IMF Executive Board Completes the Fifth Review Under the Extended Credit Facility Arrangement with the Democratic Republic of the Congo

IMF News, December 14, 2023

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Published: December 14, 2023

Review outcome and financing

The Executive Board completed the fifth review under the Extended Credit Facility (ECF) arrangement with the Democratic Republic of Congo.
Immediate disbursement: US$ 202.1 million towards international reserves, to continue building buffers.
Equivalent disbursement amount: SDR152.3 million (about US$ 202.1 million).
Aggregate disbursement to date: SDR913.8 million (about US$ 1219.1 million).
Press Release No. 23/453.

Macroeconomic performance and risks

Real GDP projected at 6.2 percent in 2023, with the extractive sector supporting resilience despite negative terms of trade shocks.
Inflation: surged to 23.3 percent year-on-year in July 2023, before declining moderately following policy actions from the Central Bank of the Congo (BCC).
Current account: remains elevated due to deteriorated terms of trade and higher-than-anticipated imports.
Reserve accumulation slowed due to a shortfall in dollar-denominated mining tax revenues and the BCC’s interventions amid exchange rate depreciation pressures.
Socio-political/security context: increasingly challenging, reflecting the upcoming December 20, 2023 general elections and ongoing conflict in Eastern DRC.
Downside risks highlighted: continued fighting, potential discontents on the electoral process, and adverse terms-of-trade shocks.

Fiscal position and public financial management

2023 domestic fiscal deficit projected at 0.8 percent of GDP.
Limited fiscal space due to revenue underperformance; spending reprioritized towards security and elections at the expense of arrears payments.
Fiscal policy priorities:
- Continued revenue mobilization.
- Contained spending, including through the phasing out of fuel subsidies.
- Improved spending efficiency, governance, and transparency.
- Reforms to strengthen fiscal governance and transparency, enhance budget credibility, and limit the usage of emergency procedures and cash management slippages.
- Progress in public financial and investment management reforms to support fiscal policy.

Monetary policy, reserves, and financial stability

Authorities: Central Bank of the Congo (BCC) actions helped moderate inflation after the July 2023 surge.
Issues and recommendations:
- Depreciation and inflationary pressures persist; strengthening monetary policy implementation is warranted.
- Strengthen the implementation framework of monetary policy to achieve price stability and enhance the attractiveness of the Congolese franc.
- Continue efforts to accumulate reserves while safeguarding the exchange rate’s role as a shock absorber.
- Strengthen governance and safeguards of the BCC and ensure its adequate capitalization.
- Implement the new banking law and the remaining FSSR recommendations to promote financial stability.

Program performance and structural reforms

Performance under the ECF arrangement described as broadly satisfactory.
Quantitative performance criteria (end-June 2023):
- All but one were met.
- The PC on domestic fiscal balance was missed due to central government revenue shortfall and insufficient expenditure adjustments.
- Continuous PC on introduction of new multiple currency practices was missed.
Indicative targets (end-June 2023):
- All met except two: the floor on social spending and the floor on central government revenues.
Structural benchmarks (nine total):
- Six were met.
- Two were implemented with delays.
- One (central bank recapitalization) was partially met and rescheduled.

Policy recommendations and reform priorities (from Mr. Kenji Okamura, Deputy Managing Director, Acting Chair)

Contain macroeconomic slippages through prudent fiscal policies, curbing non-essential spending, and improving spending efficiency, governance, and transparency.
Strengthen monetary policy implementation and readiness of the central bank to tighten policy where appropriate.
Accumulate reserves and safeguard exchange rate flexibility to build external resilience.
Strengthen governance, safeguards, and capitalization of the BCC.
Implement the new banking law and remaining FSSR recommendations to promote financial stability.
Advance reforms to improve governance and transparency, including in mining; strengthen anti-corruption and AML/CFT frameworks; enhance the business environment; and build climate resilience to support private sector development and diversified, sustainable, and inclusive growth.

Selected economic and financial indicators (as presented)

Real GDP:
- 2022: 8.8
- 2023: 6.8
- 2024: 6.2
- 2025: 4.7
Extractive GDP:
- 2022: 22.2
- 2023: 11.7
- 2024: 9.1
- 2025: 4.3
Non-extractive GDP:
- 2022: 3.1
- 2023: 4.9
- 2024: 5.0
- 2025: 6.1
GDP deflator:
- 2022: 11.4
- 2023: 16.7
- 2024: 6.6
- 2025: 13.0
Consumer prices, period average:
- 2022: 9.3
- 2023: 14.8
- 2024: 19.4
- 2025: 7.1
Consumer prices, end of period:
- 2022: 13.1
- 2023: 11.5
- 2024: 20.8
- 2025: 11.6
Money and credit (annual change in percent of beginning-of-period broad money):
- Net foreign assets: 2022: -7.0; 2023: 22.9; 2024: 29.8; 2025: 8.9
- Net domestic assets: 2022: 10.4; 2023: -6.0; 2024: 2.4; 2025: 4.2
- Domestic credit: 2022: 12.4; 2023: 28.5; 2024: 12.6; 2025: 7.8
- Broad money: 2022: 3.5; 2023: 16.9; 2024: 32.3; 2025: 20.7
Central government finance (percent of GDP):
- Revenue and grants: 2022: 14.3; 2023: 16.5; 2024: 14.9; 2025: 16.8
- Expenditures: 2022: 17.5; 2023: 16.1; 2024: 15.9; 2025: 17.6
- Domestic fiscal balance: 2022: -1.2; 2023: -0.5; 2024: -0.8; 2025: -0.2
Investment and saving:
- Gross national saving: 2022: 4.6; 2023: 5.1; 2024: 7.9; 2025: 12.0
- Investment: 2022: 11.8; 2023: 10.1; 2024: 10.8
Balance of payments:
- Exports of goods and services: 2022: 42.1; 2023: 42.8; 2024: 42.5; 2025: 41.1
- Imports of goods and services: 2022: 46.9; 2023: 48.2; 2024: 48.0; 2025: 45.6
- Current account balance, incl. transfer: 2022: -5.0; 2023: -5.5; 2024: -5.3; 2025: -3.9
- Current account balance, excl. transfers: 2022: -6.1; 2023: -6.3; 2024: -5.4; 2025: -4.2
Gross official reserves (weeks of imports):
- 2022: 8.3; 2023: 9.6; 2024: 10.2; 2025: 11.2
Debt service in percent of government revenue:
- 2022: 7.4; 2023: 7.3

Press Release No. 23/453, December 14, 2023.

References

PR 21/217](https://www.imf.org/en/News/Articles/2021/07/15/pr21217-drc-imf-executive-board-approves-us-1-52b-ecf-arrangement)

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