A Projection Model for Resource-rich and Dollarized Economy: The Democratic Republic of the Congo

By Victor Musa, Bertrand Gilles Umba, Lewis Mambo, Jonas Kibala, Christian Kandolo, Josephine Mushiya, Yannick Luvezo, Jules Nsunda, Grégoire Lumbala, Yves Siasi, Serge Mfumukanda, Lubaki Ange, Kabata Olivier, Luc Shindano, Dyna Heng, Diego Rodriguez Guzman, Barna Szabo

June 21, 2024

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Victor Musa, Bertrand Gilles Umba, Lewis Mambo, Jonas Kibala, Christian Kandolo, Josephine Mushiya, Yannick Luvezo, Jules Nsunda, Grégoire Lumbala, Yves Siasi, Serge Mfumukanda, Lubaki Ange, Kabata Olivier, Luc Shindano, Dyna Heng, Diego Rodriguez Guzman, and Barna Szabo. A Projection Model for Resource-rich and Dollarized Economy: The Democratic Republic of the Congo, (USA: International Monetary Fund, 2024) accessed November 21, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

The paper introduces a semi-structural Quarterly Projection Model (QPM) tailored for the Democratic Republic of the Congo (DRC), highlighting its resource richness and high degree of dollarization. We provide an overview of the model's specifications to elucidate key features of the DRC economy and present its properties, evaluating its alignment with DRC data and assessing its goodness of fit. Additionally, the paper demonstrates the QPM's practical application through a counterfactual scenario, comparing policy recommendations with the actual policy responses of the Central Bank of the Republic of Congo to observed exchange rate and inflation pressures in 2023. Beyond the QPM, the paper showcases supplementary tools that enhance its utility for generating medium-term forecasts and developiong narratives in support of monetary policymaking. Specifically, we introduce the Nowcasting and Near-Term Forecast models, designed to assess the economy in real-time and predict short-term inflationary trends.

Subject: Economic sectors, Exchange rate devaluation, Exchange rates, Foreign exchange, Inflation, Mining sector, Output gap, Prices, Production

Keywords: Annex II, Dollarization, DRC economy, DRC QPM model, DRC's economy, Exchange rate devaluation, Exchange Rate Policies, Exchange rates, GDP data, Global, Inflation, Mining sector, Monetary policy, Near-Term Forecast model, Output gap, Resource-rich

Publication Details

Pages:

66
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2024/126
Stock No:

WPIEA2024126
ISBN:

9798400280887
ISSN:

1018-5941

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