IMF Survey: Democratic Republic of the Congo Gets $551 Million IMF Loan

IMF News, December 11, 2009

Source details

Canonical URL: IMF Survey: Democratic Republic of the Congo Gets $551 Million IMF Loan

On December 11, 2009, the IMF approved a loan of $551 million to the Democratic Republic of the Congo under the IMF’s Poverty Reduction and Growth Facility to support a three-year program.
The IMF also provided $73 million in additional interim assistance under the enhanced Heavily Indebted Poor Countries (HIPC) Initiative.

Country status: post-conflict and debt-distressed following a decade-long conflict; transition to a democratically elected government and implementation of prudent economic policies since 2001 aided recovery and tamed hyperinflation.
Remaining challenges: per capita income and human development indicators among the lowest in Africa; insufficient domestic revenue mobilization; high external debt burden; unsettled security situation in the eastern provinces; dilapidated physical infrastructure.
Global conditions: onset of the global financial crisis slowed economic activity and aggravated vulnerabilities.

Program horizon: three-year program.
Growth target: average real GDP growth of 6.5 percent.
Inflation target: end-period inflation rate of 9 percent by 2012.
Reserves target: gross reserves equivalent to 10 weeks of nonaid imports in 2012.
External balance target: external current account deficit, including grants, limited to 25 percent of GDP on average.

Enhancing economic growth:
- Reform public enterprises that provide growth-critical services.
- Streamline the regulatory environment to improve the business and investment climate.
- Deepen financial intermediation, including restructuring and recapitalizing the central bank and strengthening its capacity to supervise the financial sector.
Domestic revenue mobilization:
- Increase the revenue-to-GDP ratio from about 16 percent in 2009 to about 20 percent in 2012.
- Strengthen customs and tax administration, streamline and simplify the tax system, and introduce a value added tax.
Public expenditure management:
- Bolster budget planning and execution.
- Reinforce budget controls and improve transparency of government operations.
- Allocate more resources to priority spending.

Stock of public and publicly guaranteed external debt: estimated at $13 billion at end-2008.
Present value ratios: estimated at 93 percent of GDP, 150 percent of exports, and 501 percent of government revenue excluding grants.
Enhanced HIPC Initiative: by reaching the completion point the country could benefit from debt relief of roughly $9 billion.
Post-relief vulnerability: external debt outlook will remain vulnerable to adverse exogenous shocks even after debt relief; essential to rely on grants and highly concessional loans for development financing.

Donor expectations: development partners expected to step up budget assistance in support of the authorities’ reform agenda.
Financing strategy: reliance on grants and highly concessional loans emphasized to maintain sustainability.
Risks: unsettled security in eastern provinces, insufficient revenue mobilization, high external debt burden, and external shocks that could derail progress.

IMF loan amount: $551 million.
Additional interim HIPC assistance: $73 million.
External debt stock (end-2008): $13 billion.
Present value of external debt: 93 percent of GDP; 150 percent of exports; 501 percent of government revenue excluding grants.
Growth target: average real GDP growth of 6.5 percent.
Inflation target: end-period inflation rate of 9 percent by 2012.
Reserves target: gross reserves equivalent to 10 weeks of nonaid imports in 2012.
External current account deficit target: limited to 25 percent of GDP on average.
Revenue-to-GDP target: from about 16 percent in 2009 to about 20 percent in 2012.
Potential debt relief at HIPC completion point: roughly $9 billion.

Source: IMF Survey, December 11, 2009.