International Monetary Fund. Legal Dept. and International Monetary Fund. Fiscal Affairs Dept.
At the request of His Excellency the President of the Republic and Head of State, the Legal (LEG) and Fiscal Affairs (FAD) Departments of the IMF conducted an assessment of governance and corruption mission in Kinshasa, Democratic Republic of the Congo (DRC) from December 9 to 20, 2019 (the “mission”).1 The objectives of the mission were to discuss with the authorities (i) a diagnostic of governance issues in the DRC; and (ii) to articulate measures to help improve governance and the fight against corruption.
The Democratic Republic of the Congo is suffering directly from the COVID-19 pandemic with 215 confirmed cases and 20 deaths as of April 9. The economic impact, chiefly through lower commodity prices, was being felt even before the first confirmed case was reported on March 10. The authorities’ policy response to the pandemic has been firm, scaling up health care spending and putting in place measures to help contain and mitigate the spread of the disease. The pandemic is also dampening domestic revenue mobilization and putting significant pressures on foreign exchange reserves.
A technical assistance mission in national accounting from the International
Monetary Fund (IMF) Regional Technical Assistance Center for Central Africa (AFRITAC
Central) visited Brazzaville during December 5–14, 2018 to support the National Statistics
Institute (INS) in its work on the national accounts estimates. The mission focused on an
analysis of the 2016 and 2017 annual national accounts finalized in accordance with the System
of National Accounts 1993 (1993 SNA). The analysis included a review of the information sources
used, the methods of calculation and extrapolation, and compliance with the 1993 SNA. The 2016
accounts are completed and finalized, including the summary tables – supply and use tables
(SUT), branch accounts, and integrated economic accounts table (IEAT); and the 2017 accounts
are still being finalized. The mission recommends that the national accounting officers improve
estimates based on the recommendations provided by the mission.1
Tighter macroeconomic and financial policies helped to avert a deeper crisis, and gross external reserves increased more rapidly in recent months, largely exceeding the mid-2019 target. However, reserves are still below the level appropriate for commodityexporting economies (5 months of imports) to absorb terms of trade shocks. Fiscal consolidation has been tilted towards cuts in public investment. This, together with a lack of significant progress in structural reforms, has weighed on growth which remains too low. The outlook for 2019 and beyond foresees further improvement in regional reserves assuming CEMAC countries remain committed to their program objectives and new programs with CAR and Equatorial Guinea could start around end-2019. This outlook is subject to potentially significant risks, including: a significant slowdown in global growth and associated decline in oil prices; a deterioration in the security situation in some countries; and weaker implementation of IMF-supported programs.
While macroeconomic policies in recent years have succeeded in restoring
elements of macroeconomic stability under difficult circumstances, macroeconomic
conditions are nonetheless precarious. The recent fall in commodity prices, new spending
initiatives, and looser spending oversight during the political transition period have led to a
weaker fiscal position mostly financed by the central bank. In that context, international
reserves have fallen to critically low levels (one week of import coverage). Balance of
payments needs remain both urgent and protracted.
The Republic of Congo was hit hard by the oil price shock and delayed fiscal adjustment, amidst governance challenges and unsustainable debt. While program negotiations were long and complex, the authorities made decisive progress in 2018 and early 2019 with decisive fiscal consolidation, and the implementation of a large package of structural reforms, including two rounds of prior actions to improve governance and transparency. In addition, financing assurances have been secured.