Democratic Republic of the Congo: Review of the 2006 Staff-Monitored Program and a New Staff-Monitored Program for 2007 Informational Annex

This paper reviews the 2006 Staff-Monitored Program (SMP) and a New Staff-Monitored Program for 2007 for the Democratic Republic of the Congo. Most quantitative and structural benchmarks under the SMP for April–December 2006 were not met; nevertheless, the SMP helped prevent major financial instability during the protracted electoral period. Cognizant of the need to reestablish macroeconomic stability, the government agreed on a policy framework for 2007 to be monitored by the IMF staff. Satisfactory performance under the SMP would open the way for discussions on a new arrangement under the Poverty Reduction and Growth Facility.


This paper reviews the 2006 Staff-Monitored Program (SMP) and a New Staff-Monitored Program for 2007 for the Democratic Republic of the Congo. Most quantitative and structural benchmarks under the SMP for April–December 2006 were not met; nevertheless, the SMP helped prevent major financial instability during the protracted electoral period. Cognizant of the need to reestablish macroeconomic stability, the government agreed on a policy framework for 2007 to be monitored by the IMF staff. Satisfactory performance under the SMP would open the way for discussions on a new arrangement under the Poverty Reduction and Growth Facility.

Democratic Republic of the Congo Relations with the Fund

(As of March 31, 2007)

I. Membership Status: Joined: September 28, 1963; Article VIII

II. General Resources Account:

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III. SDR Department:

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IV. Outstanding Purchases and Loans:

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V. Latest Financial Arrangements:

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VI. Projected Payments to Fund (without HIPC Assistance) (SDR million; based on existing use of resources and present holdings of SDRs):

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VII. Implementation of HIPC Initiative:

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VIII. Implementation of MDRI Assistance: Not Applicable

IX. Exchange Rate Arrangement:

The Democratic Republic of the Congo’s (DRC) currency is the Congo franc, which, since May 26, 2001, has been freely floating. On March 31, 2007, the rate was US$1=Congo francs 553.0

Effective February 10, 2003, the DRC accepted the obligations of Article VIII, Sections 2 (a), 3, and 4, of the Fund’s Articles of Agreement. However, the DRC maintains measures that give raise to one restriction and one multiple currency practice (MCP) subject to Fund approval under Article VIII of the Fund’s Articles of Agreement. The exchange restriction involves an outstanding net debit position vis-à-vis other contracting members under the inoperative regional payments agreement with the Economic Community of the Great Lakes Countries (CEPGL). The multiple currency practice involves a fixed exchange rate set on a quarterly basis applying to transactions through the bilateral payments agreement (BPA) with Zimbabwe.

X. Last Article IV Consultation:

(a) Consultations with the Democratic Republic of the Congo are held in accordance with the provisions of the decision on consultation cycles approved on July 15, 2002.

(b) The last Article IV consultation was concluded by the Executive Board on August 19, 2005.

XI. Safeguards Assessment

A safeguards assessment of the BCC was completed on January 3, 2003. The assessment concluded that substantial risks of misreporting or misuse may exist due to vulnerabilities in the external audit mechanism, financial reporting framework, and system internal controls. Staff findings, proposed recommendations under program conditionality, and other recommendations are reported in IMF Country Report No. 03/161. Implementation of the measures by the BCC continues to be monitored by staff.

XII. Technical Assistance:

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IV. Resident Representative: Mr. Maret assumed his duties as Resident Representative on November 30, 2005.

Democratic Republic of the Congo: Relations with the World Bank Group

I. Introduction

1. This annex first underscores the importance that the government of the Democratic Republic of the Congo (DRC) attaches to effective partnership with international development partners and foreign investors. It then summarizes the strategy and activities of the World Bank Group (IDA, IFC, and MIGA) in the DRC. It concludes with a description of areas of specific collaboration between the World Bank Group and the International Monetary Fund.

II. Partnership in the DRC’s development strategy

2. The new duly-elected government took office in February 2007. The government presented to the Parliament its program for 2007-11, with five priority sectors, infrastructure, employment, education, water and electricity, and health. The government’s program also included a governance annex, which is a compact between the population and itself. The new government’s intentions to implement change and improve the political, economic and social environment are supported by development partners. The Consultative Group meeting, which was suspended during the electoral period, is expected to resume in June 2007.

3. The PRSP was adopted by the outgoing transitional government, and was endorsed by the new government. The PRSP is a result of extensive participatory consultations at grassroots level as well as with the international development partners. The full PRSP aims at restoring political stability, consolidating peace, and reducing poverty through fostering accelerated growth. The strategy comprises five pillars: (i) promoting good governance and consolidating peace; (ii) maintaining macroeconomic stability and growth; (iii) improving access to social services and reducing vulnerability; (iv) combating HIV/AIDS; and (v) improving community dynamics. The PRSP and the Joint Staff Advisory Note (JSAN) are expected to be presented to the Boards of Directors shortly.

III. Bank Group strategy and operations (IDA, IFC, and MIGA)

4. Overall strategy. On July 31, 2001, the Executive Directors of IDA endorsed a Transitional Support Strategy to map out Bank financial and nonfinancial support to the DRC for the following 12-24 months, which included the Emergency Early Recovery Project (EERP), the Economic Recovery Credit (ERC), the Private Sector Development and Competitiveness Project (PSDC), and the Emergency Multi-Sector Rehabilitation and Reconstruction Project (EMRRP), as described hereunder. The second TSS was discussed by the Board on February 26, 2004 and covers the period 2004-06. A Country Assistance Strategy (CAS) covering the period of 2007-09 is being prepared in order to be presented to the Executive Directors of IDA following consultations with the newly elected government. The new CAS will be closely aligned with the PRSP.

5. The 2004 TSS sets forth the scope and configuration of future support during 2004-06. The TSS accompanied government efforts during the transition period, with a particular focus on (i) social stability and security, (ii) high and shared growth, (iii) governance and institutional strengthening, and (iv) social development.

6. A Country Assistance Strategy (CAS) is under preparation, and is expected to be presented to the Board of Directors in summer 2007. The CAS is an integral part of the common assistance framework for the country, which is being developed through extensive discussions and coordination with development partners, including the IMF, the EC, the UN, and bilaterals. The governance compact proposed by the new government has been endorsed by the development partners under this common assistance framework.

III. A. International Development Association (IDA)

7. IDA provides support through trust funds, development policy support, and investment operations. The IDA funds are made available on 100 percent grant basis in view of the country’s debt burden. Operational details are summarized in Table 1.

Table 1.

Summary of World Bank Financial Assistance

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III. A. 1. Trust funds

8. The trust funds that are currently active target the areas of stabilization and recovery, demobilization, capacity building, support for the PRSP, forest governance, and arrears clearance. Together these trust funds make up over US$1.3 billion.

III. A. 2. Grants and credits

Development policy support

9. Since the re-engagement, IDA has provided three policy reform operations—the Economic Recovery Credit (ERC), the Post-Reunification Economic Recovery Credit (PRERC), and the Transitional Support to Economic Recovery Operation (TSERO). Through ERC, approved in 2002, the Bank led the policy dialogue in restructuring the mining public enterprise, improving governance of the forestry sector, and reforming public finance system, in addition to providing arrears-clearance process. The operation was implemented satisfactorily and closed in June 2003. With PRERC, approved in 2004, the Bank continued to lead the public finance reform dialogue through a civil service retirement program, a domestic debt settlement program, and utilities billing and payment reforms. These reforms allowed the government to start “cleaning house” by addressing the various types of arrears accumulated by the previous regime. The operation was implemented satisfactorily and closed in December 2005. The focus of the TSERO, approved in December 2005 in the amount of SDR 62.1 million (US$90 million equivalent at the time of negotiations), was on the continuation of improvements to the budget process, strengthening the execution of pro-poor spending, implementation of civil service management reforms, the continuation of support for reforms in natural resource sectors, and increased transparency on the revenue side. Unlike the previous two operations, which had multiple thematic tranches, TSERO was a single tranche programmatic operation. It disbursed fully in December 2005 and is now closed.

Investment operations

10. The IDA leads the dialogue with the authorities in the areas of social sector reforms, demobilization and disarmament, infrastructure rehabilitation, and private sector development. More specifically, investment operations include (i) infrastructure rehabilitation, including power market; (ii) demobilization and reintegration; (iii) emergency support to living conditions and urban, economic and social reunification (iv) private sector development; (v) debt buy back operation; (vi) social development, including multi-sectoral HIV/AIDS program. Implementation of projects to date is broadly satisfactory, except for the EDRP and the Health Sector Rehabilitation Support project. See Table 1 for more information about projects listed above.

Nonlending activities

11. For several years prior to and during the first TSS (2001), IDA assistance also emphasized nonlending activities and advisory services, including trust funds and grants, to improve the understanding of the socioeconomic context, rebuild the knowledge base to support policy dialogue and design effective poverty-reduction strategies. FY03 activities included a Public Expenditure Review, which focused on the overall structure of expenditures; specific issues in the health, education, and transport sectors; evaluation of the DRC’s ability to monitor execution of poverty-related expenditures; strengthening of public expenditure management systems. In FY06, the Country Financial Accountability Assessment (CFAA) was undertaken, and was officially delivered to the Government and the donor community in Kinshasa. A workshop was also organized for Government delegates, the Reform Committee, Parliament, Cour des Comptes and several donors to validate the conclusions and action plan of the report. Based of this assessment, authorities continue to gradually implement recommendations for an efficient and transparent spending circuit. A double entry accounting plan has been recently implemented. The Agricultural Sector Review was completed in FY06. The Forest Sector Review was published in FY07 with co-authorship of a series of research centers and civil society organizations.

III. B. International Finance Corporation (IFC)

12. IFC supported the cellular telephone operator Celtel with a US$7 million loan in 2002 and a further US$20 million in 2003. Currently, IFC is conducting a needs assessment of local small and medium enterprises to help determine potential future interventions. IFC has made a US$4.9 million equity investment for a 7.5 percent equity stake in Kingamyambo Musonoi Tailings SARL (KMT), which could become one of the first mining projects to be developed under the new Mining Code. The next step will be to complete a bankable feasibility study and raise the financing for the project. Construction is planned to begin in end-2007 or early 2008. In the financial sector, IFC plans to assist banks operating in the DRC with trade financing facilities in order to help establish routine trade finance operations. IFC will work closely with the Bank in the context of the PSDC project to help implement specific sectoral initiatives and key investment projects. Considerable effort has already been spent in resolving outstanding disputes in the DRC, two of which, UTEXAFRICA, a textile business, and the Grand Hotel du Congo (formerly Inter-Continental) were settled in 2002 and 2005, respectively. A settlement is being sought actively for the last dispute remaining on the books, SOTEXKI, a textile business in Kisangani.

III. C. Multilateral Investment Guarantee Agency (MIGA)

13. MIGA can now issue guarantees for projects because the DRC has paid its initial capital subscription (the DRC has been a member of the agency since 2003). Several projects are under consideration, notably in the mining sector. On May 3, 2005, MIGA approved its first project in DRC for a US$13.3 million in guarantee coverage for the Dikulushi copper and silver mine. The guarantees approved provide coverage for investments and loans by Anvil Mining Ltd. of Canada and RMB International (Dublin) Limited of Ireland to Anvil Mining Congo, SAR of the DRC, against the risks of transfer restriction, expropriation, breach of contract and war and civil disturbance. The project was also the first extractive industries project to be considered and approved by the Board of the World Bank Group, which followed the conclusion of the Bank-sponsored Extractive Industries Review in August 2004.

IV. Bank-Fund collaboration in specific areas

14. In addition to its direct assistance to the DRC, the Bank also supports policy reforms in close collaboration with the Fund in a number of areas: donor coordination, public finance management, decentralization, financial sector reform, governance and anticorruption, and the PRSP process. The Fund takes the lead on macroeconomic policies aimed at facilitating stabilization and sustainable growth. The Bank complements the Fund’s work through its support to structural reforms. Table 2 details areas of collaboration and areas where either the Bank or the Fund lead.

Table 2.

Summary of Bank-Fund Collaboration

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Table 3.

The Democratic Republic of Congo: Financial Relations with the World Bank Group—Statement of Loans and Credits (in U.S. dollars), as of March 31, 2007

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This document was prepared by World Bank Staff and approved by the Africa Region Operations Committee on May 3, 2007. Questions should be addressed to Keiko Kubota (202-473-6836) or Heather Milkiewicz (202-473-3632).

Democratic Republic of the Congo: Statistical Issues

Despite a difficult environment, the authorities have continued to produce an array of economic and financial statistics, most of which are contained in the annual report of the Central Bank of the Congo (BCC), which also issues a monthly statistical bulletin. Moreover, a comprehensive set of external debt statistics is compiled by the Office de Gestion de la Dette Publique (OGEDEP). Statistical issues related to specific sectoral areas are described below.

Following a fact-finding mission to Kinshasa in June 2001 in real sector and government finance statistics, STA provided technical assistance on government finance statistics in March-April and September 2002, which was augmented by capacity-building support from the World Bank. A STA multitopic mission visited Kinshasa in October 2003 to assess the DRC’s economic and financial data and propose measures to improve them. A multisector statistics advisor based in Kinshasa is providing assistance to the authorities.

On April 24, 2004, the DRC began participating in the IMF’s General Data Dissemination System (GDDS), and its metadata (comprehensive information on statistical production, dissemination practices, and plans for improvement) were posted on the IMF’s Dissemination Standards Bulletin Board. However, metadata need to be updated annually. Participation in the GDDS provides a framework for statistical development and capacity building in macroeconomic statistics and socio-demographic (population, health, education, and poverty) indicators.

National accounts

The national accounts are compiled in constant and current prices by the Directorate of Research of the BCC and published on an annual basis. The compilation methodology conforms to the System of National Accounts 1968 (1968 SNA) and is based on the balance sheets of enterprises and the results of surveys of public and semipublic enterprises and agencies, with most of these surveys dating from the late 1980s. The activities of the traditional sector (including the informal sector) are also included and estimated with extrapolation techniques using industry-specific data that are outdated. As a result, GDP is likely to be underestimated. With help of the multisector statistics advisor, work is underway to introduce a new base year (2003) and introduce the recommendations of the 1993 SNA.

Employment and unemployment

Annual data on employment in the central government are available from the Ministries of Economy, Finance, and Budget, together with data on employment in the formal sector.


Consumer price indices are calculated for Kinshasa by the BCC, the National Statistics Institute (INS), the Institute of Economic and Social Research (IESR), and the Economics Section of the U.S. Embassy in Kinshasa. The IESR also calculates a monthly consumer price index for the Lubumbashi market. The household surveys on which these calculations are based date back to the late 1980s and need to be updated to take account of changes in household consumption patterns and demographic shifts.

Government accounts

The BCC produces aggregated monthly statistics on a cash basis based on its own accounting records of the government cash operations it executes. The treasury produces two sets of monthly statistics based on its own records: one relates to the transactions executed through the BCC, the other set attempts to consolidate operations through commercial bank accounts and off-budget operations. These statistics do not rely on an integrated double-entry public accounting system and provide insufficient details about the nature of expenditures owing to problems in the expenditure chain. However, the treasury has started to produce, on a quarterly basis, expenditure data reports broken down by ministry and institution.

The ongoing improvements in tax administration and expenditure control are expected to improve the quality and timeliness of fiscal statistics. In parallel with technical assistance in the public expenditure management area, the STA statistics advisor has been providing technical assistance in government finance statistics, producing improvements in the overall quality of government finance statistics. Furthermore, the adoption of a simplified, double-entry bookkeeping system for the government should significantly improve the availability of data on government financial operations.

In 2003, the DRC reported annual data up to 2002 for the IMF’s Government Finance Statistics Yearbook in the format of the Government Finance Statistics Manual 2001, but has not reported subsequently.

Monetary accounts

The Directorate of Research of the BCC regularly produces timely monetary statistics. Generally, the reliability of these statistics is now satisfactory, but some problems remain with the sectorization of accounts.

Since the last money and banking statistics mission in June 2000, data reporting by the BCC for publication in the IMF’s International Financial Statistics (IFS) has improved; currently, monetary data are reported to STA on a timely basis. The multisector statistics mission that visited Kinshasa in October 2003 recommended a new chart of accounts for the BCC and the other deposit-taking institutions, including information needed for the sectorization of economic units and classification of financial assets.

Balance of payments

Balance of payments statistics are prepared on an annual basis, based on information on exports and imports of large public and semipublic enterprises, the BCC’s payments records, and a survey of residents’ foreign operations. The estimates also take account of information on the informal sector and foreign aid flows provided by the World Bank and the local

United Nations Development Program (UNDP) office, which collects these data from the European Union, embassies, and nongovernmental organizations. However, the multisector mission found that, due to computer problems, data have not been processed since 1999. As a result, the balance of payments is currently compiled using data from different sources, supplemented by estimates.

The mission suggested that the BCC implement a system of quarterly surveys of those corporations that are authorized to hold accounts overseas. Further, the mission recommended the reinvigoration of a working group comprising staff of the customs and other relevant agencies to prepare quarterly foreign trade data and other measures to improve data on services and transfers. No data are reported to STA for publication.

External and domestic debt

External and domestic debt statistics are compiled by OGEDEP and are of reasonable quality in spite of limited computer facilities. However, data on public enterprise foreign debt and, in particular, on cross arrears in the public sector are still of very poor quality. The World Bank has been providing assistance in the compilation of cross-arrears in the public sector and public sector arrears with the private sector.

Public enterprise sector

There is no centralized, comprehensive database on the operations of public enterprises, although IMF missions are provided some information on the operations of individual enterprises. Generally, data are provided on an annual basis and become available with at least a six-month delay. As part of public enterprise reform, the World Bank has been collecting data pertaining to the sector.

Social indicators

The most consistent data sets are those assembled for the UNDP human development, poverty, and gender-related development indices. Two multiple indicator cluster surveys carried out between 1996 and 2001 in collaboration with the United Nations Children’s Fund (UNICEF) also provide important social indicators. A national household living standards survey with the help of IDA and other institutions is planned. In addition, in the context of the interim poverty reduction strategy paper (I-PRSP), the authorities, with assistance from the World Bank and the UNDP, have initiated work to construct a comprehensive database for social indicators.


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Includes reserve assets pledged or otherwise encumbered as well as net derivative positions.

Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.

Foreign, domestic bank, and domestic nonbank financinq.

The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.

Including currency and maturity composition.

Daily (D), Weekly (W), Monthly (M), Quarterly (Q), Annually (A), Irregular (I); Not Available (NA).

These columns should only be included for countries for which a Data ROSC (or a Substantive Update) has been prepared.

Reflects the assessment provided in the data ROSC or the Substantive Update (published on and based on the findings of the mission that took place during.) for the dataset corresponding to the variable in each row. The assessment indicates whether international standards concerning concepts and definitions, scope, classification/sectorization, and basis for recording are fully observed (O), largely observed (LO), largely not observed (LNO), or not observed (NO).

Same as footnote 8, except referring to international standards concerning source data, statistical techniques, assessment and validation of source data, assessment and validation of intermediate data and statistical outputs, and revision studies.

Democratic Republic of the Congo: Review of the 2006 Staff-Monitored Program and a New Staff-Monitored Program for 2007: Staff Report; Staff Statement; Statement by the Executive Director for the Democratic Republic of the Congo
Author: International Monetary Fund