The Executive Board of the International Monetary Fund (IMF) on Thursday approved a three-year US$1.52 billion financial arrangement under the Extended Credit Facility (ECF) for the Democratic Republic of the Congo (DRC).
IMF said the ECF arrangement will support Congolese authorities’ medium-term reform program aimed at maintaining macroeconomic stability, increasing fiscal space, and promoting a sustainable and private sector-led economic growth.
Approval of the ECF arrangement enables immediate disbursement of about US$216.9 million to reinforce international reserves.
This follows Fund emergency support to DRC under the Rapid Credit Facility (RCF) in December 2019, and April 2020 (for budget support), for a total of US$731.7 million.
Mr. Mitsuhiro Furusawa, Deputy Managing Director and iMF Acting Chair, said the Congolese economy has been severely impacted by the COVID-19 pandemic and is recovering, in part due to high mineral prices.
“The authorities have requested a new arrangement under the Extended Credit Facility (ECF) to address protracted balance of payment needs and support reforms aimed at maintaining macroeconomic stability, increasing fiscal space, ensuring debt sustainability, and promoting sustainable and private sector-led economic growth. The ECF arrangement is expected to catalyze financing from external partners,” he said.
Furusawa added that “the authorities are committed to creating fiscal space to address infrastructure and social needs, while maintaining a moderate risk of debt distress. Measures aim to enhance domestic revenue mobilization, by ensuring a properly functioning VAT, rationalizing non-tax and parafiscal charges, streamlining tax expenditures, and modernizing revenue administration. Spending discipline would help to increase social spending and avoid reliance on central bank financing. Prioritizing concessional financing and relief under the Debt Service Suspension Initiative would support debt sustainability.”
“Macroeconomic policies are appropriately aimed at maintaining low and stable inflation. Important measures include modernizing the monetary policy framework and strengthening the financial position, governance, and independence of the central bank. Measures are being taken to enhance the risk-based supervisory framework and the oversight of banks. The authorities’ aim to boost foreign exchange reserves while allowing the exchange rate to act as a shock absorber. Strengthening governance, including natural resource management and transparency, remains crucial to support private sector-led growth. The authorities have made progress in publishing mining contracts and on COVID-19 related spending. Further efforts are needed to enhance the AML/CFT framework to meet global standards and measures to improve the resilience to climate change would be welcome,” he said.
Simon Ateba is Chief White House Correspondent for Today News Africa. Simon covers President Joe Biden, Vice President Kamala Harris, the U.S. government, the United Nations, the International Monetary Fund, the World Bank and other financial and international institutions in Washington D.C. and New York City.