- The Kinshasa government today was told it was ready to receive a massive debt cancellation of up to US$ 12.3 billion. The IMF decision was however controversial, with several countries protesting.
The International Monetary Fund (IMF) and the World Bank today have decided to support US$ 12.3 billion in debt relief to the Democratic Republic of the Congo (DRC). As a result of this relief, the DRC will no longer face a heavy debt service burden in relation to its revenue and foreign exchange resources.
The decision was based on an IMF analysis, holding that the Kinshasa government had by now implemented the expected economic reforms required to trigger a debt cancellation programme.
This, according to the IMF, had included "satisfactory implementation of the country's poverty reduction and growth strategy, maintenance of macroeconomic stability, improvements in public expenditure and debt management, and improved governance and service delivery in key social sectors such as health, education and rural development."
But the decision was controversial, with several board members voting against it or abstaining. In particular Canada was protesting the decision following a Congolese expropriation of a Canadian company's copper assets in the country.
There were arguments that the DRC was still not ready for debt relief, as the economy needed further reform, corruption is still pervasive and there still was warfare in the vast country.
It was however remembered that most of the debt now burdening the rather progressive government in Kinshasa was made in doubtful conditions more than 20 years ago. At the time, massive loans were made to long-time Dictator Mobutu Sese Seko, creditors knowing the funds would be embezzled by the corrupt regime.
Compared to the earlier chaos in the DRC, the current administration had moved a far way to create a viable foundation for economic growth and reducing poverty, the IMF and World Bank boards found.
"We recognise the government's huge efforts," commented the Bank's Marie-Françoise Marie-Nelly. "This could be a turning point in DRC's long troubled history," she added, the day after the country celebrated its 50th independence anniversary.
But also Ms Marie-Nelly recognised success was still to be secured in the DRC. "Going forward, strengthening the rule of law, improving governance - especially in the oil and mining sectors - and improving the business climate are essential next steps to benefit the most vulnerable Congolese citizens," she urged Kinshasa authorities.
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