Economic and Structural Reforms
The Government of the D.R.C. continues to build on economic reforms initiated in 2001 aimed at stabilizing the macroeconomic situation and promoting economic growth. Reforms included liberalization of petroleum prices and exchange rates and adoption of disciplined fiscal and monetary policies. These policies have been successful in reducing inflation and supporting the resumption and acceleration of economic growth since 2002. The D.R.C.’s economy grew by 5.6% in 2006, 6.32% in 2007, and 6.15% in 2008. Inflation was reduced from over 501% in 2001 to approximately 15% in 2011.
The D.R.C.’s development framework includes implementation of the Poverty Reduction Strategy Paper (PRSP), approved in mid-2006 by the IMF and World Bank boards, and the government's 5-year program, approved by the National Assembly in February 2007. The 5-year program, known as the five pillars or “cinq chantiers” in French, is based on the PRSP and focuses heavily on President Kabila's five priority areas: infrastructure; employment; education; water/electricity; and health. Many donors had disengaged from the D.R.C. prior to 2002.
In early 2008, the Government of the D.R.C. concluded a U.S. $9.2 billion minerals-for-infrastructure agreement with the Chinese Government. Under pressure from international financial institutions and donors concerned about the potential negative effect of this deal on the D.R.C.’s debt burden, the Government of the D.R.C. and the Chinese amended the agreement in November 2009, reducing the overall value of the agreement by $3 billion among other changes. As a result, the IMF Board of Directors approved on December 11, 2009, a new, 3-year Extended Credit Facility (ECF) program.
In recent years, the Congolese Government has updated and approved several new laws including the investment code, the mining code, the agricultural law, the public finance law, and the procurement code. It has also designed a new commercial court. The goal of these initiatives was to attract investment by promising fair and transparent treatment to private business. The D.R.C. Government recently established an inter-ministerial committee called the “Steering Committee for Investment and Business Climate Improvement” to support reforms that would improve the business climate.
In December 2009, the Congolese parliament approved a law authorizing the D.R.C.’s accession to the Organization for the Harmonization of Business Law in Africa (OHADA), and President Kabila promulgated this law in February 2010. The Government of the D.R.C. officially launched the National OHADA Commission in April 2010. However, as of January 2012 the D.R.C. had not yet signed and deposited the instrument of OHADA accession.
Other measures undertaken by the Government of the D.R.C. to improve the business and investment climate include President Kabila’s promulgation of a new customs code and implementation of a value-added tax (VAT) in January 2012. The new customs code took effect on February 20, 2011. In 2007, shortly after the Joseph Kabila administration took office, the government launched a wholesale review of mining contracts that had been entered into from 1997-2002.
In theory, the purpose of this contract review was to determine which negotiations may have been colored by corruption and revisit/renegotiate their terms as needed. In practice, this process itself was opaque and plagued with numerous delays, with little information provided by the government to foreign (including American) investors. The Government of the D.R.C. reached agreement in December 2008 with the vast majority of the companies under review and formally announced the completion of the process in November 2009. In October 2010, the Government of the D.R.C. reached agreement with the final remaining company, a U.S. investor.
Paris Club creditors, including the United States, agreed in February 2010 to resume interim debt relief for the D.R.C. On July 1, 2010, the D.R.C. reached the Heavily Indebted Poor Countries (HIPC) completion point following a determination by the IMF and World Bank boards that the D.R.C. had successfully implemented the policy measures (“triggers”) under the program. Under HIPC, the IMF and World Bank forgave $12.3 billion on Congolese sovereign debt, which has greatly alleviated the D.R.C.’s official debt burden and provided resources for development and poverty-reduction efforts.
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