Congo and the IMF: negotiations with confidence

Preliminary discussions between the government of Congo and the International Monetary Fund resumed last week, after more than two months of interruption due to the elections of July 2017. For the purpose of removing all possible obstacles and prepare the files to pave the way for the conclusion of a program between the two parties, a seven-day technical mission is at work in Brazzaville. As soon as it arrived, the FMI delegation led by Abdu Wane Aziz met first with the finance minister before being received by Prime Minister Clement Mouamba. Other in camera discussions took place with several other personalities and administrations close to the file in order to refine all outlines of the on-going program.

During a first meeting he had with Minister Calixte Nganongo, on September 26, Abdul Wane Aziz unveiled the content of this mission: “we are here to take stock of the economic and financial situation of Congo and sort out uncertainties within the macroeconomic framework” he said at the outset.

On the side of the government, one prefers to stay calm in spite of the difficult economic situation and the social discontent within some social categories and some public administrations with months of unpaid salaries. “There is no reason to despair” it is said in official circles, because the arrival of the mission of the FMI in the country is proof of work which is done so that the negotiations in progress lead to the conclusion of a program that will allow Congo to get out of the rut.

This does not fail to reassure the most skeptical. Beyond these measures, some cynics as relayed by a certain press, see the arrival of the FMI as that of the policeman who has come to "handcuff" Congo before throwing it into a dark cell.

On the contrary, the IMF is in its priority role of supporting member countries when faced with a financial crisis, by granting them loans in order to guarantee its solvency and to prevent the outbreak of any financial crisis similar to that of 1929. It is a sort of "central bank of central banks and public treasuries". The IMF's updated mandate allows it to cover all macroeconomic and financial issues affecting global stability. This institution also plays the role of economic intelligence, stability maintenance and crisis prevention of the international monetary system. It reviews countries' economic policies, economic and financial developments at the national, regional and global levels, advises its 188 member states on the policy to be implemented, and provides technical assistance and training to assist countries strengthen their capacity to develop and implement their economic policies. The IMF is also responsible for governance and organization, and is responsible to the governments of its member States.

The idea for Congo to enter into program with the FMI had been in the air for more than a year, especially since the appearance of the first signs of the difficult economic situation in our country, a situation caused by the drastic drop in oil prices, the main resource of the State. Recommendations made by previous missions of the IMF and the World Bank indicate some possible paths: the adoption of realistic expenditure plans to prevent the accumulation of new arrears while preserving social expenses and the financing of the counterpart of the projects of development; continued efforts to rationalize public spending from their exceptionally high levels in recent years and to improve the quality and efficiency of investment spending and the broadening of the tax base through a systematic review and selectively eliminating tax exemptions and strengthening tax and customs administration. Similarly, in the medium term, a multidimensional approach will be needed to support diversification, with a view to achieving sustainable and inclusive growth. A medium-term perspective on tax planning and improved commitment controls would help prevent the build-up of domestic arrears and limit the increase in public debt. A clear strategy for the reimbursement of existing arrears, along with the improvement of the business climate, such as strengthening governance and transparency and improving access to finance, would be essential to support the development and diversification of the private sector.

J.D.