International Monetary Fund staff agreed to provide $1.5 billion to the Democratic Republic of Congo over the next three years, likely securing the country’s first formal loan program with the lender since 2012.
The agreement, which still needs final approval by IMF management and its executive board, will mark the end of two years of negotiations between Congo and the IMF. It is a major victory for President Felix Tshisekedi as he looks to implement his policy agenda after winning a power struggle with allies of his predecessor, Joseph Kabila, for control of the government.
The Extended Credit Facility should help the country’s recovery from the Covid-19 pandemic and reduce poverty, the IMF said.
“The program aims at building fiscal space for much needed social spending and investment, enhancing the monetary framework and financial supervision, and improving economic governance and transparency,” Mauricio Villafuerte, the IMF’s mission chief for Congo, said in an emailed statement.
The new program could unlock billions of dollars of further funding from the World Bank and other donors, who use a formal IMF program as a bellwether for the government’s commitment to fiscal discipline. The IMF financing comes with conditions including reforms of the central bank and value-added tax system, and more transparency in the mining industry, the Washington-based lender said.
Congo is Africa’s largest producer of copper and the world’s biggest source of cobalt. Mining provides nearly all the country’s export earnings. The IMF halted its last loan program with Congo at the end of 2012 amid concerns over corruption in the industry, after the government declined to publish a contract for a copper deal involving Kabila’s family.
“Improving governance and fighting against corruption are critical, with continued emphasis on the management of extractive resources, on improving public financial management and on fighting money laundering,” Villafuerte said.
Congo’s economy is set to grow 4.9% in 2021 as the country emerges from the pandemic and benefits from high copper and cobalt prices, the IMF said. The economy expanded only 1.7% last year, it said.
Finance Minister Nicolas Kazadi didn’t immediately respond to a request for comment.