Hello AVZ followers,
Here is another incentive for DRC government to get AVZ project going without delays that, nobody ever needed in the first place, and generate some good revenue - DRC's reserve bank (reserve bank and central bank, same thing) is increasing its rate
from 11% all the way to 25% !!!https://econewsrdc.com/craignant-des-risques-internes-et-externes-sur-le-marche-des-changes-la-bcc-resserre-sa-politique-monetaire-en-misant-sur-le-taux-directeur/~~~~~~~~~~~~~~~
"At the Central Bank of Congo (BCC), the machine is running at full speed in the face of the persistence of the shocks weighing on the foreign exchange market. While the Central Bank remains confident about the effectiveness of its liquidity regulation instruments, it has nevertheless decided to bet on the key rate in order, it says, "to further tighten monetary policy, neutralize any excess liquidity, and better support macroeconomic stability”.
Meeting on Tuesday, August 8, 2023, around Governor Malangu Kabedi-Mbuyi, the Monetary Policy Committee (CPM) exercised the option of raising the BCC's key rate from 11% to 25%.
Despite the increase in the key rate, the CPM recommends caution. Also, "considering the persistence of internal and external shocks and risks that the national economy continues to face", the CPM recommended "the maintenance of vigilance in the conduct of monetary policy, and called for strengthening the coordination of budgetary and monetary policy actions”.Here is, in full, the press release of the extraordinary meeting of the CPM of the BCC, held on August 8, 2023."
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I've gone to reserve bank's website to see the full press release and .... surprise, surprise ....they are blaming
war in Ukraine for DRC's financial problems....
https://www.bcc.cd/sites/default/files/communiques/communique_de_presse_cpm_8_8_2023_230809_054701.pdfTranslation below using:
https://www.deepl.com/en/translatorPress release from the extraordinary meeting of the Monetary Policy Committee of the Central Bank of CongoThe Monetary Policy Committee (MPC) of the Banque Centrale du Congo (BCC) met on Tuesday 08 August 2023, in extraordinary session, under the chairmanship of the Governor, Madame MALANGU KABEDI MBUYI.
The MPC devoted this meeting to recent developments on the foreign exchange and goods and services markets, against the backdrop of the current general economic climate, both nationally and internationally. In view of persistent external and internal inflationary pressures, the MPC agreed to tighten monetary policy further, and decided to proceed & with a further increase in the BCC's key rate.
The CPM noted that during the third quarter of 2023, the national economic environment was marked by increased pressure on the exchange rate and inflation. In a rather tense context, inflation and the depreciation of the Congolese franc accelerated, particularly in mid-July. The CPM noted that, in line with the situation in otherin other countries of the sub-region, these disruptions continue to be driven by the impact on the DRC's trading partners of
external shocks linked in particular to the war in Ukraine. As the national economy is highly dependent on imports, it is strongly affected by these negative external developments, whose impact is reinforced by that ofof major internal shocks affecting the DRC, including
the war in East Ukraine which continues to exert heavy pressure on the state budget.The MPC noted that inflationary and exchange rate pressures had eased over the past two weeks, thanks to the new monetary and fiscal corrective measures implemented in the second half of July. Improved coordination between monetary and fiscal policies has enabled excess liquidity to be better contained and absorbed in the economy, thus reducing pressure on the foreign exchange market and the exchange rate.pressure on the foreign exchange and goods and services markets.
The MPC noted that the global economic outlook for the remainder of the year is marked by significant uncertainties, due to intensifying geopolitical fragmentation and
the repercussions of the continuing war in Ukraine, which could adversely affect global economic activity, and result in higher imported inflation.
Thus, considering the persistence of internal and external shocks and risks facing the national economy, the MPC recommended maintaining vigilance in the conduct of monetary policy, and called for greater coordination of fiscal and monetary policy actions. Against this backdrop, and in view of the uncertain outlook for the global economy, the MPC decided to raise
the BCC's key interest ratefrom 11% to 25% in order to further tighten monetary policy, neutralize any excess liquidity, and better support macroeconomic stability.
Cheers
