世界发展银行-The-Democratic-Republic-of-the--Congo---Joint-World-Bank-IMF-Debt-Sustainability-Analysis_20页_541kb

Democratic Republic of the Congo: Joint World Bank-IMF Debt Sustainability Analysis (September 2019)

Core Content Summary

This document presents the Joint World Bank-IMF Debt Sustainability Analysis (DSA) for the Democratic Republic of the Congo (DRC) as of September 2019. It assesses the country's debt sustainability, including both public and external debt, and highlights vulnerabilities and risk ratings.

Key Findings

• Debt Sustainability Risk: The DRC is classified as having a moderate risk of external debt distress and moderate risk of overall debt distress.
• Debt Carrying Capacity: The country's debt carrying capacity is deemed weak, based on the Composite Indicator (CI) score of 1.98, which is below the previous vintages.
• Debt Coverage: Public and publicly-guaranteed (PPG) debt coverage includes central government, state and local government, central bank, government-guaranteed debt, and non-guaranteed state-owned enterprises (SOEs). However, data on private sector and other public institutions are not available.
• External Debt:
  • Public and publicly-guaranteed external debt (PPGE) to GDP ratio was 13.6% in 2018, down from 24.8% in the 2015 DSA.
  • External debt arrears amount to 0.7% of GDP as of end-2018.
  • The debt stock has been reduced due to debt relief under HIPC and MDRI, and adverse borrowing conditions.

Debt Composition and Trends

• Public Debt:
  • Total public debt reached 20.1% of GDP in 2018.
  • Domestic debt accounts for 6.5% of GDP, with most of it being arrears.
  • Arrears:
    • Reconciled legacy arrears: US$1.866 billion or 4.0% of GDP.
    • Unaudited legacy arrears: US$3 billion.
    • VAT arrears are the second largest category, representing 26.0% of domestic debt.
• External Debt:
  • Total external debt was US$6.4 billion in 2018.
  • Sicomines debt (mining infrastructure) is 40% of total external debt, with a repayment schedule of 10-15 years.
  • Government-guaranteed external debt is 13.1% of GDP in 2019, and is expected to decline further.

Macroeconomic Outlook and Assumptions

• GDP Growth:
  • Projected to average 4% over the medium term, driven by mining and investment recovery.
  • 2019-2024 growth is expected to be 4.3-4.6%, with a projected 3.6% for 2025-39.
• Inflation:
  • Expected to stabilize around 5%, below the BCC target of 7%.
• Fiscal Balance:
  • Primary fiscal balance is projected to remain near zero.
  • Capital expenditure is expected to reach 3.9% of GDP by the end of the projection period.
  • Revenue is estimated at 9.5% of GDP in 2016-17, compared to 20% in SSA.
• Current Account:
  • Deficit is expected to average 4% of GDP over the medium term.
  • Mineral exports are a key driver, but the current account is vulnerable due to fluctuations in import levels.

Debt Sustainability Indicators

• Debt-to-GDP Ratio:
  • PV of total public debt-to-GDP is expected to peak at 16.7% in 2019 and decline to 5.1% by 2029.
  • PPGE debt-to-GDP is projected to be 13.1% in 2019, below the 30% threshold.
• Debt Service Ratios:
  • Debt service-to-revenue ratio is expected to reach 14% in 2019, and 46% in 2021 under the one-time depreciation shock.
  • Debt service-to-exports ratio is expected to peak at 58.6% in 2019, above the 10% threshold.
• External Debt Thresholds:
  • PV of debt-to-exports: 140% (not breached).
  • PV of debt-to-GDP: 30% (not breached).
  • Debt service-to-exports: 10% (not breached).
  • Debt service-to-revenue: 14% (not breached).

Vulnerabilities and Risk Factors

• Revenue Weakness:
  • Weak revenue mobilization is a key vulnerability.
  • Revenues are only 9.5% of GDP in 2016-17, below the regional average.
• External Shocks:
  • The DRC is highly vulnerable to commodity price shocks, as copper and cobalt account for over 50% of exports.
  • The country has limited space to absorb shocks, with foreign exchange reserves at less than 3 weeks of import coverage.
• Debt Management:
  • Prudent borrowing policies are essential, especially prioritizing concessional loans.
  • Strengthening debt management policies and improving SOE debt reporting are critical.
• Stress Test Results:
  • Most external debt thresholds are breached under stress tests, indicating high vulnerability.
  • Commodity price shocks and depreciation shocks are particularly damaging.

Risk Rating and Contingent Liabilities

• Risk Rating:
  • External debt distress rating: Moderate.
  • Overall debt distress rating: Moderate.
• Contingent Liabilities:
  • A 7.5% of GDP shock is used for the tailored stress test.
  • The shock includes:
    • 5% of GDP for financial market risks.
    • 0.5% of GDP for SOE debt risks.
    • 0% of GDP for PPPs, as none exist in DRC.
• Debt Service-to-Revenue Threshold:
  • The 14% threshold is breached in 2020 under the baseline, indicating weakness in debt sustainability.

Recommendations

• Broaden debt coverage by improving SOE debt reporting.
• Ensure prudent borrowing policies, prioritizing concessional loans.
• Increase revenue mobilization to create fiscal space for investment.
• Build buffers through prudent macroeconomic and debt management policies.
• Prepare a medium-term debt strategy that aligns with debt sustainability and efficient use of borrowed resources.