A staff team from the International Monetary Fund (IMF) led by Mr. Norbert Toé visited Kinshasa and Lubumbashi during February 11-26, 2014, to conduct the 2014 Article IV consultation discussions with the DRC. The discussions covered economic and financial developments in 2013 and the policies needed to consolidate macroeconomic stability and foster inclusive growth. The mission met with Prime Minister Matata Ponyo Mapon,
Vice-Prime Minister and Minister of Budget Daniel Mukoko Samba, Minister Delegate to the Prime Minister for Finance Patrice Kitebi, and Central Bank of the Congo (BCC) Governor Deogratias Mutombo Mwana Nyembo. The mission also met the Economic and Financial Commissions of the Senate and the National Assembly, Katanga Province
Vice-Governor Guibert P. Yav Tshibal, other ministers and senior central and local government officials, as well as representatives from the private sector in Kinshasa and Lubumbashi, civil society, and the donor community.
Mr. Toé issued the following statement today in Lubumbashi, outlining the preliminary conclusions of the mission:
"The DRC continued to maintain macroeconomic stability thanks essentially to the steadfast pursuit of a tight fiscal policy stance. The economy is estimated to have expanded by 8.5 percent in 2013 extending the strong growth recorded in 2012. Output of the mining sector continued to be the main driver with copper production alone exceeding 900,000 tons. At
end-December 2013, annualized inflation fell to 1.1 percent, a record low and below the authorities' medium-term objective of close to 4 percent, which is appropriate for an economy like the DRC undergoing deep structural changes.
"The mission and the government agreed that the main challenges going forward are to sustain macroeconomic stability and endeavor to improve the living conditions of the vast majority of the DRC population.
"In view of the need to consolidate macroeconomic stability and to build larger buffers to respond to potential shocks, the mission recommends adhering to the fiscal anchor of no (net) financing of the fiscal deficit by the BCC over the medium term and underscored the need to tap the DRC's large tax potential to mobilize more domestic revenues. This would allow an increase in public spending on priority sectors, in particular education, health, and basic infrastructure.
"The mission noted the significant increase in domestic revenues projected under the 2014 budget, predicated on improvements in tax collection and corrective measures to the
value-added tax. It stressed the need for the tax and customs administrations to implement steadfastly the envisaged measures to ensure that the projected revenues materialize.
"The mission discussed the findings of the recently conducted Financial Sector Assessment Program. It urges the authorities to recapitalize the BCC and to make it an autonomous and accountable central bank, which focuses on conducting effective monetary policy and preserving the stability of the financial sector. The mission also discussed a long-term de-dollarization strategy supported primarily by macroeconomic stability, a strong and autonomous central bank, sound banking supervision, and a sufficiently developed financial infrastructure. These same pillars are necessary to promote the development of financial markets.
"The mission reiterated the importance of good and timely statistics for economic decision making and the need to strengthen the responsible agency. It noted in particular the lack of full information on a large mining and public investment project (Sicomines), which prevents a comprehensive debt sustainability analysis.
"The short-term economic outlook continues to be promising with low inflation and economic growth projected at 8.7 percent for 2014 driven by continued buoyant mining sector activity. The external current account position is expected to improve slightly on account of strong mining exports. However, given the risks of a possible commodity price fall and uncertainty related to the domestic environment, it is important to maintain a flexible exchange rate, further build up international reserves from the current level of 9 weeks of non-aid related imports coverage, and improve the structural competitiveness of the economy.
"The mission thanks the DRC authorities for the fruitful discussions and their warm hospitality.
"The IMF stands ready to assist the authorities in the implementation of their economic reforms.
"The IMF Executive Board is expected to complete the 2014 Article IV consultation in May 2014."