DR Congo wins IMF loan, enters debt relief program

Sat Dec 12, 2009 8:14am GMT

By Lesley Wroughton

WASHINGTON (Reuters) - The International Monetary Fund on Friday approved a long-awaited $550 million loan arrangement for the Democratic Republic of Congo, making the country eligible for an IMF debt relief program.

The debt relief, which will cut the DRC's overall stock of public and publicly-guaranteed debt, will be reduced to about $4 billion from $13 billion, a senior IMF official said.

At Friday's dollar-SDR exchange rate, the loan is worth about $551.45 million.

The IMF-backed economic program aims to generate economic growth, reduce inflation to single digits, strengthen public financial management and accelerate reforms in the DRC, which is emerging from a 1998-2003 war, the Fund said.

The loan was approved after the IMF pressured the DRC to renegotiate an infrastructure-for-minerals agreement with China, which the Fund argued would have increased Congo's debt burden.

The size of the deal was cut in August to $6 billion from an original plan of $9 billion, and Congolese government guarantees connected with the commercial mining aspect of the agreement were taken off the table.

The Fund delayed approval of the loan and the debt relief pending a revision of the China deal.

IMF mission chief to DRC, Brian Ames, said without debt relief the country "is not sustainable from a fiscal or from a debt perspective, China notwithstanding."   Continued...

<p>Democratic Republic of Congo's President Joseph Kabila attends the opening session of the summit on the ongoing war crisis in eastern Congo in Kenya's capital Nairobi, November 7, 2008. Congolese Tutsi rebels and government troops fought near a refugee camp in east Congo on Friday, forcing thousands of civilians to flee in panic. REUTERS/Thomas Mukoya (KENYA)</p>
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