By Judith Ugwumadu | 28 July 2014
The Republic of Congo must strengthen its public financial management to improve accountability, governance and the quality of public spending, the International Monetary Fund has said.
It also urged the central African country to increase the efficiency of its public investments, aimed at improving infrastructure, diversifying the economy and boosting employment.
Recent economic developments in the county have been favourable, the IMF said, with growth in the last 5-years averaging at about 5% per year. But Congo’s economy is highly dependent on the oil sector, which accounts for 80% of government revenues and poverty remains high, despite robust economic growth and high government spending.
The IMF also noted that external debt owed to foreign lenders continued to trend upward, reaching 32% of gross domestic product in 2013, up from 20% in 2010.
It urged Congo to adopt prudent policies and implement reforms to meet the country’s social and development needs, tackling poverty and unemployment and boosting non-oil growth.
The IMF called for the speedy enactment of a Fiscal Responsibility and Transparency Law to aid responsible fiscal management, in particular reducing public debt to prudent levels, maintaining a buffer level of public net worth, and maintaining predictable and stable tax rates. Congo is currently in the process of drafting such a law.
‘To preserve debt sustainability, [Congo must] continue to strengthen public debt management, particularly by developing a medium-term debt strategy and enhancing transparency,’ said the IMF.
‘To further promote the non-oil sector, [IMF] directors stressed the importance of structural reforms to strengthen the business climate, enhance financial development and increase access to finance by strengthening legal and informational systems.’
The IMF also said that programmes designed to strengthen the educational system and implement social spending programmes need to be well targeted, evaluated and monitored to ensure their effectiveness.
Congo was encouraged to fully comply with the regional CEMAC (Economic and Monetary Community of Central Africa) obligations. The CEMAC aims to raise the living standard of those in the region and maintain economic stability.
