An important but under-reported piece of news on the Democratic Republic of Congo over the last few months is the International Monetary Fund’s (IMF) decision not to provide a loan to the country until the Congolese government enacts key transparency and anti-corruption reforms.
IMF loans are critically important for the Congolese government. If they move forward, they open the door for other, much larger amounts of aid money from donors such as the World Bank and the African Development Bank. The World Bank has already said that it could provide Congo with up to $5 billion in aid over the next five years. For Congolese President Félix Tshisekedi, who has put forth an ambitious agenda of fighting poverty, improving infrastructure, and providing universal primary education for 20 million students, this aid money is especially significant. Without it, those programs would be very difficult to implement, and without the IMF loan, much of that funding would be on hold.
The potential IMF loan is then a key point of leverage to get the Congolese government to implement governance reforms to combat and prevent corruption, which is arguably the most important issue facing Congo today due to the system of kleptocracy that has plagued the country for decades.
For civil society, an IMF program (either a loan or a smaller engagement called a Staff Monitored Program) is important because it comes with anti-corruption and transparency requirements and with monitoring programs for institutions like the Central Bank. Congolese civil society wrote to the IMF in May asking it to demand that the government audit state-owned companies and publish mining contracts. The Enough Project has also engaged the IMF on these issues over the last several months, and The Sentry report Covert Capital highlighted how the Central Bank appeared to break its own rules when giving a license to a Kabila family secret investment bank.
Over the coming months, the IMF and World Bank will send three governance and transparency assessment teams to Congo. Then, the IMF’s board will decide on whether to move forward with a large loan package, potentially an Extended Credit Facility, in mid-2020. Whether that loan is approved rests on the political will of the Congolese government to implement reforms.
Thus far, the Congolese government under Tshisekedi has demonstrated a new willingness to engage with the IMF. In April 2019, President Tshisekedi visited Washington, DC and met with IMF’s then-Managing Director Christine Lagarde. The meeting signaled a potential new relationship with the IMF, since the previous president, Joseph Kabila, had essentially severed ties with the IMF in 2012 after it demanded public disclosure of key lucrative mining contracts. The Congolese government refused to disclose contracts, and the IMF halted its loan.
However, given Kabila’s continued strong influence, the implementation of these reforms will be an important struggle within the government over the coming months.
In May of this year, a team from IMF headquarters in Washington, DC visited Congo to conduct the first Article IV consultation in four years, an exercise to assess the country’s economic policies and developments—typically a prelude to a loan program. Following its visit, the IMF stressed several transparency and anti-corruption points in its Article IV report, saying, “Directors concurred that fighting corruption and improving governance are crucial to boost the efficiency of public spending and growth prospects.”
Specifically, the IMF emphasized that the Congolese government should undertake the following reforms, among others:
- Public tendering of mining assets
- Publication of all mining contracts
- Disclosure of true ownership of contractual parties
- Publication of audited financial statements of state enterprises
- Passage of the anti-corruption law and the law establishing an independent anti-corruption commission
- Improvement on the anti-money laundering/countering the financing of terrorism framework through the implementation of the priority actions in the mutual evaluation report of the Financial Action Task Force/Central African Anti-Money Laundering Action Group (GABAC)
The Enough Project strongly agrees with these reforms, and with the Congolese civil society recommendations, and urges the Congolese government to implement them in order to begin to transform the system of kleptocracy and receive aid funding. In order to credibly foster reform in Congo, the IMF should continue to insist on these transparency reforms as a precondition for initiating a loan program.