The Central Bank of the DRC announced on Wednsday a partnership with the African Trade Insurance Agency (ATI) in order to bring a competitive advance to the country’s banking industry.
As part of the agreement, banks would receive up to 50% capital relief on any transaction that is secured with a credit risk guarantee supplied by ATI. This would allow local banks in the DRC to free up capital, enabling them to lend at the same levels as their international counterparts.
In addition, the Central Bank of Congo and the IFC recently announced an agreement that will enable the IFC to swap U.S. dollars for Congolese francs. With this new capability, the IFC will be able to make franc-denominated investments in the local private sector to support the country’s efforts to increase the use of local currency in the economy. The IFC’s local-currency investments will help companies avoid currency risk by allowing them to borrow in the same currency in which they generate revenues.
Regarding the Central Bank’s new agreement with the IFC, Finance Minister Yav said, “As we continue to implement financial reforms aimed at expanding the DRC’s economic growth, a key priority is developing our domestic financial markets to meet the needs of the private sector. This partnership between the Central Bank of Congo and the IFC reinforces the value and availability of the Congolese franc, and represents the promise of the Congo’s economy to both local and foreign investors. We look forward to the positive impact this agreement will have for Congolese businesses—both small and large—as they focus on job creation and improving their operations.”
Last week, senior DRC government officials concluded a range of economic policy discussions with a staff team from the IMF, which in a public statement at the end of the visit credited the DRC’s “steadfast commitment to a tight fiscal policy” for preserving macroeconomic stability and economic growth. These discussions, which comprised the IMF’s 2015 Article IV consultation with the DRC covered economic and financial developments in 2014 and 2015 and the policies needed to preserve macroeconomic stability, build resilience, and foster inclusive growth and financial stability.
At the end of the IMF’s visit, IMF team leader Norbert Toé praised the government’s efforts, noting that, “The DRC continues to enjoy one of the highest gross domestic product growth rates in the world.” Toé added that, “Macroeconomic stability was preserved thanks to the authorities’ steadfast commitment to a tight fiscal policy stance.”
The IMF team also commended the government for its approval of a new insurance code. According to the IMF team, the DRC’s economy is estimated to have expanded by 9.2 percent in 2014 and is expected to grow by 9.2 percent in 2015. Inflation remained at a record low and well below the authorities’ medium-term objective of close to 3.5 percent.
Responding to Mr. Toé’s comments, DRC Minister of Finance Henri Yav Mulang said, “We appreciate the continued commitment by the IMF to support the DRC’s economic growth and development. The IMF is a valued partner in our efforts to build a better future for the Congolese people, and to promote the DRC’s investment opportunities to foreign partners around the world. We look forward to advancing these economic policies in continued consultation with the IMF.”
Launched in 2001 with the financial and technical support of the World Bank and the backing of seven African countries, ATI is Africa’s export credit agency.
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