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Preliminary data suggests that all quantitative targets and structural benchmark for end-December 2019 under the Staff Monitored Program (SMP) were met. The macroeconomic situation has so far remained relatively stable; However, 2020 budget execution until mid-February raises concerns arising from spending pressures and lackluster revenue, which have resulted in renewed central bank advances to the government and erosion of its foreign reserves; The mission welcomes steps taken by the authorities to control expenditures going forward and urges them to step up revenue mobilization.
An IMF staff team led by Mauricio Villafuerte visited Kinshasa during February 19-25 to discuss developments under the SMP approved in December 2019, update the macroeconomic framework, and discuss conclusions of the recent safeguard assessment of the Banque Centrale du Congo (BCC). At the end of the visit, M. Villafuerte issued the following statement:
“A preliminary assessment suggests that all quantitative targets and structural benchmark under the SMP for end-December were met. The first and second reviews of the SMP will be combined and formally undertaken in May. In 2019, y-o-y inflation remained contained at 4.6 percent and the exchange relative stable, while growth slowed to 4.4 percent down from 5.8 percent in 2018, owing mainly to lower mining production.
“However, budget execution until mid-February raises concerns owing to spending pressures and lackluster revenue performance, which have led to central bank advances to the government and an erosion of BCC international reserves. The mission stressed the need to put immediately a stop to central bank advances and repay those given.
“The mission welcomed steps taken by the authorities to control expenditures going forward and urged them to step up revenue mobilization. The authorities published on the Ministry of Finance’s website a Treasury Plan consistent with realistic revenue projections and the Ministry of Budget prepared a Commitment Plan to institute spending limits for all line ministries and government agencies. As regards revenue mobilization, the mission called for the authorities to implement all measures envisaged under the SMP, including the restoration of the normal functioning of the VAT while avoiding the accumulation of VAT credit arrears. Further, the authorities should act to reduce revenue lost at border entries to fraud and smuggling and tackle governance problems within revenue collecting agencies.
“The mission discussed conclusions of the safeguard assessment of the BCC with the authorities, urging them to heed recommendations of this assessment with technical assistance support from DRC partners.
“The mission met with President Tshisekedi, Prime Minister Ilunga, Minister of Finance Sele, Governor of the Bank of Congo Mutombo and various other senior government officials, representatives of the private sector, and those of the international community present in Kinshasa.
“We would like to thank Congolese authorities for their hospitality and cooperation.”
Distributed by APO Group on behalf of International Monetary Fund (IMF).