IMF urges Congo to improve mining revenue collection
Tuesday, 26 June 2012
The Democratic Republic of Congo needs to continue improving governance and transparency in its extractive sector if it is to receive the latest instalments of a $550 million loan, the International Monetary Fund (IMF) said on Monday.
The statement followed a visit by the IMF's chief of mission to the country, Robert York, to assess Congo's economic performance under the new government of prime minister Matata Ponyo.
Congo is on course for an estimated 7 percent growth in 2012 off the back of mining receipts, and could achieve single digit inflation figures by the end of the year, but more needed to be done to clean up the sector, York said in a statement.
The minerals-rich central African nation produced an estimated 500,000 tonnes of copper last year but decades of misrule and corruption mean the country came bottom of UNDP's development index in 2011.
The country plans to change its mining code to increase tax rates and raise the government's minimum automatic stake in mining projects. It received around $100 million in receipts from mining in 2011.
"Continued progress in terms of governance and transparency in the extractive industries would back up the recommendation of the mission for the completion of the fourth and fifth review," York stated.
The release of around $180 million of funds from the credit facility have been delayed since last year over Congo's secret sale of mining assets.
A five month wait for a government following controversial presidential elections last November which saw president Joseph Kabila returned to power despite widespread allegations of fraud, also delayed the disbursement of the funds.
The government is in the process of presenting an estimated $8.2 billion budget to parliament - about 20 percent rise on last year, but the IMF warned it should avoid a net budget deficit, and should invest in infrastructure, and reform revenue collection in the resources sector.
Recent improvements in Congo's economy have been helped by the fact that the country was largely unaffected by international economic shocks because of its lack of integration into global markets, the IMF said.
"This weak integration has certainly been a short term benefit, but the mission underlines that this represents a major constraint to development in the medium term," York stated.
The appointment of former finance minister Matata Ponyo to lead the government has been seen as a positive step as Congo attempts to end widespread poverty which sees nearly 80 percent of the population living on less than $2 a day.