20.01.11 IMF Executive Board Completes Fourth Review Under Nation?s ECF Arrangement and Approves U.S.$1.9 Million Disbursement

At the conclusion of the Executive Board's discussion on the Republic
of Congo, Mr. Naoyuki Shinohara, Deputy Managing Director and Acting
Chair, stated:

“Congo has weathered the global downturn well, supported by prudent
macroeconomic policies under the ECF arrangement with the Fund. Economic
activity has remained robust, buoyed by rising oil production and
sustained non-oil growth in construction, telecoms, and transport.
Inflation has declined to low single digits. The external position has
improved significantly, as fiscal surpluses have raised official foreign
assets and HIPC debt relief significantly reduced external liabilities.
The outlook is favorable provided that non-oil sector activity
accelerates on the back of improvements in basic infrastructure and the
business climate.

“Significant fiscal consolidation has provided space for much needed
infrastructure spending. Given the risks of mounting current spending
pressures, an appropriate balance should be struck between scaling up
public expenditure and macroeconomic stability. Over the medium term,
fiscal sustainability requires continued consolidation efforts,
including implementation of measures to collect additional non-oil
revenue, reining in non-priority spending, enforcing quality control to
improve expenditure efficiency, and further strengthening oil wealth
management.

“Good progress has been made on structural reforms in the areas of
public financial management and the management of oil wealth. The reform
agenda should now focus on addressing weaknesses in budgetary control
and treasury operations. The authorities’ plans to safeguard public
investment quality by fully implementing the mechanisms elaborated in
the context of the HIPC process are welcome. In particular, measures
aimed at improving the project appraisal process, reinforcing budget
execution, monitoring, and control, and increasing coordination among
public agencies, are all important steps in the right direction.

“To support non-oil growth and to durably reduce poverty, further
efforts are needed to increase private sector participation, enhance the
financial performance of state-owned enterprises, and deepen financial
intermediation. As a complement to scaling up public investment, it will
be important to swiftly implement key measures of the recently-adopted
Action Plan to improve the business climate in close collaboration with
development partners,” Mr. Shinohara added.