The International Monetary Fund board approved a three-year, $1.5 billion loan for the Democratic Republic of Congo to help boost social spending, modernize the central bank and improve governance in the impoverished, mineral-rich nation.

The IMF could release about $217 million — the first of seven tranches — almost immediately, as the government fights a third wave of Covid-19 infections, Gabriel Leost, the lender’s representative in Congo, said in an interview. A new IMF program has been a priority for the central African nation’s President, Felix Tshisekedi, since he came to power in 2019.

“The fact they have a program with us should assure partners and the private sector that in terms of macroeconomic financial stabilization, they are going the right way,” Leost said. “We really hope to see some catalytic impact of the IMF program to attract more budget support from other donors and also more investment.”

The loan program is Congo’s first since 2012, when the IMF halted financing because of concerns about corruption in the mining industry.

Assistance Needed

Congo’s economy is heavily reliant on mining and high mineral prices have helped support income during the pandemic. Still, growth slipped to 1.7% in 2020 and foreign reserves fell below two weeks of imports. In April, the United Nations said Congo had 27.3 million people in need of urgent food-security assistance — the highest number in the world.

The IMF’s extended credit facility, which supports a country’s reserves, will increase fiscal space for Tshisekedi’s free-education initiative, expanded health programs, and security spending as the UN gradually withdraws its peacekeeping mission from the country, according to Leost.

Congo may also be eligible for another $1.5 billion later this year as part of a general allocation to IMF member states in response to the global slump caused by Covid-19, he said.

Congo’s Finance Minister Nicolas Kazadi was traveling and didn’t immediately respond to a request for comment. The government said Wednesday it wants to more than double its reserves to $3 billion, or 3 months of imports.

Policy Changes

As part of the loan program, the government will audit its value-added tax arrears owed to mining companies and set up a repayment plan. It will also publish all new mining contracts in a series of transparency initiatives.

The IMF program comes less than two-and-a-half years ahead of elections, which will put added pressure on the country’s budget.

“I think they are very aware that they have a short window of opportunity, perhaps one year maximum, to really launch some reforms and to show some results,” Leost said. “If they do this, we can be flexible for the rest of the conditionalities, especially in a very uncertain global economy.