IMF praises Congo economy, releases fresh loans


The International Monetary Fund has praised Democratic Republic of Congo’s economic progress and approved the release of US$77 million as part of an existing loan facility to the central African nation.

Separately, the Fund’s country chief told Reuters on Thursday he was seeing an improved business climate in Congo after a series of disputes with investors in its vast mining sector in recent months.
“Macroeconomic performance has improved markedly,” IMF Executive Board acting chairman John Lipsky said in a statement, Reuters reports.
“Economic activity is expanding at a strong pace, inflation has decelerated, the exchange rate has stabilised and debt relief has reduced the external debt burden that weighed heavily on the economy,” he added, in reference to the US$12.3 billion reduction made to Congo’s international debts last year.

The review is the second to be carried out as part of the three-year Extended Credit Facility, which started in December 2009 and is planned overall to release US$541 million in loans.

IMF country representative Samir Jahjah said the Fund agreed with Congo’s 2011 budget forecast of 6.8 percent growth this year, up from around six percent last year, and annual inflation averaging 9.9 percent during 2011.

Jahjah dismissed fears fiscal discipline would be abandoned as Joseph Kabila seeks re-election this year, saying the budget showed the government was committed to balancing its books.

He further noted that the high global prices for two major exports — cobalt and copper — would boost income and was optimistic Congo could allay concerns of would-be investors.
“The government has put in a number of reforms (to increase transparency) which will take time to implement, but they have shown their commitment to do so, so we do see change and improvement, that is for certain,” he added.

Perceived contract insecurity prompted risk premiums in Congo to rise 40 percent last year after the state withdrew rights to Canadian miner First Quantum’s US$750 million KMT mining project and handed them to Kazakh rival ENRC.

Uncertainty over Freeport-McMoRan Copper & Gold’s huge Tenke Fungurume copper project also hung over the sector.

But a mining review concluded with the company conceding a small share in the project to the state in a deal which analysts widely viewed as positive for the company.