Republic of Congo eligible for debt relief from IMF

The Democratic Republic of Congo has finally received a loan from the International Monetary Fund. The loan will also make the DRC eligible for debt relief from the IMF.

What stood in the way of receiving the loan was the Congo's plans to do infrastructure for copper deals with China. The IMF said those deals would only put Congo deeper in debt. Meanwhile, the DRC has been negotiating with India on similar trades which the IMF said they would monitor.

From Reuters, writer Lesley Wroughton describes the loan further and the negotiations that led to it.

The debt relief, which will cut the DRC's overall stock of public and publicly-guaranteed debt, will be reduced to about $4 billion from $13 billion, a senior IMF official said.

At Friday's dollar-SDR exchange rate, the loan is worth about $551.45 million.

The IMF-backed economic program aims to generate economic growth, reduce inflation to single digits, strengthen public financial management and accelerate reforms in the DRC, which is emerging from a 1998-2003 war, the Fund said.

The loan was approved after the IMF pressured the DRC to renegotiate an infrastructure-for-minerals agreement with China, which the Fund argued would have increased Congo's debt burden.

The size of the deal was cut in August to $6 billion from an original plan of $9 billion, and Congolese government guarantees connected with the commercial mining aspect of the agreement were taken off the table.

The Fund delayed approval of the loan and the debt relief pending a revision of the China deal.

IMF mission chief to DRC, Brian Ames, said without debt relief the country "is not sustainable from a fiscal or from a debt perspective, China notwithstanding."