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The Democratic Republic of Congo (DRC) will receive $363.27-million from the International Monetary Fund (IMF) for urgent balancing of payment needs, as the country’s short-term economic outlook deteriorates during the coronavirus (Covid-19) pandemic.
The IMF approved the fund disbursement under the Rapid Credit Facility to fill financing gaps in the country, as its economy suffers owing to lower mineral prices and the impact of containment and mitigation measures.
In a statement, IMF deputy MD and chair Mitsuhiro Furusawa said the DRC was a fragile country that would be considerably impacted, economically and socially, by the pandemic.
“The outbreak will affect the 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,” said Furusawa.
Although the government’s policy response to the pandemic has been firm, the pandemic is dampening domestic revenue mobilisation and putting significant pressure on foreign exchange reserves.
Central Bank of Congo has also announced several liquidity support measures to mitigate the economic impact of the pandemic.
Furusawa said 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,” he said.
He urged the DRC to implement policies and structural reforms that were agreed on in December to ensure macroeconomic stability and restore sustained inclusive growth.
Some of these measures include strengthening transparency and governance in the fiscal and mining sectors, boosting revenue mobilisation, maintaining financial stability, and halting central bank financing of the deficit.