A mission of the International Monetary Fund (IMF) led by Mr. Mbuyamu Matungulu, Mission Chief for the Republic of Congo, visited Brazzaville during March 9–16, 2013 to review recent macroeconomic developments and short-term prospects, and to seek agreement with the authorities on the agenda for the 2013Article IV consultation discussions for Congo, which are scheduled to be held in Brazzaville during April 30-May 14, 2013. The mission held discussions with His Excellency Leon Raphael Mokoko, Deputy Minister in charge of Planning, Mr. Cedric Ebauh Ondaye, the National Director of the Bank of Central African States (BEAC), and other senior government officials; as well as with representatives of Congo’s development partners.
At the end of the mission, Mr. Matungulu made the following statement in Brazzaville:
“The staff team initiated data collection and discussions in preparation for the upcoming Article IV consultation. A preliminary assessment suggests that the Republic of Congo has maintained broadly satisfactory progress in macroeconomic stability. Production in maturing oil fields declined in 2012, but non-oil growth has accelerated, buoyed by strong activity notably in the non-tradable services, commerce, and construction sectors.
“In 2012, macroeconomic developments were dominated by the authorities’ swift fiscal response to a munitions depot explosion in March. Economic growth is estimated to have reached 3.8 percent, with inflation peaking at 7.5 percent, reflecting a limited aggregate supply response to an increase in domestically financed government outlays equivalent to 16 ½ percentage-points of non-oil gross domestic product (GDP) relative to 2011, mainly in support of the efforts to begin addressing the destructions from the munitions explosion. The brisk increase in spending caused a widening of the basic non-oil primary deficit to 64.3 percent of non-oil GDP (46.3 percent of non-oil GDP in 2011). The prospects for 2013 and the medium term appear generally favorable. Growth is projected to increase to 6.4 percent this year, and end-year inflation should decline to around 4 percent. Despite the scaling up of investment, the fiscal and external positions should remain comfortable, and a fiscal rule introduced as from FY 2013 will help to mitigate the negative macro-budgetary repercussions of oil revenue volatility and ensure fiscal sustainability.
“The mission welcomes the Republic of Congo’s compliance status under the Extractive Industries Transparency Initiative, which was reached last February. The staff team urged early Parliament adoption of the mandated law on fiscal transparency and accountability.
“The authorities reiterated their commitment to further strengthen economic governance, improve the business environment, strengthen the quality of social expenditures and set the economy on a path of sustained inclusive growth, all of which are essential to achieving deeper gains in employment and poverty reduction. In this context, it was agreed that the 2013 Article IV consultation discussions would review the authorities’ medium-term fiscal policy framework, examine Congo’s vulnerability to global shocks, assess the country’s external competitiveness and discuss economic diversification and inclusive-growth policies. Within the latter, focus will be on structural reforms to improve economic governance, the business climate, and to strengthen the financial sector.
“The IMF will continue its close cooperation with Congo.
“The mission wishes to thank the authorities for their hospitality.”
Source: International Monetary Fund (IMF) – Press Release – 18 March 2013