The IMF teaches a lesson in budgetary management in Kinshasa

The IMF teaches a lesson in budgetary management in Kinshasa
The IMF teaches a lesson in budgetary management in Kinshasa

The International Monetary Fund (IMF) recommended to the Congolese government in a press release dated May 8, to ensure the proper use and governance of the funds that will be mobilized thanks to the recent revision of the “minerals for infrastructure” mega-mining contract concluded with China

“A revised finance law for 2024 must integrate the positive impact of the amendment to the contract with the mining company Sicomines recently signed, both in terms of revenue and investment expenditure. In addition, mechanisms must be put in place or strengthened to guarantee the proper use and governance of these funds,” underlined the IMF at the end of discussions with the Congolese authorities under Article IV of the Fund’s statutes and the 6th and final review of the economic and financial program supported by an agreement under the Extended Credit Facility (ECF).

Improving the quality of public spending

The revised Finance Law should reflect these changes and other modifications to the budgetary framework, notes the IMF, adding that strengthening public financial management remains essential to continue to mobilize revenue and improve the quality and efficiency of public spending. .

The “minerals for infrastructure” contract was signed with Beijing in 2008 under Joseph Kabila. It stipulated in its initial version that the Chinese groups Sinohydro Corporation and China Railway Engineering Corporation must build infrastructure (roads, bridges, hospitals, supply of drinking water, etc.) for an investment of 3 billion dollars between 2008 and 2040 in exchange of a 68% stake in the Sino-Congolese Mines Company (Sicomines), a joint venture specializing in copper and cobalt mining with the Congolese state mining company Gécamines.

Following tough negotiations which took place in recent months between Beijing and Kinshasa, the total amount of these investments was revised to 7 billion dollars to reflect the real value of the mining concessions. Of this amount, around $1.5 billion has already been disbursed since 2008.

Copper prices and its impact on infrastructure

According to the new amendment to the contract signed between the two countries in March 2024, the DRC will receive $324 million per year from its Chinese partners for infrastructure projects until 2040, as long as the price of copper remains above $8,000. per ton.

If the price of the red metal exceeds $12,000 per tonne, 30% of the additional profits made by Chinese groups will be devoted to financing new infrastructure projects. If it falls below $8,000, funding would gradually decrease until it stops completely at $5,200 per ton.

The IMF also indicated that it reached an agreement with the Democratic Republic of Congo on the latest review of an economic and financial program supported by an agreement under the Extended Credit Facility (ECF). This 3-year agreement worth approximately $1.52 billion was approved by the IMF Executive Board in July 2021.

By AJ.SEditorial Committee

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