After a third wave over the summer, COVID-19 cases are declining but vaccination has stalled. Economic activity has improved on the back of strengthened external demand, allowing for a stronger-than-envisaged buildup in international reserves. Inflation and the exchange rate have stabilized. Near-term challenges arise from uncertainty related to the pandemic and the gradual global economic recovery supporting high commodity prices.
This issue of the Fiscal Monitor examines the conduct of fiscal policy under the uncertainty caused by dependence on natural resource revenues. It draws on extensive past research on the behavior of commodity prices and their implications for macroeconomic outcomes, as well as on extensive IMF technical assistance to resource-rich economies seeking to improve their management of natural resource wealth.
This 2015 Article IV Consultation highlights that Congo’s growth was strong in 2014 and inflation was moderated, but the country has been hit hard by the oil price shock. Growth rose to 6.8 percent in 2014, driven by a rebound in oil production. The fiscal deficit amounted to 8.5 percent of GDP in 2014, a near doubling from 2013, owing mostly to increased spending and the lower oil revenues. The near- and medium-term outlook will be shaped by developments in the oil sector and the path and quality of fiscal adjustment. GDP growth in 2015 is projected at 1 percent and to average about 3 percent per year during 2015–20.
The key issue facing Congo is how to use oil and mineral resources effectively in support of inclusive growth. Economic conditions are supportive--macroeconomic stability is in place, the terms of trade are favorable, and the external position is strong. External risks are mitigated by membership in CEMAC, under which all members benefit from the French convertibility guarantee, and large fiscal buffers. Yet, growth has not been inclusive. Over half of the population lives in poverty and a labor skills mismatch results in high unemployment and underemployment, especially among youth. The difficult business climate holds back diversification. On March 4, 2012 a munitions depot exploded in Brazzaville causing death and destruction; near-term policies focus on reconstruction and addressing the humanitarian crisis.
International Monetary Fund. Independent Evaluation Office
This Independent Evaluation Office (IEO) Annual Report 2012 presents an overview of overall developments in FY2012. In FY2012, the IEO expended approximately 97 percent of its total budgetary resources, including the approved budget amount and the resources carried forward from FY2011 as authorized. Vacancies amounted to about one and one-half staff years over the course of the financial year. This level of vacancies is within the range of what could be expected in a small organization with structural difficulties in recruitment and retention.
The FY 13–15 Medium-Term Budget presented in this paper reflects the following main features: Unchanged administrative budget in real terms for FY 13. Overall spending (structural plus crisis/temporary) will be kept unchanged in real terms in FY 13 relative to the FY 12 budget (excluding the one-off additional cost of the 2012 Annual Meetings in Tokyo).Broadly unchanged administrative envelope in nominal terms for FY 13. This reflects the impact of the Executive Board’s decision in March to grant no increase in the staff salary structure in the context of the 2012 Compensation Review. The “structure increase” is the main component in the budget deflator applied to map the real total envelope into nominal terms. A capital budget dominated by the impact of the HQ1 Renewal Program. The final appropriation for this project, approved by the Executive Board in March 2011, is reflected in the proposed capital budget for FY 13.
The question of what makes fiscal decentralization work is faced by many policymakers around the world. This book draws on both the relevant literature and policy and technical advice provided by the IMF to a wide range of member countries, and discusses the key factors that help make decentralization sustainable, efficient, and equitable from a macroeconomic perspective. It focuses on institutional reforms (in the revenue and expenditure assignments to different levels of government, the design of intergovernmental transfers, and public financial management systems) that are suited to different countries circumstances, and their appropriate sequencing.
This Selected Issues paper describes the three phases of IMF engagement in the Democratic Republic of Congo (DRC) with a view to drawing lessons that could prove useful in identifying objectives and policies for a medium-term program that could be supported through a successor Poverty Reduction and Growth Facility arrangement. The paper describes recent developments in the financial sector of the DRC and offers suggestions for fostering financial deepening. It addresses the agenda for structural fiscal reforms over the next five years. It also presents an overview of structural fiscal issues.
This paper discusses the Republic of Congo’s enhanced Heavily Indebted Poor Countries (HIPC) initiative. If the Republic of Congo is to effectively use the resources generated by the oil windfall to reduce poverty and ensure sustainable and equitable growth, improved prioritization of public investment resources and improved project management practices are required. The establishment of institutional structures to monitor reforms is a key test of the resolve of the government to meet the HIPC triggers.