The IMF gives a lesson on budget management in Kinshasa

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

“The revised finance law for 2024 must integrate the positive impact of the recently signed contract amendment with the mining company Sicomines, both in terms of revenue and investment expenditure. In addition, mechanisms must be established or strengthened to guarantee the proper use and management of these funds”, underlined the IMF at the end of the talks with the Congolese authorities in accordance with Article IV of the Fund’s statute and the sixth and final review of the Fund. an economic and financial program supported by an agreement under the extended credit line (ECF).

Improving the quality of public spending

The revised Finance Law should reflect these changes and other modifications 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.

The “minerals for infrastructure” agreement was signed with Beijing in 2008 under the leadership of Joseph Kabila. In its initial version, it stipulated that the 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 68% stake in the Sino-Congolese Mines Company (Sicomines), a joint venture specializing in copper and cobalt mining with the Congolese state-owned mining company Gécamines.

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

Copper prices and its impact on infrastructure

Under a new treaty amendment 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, as long as the price of copper remains above $8,000 per ton.

If the price of the red metal exceeds 12,000 dollars per ton, 30% of the additional profit of the Chinese group will be intended to finance 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 has reached an agreement with the Democratic Republic of Congo on the latest revision of the economic and financial program supported by the Extended Credit Facility (ECF) agreement. This three-year agreement, worth approximately $1.52 billion, was approved by the IMF’s Executive Board in July 2021.