DRC: IMF teaches budget management lesson in Kinshasa

In a May 8 press release, the International Monetary Fund (IMF) advised the Congolese government to ensure the proper use and management of funds that will be mobilized through the recent review of the “minerals for infrastructure” mega-mining contract. closed with China

“The revised financial law for 2024 must incorporate the positive impact of the recently signed amendment to the contract with the mining company Sicomines, both in terms of revenue and capital expenditure. In addition, mechanisms must be established or strengthened to guarantee the proper use and management of these funds,” the IMF emphasized at the end of negotiations with the Congolese authorities under Article IV of the fund’s statute and the 6th and final review of the fund. an economic and financial program supported by the Extended Credit Facility (ECF) agreement.

Improving the quality of public spending

The revised financial law should reflect these changes and other adjustments to the budget framework, notes the IMF, adding that strengthening public finance management remains essential to continue revenue mobilization and improve the quality and efficiency of public spending.

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

After tough negotiations between Beijing and Kinshasa in recent months, the total amount of these investments was revised to $7 billion to reflect the true value of the mining concessions. Of this amount, approximately $1.5 billion has already been paid out since 2008.

Copper prices and their impact on infrastructure

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

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

The IMF also said it had reached an agreement with the Democratic Republic of the Congo on the latest review of the economic and financial program supported by the Extended Credit Facility (ECF) agreement. The three-year agreement, worth approximately $1.52 billion, was approved by the IMF’s Executive Board in July 2021.

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