Press Release: IMF Mission Encourages the Democratic Republic of the Congo (DRC) to Accelerate Resource Mobilization to Meet Social Needs

IMF News, February 25, 2014

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Canonical URL: Press Release: IMF Mission Encourages the Democratic Republic of the Congo (DRC) to Accelerate Resource Mobilization to Meet Social Needs

IMF staff team led by Mr. Norbert Toé visited Kinshasa and Lubumbashi during February 11–26, 2014 to conduct the 2014 Article IV consultation discussions with the DRC.
The mission met with Prime Minister Matata Ponyo Mapon, Vice-Prime Minister and Minister of Budget Daniel Mukoko Samba, Minister Delegate to the Prime Minister for Finance Patrice Kitebi, Central Bank of the Congo (BCC) Governor Deogratias Mutombo Mwana Nyembo, Economic and Financial Commissions of the Senate and the National Assembly, Katanga Province Vice-Governor Guibert P. Yav Tshibal, other ministers and senior central and local government officials, representatives from the private sector in Kinshasa and Lubumbashi, civil society, and the donor community.
IMF Executive Board is expected to complete the 2014 Article IV consultation in May 2014.

The economy is estimated to have expanded by 8.5 percent in 2013, extending the strong growth recorded in 2012.
Output of the mining sector continued to be the main driver with copper production alone exceeding 900,000 tons.
At end-December 2013, annualized inflation fell to 1.1 percent, a record low and below the authorities’ medium-term objective of close to 4 percent.
The short-term outlook: economic growth projected at 8.7 percent for 2014 driven by continued buoyant mining sector activity.
External current account position is expected to improve slightly on account of strong mining exports.
International reserves: current level of 9 weeks of non-aid related imports coverage.

The DRC maintained macroeconomic stability largely through a tight fiscal policy stance.
The mission recommends adhering to the fiscal anchor of no (net) financing of the fiscal deficit by the BCC over the medium term.
The mission underscored the need to tap the DRC’s large tax potential to mobilize more domestic revenues to allow an increase in public spending on priority sectors, in particular education, health, and basic infrastructure.
The mission noted the significant increase in domestic revenues projected under the 2014 budget, predicated on improvements in tax collection and corrective measures to the value-added tax.
The mission stressed the need for the tax and customs administrations to implement steadfastly the envisaged measures to ensure that the projected revenues materialize.

The mission discussed the findings of the recently conducted Financial Sector Assessment Program.
It urges the authorities to recapitalize the BCC and to make it an autonomous and accountable central bank focused on conducting effective monetary policy and preserving the stability of the financial sector.
The mission discussed a long-term de-dollarization strategy supported primarily by:
- macroeconomic stability,
- a strong and autonomous central bank,
- sound banking supervision, and
- a sufficiently developed financial infrastructure.
These same pillars are necessary to promote the development of financial markets.

The mission reiterated the importance of good and timely statistics for economic decision making and the need to strengthen the responsible agency.
The mission noted the lack of full information on a large mining and public investment project (Sicomines), which prevents a comprehensive debt sustainability analysis.

Risks highlighted:
- possible commodity price fall,
- uncertainty related to the domestic environment.
Policy priorities recommended:
- maintain a flexible exchange rate,
- further build up international reserves from the current level of 9 weeks of non-aid related imports coverage,
- improve the structural competitiveness of the economy,
- mobilize domestic revenues to finance increased public spending on education, health, and basic infrastructure,
- recapitalize and strengthen the autonomy and accountability of the BCC,
- implement tax and customs administration reforms to realize projected revenue increases,
- strengthen statistical capacity and transparency, especially regarding large projects such as Sicomines.

Press Release No. 14/68, February 25, 2014, IMF Communications Department.