Press Release No. 21/381

IMF Executive Board Completes First Review Under the Extended Credit Facility Arrangement and Approves US$212.3 Million Disbursement for the Democratic Republic of the Congo

December 16, 2021

• Despite the COVID-19 pandemic, the rebound in economic activity is stronger than initially projected, supported by higher-than-envisaged mining production and the recovery in non-extractive growth.
• The conclusion of the first review under the ECF arrangement enables the immediate disbursement of US$212.3 million to reinforce international reserves, given downside risks to the domestic and global economy outlook and recovery.
• The ECF arrangement continues to support the authorities’ medium-term reform program to foster macroeconomic stability and sustainable development by stepping up domestic revenue mobilization, strengthening governance, and reinforcing monetary policy.

Washington, DC: On December 15, 2021, the Executive Board of the International Monetary Fund (IMF) completed the first review of the arrangement under the Extended Credit Facility (ECF) for the Democratic Republic of the Congo (DRC). The completion of the review enables the immediate disbursement of SDR152.3 million (14.3 percent of quota or US$212.3 million) to help meet balance of payment needs. The DRC’s 36-month ECF arrangement for SDR1,066 million (100 percent of quota, about US$1.52 billion) was approved by the Executive Board on July 15, 2021 to help meet financing needs associated with the COVID-19 pandemic (see Press Releases No. 21/217), following IMF emergency support to the DRC under the Rapid Credit Facility (RCF) in December 2019 and April 2020, for a total of SDR 533 million (50 percent of quota or US$731.7 million, see Press Releases No. 19/465 and 20/182).

Despite the persistence of the COVID-19 pandemic, the economy is recovering; growth for 2021-22 has been revised upward to 5.4 percent and 6.2 percent respectively, supported by higher-than-envisaged mining production and a rebound in non-extractive growth. Inflation has remained anchored at about 5 percent. Better-than-projected external developments, supported by high commodity prices, have allowed a significant increase in gross international reserves to US$3.3 billion in mid-October 2021 (from US$0.8 billion at end-2020). This reflects more proactive foreign exchange purchases by the central bank and the end-August general SDR allocation from the IMF. Higher fiscal revenues have provided space for additional spending, mostly on investment, without undermining the end-2021 fiscal deficit.

Following the Executive Board discussion, Ms. Kristalina Georgieva, Managing Director and Acting Chair, made the following statement:

“The Democratic Republic of Congo has had a promising start on the program supported by the Extended Credit Facility arrangement. Program performance is satisfactory and economic activity has improved in 2021 on the back of higher external demand and mining production, allowing for a higher-than-projected buildup in reserves. However, new COVID-19 containment measures were implemented since the summer and vaccination rates remain very low.

“Fiscal policy remains prudent. The 2022 budget is expected to support economic recovery, with half of the recent SDR allocation devoted to priority investment projects over the coming years. Strengthening public investment management will be crucial to enhance its efficiency.

“Creating fiscal space by improving domestic revenue mobilization is key to the success of the authorities’ reform agenda, notably to address infrastructure and social needs. Concessional financing should be prioritized, while continuing to avoid monetary financing from the Central Bank of Congo (BCC). Enhancing public financial management will be important to support spending efficiency and fiscal transparency and accountability.

“The BCC should continue strengthening its monetary policy framework and financial position, improve banking supervision and scale up efforts to strengthen safeguards. Reducing dollarization would help improve the policy transmission mechanism. Accumulating foreign exchange reserves should continue while allowing the exchange rate to act as a shock absorber. Continued efforts to promote financial inclusion are also needed.

“Implementation of structural reforms, including on governance, remains critical to support the recovery and promote sustainable and private sector-led growth. Advancing reforms on anticorruption, AML/CFT, and mining and natural resource transparency, remains crucial to improve the business climate. T his reform agenda should continue to benefit from building capacity for policy formulation and effectiveness, including on fiscal policy, governance, and the monetary and financial sectors. ”