Mr. Dominique Strauss-Kahn, Managing Director of the International Monetary Fund (IMF), issued the following statement today in Kinshasa at the conclusion of his visit to the Democratic Republic of Congo:
"This is my first visit to DRC in my capacity of Managing Director of the IMF. I wish to thank President Kabila, Prime Minister Muzito, Minister of Finance Matenda, Central Bank Governor Masangu, and other senior government officials. I also met with members of the Economic and Financial Commissions of both the National Assembly and the Senate, and representatives from civil society and the private sector. This was also an opportunity for me to visit the Health Center Avenir Meilleur pour les Orphelins du Congo (AMOCongo), where I was greatly impressed by the dedication of the staff and their efforts to help young children and women living with HIV. I also had valuable exchanges with labor unions, civil society organizations and the students and faculty of private and public universities of Kinshasa.
"In my meeting with President Kabila, I welcomed DRC's remarkable economic progress, for a post-conflict country, toward its long-term development objectives. We had a productive discussion on the DRC's economic outlook and challenges to be met, in particular as the country is facing pressures posed by the global financial crisis. The DRC is one of the most severely hit countries in Africa. Prices of copper, cobalt and diamonds have collapsed. Terms of trade are expected to drop by 20 percent this year. As a consequence, economic growth is projected at 2.7 percent in 2009, well below pre-crisis levels.
"We agreed that external support will be key for DRC's ability to weather the impact of these shocks and to protect the poorest within its population. In this regard, the IMF approved a US$195 million disbursement to the DRC under the Exogenous Shock Facility (ESF) in March. We are continuing our discussions over a new Poverty Reduction and Growth Facility, as well. Additional support from the donor community will further help mitigate the consequences of this crisis. I welcomed President Kabila's agenda for tackling critical social and infrastructural needs, and which warrant increased public spending. Of course, such spending should take place within a clear debt sustainability framework "IMF staff are finalizing negotiations on a new program under the Poverty Reduction and Growth Facility, pending an outcome, consistent with debt sustainability, to the mining and infrastructure cooperation agreement between DRC and China. The IMF supports DRC's efforts to secure much-needed debt relief and investment in infrastructure and the mining sector. and we stand ready to use our good offices with DRC's development partners to this end. Before the IMF Executive Board can consider a new program for the DRC, a positive solution to issue of the Sino-Congolese agreement and financing assurances of the Paris Club are needed.
"It is essential to keep a balance between domestically financed spending and domestic revenue to avoid an expansion that could trigger higher inflation and put pressure on the exchange rate. At the same time, the Central Bank will need to monitor the money supply and offset any excess liquidity that could be created by these resources. Meanwhile, the government should use the additional fiscal space to allocate more resources to the social sectors and to implement structural reforms to make the economy more competitive and better integrated to the global economy.
"The IMF stands ready to continue supporting the DRC in its endeavor to reduce poverty, fight corruption, and maintain the economy on a sustainable path.