Publication: The Democratic Republic of the Congo - Joint World Bank-IMF Debt Sustainability Analysis
Loading...
Date
2019-09
ISSN
Published
2019-09
Author(s)
Editor(s)
Abstract
According to the updated Low-Income Country Debt Sustainability Framework (LIC DSF), the Democratic Republic of the Congo (DRC)’s debt-carrying capacity was assessed as weak. DRC remains at a moderate risk of external and overall debt distress, with limited space to absorb shocks. The debt coverage has been improved since the last DSA, especially on domestic debt. The external nominal debt ratios are lower than at the time of the 2015 debt sustainability analysis (DSA), however the country shows vulnerability in debt repayment capacity, even under the baseline, due to weak revenue mobilization. Most external debt thresholds are breached under the stress tests, highlighting the country’s vulnerability to external shocks. Given limited buffers, prudent borrowing policies are essential by prioritizing concessional loans and strengthening debt management policies
Link to Data Set
Citation
“World Bank; International Monetary Fund. 2019. The Democratic Republic of the Congo - Joint World Bank-IMF Debt Sustainability Analysis. © World Bank. http://hdl.handle.net/10986/32577 License: CC BY 3.0 IGO.”
Associated URLs
Associated content
Other publications in this report series
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication Republic of Congo - Joint World Bank-IMF Debt Sustainability Analysis Update(World Bank, Washington, DC, 2019-07)Based on an assessment of external public debt indicators and given the continued buildup of external arrears, the Republic of Congo is classified as “in debt distress”. Moreover, despite the recent restructuring agreement with China, public debt remains unsustainable with the net present value of external debt in percent of gross domestic product (GDP) and the external debt service-to-revenue ratios projected to remain above their indicative thresholds in the medium terPublication Lao People's Democratic Republic - Joint World Bank-IMF Debt Sustainability Analysis(World Bank, Washington, DC, 2019-08)Lao P.D.R.’s risks of external and overall debt distress continue to be assessed as high. Under the revised low-income country debt sustainability framework (LIC DSF), its debt carrying capacity has deteriorated and most external and total public debt indicators breach their respective indicative thresholds and benchmarks under the baseline scenarios. External debt indicators are most vulnerable to shocks to exports and depreciation of the currency. Public and external debt indicators are most sensitive to the contingent liabilities shock, while recent natural disasters underscore the need for strengthening buffers. The low level of reserves adds to these vulnerabilities. Factors, such as the large share of electricity export earnings under long-term intergovernmental power purchase agreements, and a strong and growing electricity exports market help mitigate risks, keeping the debt outlook sustainable. Market access is being maintained, around 65 percent of external debt is concessional, and the stock of expenditure arrears is declining. Rebuilding fiscal space, adopting clear guidelines for sovereign debt issuance and guarantees, assessing risks from contingent liabilities, and improving debt management are immediate priorities. Assessing and targeting infrastructure projects with high growth and social returns and financing these with concessional financing would benefit debt sustainability. Strengthening the business environment and governance, would improve the investment outlook, help diversify and make growth more inclusive. Increasing the export base, continuing to maximize the proportion of concessional loans and improving primary deficits would help to keep the debt burden contained.Publication Kyrgyz Republic - Joint World Bank-IMF Debt Sustainability Analysis(World Bank, Washington, DC, 2019-07)The joint World Bank/IMF Debt Sustainability Analysis (DSA) has been prepared in the context of the 2019 Article IV Consultation, for the first time based on the revised framework for low-income countries. Results indicate moderate risk of debt distress for both external and overall public debt. However, the debt outlook remains vulnerable, especially to a deceleration in real GDP and exports growth and the depreciation of the KGS. To address these vulnerabilities, the authorities need to remain cautious when contracting and guaranteeing new debt, maintain fiscal discipline, improve public investment management, and continue improving the business environment to maintain the export potential of the country after the main gold mine will close in 2026.Publication Republic of Madagascar - Joint World Bank-IMF Debt Sustainability Analysis(World Bank, Washington, DC, 2019-08)Madagascar is assessed at low risk of external debt distress. This marks a change from moderate risk in the June 2018 DSA, despite a broader definition of external debt, and reflects an upgrade in Madagascar’s debt carrying capacity rather than a change in the debt path. Under the baseline, external public and publicly guaranteed (PPG) debt is well below applicable thresholds. Stress tests do not breach the threshold applicable to countries with medium debt-carrying capacity. Total (external plus domestic) PPG debt is below the benchmark under the baseline, but growth shocks drive the present value of the ratio of debt to GDP above the benchmark. Shocks could also introduce liquidity problems, as the debt-service to revenue ratio could exceed 100 percent over the long term. The overall rating, of moderate debt distress, remains consistent with the 2018 DSA. These assessments continue to be supportive of Madagascar’s current plans to scale up its borrowing to meet its investment needs, though other factors are also critical.Publication Republic of Uzbekistan - Joint World Bank-IMF Debt Sustainability Analysis(World Bank, Washington, DC, 2019-05)Based on the Joint Bank-Fund Low-Income Country Debt Sustainability Analysis (LIC-DSA), Uzbekistan has a low risk of debt distress, with debt burden indicators below relevant thresholds in the baseline and all stress scenarios. Over the medium term, the public debt-to-GDP ratio is expected to increase moderately, while the total external debt-to-GDP ratio is expected to decline somewhat. In addition, large foreign exchange reserve buffers mitigate potential distress concerns. The debt sustainability analysis suggests that the most significant risks could result from worse-than-expected external flows (mostly lower remittances) and significantly lower exports. The government should carefully manage external borrowing to maintain Uzbekistan’s strong external position.
Users also downloaded
Showing related downloaded files
Publication Improving Access to Medicines in Developing Countries : Application of New Institutional Economics to the Analysis of Manufacturing and Distribution Issues(World Bank, Washington, DC, 2005-03)This paper examines alternative frameworks for empirical analysis of supply side activities, namely, the manufacture and distribution of medicine, through the application of New Institutional Economics (NIE) concepts. Attention is focused particularly upon the potential utility of ideas from agency theory, transaction cost analysis and contemporary ideas from strategy theory. The major purpose of this paper is to use these theoretical frameworks to provide insight for policy makers, when faced with specific situations, whether in an international agency, or a private company, or in defining a national strategy. The analysis attempts to show the importance of distinctions between ideas of 'make' or 'buy', between 'national self sufficiency' and 'international purchasing' strategies, the limitations of contractual agreements under market governance and the crucial linkages between strategy formulation, strategy implementation and the necessary capabilities to achieve successful performance in practice. The current international situation on the investment, location and capacity of pharmaceutical manufacturing is reviewed and likely future scenarios suggested. Correspondingly current patterns of trade in medicines and their likely development within the context of the WTO and bilateral trade agreements are discussed. Against this background the promise and the pitfalls for new forms of public-private partnerships, which may offer attractive alternatives to conventional structures are evaluated. The implications of alternative future strategic options for national governments in setting the balance between health and industrial policies are examined and in particular the extent to which a national manufacturing capability should be developed or sustained. Similarly the scope for improving low cost distribution systems for medicines, based upon a mix of public and private sector channels, is assessed. We conclude with suggestions for further development of a transaction-based framework.Publication Aid Dependence and the Quality of Governance : A Cross-Country Empirical Analysis(World Bank, Washington, DC, 2000-07)Good governance -- in the form of institutions that establish predictable, impartial, and consistently enforced rules for investors -- is crucial for the sustained and rapid growth of per capita incomes in poor countries. Aid dependence can undermine institutional quality by weakening accountability, encouraging rent seeking and corruption, fomenting conflict over control of aid funds, siphoning off scarce talent from the bureaucracy, and alleviating pressures to reform inefficient policies and institutions. The author's analyses of cross-country data provide evidence that higher aid levels erode the quality of governance, as measured by indexes of bureaucratic quality, corruption, and the rule of law. This negative relationship strengthens when instruments for aid are used to correct for potential reverse causality. It is robust to changes in the sample and to several alternative forms of estimation. Recent studies have concluded that aid's impact on economic growth and infant mortality is conditional on policy and institutional gaps. The author's results indicate that the size of the institutional gap itself increases with aid levels.Publication Accessing Economic and Political Impacts of Hydrological Variability on Treaties : Case Studies on the Zambezi and Mekong Basins(2012-03-01)International river basins will likely face higher hydrologic variability due to climate change. Increased floods and droughts would have economic and political consequences. Riparians of transboundary basins governed by water treaties could experience non-compliance and inter-state tensions if flow falls below levels presumed in a treaty. Flow information is essential to cope with these challenges through water storage, allocation, and use. This paper demonstrates a simple yet robust method, which measures gauge station runoff with wetness values derived from satellite data (1988-2010), for expanding sub-basin stream flow information to the entire river basin where natural flow information is limited. It demonstrates the approach with flow level data that provide estimates of monthly runoff in near real time in two international river basins: Zambezi and Mekong. The paper includes an economic framework incorporating information on existing institutions to assess potential economic and political impacts and to inform policy on conflict and cooperation between riparians. The authors conclude that satellite data modeled with gauge station runoff reduce the uncertainty inherent in negotiating an international water agreement under increased hydrological variability, and thus can assist policy makers to devise more efficient institutional apparatus.Publication Rwanda Diagnostic Review of Consumer Protection and Financial Literacy(World Bank, Washington, DC, 2013-11)Although the Parliament of Rwanda has passed an impressive array of financial sector laws since 2008, the laws relevant to financial consumer protection are very limited and in some cases overlapping. Consumer protection in Rwandan banking, microfinance, and insurance sectors is fragmented because of insufficiently defined roles and responsibilities among institutions and unclear enforcement capacity. While there are some strong provisions in some areas such as electronic money transfer, electronic transmission, credit information, and market conduct regulation in the insurance industry, many other areas are lagging. Rwandan authorities recognize that a sound financial consumer protection framework is fundamental to improving usage and quality of financial services, access to them, and overall deepening of the financial sector. This World Bank diagnostic review was requested by the National Bank of Rwanda (BNR) in November 2012. Modules on banking and microfinance sectors were developed based on publicly available information and data during the World Bank mission in Rwanda, and the review of the insurance sector was conducted through a desk review using the data obtained from BNR data requests and questionnaires, and the analysis is therefore constrained by it. Volume I of the review summarizes its key findings and recommendations, and volume II provides a detailed assessment against the World Bank’s good practices on financial consumer protection.Publication Strategic Planning for Poverty Reduction in Vietnam : Progress and Challenges for Meeting the Localized Millennium Development Goals(World Bank, Washington, DC, 2003-01)This paper discusses the progress that Vietnam has made toward meeting a core set of development goals that the government recently adopted as part of its Comprehensive Poverty Reduction and Growth Strategy (CPRGS). These goals are strongly related to the Millennium Development Goals (MDGs), but are adapted and expanded to reflect Vietnam's national challenges and the government's ambitious development plans. For each Vietnam Development Goal, the authors describe recent trends in relation to the trajectories implied by the MDGs, outline the intermediate targets identified by the government, and discuss the challenges involved in meeting these. Relative to other countries of similar per capita expenditures, Vietnam has made rapid progress in a number of key areas. Poverty has halved over the 1990s, enrollment rates in primary education have risen to 91 percent (although there is a quality problem), indicators of gender equity have been strengthened, child mortality has been reduced, maternal health has improved, and real progress has been made in combating malaria and other communicable diseases. In contrast, Vietnam scores worse than other comparable countries in the areas of child malnutrition, access to clean water, and combating HIV/AIDS. A number of important crosscutting issues emerge from this analysis that need to be addressed. One such challenge is improving equity, both in terms of ensuring that the benefits of growth are distributed evenly across the population and in terms of access to public services. This will involve addressing the affordability of education and curative health care for poor households. Improvements in public expenditure planning are needed to align resources better to stated desired outcomes and to link nationally-defined targets to subnational planning and budgeting processes. There is also a need to address capacity and data gaps which will be crucial for effective monitoring.