IMF and DR Congo reach agreement on final review of loan deal

By Thomson Reuters May 8, 2024 | 3:56 PM

By Sonia Rolley

(Reuters) – The International Monetary Fund said on Wednesday it had reached a staff-level agreement with Democratic Republic of Congo on the final review of a $1.5 billion loan programme, noting the need for Congo to manage properly funds from a revised mining deal.

This takes Congo one step closer to completing an IMF programme for the first time. Previous agreements have been derailed by issues including a lack of transparency in its vast mining sector.

“Performance under the (three-year) program has been generally positive, with most quantitative objectives met and key reforms implemented, albeit at a slow pace,” the Fund said in a statement.

Once approved by the IMF board, the agreement will allow for the disbursement of a final tranche of around $200 million.

The IMF noted that the world’s top supplier of cobalt – the mineral used in smartphones – and the third-largest producer of copper must account for the positive impact of a recently amended Sicomines joint venture with Chinese companies in its revised budget law for 2024.

“In addition, mechanisms will need to be put in place or reinforced to ensure the proper use and governance of these funds,” the Fund said.

President Felix Tshisekedi pushed for the revision of the 2008 infrastructure for minerals deal with Sinohydro Corp and China Railway Group to bring more benefits for Congo. An agreement was signed in March.

“The IMF is concerned about the mechanisms for using this money and has asked for it to be paid into the public treasury accounts rather than being managed by an agency as has been done in the past,” a finance ministry official, who requested anonymity, told Reuters.

Publishing mining contracts was also one of the conditions of the IMF programme and last week Congo shared long-awaited details of the revised Sicomines terms, which include around $7 billion of infrastructure investments from the Chinese side provided that copper prices remain high.

Under the previous version of the agreement, only $822 million of $3 billion promised to infrastructure investments was disbursed, according to a 2023 report by Congo’s state auditor.

The revised deal still includes terms which Congolese and international civil society organisations see as disadvantageous to Congo. These include Sicomines’s exemption from paying taxes until 2040.

(Writing by Alessandra Prentice; Editing by Chris Reese and Deepa Babington)