IMF Says Congo Transition Creates Opportunity for Reform

The Democratic Republic of Congo must seize
the opportunity to institute reforms to boost state revenue and
economic growth, the International Monetary Fund said in its
first annual review of the country’s economy since 2015.
President Felix Tshisekedi, in power since January, is
seeking to repair Congo’s relationship with the Washington-based
institution after it soured under his predecessor, Joseph
Kabila. The former head of state, who was in charge for 17
years, didn’t permit the IMF to undertake an annual check on
economic, financial and exchange-rate policies, known as Article
IV Consultations, during his final years in office.
Congo’s “peaceful political transition provides an
opportunity to put in place transformational reforms to
strengthen public finances, boost growth of the non-extractive
sector, tackle corruption, and reduce widespread poverty,” the
IMF said Wednesday.
The central African nation’s revenue-to-GDP ratio of 12%
“is well below the average for sub-Saharan Africa” and annual
budgets passed by parliament “have tended to deviate widely”
from the resources actually raised, according to the lender.

IMF Assessment

Then-IMF Managing Director Christine Lagarde sent a team to
Congo to carry out an inspection after meeting Tshisekedi in
April. It recommended authorities step up the fight against
corruption and “pursue efforts to sharply increase international
reserves,” which at the time covered only three weeks’ imports
of goods and services. Tshisekedi hasn’t said if he intends to
request financial assistance from the lender.
“It’s very encouraging that the government has re-engaged
with the IMF,” said Charles Robertson, global chief economist
for Renaissance Capital. “It’s also positive the IMF praises the
balanced budget and sees only moderate risk of debt distress.”
Former opposition leader Tshisekedi has repeatedly pledged
to tackle corruption and in May told a meeting in Washington
that endemic graft had discouraged serious investors from coming
to Congo.

Les vendeurs ambulants de Masina à Kinshasa

The president is running Congo in partnership with Kabila
and the two men last week appointed a power–sharing government.
While the ex-president’s handpicked candidate finished third in
the presidential contest, his supporters dominate the National
Assembly and Senate.
The government’s priority will be to grow budgetary
receipts and “rationalize” expenditure, Prime Minister Ilunga
Ilunkamba, a Kabila ally, told lawmakers on Tuesday.

Transparency and Accountability

The IMF halted a $532 million three-year loan program for
Congo seven years ago after Kabila’s government failed to
publish details of a 2011 mining deal. Local non-governmental
organizations have called on the fund to insist on independent
audits into the management of public companies, singling out
state miner Gecamines.
The IMF called for the “public tendering of mining assets,
publication of all mining contracts, disclosure of true
ownership of contractual parties, and publication of audited
financial statements of state enterprises.” The IMF will conduct
a governance assessment mission next month at the invitation of
the Congolese authorities, the report said.
A review of Gecamines’ management is “urgently needed,”
according to a background document also published Wednesday by
the IMF.
Mining sales from the world’s biggest cobalt producer and
fourth-largest source of copper account for over 90% of total
exports, according to the IMF. Congo is “highly vulnerable to
external shocks.”
“Even Congo is not immune to Trump’s trade wars – the
global manufacturing slump has hit copper and cobalt prices,”
Renaissance Capital’s Robertson said.

La Presse du Congo/Bloomberg News

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