By Laure Gnassou, Economic Affairs Officer MONUC. 8 October ipad Afrique Centrale 2008, Kinshasa, RDC

Transcription

1 Recent Title macroeconomic of presentation situation of the DRC By Laure Gnassou, Economic Affairs Officer MONUC 8 October 2008

2 OUTLINE INTRODUCTION: The DRC at Glance 1. Brief overview of the DRC s economy: From the war to the transition period 2. Macroeconomic developments in Key challenges of a post-conflict economy CONCLUSION

3 Recent macroeconomic situation of the DRC by Laure Gnassou, Economic INTRODUCTION: The DRC at Glance Graph 1. Selected socio-economic indicators Population: about 58.7 million (2005) GDP per capita in USD : USD 96 (29 cents per day) - HIV/AIDS prevalence (adult): 4.9% (in 2001) - HIV/AIDS prevalence among women in conflict area): 8.0% (in 2001) - Literacy: 67.2% ( ) - Life expectancy: 45.8 years (2005) In Access to electric power (% of pop.): 6% - Access to safe water source (% of pop.): 46% - Public expenditure on health (% of GDP): 1.1% Impact of conflict In Child soldiers: Displaced persons: 2-3 million - Conflict-related deaths (since 1997): about 3.3 million 2007/2008 Human Development Index, the DRC ranked 168th out of 177 countries Source: Congolese authorities, World development indicators , World Bank & Annual report, UNDP, 2007

4 1. Brief overview of the DRC s economy: From the war to the transition period Multilateral donors IMF, WORLD BANK, AfDB, EUROPEAN COMMISSION, UNDP, MONUC** & others UN agencies Bilateral donors Belgium, France (AFD), Germany (GTZ), USA (USAID), South Africa, No financial assistance Since April 2001, the Government has implemented a program of economic reforms with support of the Bretton Institutions WORLD BANK Focus on the IMF June March 2002: Progamme Intérimaire Renforcé (PIR) April March 2006: a medium-term economic programme (PEG) supported by a Poverty Reduction and Growth Facility (PRGF) Transitional Support Strategy (TSS): Road map to support the recovery & transition process in the DRC: : 1 st TSS: 4 projects (USD 1074 million) : 2 nd TSS: 13 projects (USD 1214 million) 1 April : Staff Monitored Program or Programme Suivi par les Services du FMI (PSSF) Country Assistance Strategy (CAS) years ** Quick Impact Projects Program (QUIPS): launched in June 2001 in order to enhance MONUC's efforts for peace building in the DRC.

5 1.1. The DRC s economy: from 2002 to Real GDP growth increased from 3.5% to 5.8% - Annual inflation decreased from 25.3% to 12.8% 2004 Macroeconomic disorders at the end of Real GDP growth: 6.6% - Annual inflation increased to 9.2% at the end of Real GDP growth decreased from 7.8% to 5.6% - Annual inflation rate to 20% on 24 November 2006 Source: Central Bank of Congo and IMF, 2008 Between 2001 and the end of 2004, the DRC has made substantial progress towards a macroeconomic stabilization and the economic reunification. From the end of 2004 to early 2006, PEG supported by the IMF went off-track. In March 2006, suspension of the PEG and the direct budgetary support of the World Bank. The DRC authorities and the IMF agreed to set up a SMP covering initially the period from 1 April to 30 December The DRC: a rent-based economy

6 2. Macroeconomic developments in Brief overview of the international macroeconomic situation Since June 2007, the subprimes crisis in the US an international financial crisis. Slowing U.S. economy Global repercussions Potential risks for the DRC: - Less foreign direct investments - Less external aid - Less credits and increase in interests related to credits The DRC, a dollarized economy, is confronted with external shocks, notably food and energy crises. The resilience of the country s economy is extremely weak to external shocks Macroeconomic disorders observed in December 2007 and early 2008 Budgetary slippages A rise in current expenditures was estimated at about USD 99,403,578 due to military spending linked to the volatile security situation in the Eastern DRC. In 2007, real GDP growth: 6.3%

7 2.3. In 2008 Graph 1. Inflationary pressures since January 2008 Key socioeconomic indicators Growth rate s projection: 10.8% Annual inflation: 29.11% at the end of September 2008, well above the objective of 23.5% under the Staff Monitored Program (SMP) The DRC experiences a cost-push inflation: Macroeconomic disorders in % Jan-07 Mar-07 May-07 Jul-07 Sep-07 Nov-07 Jan-08 Mar-08 May-08 Jul-08 Sep-08 Source: the World Economic Outlook, IMF (April 2008) & the Central Bank of Congo (2008) 2.4. Outlook of the cooperation between the DRC and the IMF - Conclusion of a medium-term economic programme (PEG II) supported by a Poverty Reduction and Growth Facility (PRGF) arrangement. - The completion point Debt cancellation

8 3. Key challenges of a post-conflict economy 3.1. key reforms - The infrastructure policy through the implementation of Sino-Congolese economic agreement of 17 September The mining policy of the DRC through the review of 61 mining contracts started on 11 June The oil policy. The oil exploration and production at the frontiers of the DRC entails significant security risk, given the existing border disputes - Review of forestry concessions launched in July The fiscal decentralization and the reinforcement of the capacity and role of local authorities. CONCLUSION Uncertain political and security environments Macroeconomic instability A major part of economic activity outside the GDP and a growing informal economy. I thank you for your attention