The impact of the global financial crisis on the economy of the Democratic Republic of Congo economy was more severe in 2009 than in 2008. Real gross domestic product (GDP) reached a growth rate of 2.7%, which is 3.5 percentage points below the rate of growth realised in 2008. With the exception of official aid – which increased from $1019 billion in 2008 to $1499 billion in 2009 – most of the potential transmission mechanisms were affected. Trade fell from $125 million in 2008 to $-1467 million in 2009; foreign direct investment (FDI) from $1713 billion to $626 million; and remittances from $212 million to $135 million. Altogether, the impact of the global financial crisis on the overall balance of payments amounted to $-574 million in 2008 and $-413 million in 2009.
Debt relief allowed the DRC to cover its financial needs before assistance of $-416 million in 2008 and $-444 million in 2009. In addition to donor support, more debt relief will be needed to alleviate the DRC’s financial situation. On 11 December 2009, the International Monetary Fund (IMF) Executive Board approved a $551 million Poverty Reduction and Growth Facility (PRGF) arrangement and additional interim assistance of about $72.68 million under the enhanced Heavily Indebted Poor Countries (HIPC) Initiative. Thus, the country will be embarking on a three-year programme to strive to meet the enhanced HIPC Initiative requirements and triggers and to reach the completion point, giving way to debt relief under the Multilateral Debt Relief Initiative (MDRI) as soon as possible.
Signs of recovery from the global financial crisis are manifest, particularly in the mining sector, through which the DRC’s economy was hit in the first place. Mining activity is certainly responding favourably to the new buoyancy in world commodity prices, but there is an urgent need for an enabling environment, strengthened supervisory institutions and good governance to attract more private investment in the sector.
Kalala, F. K. and Cassimon, D. Global Financial Crisis Discussion Series. Paper 15: Democratic Republic of Congo Phase 2. ODI, London, UK (2010) 36 pp.