DRC gets US$203m IMF loan to boost reserves

The Democratic Republic of Congo has received a US$203,3 million loan from the International Monetary Fund (IMF) to boost the country’s foreign exchange reserves which have fallen to US$4,5 billion, covering only two months of imports.

The loan is part of the extended credit facility (ECF) arrangement with the multilateral lender reached in July 2021, which will see DRC get a total of 1,066 billion special drawing rights (SDRs) or about US$1,52 billion by 2024.

The disbursement brings the total amount received under the arrangement to US$1,02 billion.

DRC’s forex reserves have been below the desired 4,5 months of import cushion recommended by the seven-nation East African Community (EAC) trading bloc.

IMF had earlier projected that a sustained increase in mining yields could help buffer the economic headwinds the country faces and secure an improved growth in GDP this year, but growth in DRC’s main exports only partly compensates for the increased imports.

“The current account deficit deteriorated to 5,3 percent of GDP, as higher export growth only partially compensated for higher imports and a more deteriorated service account,” IMF said in a statement on Wednesday.

Kinshasa continues to grapple with a high trade deficit, currently at 5,3 percent of GDP, which has contributed to the continued drop in forex reserves, compounded by other internal and international economic shocks.

IMF’s deputy managing director Kenji Okamura said the ongoing conflict in the eastern parts of the country and the upcoming elections in December have created uncertainty, lowered government revenue collection to below expectations and increased public spending, limiting expenditure on priority areas.

The multilateral lender has revised the GDP projection to 6,8 percent this year, down from an estimate of 8,9 percent earlier in February.

IMF wants Kinshasa to implement additional reforms, including spending controls and reprioritisation in the face of below-target revenue collections.

“Improved spending efficiency, tighter controls on spending under emergency procedures, and better cash management will improve budget execution and provide space for much-needed social and development spending,” Mr Okamura said. – The East African