PARIS/KINSHASA (Reuters) - Creditor countries have agreed to write off $7.35 billion in debt owed by the Democratic Republic of Congo (DRC), according to the Paris Club of creditors.
Cancellation of debt owed to the Paris Club follows the approval in July by the World Bank and the IMF of an $8 billion debt deal, but both groups of creditors have flagged concerns over transparency and the business environment.
In a statement issued after talks on Wednesday, the Paris Club said an agreement had been struck on the write-off “as a contribution to restoring DRC’s debt sustainability”.
Jean-Louis Kayembe, head of the Congolese central bank’s monetary policy committee, told Reuters from Paris that the debt relief meant an 82.4 percent reduction of Congo’s debt stock, short of the 90 percent target.
It leaves the Central African nation with $200 million in arrears, he said.
It is hoped that the deals with bilateral and multilateral creditors will free up funds previously used to service debts for developing a country that is rich in minerals but has been bogged down by decades of corruption and a string of conflicts.
However, the July deal - part of the Highly Indebted Poor Countries (HIPC) programme - was delayed due to concerns over governance and protests by Canada over a dispute between Kinshasa and Canadian firm First Quantum Minerals.
The Paris Club said it recognised efforts being made to implement poverty-reduction strategies, but raised similar issues as it confirmed the latest deal.
“Paris Club creditors expressed their concern over the business environment and urged the government of the DRC to carry out further reforms to improve governance, strengthen the rule of law and fight corruption ..,” the statement said.
Congo has attracted billions of dollars in mining investments but regularly comes near the bottom of the World Bank’s “Doing Business” report. This year it rose just four places to 175 out of 183.
The African country is seeking political stability, battling economic woes and stubborn rebel insurgencies as it prepares for presidential and parliamentary elections expected in 2011.
The elections would be the second since the official end to a 1998-2003 war that drew in six foreign armies and resulted in the deaths of 5 million from fighting and other causes.