Congo Plans Dollar Purchases From Miners to Bolster Reserves
The Democratic Republic of Congo’s central bank plans to use
the country’s updated mining law to buy dollars from mining companies in
exchange for Congolese francs to shore up dwindling foreign currency reserves.
The government’s demand for dollars is “to assure the
resilience of the national economy” as Congo looks to qualify for a formal loan
program with the International Monetary Fund, Prime Minister Sylvestre Ilunga
Ilunkamba said in a Feb. 26 letter to Louis Watum, president of Congo’s Chamber
of Mines, a division of the country’s main business lobby group.
Mines Minister Willy Kitobo confirmed in a text message the
purchase of foreign currency from mining companies active in the country is
being “proposed in two stages” to allow the government to “increase the
country’s international reserves.”
A senior official from the Chamber confirmed the letter’s
authenticity. Neither Watum nor Ilunga’s spokesman Albert Lieke responded to
Bloomberg’s requests for comment.
Joint Delegation
The government has sent a joint delegation from the central
bank and mines ministry to the provinces of Lualaba and Haut Katanga, where all
of Congo’s copper and cobalt is produced, to discuss “concrete arrangements for
the purchase of a quota of repatriated foreign exchange,” according to Ilunga’s
letter. Major international companies including Glencore Plc and China
Molybdenum Co. Ltd. mine and export metals from the country.
The delegation has already met with the “majority” of the
mining companies to discuss the idea, Kitobo said.
In December, the IMF injected about $370 million into
Congo’s reserves, which had fallen to “critically low levels” due to
central-bank financing of government spending.
Congo’s miners must repatriate at least 60% of their export
revenue to accounts in the country, according to mining legislation that was
revised in 2018. This law allows the state and the central bank to buy the
dollars “if the needs of the national economy require it.” The amount and
exchange rate of the purchase are negotiable, the new mining code says.
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