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DRC: Most of IMF’s Article IV Consultation Report

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[Exclusive] – Three main lines to remember. First, growth in non-mining activities is expected to more than double in 2019, but total GDP growth will slow down on the assumption of a slowdown in mining activity. Secondly, stronger revenue mobilization is needed to increase infrastructure spending. Third, reducing regulation, simplifying tax payments and improving governance should help boost private sector investment.

An International Monetary Fund (IMF) team led by Mr. Mauricio Villafuerte, IMF mission chief in the Democratic Republic of Congo (DRC), traveled to Kinshasa and Lubumbashi from May 22 to June 5, 2019 to lead the consultations. 2019 under Article IV for the DRC.

Zoom Eco publishes, below, the complete statement made by Mr. Villafuerte, at the end of the visit to the DRC:

« Macroeconomic stability has continued to strengthen in 2018 thanks to the prudent macroeconomic policies put in place since mid-2017 in a context of sharp deterioration of the terms of trade and political shocks and withdrawal of donor support. GDP growth increased from 3.7% in 2017 to 5.8% in 2018. Mining production grew faster than expected, driven by a sharp rise in cobalt prices, which more than offset the slowdown in non-extractive GDP growth. In just one year, up to December 2018, year-on-year inflation dropped from 54.7% to 7.2%, while the rate of exchange rate depreciation slowed sharply, from 31% to 2.7%. The 2018 budget deficit was contained at 0.1 percent of GDP, compared with a surplus of 0.5 percent of GDP a year earlier, despite higher spending resulting from the elections last December that were fully covered. by the government’s own resources. »

« GDP growth is expected to slow to 4.3% in 2019, due to a slowdown in mining activity in a context of weaker cobalt prices. By contrast, growth in the non-mining economy would more than double due to increased public investment and post-election optimism. In the medium term, overall growth would be around 4% on the basis of current policies, although the implementation of structural reforms should stimulate growth, especially in the non-mining sector. After a further decline to 5.5 percent in 2019, inflation is expected to stabilize around 5 percent in the medium term »

« The Article IV talks, the first since 2015, have focused on policies that would ultimately diversify the economy and address the high levels of poverty and unemployment in a rapidly expanding population. To this end, the reduction of regulation, the simplification and consolidation of taxes and non-fiscal payments, the improvement of governance and the intensification of the fight against corruption and rent seeking should help to improve business environment and encourage private sector investment. In this context, 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 prevent corruption. anchor the credibility of the government in its quest for inclusive and sustained growth in the DRC. »

« The authorities’ rehabilitation and infrastructure construction plans are consistent with the goal of creating the foundation for sustainable growth, but would require greater revenue mobilization. The staff team urged the authorities to focus on streamlining tax expenditures and consolidating the various sources of mining revenue in the Treasury, which would give the government greater fiscal space and capacity to raise money. increased borrowing to support public investment and social priorities. Greater transparency in the management of natural resources is essential to achieve this goal. Given that mining revenues can lead to volatile expenditures, the IMF staff suggested changing the formulation of fiscal policy to be based on a non-mining budget balance and continuing to demonstrate prudence in public borrowing to preserve debt sustainability. »

« 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 increase international reserves sharply from their current low level of about 3 weeks. import cover. Discussions also focused on the need to further strengthen controls based on the risks and quality of financial data, and to finalize the framework for the fight against money laundering and terrorist financing (AML-CFT) to improve more financial stability. »

« 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. »

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