorities:
- implement the authorities’ revenue mobilization strategy,
- better prioritize public investment projects,
- strengthen cash management,
- improve debt management,
- ensure public-sector liability management operations, including refinancing of external debt, are consistent with debt sustainability.

Progress in procurement and management of debt and public finances, including public investment, remains essential to:
- avoid accumulation of domestic and external arrears,
- improve spending efficiency and quality.
Debt management reforms, coupled with implementation of the new anti-corruption architecture, could help cement recent gains in governance and transparency.
Priority reform areas to unlock financing from development partners and achieve private sector-led diversification include:
- public financial management,
- governance,
- transparency,
- financial inclusion.
It is particularly important to ensure oil revenues are managed transparently and to continue energy sector reforms.

Policies under the ECF-supported program will help reduce fragilities and place the Republic of Congo on a path of higher, more resilient, and inclusive growth.
The program will also contribute to the regional effort to preserve external stability for the Central African Economic and Monetary Union (CEMAC).

Press Release No. 22/227 — June 24, 2022, IMF Communications Department.