Congo DR is facing considerable development challenges despite its rich natural resource base. For the International Monetary Fund (IMF), the first peaceful alternation of power at the top of the state offers the opportunity to initiate reforms to reduce widespread poverty, create jobs and promote inclusive growth.
IMF Executive Directors, at the end of the August 26 meeting, acknowledged the need to consolidate and capitalize on gains from prudent macroeconomic policies that helped to stimulate the recovery from falling export prices between 2016 and 2017.
According to IMF estimates, GDP growth is expected to fall to 4.3 percent in 2019 as copper and cobalt prices fall from their peak in 2018. A budget deficit of 0.2 percent of GDP is forecast and mining revenues are lower than those of 2018.
« The current account deficit is expected to decline 3.5 percent of GDP, with the central bank’s foreign exchange reserves rising to 3.7 weeks of imports. According to current policies, revenues in the DRC will remain well below the average for sub-Saharan Africa despite the positive impact of the revised Mining Code of 2018. The proliferation of taxes and fiscal institutions; generalized tax exemptions; a narrow tax base; and long porous borders are the underlying factors, « says the board of directors.
The assessment made by the IMF’s directors reveals that the Congolese state’s budget forecasts tended to deviate widely from the results, thus undermining the credibility of the budget process and parliamentary oversight. While emergency spending procedures have been widely used and large domestic arrears have been accumulated.
On the other hand, the IMF’s board of directors argues, monetary policy has been hampered by high levels of dollarization. Hence, the need to ensure the implementation of the new central bank law that was promulgated in 2018 to strengthen the independence of the central bank, increase its capital and strengthen its supervisory capacity of the financial system.
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Transparency and accountability in the management of natural resources remain major challenges facing DR Congo. A 2011 decree requiring the Government to publish all mining, oil and forestry contracts has not been fully implemented.
« The audited financial statements of certain government enterprises are not publicly available. The IMF will conduct a governance assessment mission in October, « warned the directors.
As for the business climate, the Board notes that it remains difficult due to a wide range of factors, including the complexity of taxation and judicial vulnerabilities. Weak infrastructure also leads to high production costs.
Emilie MBOYO
