IMF Reaches Staff-Level Agreement with the Democratic Republic of Congo on An Extended Credit Facility and A Resilience and Sustainability Facility

IMF News, November 13, 2024

Source details

Canonical URL

IMF Reaches Staff-Level Agreement with the Democratic Republic of Congo on An Extended Credit Facility and A Resilience and Sustainability Facility

Other formats

• Markdown version
• Structured JSON version
• Bundle manifest

Bibliographic details

• Published: November 13, 2024

Agreement summary

• IMF staff and DRC authorities reached a staff-level agreement on:
  • a new 3-year economic and financial program supported by the Extended Credit Facility (ECF), for an amount of about US$ 1.77 billion.
  • a new 3-year climate-focused program supported by the Resilience and Sustainability Facility (RSF), for an amount of about US$ 1.1 billion.
• The agreements are subject to approval by IMF management and Executive Board.
• Consideration by the IMF Executive Board is tentatively scheduled for mid-January 2025.
• Mission timing: IMF staff visited Kinshasa during October 31–November 13.

Program objectives and anchoring

• The programs will be anchored on the DRC Government’s Action Program (2024-28).
• ECF program aims:
  • foster strong and inclusive growth,
  • accelerate economic diversification,
  • stimulate job creation,
  • enhance living standards,
  • advance governance and transparency,
  • alleviate poverty,
  • deliver ramped up high-quality investment in priority infrastructure and social sectors.
• RSF program aims:
  • help DRC realize its strategic vision as a “solution country” in the transition towards a low-carbon global economy,
  • strengthen resilience to climate shocks.

Macroeconomic outlook and targets

• Economic growth:
  • Despite protracted war in the Eastern region and the Mpox epidemic, economic growth is expected to remain resilient above 5.0 percent throughout the program period.
• Inflation and reserves:
  • Policies are expected to ease inflationary pressures and bring inflation back to the Central Bank’s target of 7 percent by 2026.
  • Continued accumulation of international reserves toward recommended adequacy levels is expected.

Fiscal policy priorities and public financial management reforms

• Key fiscal priorities under the ECF-supported program:
  • ensure stricter adherence to the public expenditure chain procedures.
  • operationalize the Treasury (DGTCP) and the Treasury Single Account.
  • gradually decentralize spending authorization to line ministries.
  • lay the groundwork for moving towards a resource-based fiscal framework to insulate public spending from volatility of extractive sector revenues.
• Revenue mobilization and tax measures:
  • increase domestic revenue mobilization.
  • mainstream the standardized VAT billing system.
  • streamline inefficient tax exemptions.
  • curb tax evasion through strengthened oversight of mineral exports.
  • further combat customs fraud at the borders.
• Expected fiscal outcome:
  • the expected expansion of fiscal space from implementation of these policies should enable the DRC to address priority spending needs, including on security, humanitarian assistance, education, health, justice, and investment in infrastructure and agriculture.

Climate, natural resources, and RSF-specific priorities

• DRC comparative advantages:
  • extensive forest and water resources, and green mineral reserves position DRC to play a pivotal role in the global low-carbon transition.
• RSF program policy priorities:
  • accelerate efforts to more effectively protect forests.
  • build resilience to climate-induced natural disasters.
  • integrate climate considerations into public investment management.
• Strategic vision:
  • support DRC’s ambition to become a global “climate solution country.”

Governance, transparency, and business environment reforms

• IMF staff urged intensified efforts on reforms to:
  • improve governance and transparency, including in the extractive sector.
  • combat corruption.
  • improve the business environment.
  • enhance reliance on digitalization in public service delivery.
• Rationale:
  • steadfast progress on these fronts is critical for unleashing DRC’s potential for strong, diversified, inclusive and sustainable, private sector-led economic growth.

Mission statement and next steps

• Statement issued by Calixte Ahokpossi, IMF Mission Chief for the DRC, at the end of the October 31–November 13 mission.
• Next steps:
  • IMF staff will prepare a report that, subject to management approval, will be presented to the IMF's Executive Board for discussion and decision.
  • Executive Board consideration is tentatively scheduled for mid-January 2025.

IMF Communications Department, November 13, 2024.

References

• Democratic Republic of the Congo and the IMF
• IMF-World Bank Debt Sustainability Framework for Low-Income Countries -- A Factsheet
• Press Releases
• PRESS CENTER
• https://www.imf.org/en/home