IMF Considers $365 Million Loan to Congo Battling Multiple Epidemics

(Bloomberg) --

The International Monetary Fund is considering $365 million in urgent support for the Democratic Republic of Congo as the country struggles to find the money to fight three different epidemics.

The worldwide economic slowdown caused by the Covid-19 pandemic is the latest blow to the central African nation, which relies on mineral shipments to China for most of its export earnings. Since 2018, Congo has also been fighting a stubborn Ebola epidemic that’s killed more than 2,260 people and a measles outbreak that has left more than 6,000 people dead.

“This could be very bad in terms of revenues, and we have no idea how long it’s going to last,” the Washington D.C.-based lender said in an emailed response to questions.

The IMF on Tuesday forecast Congo’s economy will contract 2.2% this year, compared with an October estimate of 3.9% growth, and warned the effects of the global economic slowdown could lead to inflation surging to 11%, instead of 5% predicted previously.

On Monday, the institution announced it would postpone Congo’s debt-service payments to the fund for six months, saving the country about $20.4 million. The debt relief could be extended to two years if the economic impact of the virus is sustained, the IMF said.

The next intervention might be $365 million in support through a Rapid Credit Facility, which the IMF’s executive board will discuss as early as April 22. Congo received the same amount of money from the IMF in December to bolster the central bank’s foreign reserves, which had fallen to critical levels. Through April 3, reserves were only $693 million, equivalent to about two weeks of imports, according to the central bank.

Congo is in the midst of a six-month Staff-Monitored Program with the IMF as it prepares for the possibility of new formal loan program. The IMF halted its last program with Congo in 2012 over corruption concerns.

Any support given to the country “would include commitments by the authorities to safeguard the proper and transparent use of resources from the Fund,” the IMF said.

Through Tuesday, Congo had 254 cases of Covid-19 and 21 deaths since March 10, almost all of which have been in the capital, Kinshasa. In the east of the country, three more cases of the Ebola virus were found over the weekend after more than 50 days without a case, according to the World Health Organization. Congo’s measles epidemic has infected more than 300,000 people since 2019. Widespread malnutrition and low immunization rates have made the virus particularly deadly, the WHO says.

Congo is the world’s largest source of cobalt and Africa’s biggest producer of copper. Prices for both metals have dropped significantly since the beginning of the year, with copper down 18% from its high on Jan. 14.

©2020 Bloomberg L.P.

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