KINSHASA (Reuters) - Rising food and fuel prices will pose a major challenge for Congo this year, the International Monetary Fund said on Friday, as it announced the release of $80 million in loans to the government.
The vast central African country posted better than expected 7 percent growth in 2010, driven by the mining and service sectors, the IMF’s country representative Samir Jahjah told a news conference.
But with growth predictions for 2011 downgraded to 6.5 percent from 7.2 percent and inflation on the rise, the country’s main challenge this year will be how to address the rapid rise in consumer food and fuel costs, he said.
“The government has expressed a desire to limit the impact (of price rises),” Jahjah said, adding that the IMF was working with the authorities to help ensure stable fuel prices.
The World Bank’s head of African agriculture told Reuters this week a surge in food prices would hit the continent’s urban populations harder than in 2008, posing a threat to leaders in an election-heavy year.
Congo is due to hold elections in the coming months, pitting President Joseph Kabila against a fractured opposition.
Jahjah praised efforts by Congo’s government to restructure the country’s mining and financial sectors, saying he expected the central bank’s foreign reserves to hit $1.5 billion by the end of the year.
Congo is one of the most resource-rich countries in the world, but has been devastated by decades of conflict.
Analysts say its heavy reliance on imports and widespread poverty mean the country is particularly vulnerable to fluctuations in the global market.