This Selected Issues paper focuses on macro-critical issues related to governance and corruption in Democratic Republic of the Congo (DRC). Third-party indicators suggest that governance has been poor and corruption widespread in the country. Conducting an audit of the civil service and improving the transparency of its remuneration system, simplifying tax payment processes, and merging the activities of the numerous revenue agencies would boost public efficiency and improve the business environment. Contract enforcement and protection of property rights could be enhanced by insulating the courts from external influence. Limited information on the budget annexes and special accounts and little or no oversight by the central government, Parliament, and civil society, create scope for corruption. The multiplicity of special taxes and fees, some accruing to special accounts outside the Treasury, generate opportunities for corruption and informalization of economic activity. Despite some progress in strengthening public financial management, budget execution remains deficient. The government has formalized the four stages of the expenditure chain and introduced budget commitment plans to align expenditures with revenues.
The Guinean economy is growing at a faster than anticipated pace on the back of buoyant mining activity. The growth momentum is expected to continue, with real growth at about 6 percent in 2018 and over the medium term. However, risks of instability are heightened by the current electoral cycle.
This paper discusses Niger’s Eighth Review Under the Extended Credit Facility (ECF) Arrangement and Request for Waivers of Nonobservance of Performance Criteria (PC) and for Modification of PCs. Niger’s medium-term prospects are closely linked to returns on major projects in oil and mineral extraction that are under way. Two of the end-2015 PC for the eighth ECF review were missed (on domestic financing and domestic arrears repayment), as were several indicative targets. The IMF staff supports the authorities’ request for waivers for the unmet PC on domestic financing and domestic arrears repayments at end-December 2015.
This paper focuses on the economic developments, economic policies, and economic risks in Burkina Faso. Economic activity remained sluggish over the course of 2015 and in early 2016, amidst political uncertainty and weather shocks. The overall fiscal deficit increased by 0.3 percentage points of GDP compared with 2014, as the sharp decline in revenues was offset by expenditure compression. However, growth is projected to gradually recover in 2016, albeit at a slower rate than anticipated at the time of the 2nd/3rd Extended Credit Facility reviews. Fiscal policy in 2016 will remain prudent and anchored by the WAEMU convergence criterion. Moreover, the authorities are prioritizing measures to boost domestic revenue mobilization.
This report reviews Guinea’s economic performance under the program supported by an Extended Credit Facility (ECF) arrangement. Guinea was declared free of the Ebola epidemic at end-2015, and after two years of stagnant activity, growth is expected to rebound this year. After solid performance in 2014, ECF program implementation weakened in 2015. Following last October’s Presidential elections, there has been a concerted effort to bring the ECF-supported program back on-track. Macroeconomic policies for 2016 aim to improve reserves coverage to three months of imports, and keep inflation within single digit figures as envisioned in the 2015 ECF-supported program. The 2016 budget envisions a significant broad-based fiscal contraction.
This 2015 Article IV Consultation highlights that the Democratic Republic of the Congo’s macroeconomic performance remained strong through the first half of 2015 despite a difficult external and domestic environment. Real GDP growth in 2014 is estimated at 9.2 percent, driven by copper production and the service sector. The medium-term outlook is favorable but subject to downside risks. Real GDP growth is projected to remain strong at 9.2 percent in 2015—among the highest rates in the world—and average 8.4 percent in 2016–17 before stabilizing at about 6 percent in 2018–20.
This 2015 Article IV Consultation highlights that in the last two years, the Zambian economy has been weighed down by large fiscal imbalances, lower copper prices, and policy uncertainties. Real GDP growth has slowed, the current account has deteriorated, international reserves have fallen, and the exchange rate has been under downward pressure. The IMF staff estimates that real GDP growth slowed from 6.7 percent in 2013 to 5.6 percent in 2014, driven by a contraction in copper production. Growth is projected to average 5.5–7 percent a year over the medium term, reflecting the impact of investments in mining and electricity in recent years.
This paper discusses Guinea’s Fifth Review Under the Three-Year Arrangement Under the Extended Credit Facility (ECF), Financing Assurances Review, and Requests for an Augmentation of Access and Extension of Current Arrangement. Performance under the ECF program has been satisfactory. All quantitative performance criteria have been met. Macroeconomic policies in 2015 will remain supportive to help deal with the Ebola outbreak. The IMF staff supports the completion of the fifth review under the ECF arrangement and financing assurances review and requests for an extension of the current arrangement to end-2015, an augmentation in access, and disbursement of 25 percent of quota as budget support under the 5th review.
Résumé analytique. L’activité économique est restée déprimée au début de 2014. Depuis la fin de 2013, elle souffre des conséquences de l’épidémie du virus Ébola, mais il se peut que le retard pris dans l’exécution des réformes structurelles, les pénuries d’énergie et l’incertitude politique entrent également en jeu. La croissance économique a été estimée à 2,3 % en 2013, et devrait s’établir à 3,5 % en 2014, grâce à la hausse de l’investissement public et en supposant la reprise graduelle de l’investissement dans le secteur minier. L’inflation est tombée à moins de 10 % en glissement annuel en mai 2014, les réserves internationales couvraient 3,6 mois d’importations à la fin de 2013, et le taux de change est resté stable. Les résultats dans le cadre du programme appuyé par la FEC demeurent globalement satisfaisants, malgré la lente mise en œuvre des réformes structurelles. Tous les critères de réalisation pour la fin de 2013 et tous les objectifs indicatifs du programme pour mars 2014 sauf un (le plancher de dépenses dans les secteurs prioritaires) ont été observés. Les repères structurels pour le second semestre de 2013 et le début de 2014 n’ont cependant pu être respectés dans les délais prévus. Les entretiens ont porté sur : i) les perspectives de croissance pour 2014; ii) une rallonge budgétaire pour 2014 compte tenu du manque à gagner sur les recettes et des besoins supplémentaires de dépenses; iii) les progrès dans la mise en œuvre des réformes structurelles; et iv) la gestion de la dette. Les risques pesant sur le programme tiennent en grande partie à des facteurs nationaux. La résurgence et la propagation de l’épidémie Ébola observées ces derniers mois pourraient peser sur la croissance au second semestre 2014. L’approbation récente du cadre d’investissement pour le grand projet de minerai de fer de Simandou est de bon augure pour la reprise graduelle de l’activité minière. Le regain des tensions politiques et de l’incertitude durant la période précédant les élections présidentielles, qui doivent avoir lieu au second semestre de 2015, risque toutefois de retarder les nouveaux investissements. Les services du FMI recommandent la conclusion de la quatrième revue de l’accord au titre de la FEC et de la revue des assurances de financement. L’achèvement de la revue donnera lieu à un décaissement d’un montant équivalant à 18,36 millions de DTS au titre de l’accord FEC.
EXECUTIVE SUMMARY Economic activity remained weak in early 2014. Activity was impacted by an outbreak of the Ebola virus since late 2013, but lagging structural reforms, energy shortages, and political uncertainty may also be at play. Economic growth is estimated to have been 2.3 percent in 2013, and is projected at 3.5 percent in 2014, supported by higher public investment and assuming a gradual start-up of new mining sector investment. Inflation fell to below 10 percent year-on-year in May 2014, international reserves covered 3.6 months of imports by end-2013, and the exchange rate has remained stable. Performance under the ECF-supported program remains broadly satisfactory, although progress with structural reform has been slow. All performance criteria for end-2013 were met as were all but one (the floor on priority sector spending) of the program’s indicative targets for March 2014. However, the structural benchmarks for the second half of 2013 and early-2014 could not be completed as planned. The policy discussions focused on (i) the growth outlook for 2014; (ii) a supplementary budget for 2014 in light of a shortfall in revenues and new spending needs; (iii) progress in implementing structural reforms; and (iv) debt management. Risks to the program largely stem from domestic factors. New cases of Ebola have surged and spread more widely in recent months, which could affect growth in the second half of the year. The recent approval of the investment framework for the large Simandou iron ore project augurs well for a gradual pick-up in mining activity. However, renewed political tensions and uncertainty in the run-up to presidential elections, due in the second half of 2015, could risk delaying new investment. Staff supports completing the fourth review under the ECF arrangement and the financing assurances review. Completion of the review will result in a disbursement of an amount equivalent to SDR 18.36 million under the ECF arrangement.