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Business and Economics > Banks and Banking

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  • Type: Journal Issue x
  • Congo, Democratic Republic of the x
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Cover IMF Working Papers
Chinese Banks and Their EMDE Borrowers: Have Their Relationships Changed in Times of Geoeconomic Fragmentation?
Catherine Casanova
,
Eugenio M Cerutti
, and
Swapan-Kumar Pradhan
While Chinese banks have become the top cross-border lender to EMDEs, their expansion has slowed recently, both in terms of volume and market share. Also, the strong correlation of China’s bilateral trade and its banks’ cross-border lending has weakened, while during 2020-22 lending became more positively correlated with FDI. In our paper, we analyse these patterns and we explore the role of borrower risk variables and foreign policies. Our findings show that, although the shifting correlation from trade to FDI is a general EMDE phenomenon, China’s Belt and Road Initiative reinforces it. By contrast, borrowers that potentially benefit from geoeconomic fragmentation do not display stronger FDI-lending relationships. We also find that Chinese banks exhibit different levels of risk tolerance relative to other bank nationalities as borrower country risk variables are positively correlated with Chinese banks’ market shares, but not with their amounts of cross-border lending.
Keywords:
ross-border lending; Chinese banks; Trade; FDI; Borrower indebtedness; Pandemic; Sanctions; Geoeconomic fragmentation; cross-border lending; borrower country risk variable; FDI-lending relationship; EMDE borrower; borrower characteristic; Chinese bank; CN bank; Bank credit; Cross-border banking; Foreign direct investment; Global
Cover The IMF and Capacity Development: Evaluation Report 2022
The IMF and Capacity Development: Evaluation Report 2022
International Monetary Fund. Independent Evaluation Office

Abstract

Capacity development (CD) is a key function of the IMF, aiming to assist its member countries develop their institutional and human capacity to design and implement sound macroeconomic and financial policies. CD has been provided to all IMF member countries at some point, although it is directed mainly toward low- and middle-income countries. CD represents about one-third of the IMF’s administrative budget, having expanded substantially in the past decade. This evaluation assesses how effective the IMF has been in meeting the CD needs and expectations of recipient countries, and the Fund’s institutional objectives for CD, during 2012-20. It also provides an initial review of how IMF CD adapted to the challenges of the COVID-19 pandemic. The evaluation finds that IMF CD was relevant, valued, and broadly effective. Recipients, donors, and the wider membership saw IMF CD as being of the highest technical quality in the Fund’s core areas of expertise and generally perceived that it had become better tailored to recipient needs and circumstances. Overall, Fund CD has supported member countries in building the institutional capacity, in a very wide range of country circumstances. The IMF has also put substantial effort into integrating CD with surveillance and programs, which has in general enhanced its overall engagement with member countries. While recognizing these achievements, the evaluation also identifies a number of important shortcomings and challenges. The evaluation includes recommendations to enhance the strategic framework for, and prioritization of, CD; information available to Executive Directors and opportunities to exercise their oversight role; the integration of CD with surveillance and programs, particularly in the context of programs; CD ownership and delivery; the monitoring and evaluation framework; the sustainability of the CD funding model; and HR policies and incentives to maintain and develop the expertise in the Fund’s core and newly emerging CD topics.

Keywords:
Capacity Development; Technical Assistance; Training; Donors; Capacity Building; Institutional Capacity; IMF CD; CD strategy review; CD resource; CD ownership; CD work; COVID-19; Absorptive capacity; Climate change; Information and data management; Global; Middle East and Central Asia; Middle East; Central America; Southeast Asia; North Africa; Africa; Western Hemisphere; Europe; Asia and Pacific
Cover IMF Staff Country Reports
Democratic Republic of the Congo: Technical Assistance Report-Financial Sector Stability Review
International Monetary Fund. Monetary and Capital Markets Department
In response to a request from the Central Bank of the Congo (BCC), the Monetary and Capital Markets Department of the International Monetary Fund (IMF) conducted a Financial Sector Stability Review (FSSR) mission virtually, during January 5–28, 2022. The FSSR performed a diagnostic of the financial system, reviewed progress in implementing previous IMF technical assistance (TA) recommendations, and developed a draft Technical Assistance Roadmap to help strengthen the BCC’s capacity in the areas covered by the FSSR. The FSSR also for the first-time covered gender inclusion in financial supervision. It identified five macrofinancial vulnerabilities pertaining to: (i) the quality of the banking system’s capital base; (ii) the difficulty in evaluating nonperforming loans following the COVID 19 financial support measures; (iii) risks related to financial dollarization; (iv) the impact on correspondent banking relationships of “de-risking”; and (v) intragroup exposures, as bank subsidiaries in the DRC place surplus funds with parent companies abroad. The BCC’s adoption of COVID-19 exit measures in December 2021, including specific reporting requirements, should provide momentum for additional TA in the near term to help the BCC analyze banks’ asset quality going forward.
Keywords:
bank stress tests; bank funding; IMF resident representative; draft banking law; bank resolution function; Financial sector stability; Stress testing; Bank supervision; Bank resolution framework; Central Africa; Africa; Maghreb; Global
Cover IMF Staff Country Reports
Democratic Republic of the Congo: Request for a Three-Year Arrangement Under the Extended Credit Facility; Review of Performance Under the Staff Monitored Program-Press Release; Staff Report; and Statement by the Executive Director for the Democratic Republic of Congo
International Monetary Fund. African Dept.
The Democratic Republic of the Congo (DRC) is a fragile state and vulnerable to recurrent shocks. Relations with the Fund have been quite active since early 2019, with a Staff Monitored Program (SMP) coupled with a Rapid Credit Facility (RCF) disbursement in December 2019 and a second RCF disbursement in April 2020 to respond to the COVID-19 crisis. Economic activity decelerated sharply in 2020 because of the crisis and reserves decreased to less than two weeks of imports. President Tshisekedi requested a three-year Extended Credit Facility (ECF) arrangement to support his medium-term reform program.
Keywords:
ECF arrangement; DRC government; DRC authorities; government transfer; COVID support measure; Arrears; Global; Africa; BCC Law; RCF commitments summary; staff appraisal; Mining sector
Cover IMF Staff Country Reports
Democratic Republic of the Congo: Request for a Three-Year Arrangement Under the Extended Credit Facility; Review of Performance Under the Staff Monitored Program-Press Release; Staff Report; and Statement by the Executive Director for the Democratic Republic of Congo
International Monetary Fund. African Dept.
The Democratic Republic of the Congo (DRC) is a fragile state and vulnerable to recurrent shocks. Relations with the Fund have been quite active since early 2019, with a Staff Monitored Program (SMP) coupled with a Rapid Credit Facility (RCF) disbursement in December 2019 and a second RCF disbursement in April 2020 to respond to the COVID-19 crisis. Economic activity decelerated sharply in 2020 because of the crisis and reserves decreased to less than two weeks of imports. President Tshisekedi requested a three-year Extended Credit Facility (ECF) arrangement to support his medium-term reform program.
Keywords:
ECF arrangement; DRC government; DRC authorities; government transfer; COVID support measure; Arrears; Global; Africa; BCC Law; RCF commitments summary; staff appraisal; Mining sector
Cover IMF Staff Country Reports
Central African Economic and Monetary Community (CEMAC): Staff Report on the Common Policies in Support of Member Countries Reform Programs-Press Release, Staff Report, and Statement by the Executive Director
International Monetary Fund. African Dept.
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.
Keywords:
ISCR; CR; CEMAC authorities; CEMAC PFM; CEMAC Commission; MCM; FAD CEMAC
Cover IMF Staff Country Reports
Democratic Republic of the Congo: Staff-Monitored Program and Request for Disbursement Under the Rapid Credit Facility; Press Release; Staff Report; and Statement by the Executive Director for the Democratic Republic of the Congo
International Monetary Fund. African Dept.
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.
Keywords:
ISCR; CR; Congo; governance; holding; World Bank Group project
Cover IMF Staff Country Reports
Democratic Republic of the Congo: Staff-Monitored Program and Request for Disbursement Under the Rapid Credit Facility; Press Release; Staff Report; and Statement by the Executive Director for the Democratic Republic of the Congo
International Monetary Fund. African Dept.
This paper discusses The Democratic Republic of the Congo’s Staff-Monitored Program and Request for Disbursement Under the Rapid Credit Facility. The economic environment remains challenging and vulnerable to shocks. Real gross domestic product growth is projected to decelerate to 4.5 percent in 2019 from 5.8 percent in 2018. 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 this context, international reserves have fallen to critically low levels creating urgent balance of payment needs. The new government is committed to implementing measures and reforms that would strengthen macroeconomic stability, reinforce international reserves, address issues related to poor governance, a difficult business environment, and pervasive poverty. Authorities also intend to boost domestic revenue by restoring the functioning of the value-added tax and enforcing the personal income tax, while improving mining revenue forecasting. In addition, the government intends to introduce strict spending caps, increase the effectiveness of monetary policy, and foster inclusive growth and private sector development including through infrastructure projects and free basic education.
Keywords:
ISCR; CR; Congo; governance; holding; World Bank Group project; assessment mission; Congolese authorities; central bank financing; SDR million; recapitalization effort; mining revenue forecasting; bcc law; spending control; International reserves; Mining sector; Global
Cover IMF Staff Country Reports
Central African Economic and Monetary Community (CEMAC): Staff Report on the Common Policies in Support of Member Countries Reform Programs-Press Release, Staff Report, and Statement by the Executive Director
International Monetary Fund. African Dept.
This paper highlights annual discussions on Central African Economic and Monetary Community’s (CEMAC) Common Policies in Support of Member Countries Reform Programs. Tighter macroeconomic and financial policies helped to avert a deeper crisis, and gross external reserves increased more rapidly in recent months, also helped by a stronger implementation of CEMAC foreign exchange regulations. Reforms to support a more diversified and inclusive growth, including by improving governance and the business climate, should gain momentum to make current efforts to buttress the external position of the region sustainable. 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 Cameroon, Central African Republic and Equatorial Guinea could start around end-2019.
Keywords:
ISCR; CR; CEMAC authorities; CEMAC PFM; CEMAC Commission; MCM; FAD CEMAC
Cover IMF Staff Country Reports
Democratic Republic of the Congo: 2019 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for the Democratic Republic of the Congo
International Monetary Fund. African Dept.
This is the first Article IV mission to DRC since June 2015. The inauguration of President Tshisekedi in January 2019 marks the first peaceful transfer of power since independence. He has pledged to improve governance and scale up public investment. Challenges abound. Poverty and unemployment are widespread. Violent conflict persists in some regions, and the worst ever outbreak of the deadly Ebola disease is ongoing. Dependence on mineral exports leaves DRC vulnerable to commodity shocks. Tackling corruption and improving governance are imperative. The main risks include an escalation of the Ebola epidemic; fiscal loosening leading to monetization of budget deficits; a relapse in copper and cobalt prices; an intensification of ongoing armed conflicts; and resistance to reform from vested interests.
Keywords:
ISCR; CR; authority; Congolese authorities; debt; Congo