AfDB Grants US$ 97 Million Budget Support to DRC to mitigate impacts of financial crisis
Tunis, May 6, 2009 – The African Development Bank (AfDB) Group Board of Directors approved in Tunis on Wednesday, an African Development Fund (ADF) grant of UA 65 million (US$ 97.18 million) to the Democratic Republic of Congo (DRC) to finance the country’s Emergency Programme to Mitigate the Impacts of the International Financial Crisis (PUAICF).
It is primarily a program of targeted balance of payments support coupled with the government’s commitment to allocate the equivalent of urgent foreign exchange expenditures in the 2009 budget in local currency. The program will be implemented over one year from May 2009.
The program was formulated in close coordination with key donors in the countries with the IMF and the World Bank. It is in line with the government’s policy paper on the mitigation of the impact of the international financial crisis, and its design took into account the guidelines of the Bank's response to the economic impact of the financial crisis.
The ultimate goal of the emergency programme is to maintain economic stability as well as social peace and order. Its specific objective is to mitigate in the short-term the impacts of the international financial crisis on the Congolese economy. The operational objectives are the facilitation of the supply of essential imported goods and products; and the facilitation of the financing of top priority expenditures of the 2009 Budget.
The expected outcomes of this grant are:
- strengthening of the international reserves of the Central Bank of Congo (BCC) and the availability of essential imported commodities;
- the establishment of some key benchmarks for reaching the enhanced Heavily Indebted Poor Countries (HIPC) Initiative completion point by end 2009;
- the implementation of the crisis exit emergency plan of the National Railway Corporation of Congo (SNCC), a strategic public enterprise for economic recovery and social stability in 2009;
- more regular payment of the salaries of primary and secondary school teachers in 2009; and
- more regular payment of water and electricity bills of public entities in 2009.
The economic outlook in the DRC has deteriorated considerably since September 2008 because of two exogenous shocks, namely the international financial crisis, coupled with an acute economic crisis; and the resurgence of conflicts in the East of the country, which has led to a humanitarian crisis with the displacement of 250,000 people and pressure on public finance and international exchange reserves.