IMF, World Bank Support $12.3 Billion Debt Relief for DR Congo

Relief cuts Democratic Republic of the Congo's debt by more than 80 percent

Deal highlights authorities' progress in policy management, performance

IMF urges authorities to stay on course on economic reforms

The decision grants the debt relief under the Heavily Indebted Poor Countries Initiative (HIPC). Having reached the HIPC Initiative’s final stage, or completion point, the Democratic Republic of the Congo also qualifies for debt relief under the Multilateral Debt Relief Initiative (MDRI).

“Reaching the HIPC completion point demonstrates the significant progress that the authorities have made over the past several years in strengthening macroeconomic policy management and performance following a decade-long devastating conflict that destroyed the country’s economic and social infrastructure,” said the IMF’s mission chief for the Democratic Republic of the Congo, Brian Ames.

“The conditions for reaching the HIPC completion point provided the authorities with a policy and reform framework that guided their efforts to enhance macroeconomic stability, address weaknesses in public financial management and economic governance, and reform the social sectors. Progress in each of these areas also sets a solid foundation for advancing the country’s development agenda going forward,” he added

The decision of the IMF and World Bank Executive Boards will generate total debt service savings of $12.3 billion in debt relief ($7.9 billion in present value terms—the discounted sum of all future debt service obligations) of which $11.1 billion is under the enhanced HIPC Initiative and $1.2 billion is under the MDRI. Debt relief from the IMF totals $491 million and from the International Development Agency $1.8 billion, with the remainder expected to come from official and commercial creditors.

The additional resources released by the debt relief will help create room in the budget for spending on priority programs such as roads, schools, and hospitals (see chart). The significant reduction in the country’s debt burden also will help improve prospects for private investment.

From conflict to reconstruction

The Democratic Republic of the Congo remains one the poorest countries in Africa notwithstanding the country’s immense natural resources. Economic mismanagement and a decade-long conflict have destroyed the country’s social and economic infrastructure and limited its progress toward achieving the United Nations Millennium Development Goals.

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