Country Report Congo (Democratic Republic) March 2009

Outlook for 2009-10

The Economist Intelligence Unit expects the president, Joseph Kabila, to remain in power throughout the forecast period. Political-ethnic conflict is likely to continue in the east of the country. The government's economic policy priority is to respond appropriately to the world economic downturn, which has had a profound effect on the national economy. Agriculture will be the main source of growth in 2009, as construction, mining and, to a lesser extent, telecommuni-cations falter, although we expect construction and mining activity to begin to pick up in 2010. Overall, we expect real GDP growth of 3-5% in 2009-10.

The political scene

In January Rwandan troops entered the Democratic Republic of Congo (DRC) to carry out joint operations with the Congolese army. First they forced the rebel Tutsi general, Laurent Nkunda, to flee to Rwanda, where he was arrested, then they attacked the Rwandan Hutu rebel militia, the FDLR. Rwandan forces appear to have left at the end of February, although many FDLR have escaped into the bush. The troops formerly commanded by Mr Nkunda are expected to rejoin the national army. In December Ugandan troops, also by agreement with the Congolese government, crossed into Orientale province to combat LRA rebels. A report from Human Rights Watch documents the Kabila government's use of violence and intimidation to eliminate political opponents.

Economic policy

The 2009 budget projects an increase in revenue of 64% on the 2008 budget, despite the sharp downturn in metal and oil prices. The IMF has advised a redrafting of the 2009 budget but the government will not review its spending until March. The prime interest rate has risen to 66% as the government seeks both to generate income from Treasury-bill and bond sales, and to stem inflation and the depreciation of the Congolese franc.

The domestic economy

Manufacturing and mining output declined steeply in fourth-quarter 2008 in response to the world economic downturn. Year-on-year inflation at the end of 2008 was 27.6% and has continued to rise; and the Congolese franc has depreciated by 25% since September. Government revenue in 2008 was 68% lower than budgeted. Several mines have suspended production, but the Tenke Fungurume project is moving forward. The feasibility study of the Sicomines joint venture with Chinese companies is not due to be completed until June.

Foreign trade and payments

The IMF, the World Bank and the EU have made funds available to help the government to cope with the consequences of the world economic downturn.

This report covers the following industry codes:
SIC Code: 10
NAICS Code: 212