December 5, 2022

Félix Tshisekedi administration spending big, making less and eroding DRC international reserves, IMF raises concerns

The International Monetary Fund (IMF) on Tuesday raised concerns over spending pressures and ‘lackluster’ revenue performance in the Democratic Republic of the Congo (DRC), saying they have led to central bank advances to the government and an erosion of Banque Centrale du Congo (BCC) international reserves.

The IMF called on the administration of President Félix Tshisekedi to put an immediate stop to central bank advances and repay advances given.

The latest assessment of the DRC economic performance came after an IMF staff team led by Mauricio Villafuerte visited Kinshasa between February 19 and February 25, 2020, to discuss developments under the Staff Monitored Program (SMP) approved in December 2019, update the macroeconomic framework, and discuss conclusions of the recent safeguard assessment of the Banque Centrale du Congo (BCC).

“A preliminary assessment suggests that all quantitative targets and structural benchmark under the SMP for end-December were met. The first and second reviews of the SMP will be combined and formally undertaken in May. In 2019, y-o-y inflation remained contained at 4.6 percent and the exchange relative stable, while growth slowed to 4.4 percent down from 5.8 percent in 2018, owing mainly to lower mining production,” Mauricio Villafuerte said in a statement received by TODAY NEWS AFRICA in Washington DC on Tuesday.

“However, budget execution until mid-February raises concerns owing to spending pressures and lackluster revenue performance, which have led to central bank advances to the government and an erosion of BCC international reserves. The mission stressed the need to put immediately a stop to central bank advances and repay those given,” he said.

IMF said it welcomed steps taken by the authorities in DRC to control expenditures going forward, and urged them to step up revenue mobilization.

“The authorities published on the Ministry of Finance’s website a Treasury Plan consistent with realistic revenue projections and the Ministry of Budget prepared a Commitment Plan to institute spending limits for all line ministries and government agencies. As regards revenue mobilization, the mission called for the authorities to implement all measures envisaged under the SMP, including the restoration of the normal functioning of the VAT while avoiding the accumulation of VAT credit arrears. Further, the authorities should act to reduce revenue lost at border entries to fraud and smuggling and tackle governance problems within revenue collecting agencies,” Villafuerte added.

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