Press Release No. 08/182

Press Release: Statement by an IMF Staff Mission to the Democratic Republic of the Congo

July 28, 2008

A mission from the International Monetary Fund (IMF) headed by Mr. Brian Ames visited Kinshasa from June 18 to June 29.

The mission met with Minister of Finance Athanase Matenda Kyelu, Minister of Budget Adolphe Muzito, Minister of Infrastructure, Public Works and Reconstruction Pierre Lumbi, Minister of Mines Martin Kabwelulu, Central Bank Governor Jean-Claude Masangu, and other senior government officials. The mission assessed the implementation to date of the government's economic program for 2008, discussed the implications of the surge in world food and petroleum product prices on the Congolese economy, and assessed the recent cooperation agreement signed with a consortium of Chinese companies involving a set of large mining and infrastructure projects.

The mission issued the following statement today in Kinshasa:

"Implementation of the Government's Economic Program was satisfactory through end-May. The tightening of monetary and fiscal policies early in the year helped abate exchange rate and inflationary pressures that resulted from the end-2007 fiscal slippages, but the pass through of the large increases in world energy and food prices has led to an acceleration of inflation since end-April. The mission discussed the government's plans for a temporary reduction in import tariffs on selective food products, which should help alleviate the impact of the world price increases on the poor. Looking forward, prudent monetary and budgetary policies will be important in anchoring macroeconomic stability in line with the expectations of the Congolese people.

"The mission reached understandings on a set of revised macroeconomic policies and structural reforms for the remainder of 2008. The government's revised program seeks to achieve economic growth of 10 percent, on account of stronger than expected performance in the construction and tertiary sectors. Tight monetary policies should help limit annual inflation to around 24 percent. International reserves of the Central Bank are targeted to reach a minimum of US$200 million at year end. The mission highlighted the need to give new momentum to the structural reform program, particularly in the areas of public financial management and tax policy and administration.

"The mission supported the government's twin objectives of accelerating the reconstruction of the country's dilapidated infrastructure and achieving substantial debt relief from its external creditors. The recent cooperation agreement with Chinese companies raises specific questions about public debt and debt sustainability, which will be important to resolve in order to conclude discussions on a new arrangement under the IMF's Poverty Reduction and Growth Facility (PRGF). The completion of the feasibility study before year-end should help clarify these matters, as well as provide an opportunity for the government to ensure the compatibility between its twin objectives. In the meantime, Fund staff will continue to monitor the implementation of the government's economic program.

"The mission would like to thank the authorities for their warm hospitality and excellent cooperation during the visit."