Macro-Fiscal Gains from Anti-Corruption Reforms in the Republic of Congo

IMF Working Papers, June 3, 2019

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Title: Macro-Fiscal Gains from Anti-Corruption Reforms in the Republic of Congo
Authors: Giovanni Melina, Hoda Selim, Concha Verdugo Yepes
Date: June 3, 2019
Paper type: IMF Working Paper
Core argument: Oil revenue management and public investment in Congo are vulnerable to corruption due to limited transparency and accountability; corruption has potentially contributed to poor macro-fiscal outcomes. The paper acknowledges existing anti-corruption efforts and proposes further critical reforms to reduce remaining vulnerabilities.

Potential additional growth from anti-corruption reforms can range between 0.8 to 1.8 percent per year over the next 10 years.
Debt can decline by 2.25 to 3 percent of GDP per year over the same period.
Conclusion: Macrofiscal gains from anti-corruption reforms could be substantial even under conservative reform scenarios.

Methodology: Dynamic stochastic general equilibrium (DSGE) model calibrated to a small open economy setting as applied to Congo.
Scenarios: Results vary depending on the specific reforms adopted; quantitative outcomes reported as ranges:
- Growth: 0.8 to 1.8 percent per year (over the next 10 years)
- Debt decline: 2.25 to 3 percent of GDP per year (over the same period)

Strengthen transparency and accountability in oil revenue management.
Enhance governance of public investment to reduce vulnerabilities to corruption.
Implement further critical reforms to complement ongoing anti-corruption efforts to realize the projected macro-fiscal gains.

Subjects: Commodities; Corruption; Crime; Expenditure; Oil; Oil, gas and mining taxes; Public investment and public-private partnerships (PPP); Public investment spending; Taxes
Keywords (selected from source): Africa; authorities in the Republic of Congo; Congo; Congolese authority; corruption; DIGNAR; firm; gas and mining taxes; Global; government; government bureaucracy; government contract; government oil; government share; investment; investment efficiency; investment project cycle; learning by doing; Oil; oil curse; PFM; Public investment and public-private partnerships (PPP); public investment efficiency; Public investment spending; share of oil production; share of profits; small open economy DSGE Model; Sub-Saharan Africa; WP