In the Democratic Republic of Congo, the government has committed to a three-year program with the International Monetary Fund (IMF). In exchange for $ 1.5 billion, the Congolese government promised to implement reforms, but also to be transparent, especially in the mining sector. Minister of Finance Nicolas Kazadi, who handled most of the negotiations with the IMF, is RFI’s guest.
RFI: How is this program with the International Monetary Fund crucial to the reforms you want to launch?
Nicolas Kazadi: Simply because it is the path that opens the solution to all our economic structural problems. This program is part of the government program. So the elements that are affected by this program are already elements that were planned in the government program before we entered into discussions with the IMF program.
But why do you need the IMF for that? Is it expertise or is it the fact that it is complicated to implement these reforms because there may be resistance in some administrations?
But no, it is first and foremost an effort for openness and then there is a concern for support. And we want the IMF, as an auditor, to come and certify our efforts to improve the macroeconomic situation and pave the way for more investment, better income distribution and economic and social progress.
What are the main axes of reform for the Central Bank? We have seen it cited regularly in recent years’ economic scandals.
The central bank has made a major contribution to its restructuring, which is an ongoing process that started a long time ago. It must control its costs. As far as monetary policy is concerned, it must continue its efforts to dollarize the economy, which presupposes an attempt to maintain stability. It must comply with the government’s policy in the fight against money laundering, terrorist financing and excessive handling of cash, including in foreign currency. She has a lot to do. Access to credit must be strengthened, banking integration must be improved. With regard to credit, it is time to strengthen credit information, ie the credit company, so that banks have more opportunities to grant it to companies and private individuals.
How do you get the central bank to really control the commercial banks? RFI has participated in several surveys that show that the central bank does not play its role at all and allows many transactions to go through …
Nothing is immutable in life. The central bank is, as I said, in the process of – as I said – restructuring. It has a new team at the helm that will continue to do so and has a very clear mandate.
So we will no longer see transfers from the Central Bank directly to the account of private companies or even the creation of sub-accounts or accounts in commercial banks to which money has been diverted?
The mandate they received is a mandate to improve the situation, move away from bad practices, move away from the incidents you are talking about. You talk about it as if it just existed, no, these are incidents that could have happened. But what is clear is that the new management has a mandate to do better, to drive the bank forward in all its aspects.
Will she have the power to stop cash payments? Because we know that money laundering happens mainly in this way. But today, in most banks, we withdraw millions of dollars in cash. And that was still true in recent months.
Yes, we have already made great progress, we have already strengthened control bodies such as CENAREF [Cellule nationale des renseignements financiers, NDLR]and other. The difficulty we have is that we are in a mining country where mining, mineral trade takes place within the country and especially on a craft basis. All this requires a lot of cash use. And so we are fighting against this excessive use of cash in a difficult context. But it is clear that we are moving forward on these issues, we are promoting our laws, our controls. Today we also receive many exemption requests, as users realize that it is less and less easy to withdraw large amounts in foreign currency or Congolese francs. So there is clear progress on this issue.
Suddenly, with this group change in the Central Bank, we will see sanctions against commercial banks that have been involved in scandals?
Yes, in these matters there is a shared responsibility between the Ministry of Finance and the central bank. We are working on these issues with CENAREF as I told you. And believe me, we are moving forward with the goal of no longer allowing banks to maintain this practice and, in general, to strengthen transparency in the use of cash in the country.
Are there any warnings to some banks? We have seen that Afriland First Bank had changed leaders in Congo.
It is not my role to give specific examples, but I think there really is a movement going in that direction.
So clear warnings?
Absolutely!
Talking to you about strengthening foreign exchange reserves is one of the goals of this program. Is it really possible to double foreign exchange reserves in three years?
Yes, absolutely, look. Between December 2020 and June 2021, we went from $ 900 million to $ 1.4 billion. 1.4 billion, these are the reserves that are invested abroad. This is what meets the IMF nomenclature. But if we take all the reserves available to the Central Bank, we are already around two billion. Unfortunately, the part of foreign currency that exists in the local banking system is not counted as international foreign exchange reserves according to the international nomenclature.
In this program with the IMF, there is one aspect that is important, and that is transparency in the mining sector. You have promised regularly and you have already started publishing all mining contracts. But will this effort of openness go so far as to scrutinize Gécamines, the state-owned mining company?
Yes, we ourselves had planned to do this review of Gécamines and it is also planned in the program. So it will be this Gécamines review. We will produce these audited accounts.
And will this also be the case for Sicomines, a joint venture with Chinese companies? We know that civil society has largely rejected the management of so-called Chinese contracts.
Yes, why would Sicomines escape it? We need to clarify the accounts and the financial situation of these large projects that are important to us. And we have a relationship with the Chinese side of openness, improving transparency and efficiency in this Sicomines project.
So you are currently in discussion to try to correct what was condemned by NGOs?
Very clearly, very clearly, we will not go back to the past. But very clearly we are engaged in a correction process for the famous Chinese contracts. We have a very clear roadmap for this and we go to all previous mistakes.
But when you say you will not go back to the past, that is, you will improve the contracts, but does that not mean that there will be lawsuits related to it?
As far as I know, that is not the order of the day today.
It is not just this program with the International Monetary Fund. The Democratic Republic of Congo is expected to receive $ 1.5 billion in special drawing rights, probably in late August or early September. It is unconditional help. What are you going to do with this money?
Yes, this is a special allocation under special drawing rights that the international community wants through the IMF to allow developing countries such as the Democratic Republic of Congo to stimulate their economy and revive it after the effects of the crisis. Crisis linked to the Covid pandemic.
With regard to the use of this money, it is clear at this stage that some will strengthen the reserves and another will be used in the financial perspective for other measures to stimulate the economy. But I would rather not talk about it right now, but we are discussing to put forward a really innovative proposal regarding the use of these resources.
How are you going to finance the next election cycle in this context where you have to have a really rigid administration?
As we have undertaken, the Prime Minister was very clear in his inaugural address, announcing that we will make arrangements year after year to be able to finance the elections with confidence. We have already started and when we speak we have made regulations.
When the budget collective is published, you will be informed about the appropriations for this year. Which, I hope, coincides with the start of the operation of the new Ceni. And so we are on the right path from that point of view. That said, in addition to internal funding, we are open, as has been the case in the past, to partner support for the election cycle. But we start by doing our duty and making provisions to finance Ceni.
Because that is precisely one of the difficulties that has arisen during previous election cycles: having budgets that literally explode and ultimately relatively few controls. We have seen that in the latest CENI report there was no real control and there are not enough figures in it to explain how the money was used.
Yes, I agree with you that there is a great effort when it comes to efficiency and it does not just apply to Ceni, it is general. And we have a lot of progress to make in strengthening our public spending and the quality and efficiency of our public spending. We will do for the Cenicas what we are starting to do for the other sectors.
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