Improving the business climate and promoting private sector investment; streamlining tax expenditures and maximizing non-mining mining revenues; greater transparency in the management of natural resources; raising the level of foreign exchange reserves; and the strengthening of controls based on the risks and the quality of financial data. These are the five recommendations of the International Monetary Fund (IMF) made to the Congolese authorities at the end of the Article IV consultations.
« The mission thanks the Congolese authorities for their hospitality, openness and cooperation. The Fund stands ready to support the authorities in their reform efforts and to continue cooperation in the future », said IMF Chief of Mission Mauricio Villafuerte in the DRC.
Clean up the business climate
IMF experts encourage the Congolese executive to improve the business environment and encourage private sector investment. Achieving this goal includes reducing regulation, simplifying and consolidating taxes and non-fiscal payments, improving governance, and intensifying the fight against corruption and the search for resources.
« The staff team urged the authorities to speed up the adoption of the anti-corruption bill and the law establishing an independent anti-corruption commission, as essential measures to anchor credibility. of the government in its quest for an inclusive and sustained growth of the DRC », says the official communiqué sanctioning the end of the mission.
Have sound and solid public finances
While the authorities’ plans for rehabilitation and infrastructure construction are consistent with the goal of creating the foundation for sustainable growth, the IMF says, they require greater mobilization of public resources.
Hence, the IMF’s exhortation to the Congolese authorities to work to rationalize tax expenditures and to diversify the sources of revenue beyond income from mining. This would give the government, says the IMF, greater fiscal space and increased borrowing capacity to support public investment and social priorities.
Establish a more transparent management
More transparent management of natural resources is a determining factor in the accountability process required by good governance practices.
« Given that mining revenues can lead to volatile expenses, the IMF staff suggested changing the formulation of fiscal policy to be based on a non-mining budget balance and continue to prudence in public borrowing to preserve the sustainability of the debt », reads the statement.
Increase foreign exchange reserves
The current level of DRC’s international reserves still remains well below that required by the international standard which is located at least three months of import, ie 12 weeks. In order to comply with this requirement, President Félix Antoine Tshisekedi and his future government should roll up their sleeves to meet the challenge of exceeding US $ 4.5 billion in international reserves.
What is more normal for the IMF to return to this need: « given the high levels of dollarization of the financial system and the country’s vulnerability to external shocks, the mission encouraged the authorities to continue efforts to significantly increase international reserves through compared to their current low level of around 3 weeks of import cover. »
Strengthen the financial system
Discussions between the two parties during these consultations also focused on the need to continue strengthening controls based on the risks and quality of financial data.
But also to « finalize the framework of the fight against money laundering and the financing of terrorism (LBC-FT). The aim is to further improve financial stability. «
As a reminder, the Article IV consultations that took place from 22 May to 5 June 2019 focused on policies that will eventually lead to diversification of the economy and tackle high levels of poverty. and unemployment in a population that continues to grow at a worrying rate.
Eric Tshikuma
