The country’s economic and financial situation assessed on March 15, 2017 was highlighted during the strategic meeting between the ministers of finance, budget and economy and the governor of the Central Bank of Congo CBC. Thus, both inflation and monetary depreciation were increasing, said the Prime Minister, Samy BADIBANGA, on March 27.
“The growing inflation and monetary depreciation seem to have destabilized the national macroeconomic framework, despite the international economic context, which is still not very reassuring,” according to the official communiqué of March 27. For Deogratias Mutombo, the Governor of the CBC, “this year was tough for our institution.”
With respect to the Congolese currency, it is mentioned in the official communiqué that the pace of depreciation of the Congolese currency exchange rate against the US dollar is becoming more pronounced. As of March 15, it was 4.38% in the indicative market, and 2.07% on the parallel. In these two markets, the exchange rate was CDF/USD 1,460.98 and CDF/USD 1,465.87, respectively, compared to CDF/USD 1380.19 and CDF/USD 1,465.17 previously.
Therefore, the depreciation of the Congolese currency against the US dollar resulted in higher prices for some products in the market. For example, the liter of fuel which was traded at the pump before at CDF 1,150 is now sold at CDF 1,550 due, according to the monetary policy committee of the Central Bank of Congo, to the slowdown in economic activity in the DRC and the fall in the price of raw materials in the world market.
“A negative balance to write off the debt”
At the same time, it should be noted that the government’s financial operations have a negative balance of CDF 75.653 billion, against a projected surplus of CDF 39.346 billion. “This results from the receipts of CDF 320.960 billion (72% achieved) and expenses of CDF 376.614 billion (104% implemented)”, according to the official communiqué. This negative balance is also due to “the expenses by the institutions and ministries, centralized payments, payment of external debt and CENI special expenses.”
In addition, “all the forecast parameters have moved,” said the governor, Deogratias Mutombo, in an interview-balance, on the national television, who also pointed out that inflation expected at the end of the year at 4.2% is far exceeded. For the year 2016 alone, the Congolese currency registered “more than 20% depreciation”, he said regrettably.
“Foreign exchange reserves crumbled”
“The year 2016 was particularly tough for the CBC,” added Governor Mutombo, due to the difficulties faced by his institution. He pointed out inadequate in-house financial resources and a gloomy economy as a whole.
“Of course, there was a depreciation of the Congolese currency against the main currency, the US dollar, as well as the resurgence of inflation in the goods and services, but also the erosion of foreign exchange reserves in the recent twelve months,” said the governor of the CBC.