The Democratic Republic of Congo (DRC) has received the second instalment of a $1.7 billion loan from the International Monetary Fund (IMF) under the Extended Credit Facility, totalling $261.9 million. This is the result of progress on financial reforms.

 

This followed Kinshasa meeting some of the deal's key requirements, including implementing a Treasury Single Account (TSA).

On Wednesday, the IMF executive board completed the first review of DRC’s performance under the programme, unlocking an immediate disbursement. This brings total disbursements under the 38-month programme to $523.4 million, including the $261.5 million released when the facility was approved earlier this year.

The funds –equivalent to 190.4 million Special Drawing Rights (SDRs), a basket of foreign currencies—will support DRC’s balance of payments, bolster foreign exchange reserves, and strengthen its ability to engage in international trade.

The board, chaired by IMF deputy managing director Kenji Okamura, noted that aside from a few missed structural benchmarks, DRC met all the quantitative performance criteria set for the first review period.

A key reform under the programme was the rollout of a Treasury Single Account, aimed at consolidating thousands of government-linked accounts into one, to enhance transparency and curb corruption.

To facilitate this, the IMF asked Kinshasa to phase the TSA, starting with stress tests to assess potential impacts on local banks and to invest in software upgrades at the Central Bank of Congo (BCC).

A steering committee was established in January to spearhead the reforms, and the IMF noted that the DRC government is making “concomitant progress” on its implementation.

The push for a TSA is also intended to support revenue mobilisation by eliminating parallel tax collections outside official accounts. Although Congo began working on the reform in May 2023, progress was limited until the ECF programme was launched this year.“Performance under the programme was mixed, as the intensification of the conflict has placed significant strains on the budget,” the IMF said in a dispatch after the board meeting.

Among the missed targets was the commitment to keep the fiscal deficit below 0.3 percent of GDP, which was overshot to 0.8 percent due to increased security spending in response to escalating conflict in eastern DRC.

The government also missed the target for BCC’s foreign exchange assets held with local correspondents, attributed to higher-than-expected tax payments in foreign currency on government accounts.

The board approved waivers for these missed targets, allowing the disbursement to proceed.

Mr Okamura noted that the recent peace agreement signed between DRC and Rwanda in Washington could improve the outlook, with the possibility of missed targets being met by 2026.“The authorities have committed to accompany these efforts to preserve macroeconomic stability with an acceleration of structural reforms in key areas, including strengthening the AML/CFT framework, improving the business climate, enhancing transparency and governance, combating corruption and upgrading national statistics,” he said.

TSA implementation is not unique to DRC. Other countries in the region, including Kenya, Uganda and Tanzania, have been required to adopt similar reforms under their IMF programmes.

© Copyright 2022 Nation Media Group. All Rights Reserved. Provided by SyndiGate Media Inc. (Syndigate.info).