Accepted paper:

The end of the commodity super-cycle and its implications for the DR Congo

Author:

Laure Gnassou (Experienced Economist)

Paper short abstract:

China’s economic slowdown hit hard the DR Congo. In 2016, the country faces major budgetary constraints mainly due to funding of the electoral cycle. Given pressures on public finance, the country might seek the IMF assistance; it has not concluded an economic programme since January 2013.

Paper long abstract:

According to the IMF, in 2014, the DR Congo GDP growth rate was estimated at 9.2%, which was the third fastest growth rate in the world. In 2015, the IMF stressed that the country registered a 8.4% GDP growth rate. In 2016, it points out that the DR Congo growth rate is likely to be estimated at 4.9% due to a continued drop in commodities prices. Referring to the central bank of Congo, in 2013, exports accounted for USD 10,904,924,592.52. The same year, 97.7% of exports value relied on copper, cobalt, and zinc. The DR Congo has emerged as an investment hot spot for the extractive industries. The UNCTAD stressed that, in 2014, Foreign Direct Investment (FDI) flows to the DR Congo reached USD 2,063,000,000 and might decrease due to a wait-and-see attitude of the private sector in the run-up to the 2016 presidential elections. Given the weak global economy, the 2002 mining code's review has been suspended in early 2016. Moreover, the DR Congo faces with internal shocks: sovereignty-related spending given insecurity in Eastern DR Congo and funding the 2016 electoral cycle. Public finance is under pressure with a limited 2016 State budget of USD 9.080.681.622. The commodities slump entails a revised State budget, which will decrease by 30% in April 2016. The country might seek assistance of the IMF, which advised to implement an orthodox budget policy by not financing fiscal deficit by the central bank. It recommended the country's diversification restricted by lack of electricity and infrastructure.

panel P38
The end of the commodity super-cycle and its implications for oil- and mineral-exporting countries