IMF says $10 billion Congo budget unrealistic as mining slows

Kamoa-Kakula copper project, 25 km west of Kolwezi in the Democratic Republic of the Congo. (Image courtesy of Ivanhoe Mines)

The International Monetary Fund said the Democratic Republic of Congo’s proposed $10.2 billion budget is “unrealistic,” amid slowing output from the country’s copper and cobalt mines.

The government is seeking a budget of 16.9 trillion francs ($10.2 billion) next year, with revenue expected to climb 63% compared to this year. The IMF projects that Congo’s actual revenue this year will only be about $5.5 billion, including grants, and will rise to about $6.32 billion next year.

While the IMF expects Congo’s economy to grow 4.5% this year, growth will slow to 3.2% in 2020 mainly because of the closing of Glencore Mutanda copper and cobalt mine

“It’s very rare for a country to be able to increase its revenue 50-60% from one year to the next,” Philippe Egoume, the IMF’s resident representative in Congo, told reporters Friday in the capital, Kinshasa. “We think there are a certain number of measures to raise revenue that could generate 1-2% of GDP, so between $500 million and $1 billion. Maybe it will be more if more important reforms are made. But five billion is a lot.”

While the IMF expects Congo’s economy to grow 4.5% this year, growth will slow to 3.2% in 2020 mainly because of the closing of Glencore Plc’s Mutanda copper and cobalt mine last week. Mutanda, which will be on care and maintenance for two years, provided more than $626 million in revenue to the government in 2018, according to Glencore.

Natural-resource extraction typically provides about a third of government revenue and 95% of Congo’s export earnings, mostly from copper and cobalt, according to the IMF. In mid-December, the IMF board will consider a credit injection of about $370 million to boost Congo’s reserves, which have fallen by about half since the end of 2018 and are now equivalent to only about 1 week of imports, Egoume said.

Congo’s central bank, which includes the bank’s domestic deposits in its reserve calculations, says reserves have fallen to $873 million, equivalent to about three weeks of imports.

(By Michael J. Kavanagh)

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