The IMF requires the Democratic Republic of Congo to consolidate government accounts into a single Treasury Single Account as part of a $2.87 billion financing deal. The agreement includes funds for public resource management and necessitates tax reforms. Implementation of these reforms is critical to improve transparency and economic stability in the country.
The International Monetary Fund (IMF) is urging the Democratic Republic of Congo (DRC) to consolidate thousands of government accounts into a single Treasury Single Account (TSA) as part of a new financing agreement worth $2.87 billion over the next three years. This requirement aims to enhance transparency and streamline the management of public resources, a measure initially proposed since 2019 but largely unimplemented by the Kinshasa government. The recent agreement includes $1.77 billion from the IMF’s Extended Credit Facility (ECF) and introduces $1.1 billion from the Resilience and Sustainability Facility (RSF), contingent upon expediting the TSA and implementing necessary tax reforms. Calixte Ahokpossi, the IMF mission chief for the DRC, emphasized that the program priorities under the ECF-supported initiative involve strict compliance with public expenditure protocols. “A key priority under the planned ECF-supported programme is to ensure stricter adherence to the public expenditure chain procedures,” he stated. The IMF reports a staggering 3,625 accounts linked to government entities, highlighting a significant need for consolidation to enhance budget credibility and reduce the occurrence of off-budget taxes. The Congolese government has defined the TSA’s structure via a decree issued in May 2023, yet the IMF noted that substantial work remains, particularly regarding cash management deficiencies. In addition to establishing the TSA, the IMF advocates for decentralizing spending authority to improve governmental fiscal efficiency and resilience against economic fluctuations. Furthermore, the IMF is pressing Kinshasa to bolster domestic revenue streams, enhancing tax compliance through initiatives that include standardized VAT billing and combating tax evasion. These reform prescriptions are not exclusively aimed at the DRC, as other nations in the region, including Uganda and Tanzania, have implemented similar fiscal measures at the IMF’s behest. However, such reforms have sometimes encountered significant public resistance. For instance, the TSA’s introduction in Kenya has raised potential banking liquidity concerns and has been associated with violent protests against the proposed tax measures.
The International Monetary Fund’s push for the Treasury Single Account (TSA) in the Democratic Republic of Congo is part of an overarching strategy to enhance government fiscal management and transparency. Since 2019, the need to consolidate government accounts has been recognized, yet actual implementation has lagged. The IMF’s new financing arrangement includes funds aimed at addressing economic challenges and funding vital sectors, underscoring the urgency of fiscal reforms. Such strategies are part of broader efforts by the IMF in various nations to improve revenue generation and expenditure management amidst challenges including public pushback and economic volatility.
In summary, the IMF’s advocacy for a Treasury Single Account and accompanying tax reforms in the Democratic Republic of Congo highlights the organization’s commitment to enhancing fiscal policy governance in the face of economic challenges. With $2.87 billion in funding pending, the urgency for Kinshasa to swiftly enact these measures is clear, not only for securing financial assistance but also for fostering economic stability and growth. The situation will serve as a crucial test of the relationship between fiscal reform efficacy and government accountability within the DRC and possibly set a precedent for other nations in similar contexts.
Original Source: www.theeastafrican.co.ke
