DRC could win debt relief deal by June: IMF

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Democratic Republic of Congo could win a deal to wipe out the bulk of its $11 billion debt in time for June celebrations marking 50 years of independence, the International Monetary Fund said.

President Joseph Kabila has sought to step up the pace of the reforms needed to secure the accord, which would ease the debt repayment burden on an economy still recovering from a 1998-2003 war in which some 5 million died.

Kabila set a target date for clinching the accord by June 30, when Congo will celebrate its 1960 independence from Belgium with festivities it hopes will show the world it is putting its painful past behind it.
“If all goes well on the authorities’ part, the IMF and World Bank staff expect to submit the request for debt relief … before end-June,” IMF country mission chief Brian Ames told reporters in Kinshasa after a Fund visit to the central African country, insisting “steadfast actions” were still needed.

Congo’s debt stands at $10.9 billion, a figure which could fall to $2.3 billion if all foreign donors commit to write off debt under an IMF scheme to help poor countries.

Congo’s annual debt servicing burden would fall from $920 million to $194 million, a boon for one of the poorest countries in the world with a gross domestic product of $300 per capita.
“These figures are important and will allow the Congolese to spend the next 50 years without the burden of over $10 billion debt,” Congolese central bank chief Jean-Claude Masangu said.

Security problems

Seven years after a 2003 peace deal, Congo is still plagued by a violent conflict with rebels in the east of the country and sporadic insecurity elsewhere which means it has yet to reap the full benefit of its huge mineral reserves.
“We need to find a way to manage these (security) problems and keep the macroeconomic framework on track at the same time,” said Masangu, adding: “It won’t be easy.”

Congo is looking for the United Nations to pull out its 22 000 peacekeepers in 2011, a move which could put more of the strain of providing security on its own army.

Criteria used by the IMF to judge whether Congo qualifies for debt relief include progress on reforms such as improving revenue collection, demonstrating sound management of state spending and making it easier for businesses to operate.

IMF officials said it was on track with commitments to publish monthly tables on budget spending, publish partnership contracts with private enterprises in the mining sector, and to revise tax exemptions.

Congo must also put in place a law governing procurement practice, something which parliament has yet to approve.

A thumbs-up from the IMF on reform efforts would also allow Congo to win the next $70 million slice of a three-year $550 million IMF loan programme. The loan will have to be paid back, but at concessional rates and only after 2016.

Pic: A road in the DRC

Source: www.af.reuters.com