Press Release No. 10/271

Press Release: IMF Executive Board Completes First Review Under ECF Arrangement for the Democratic Republic of the Congo and Approves US$73.20 Million Disbursement

June 30, 2010

The Executive Board of the International Monetary Fund (IMF) today completed its first review of the Democratic Republic of Congo’s economic performance under the Extended Credit Facility (ECF) arrangement. Completion of the review enables the Democratic Republic of Congo to draw SDR 49.493 million (about US$73.20 million) immediately, bringing total disbursements under the arrangement to SDR 98.986 million (US$146.39 million).

The Executive Board approved the three-year ECF arrangement for the Democratic Republic of the Congo (DRC) in December 2009 (see Press Release No. 09/455) in the amount of SDR 346.45 million (about US$512.36 million, or 65 percent of the country’s quota in the Fund).

The Executive Board also agreed, in principle, that the DRC has taken the steps necessary to reach its completion point under the Enhanced Heavily Indebted Poor Countries (HIPC) Initiative. This decision on the HIPC completion point is contingent upon the Executive Board of the World Bank reaching a similar decision, after which a joint press release will be issued.

Following the Executive Board’s discussion of the Democratic Republic of the Congo, Mr. John Lipsky, First Deputy Managing Director and Acting Chair, issued the following statement:

“The Democratic Republic of the Congo authorities implemented satisfactorily their economic program despite difficult economic, social, and security conditions. The DRC has met the conditions for reaching the completion point under the Enhanced Heavily Indebted Poor Countries Initiative and qualifies for additional debt relief under the Multilateral Debt Relief Initiative (MDRI). Debt relief will significantly reduce the country’s debt burden and create fiscal space for poverty reduction programs.

“Going forward, prudent and credible fiscal policy will be key to entrenching macroeconomic stability and making progress toward fiscal sustainability. The authorities’ 2010 fiscal policy aims at further reducing government recourse to central bank financing. Effective implementation of revenue-enhancing measures and strict adherence to the expenditure commitment and treasury plans will be critical to achieving the fiscal objectives.

“Safeguarding debt sustainability after HIPC/MDRI debt relief requires prudent debt management. The authorities are committed to meeting their external financing needs through grants and highly concessional loans.

“Monetary policy will continue to focus on containing inflation. The policy interest rate will be kept significantly positive in real terms in order to avoid the reemergence of pressures on the exchange rate and inflation. Recent steps to enhance coordination between the central bank and the Treasury regarding liquidity management should contribute to effective control over the monetary aggregates.

“The authorities intend to accelerate structural reforms aimed at strengthening economic management and bolstering the economy’s supply response. These include enhancing revenue administration and public financial management, and addressing weaknesses in the financial sector. The authorities are strongly committed to improving governance and transparency, and to enforcing the rule of law in economic activities, particularly in the mining and oil sectors, critical for foreign direct investment and donor assistance in support of their development objectives.”