Press Release No. 24/145

IMF Reaches Staff Level Agreement on Sixth Review of Extended Credit Facility with the Democratic Republic of Congo and completes 2024 Article IV

May 8, 2024

• IMF staff and the authorities have reached a staff-level agreement on the sixth and last review under the three-year Extended Credit Facility (ECF) supported program. IMF staff also completed the 2024 article IV consultation.
• Performance under the program has been generally positive, with most quantitative objectives met and key reforms implemented, albeit at a slow pace.
• With the end of the current program, prudent economic policies remain warranted, including through an appropriate mix of fiscal and monetary policy, supported by improvement in governance. The authorities have expressed interest in a successor arrangement and in accessing the Resilience and Stability Facility.

Kinshasa, DRC: An International Monetary Fund (IMF) mission led by Calixte Ahokpossi visited Kinshasa from April 25 to May 8 to conduct discussions on the 2024 Article IV consultation and the sixth and last review of the Democratic Republic of the Congo’s (DRC) economic and financial program supported by an Extended Credit Facility (ECF) arrangement. The DRC’s 3 year-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 (see Press Releases No. 21/217). The fifth review was completed on December 14, 2023 (see Press Releases no. 23/453).

At the end of the mission, Mr. Ahokpossi issued the following statement:

“The Democratic Republic of Congo’s authorities and the IMF team reached a staff-level agreement for the conclusion of the Sixth Review under the ECF arrangement, subject to IMF management approval. Consideration by the IMF’s Executive Board for this review and Article IV consultation is expected by early-July 2024. Completion of the review will make SDR152.3 million (slightly more than US$200 million) available to build up international reserves.

“Real GDP growth is now estimated at 8.3 percent for 2023, supported by the rapid growth of the extractive sector. Inflation remained high, reaching 23.8 percent at the end of 2023, before easing slowly to 21.2 percent at end-April. With higher spending for elections and security, the 2023 domestic fiscal deficit exceeded projections and reached 1.3 percent of GDP, despite good performance for revenue in the last quarter of 2023. International reserves continued to strengthen, reaching US$5.5 billion or about two months of imports of goods and services at the end of 2023.

“The security situation in the East and the pre- and post-electoral period have impacted the implementation of the ECF-supported program. While most quantitative program targets have been met, the performance criterion on the public deficit was missed, mainly due to higher-than-expected exceptional security spending. The structural reform program advanced, but at a slower pace than anticipated.

“Discussions focused on improving the policy mix by lessening fiscal pressures and strengthening the role of monetary policy, while setting a medium-term fiscal path consistent with financing availability and the capacity of the monetary policy to deal with the impacts of fiscal policy. Discussions also focused on domestic revenue mobilization, the quality and level of social spending, and efforts needed to strengthen the external position of the economy.

“Revenue performance of the first four months of 2024 is encouraging, and security spending pressures remain high. A revised budget law for 2024 must incorporate the positive impact of the recently signed amendment to the contract with the mining company SICOMINES, in terms of both revenue and capital expenditure. In addition, mechanisms will need to be put in place or reinforced to ensure the proper use and governance of these funds. The revised budget law will have to reflect these and other changes. Revised budget commitment plans consistent with these objectives will be published.

“Strengthening public finance management remains essential to continue to mobilize revenues and improve the quality and efficiency of public spending. Staff welcomed recent steps in the implementation of the fuel subsidy reform, which are expected to reduce fiscal pressures and create space for social spending to protect the most vulnerable. Improving the expenditure chain is critical, as it continues to suffer from major deficiencies and major governance risks.

“While the current tight monetary policy seems appropriate, staff welcomed the central bank readiness to take additional measures, if necessary, and stressed that efforts to continue building up international reserves while safeguarding the role of the exchange rate as a shock absorber remain crucial to building external resilience. Discussions also covered ongoing reforms at the central bank to improve safeguards, strengthen the monetary policy framework, improve banking supervision, and support financial inclusion.

“Exiting fragilities and unleash potential for sustainable and inclusive growth requires stepping up the fight against corruption through transparency in the use of public resources, strengthened judiciary and law enforcement, improved AML/CFT framework with further progress on the action plan agreed with the FATF, as well as measures enhancing the business environment. This is critical for supporting private sector development and for promoting diversification on non-extractive economic sectors.

“The mission thanks the DRC’s authorities for their strong cooperation and the constructive discussions.”