IMF Executive Board Completes First Review Under the Extended Credit Facility Arrangement and Approves US$212.3 Million Disbursement for the Democratic Republic of the Congo

IMF News, December 16, 2021

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Canonical URL: IMF Executive Board Completes First Review Under the Extended Credit Facility Arrangement and Approves US$212.3 Million Disbursement for the Democratic Republic of the Congo

Executive Board completed the first review of the arrangement under the Extended Credit Facility (ECF) for the Democratic Republic of the Congo (DRC) on December 15, 2021.
Completion of the review enables the immediate disbursement of SDR152.3 million (14.3 percent of quota or US$212.3 million) to help meet balance of payment needs.
The DRC’s 36-month ECF arrangement is for SDR1,066 million (100 percent of quota, about US$1.52 billion), approved on July 15, 2021.
Prior IMF emergency support to the DRC under the Rapid Credit Facility (RCF) in December 2019 and April 2020 totaled SDR 533 million (50 percent of quota or US$731.7 million).

Growth forecasts: 2021 revised to 5.4 percent; 2022 revised to 6.2 percent.
Inflation: has remained anchored at about 5 percent.
Gross international reserves: increased to US$3.3 billion in mid-October 2021 (from US$0.8 billion at end-2020).
Better-than-projected external developments supported by high commodity prices contributed to the reserve buildup.
Higher fiscal revenues provided space for additional spending, mostly on investment, without undermining the end-2021 fiscal deficit.
COVID-19 context: Despite the persistence of the COVID-19 pandemic, the economy is recovering; new COVID-19 containment measures were implemented since the summer and vaccination rates remain very low.

The ECF arrangement supports the authorities’ medium-term reform program to foster macroeconomic stability and sustainable development by:
- Stepping up domestic revenue mobilization.
- Strengthening governance.
- Reinforcing monetary policy.
Half of the recent SDR allocation is expected to be devoted to priority investment projects over the coming years.
Strengthening public investment management is highlighted as crucial to enhance investment efficiency.

Fiscal policy described as prudent; the 2022 budget is expected to support economic recovery.
Creating fiscal space by improving domestic revenue mobilization is emphasized as key to the success of the authorities’ reform agenda, notably to address infrastructure and social needs.
Concessional financing should be prioritized.
Continue to avoid monetary financing from the Central Bank of Congo (BCC).
Enhancing public financial management is important to support spending efficiency and fiscal transparency and accountability.

The BCC should:
- Continue strengthening its monetary policy framework and financial position.
- Improve banking supervision and scale up efforts to strengthen safeguards.
Reducing dollarization would help improve the policy transmission mechanism.
Accumulating foreign exchange reserves should continue while allowing the exchange rate to act as a shock absorber.
Continued efforts to promote financial inclusion are needed.

Implementation of structural reforms, including on governance, remains critical to support the recovery and promote sustainable and private sector-led growth.
Priority reform areas include:
- Anticorruption.
- AML/CFT.
- Mining and natural resource transparency.
Building capacity for policy formulation and effectiveness is recommended, including on fiscal policy, governance, and the monetary and financial sectors.

IMF press release, December 16, 2021.