DRC battle against M23 strains public finances, says IMF

An escalation of fighting in eastern Democratic Republic of Congo (DRC) has strained the Central African nation's public finances, the International Monetary Fund (IMF) said on Tuesday.

Rwanda-backed M23 rebels have staged an unprecedented advance in eastern DRC this year, triggering a fresh cycle of violence in a decades-long conflict in a region rich in minerals including tantalum and gold.

The rebels seized Goma, eastern DRC's largest city, in late January and Bukavu, the area's second-largest, weeks later.

The closure of revenue collection offices in M23-controlled regions, combined with measures to ease living costs by exempting basic food products from customs duties and value-added tax, "have led to a revenue shortfall", the IMF said in a statement after a visit to DRC's capital Kinshasa.

Elevated security spending has also put pressure on the budget, the statement said. The finance ministry announced in March it was doubling salaries for soldiers and police in an apparent bid to boost morale.

The IMF said it had reached a staff-level agreement on the first review of DRC's three-year economic and financial programme under its extended credit facility.

"The government has reaffirmed its commitment to the objectives of ECF-supported program, which has been recalibrated to reflect the new realities following the intensification of the conflict," the statement read.

It also said the programme would help safeguard fiscal sustainability while enabling adequate fiscal space for pressing security and humanitarian needs.

The UN and Western governments say Rwanda has provided arms and troops to M23. Rwanda denies backing M23 and says its military has acted in self-defence against DRC's army and a militia founded by perpetrators of the 1994 genocide.

Reuters