IMF Executive Board Completes Third Review Under the ECF Arrangement with the Democratic Republic of the Congo and Approves US$80 Million Disbursement

Satisfactory policy implementation continues in the program under challenging conditions, but the uncertain economic, social, and political environment will test this commitment. The program is flexible to accommodate a partial pass-through of higher world oil prices to domestic fuel prices and further pro-poor spending, but ongoing fiscal discipline will be essential to achieve the program’s fiscal objectives. The implementation of revenue-enhancing measures will require political will. Executive Directors welcome the efforts to implement the broad range of reforms in extractive industries.

Abstract

Satisfactory policy implementation continues in the program under challenging conditions, but the uncertain economic, social, and political environment will test this commitment. The program is flexible to accommodate a partial pass-through of higher world oil prices to domestic fuel prices and further pro-poor spending, but ongoing fiscal discipline will be essential to achieve the program’s fiscal objectives. The implementation of revenue-enhancing measures will require political will. Executive Directors welcome the efforts to implement the broad range of reforms in extractive industries.

The Executive Board of the International Monetary Fund (IMF) has completed the third review of the Democratic Republic of Congo’s (DRC) economic performance under a three-year Extended Credit Facility (ECF) arrangement.1 The Board’s decision, which was taken on a lapse-of-time basis,2 enables the authorities to draw an additional SDR 49.493 million (about US$80.2 million), bringing total disbursements under the arrangement to an amount equivalent to SDR 197.972 million (about US$320.6 million).

Satisfactory policy implementation continues in the Fund-supported program under challenging conditions. The authorities met all quantitative performance criteria at end-December 2010 and structural reforms progressed well, including in the extractive industries, where these reforms are expected to contribute to economic growth.

The three-year ECF arrangement for the DRC was approved on December 11, 2009 (see Press Release No. 09/455) in an amount equivalent to SDR 346.45 million (about US$561.1 million, or 65 percent of the country’s quota in the Fund). In mid-2010, the Executive Boards of the IMF and the World Bank’s International Development Association supported US$12.3 billion in debt relief for the DRC under the Heavily Indebted Poor Countries (HIPC) Initiative and the Multilateral Debt Relief Initiative (MDRI—see Press Release No. 10/274). DRC has been a member of the Fund since September 1963.

1

The Extended Credit Facility (ECF) has replaced the Poverty Reduction and Growth Facility (PRGF) as the Fund’s main tool for medium-term financial support to low-income countries by providing a higher level of access to financing, more concessional terms, enhanced flexibility in program design features, and more focused streamlined conditionality. Financing under the ECF carries a zero interest rate, with a grace period of 5½ years, and a final maturity of 10 years (http://www.imf.org/external/np/exr/facts/ecf.htm). The Fund reviews the level of interest rates for all concessional facilities every two years.

2

The Executive Board takes decisions under its lapse-of-time procedure when it is agreed by the Board that a proposal can be considered without convening formal discussions.

Democratic Republic of the Congo: Third Review of the Three-Year Arrangement Under the Extended Credit Facility, Financing Assurances Review, and Request for Modification of Performance Criteria: Staff Report and Press Release on the Executive Board Discussion
Author: International Monetary Fund