WASHINGTON D.C., United States of America, April 23, 2020/ — The IMF approves the disbursement of US$363.27 million under the Rapid Credit Facility (RCF) to help the Democratic Republic of Congo (DRC) meet urgent balance of payments stemming from the COVID-19 pandemic; The DRC is experiencing a severe shock, as the economic impact of the COVID-19 pandemic unfolds, with the near-term outlook deteriorating quickly; The authorities have responded quickly, scaling up health-related spending and deploying a series of containment and mitigation measures.
The Executive Board of the International Monetary Fund (IMF) approved a disbursement under the Rapid Credit Facility (RCF) equivalent to SDR 266.5 million (about US$363.27 million, or 25 percent of quota), to help the Democratic Republic of Congo (DRC) meet the urgent balance of payment needs stemming from the outbreak of the COVID-19 pandemic.
DRC is experiencing a severe shock as a result of the Covid-19 pandemic. The short-term economic outlook has deteriorated quickly due to the fall of minerals’ prices and the impact of needed containment and mitigation measures.
The authorities’ policy response to the pandemic has been firm, preparing a national response plan that includes an increase in health-related spending and putting in place measures to help contain the spread of the disease. The pandemic is also dampening domestic revenue mobilization and putting significant pressures on foreign exchange reserves. Given the extraordinary nature of the pandemic and the sizeable economic fallout, the authorities have decided to accommodate the impact of the pandemic on the budget. The Banque Centrale du Congo (BCC) has also announced several liquidity support measures aimed at mitigating the economic impact of the pandemic.
The deteriorating macroeconomic outlook and the additional fiscal pressures are creating an urgent balance of payments need. The IMF support through RCF financing would help fill part of the financing gap, while additional support from other development partners is expected to close the remaining gap and ease budget financing needs.
Following the Executive Board discussion, Mr. Mitsuhiro Furusawa, Deputy Managing Director and Chair, made the following statement:
“The COVID‑19 crisis is expected to have a considerable economic and social impact on the Democratic Republic of the Congo (DRC), which is a fragile country. The outbreak will affect DRC’s economy, as containment measures impact domestic activities and exports are hit hard amid weaker commodity prices and global demand. Along with a decline in financial flows, the pandemic has created substantial urgent external financing needs.
“To limit the pandemic’s human and economic impact, the authorities have adopted strong measures to contain its spread. They have also prepared a COVID‑19 national response plan aimed at strengthening the medical response. In addition, the central bank has announced some liquidity support measures to mitigate the economic impact of the pandemic.
“The budget deficit is projected to widen this year given expected lower government revenues and higher spending needs related to the pandemic. The IMF’s emergency financial support under the Rapid Credit Facility will address DRC’s urgent balance of payments needs while supporting this temporary fiscal loosening. Additional assistance from other development partners is expected to close the remaining external financing gap and ease budget financing needs. The authorities’ commitment to publish monthly audits of COVID‑19 related expenditures is welcome, to ensure transparency in the use of public funding.
“The implementation of the policies and structural reforms to which the authorities committed under the staff-monitored program agreed in December remains key to ensuring macroeconomic stability and restoring sustained inclusive growth. These include strengthening transparency and governance in the fiscal and mining sectors, boosting revenue mobilization, maintaining financial stability, and halting central bank financing of the deficit.”