The Democratic Republic of Congo’s central bank cut its 2015 growth target as falling metal prices and power shortages slow the expansion of mining output in Africa’s biggest copper producer and top cobalt exporter.
Gross domestic product is expected to expand 9.2 percent, compared with an earlier forecast of 10.3 percent, the Central Bank of Congo said in a statement on its website.
Service industries will contribute 4 percentage points to the growth rate “through the dynamism of activity in commerce, transportation and telecommunications,” it said. Primary industries including mining are expected to contribute 3.9 percentage points, it said. Congo’s miners have halted exploration projects and are cutting costs amid falling metal prices and power rationing by the government, the country’s main business federation said last month.
Congo’s economy is one of the fastest growing in the world, with only Ethiopia surpassing its 2015 growth forecast, Moody’s Investors Service said June 2. The country’s “medium-term economic outlook continues to be promising,” the International Monetary Fund said June 3.
Uncertainty over elections scheduled for later this year and next is delaying investment in the country, the IMF said. Congolese security forces have clashed with opponents of President Joseph Kabila over concerns that he may seek to stay in power after his second five-year mandate ends in December 2016. The country’s constitution prohibits the president from running for a third term.
The IMF is pushing for the country to increase its tax base instead of using foreign currency reserves to finance social spending and elections. Congo spent $257 million from its foreign currency reserves to help pay for national elections in 2011, the central bank said at the time.
Congo’s reserves stand at $1.7 billion, covering about seven weeks of imports, the bank said. Through May, annual inflation was 0.7 percent and is expected to remain below 1 percent for the year, compared with an earlier target of 3.5 percent.
The bank kept its benchmark interest rate unchanged at 2 percent, where it has been since November 2013.