DRC: Central Bank takes action on worrisome economic situation

Congolese francs (illustration image). Screen capture from the DRC Congolese ministry website.

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In the Democratic Republic of Congo (DRC), the government has instructed the Central Bank of Congo to put in place mechanisms to manage the instability of the exchange rate. The Congolese franc (FC) has suffered against the US dollar for two weeks. The rate went from 1,800 FC the US dollar to more than 1,900 FC this week.

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With our correspondent in Kinshasa, Patient Ligodi

The economic picture of the Democratic Republic of Congo (DRC) is bad. Added to the negative economic situation is an exchange rate of 7.4% at the end of April, whereas last year it stood at 2.3%.

Volatility is just as worrying when it comes to inflation, which stood at 4.6% in 2019. At the end of last month, the Central Bank of Congo (BCC) noted a rate of 10.7%.

Stop "spinning the billboard"

Government sources say it is not all related to the Covid-19 health crisis. There are also internal factors including the size of the deficit in public finances, the strong circulation of the Congolese franc in a context of scarcity of the dollar. And banks can no longer import US currency due to the suspension of flights.

Today, the BCC intends to intervene in the market by selling to the banks this Monday, May 4, the dollar. The amount has not yet been communicated. There are also plans to launch additional treasury bonds. For some analysts, it is also imperative to put an end to the monetary financing of the economy, what is called "turning the printing press".

On the government side, the Deputy Prime Minister in charge of the budget, Mayo Mambeke, and the Minister of Finance, Sele Yalaghuli, were ordered to bring public spending down to revenue.

► Read also: DRC: the Central Bank confirms the tightening for public finances

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