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By Joe Bavier
KINSHASA, March 31 (Reuters) - The International Monetary Fund on Tuesday slashed its 2009 growth forecast for the Democratic Republic of Congo to 2.7 percent, down from a previous estimate of 4.4 percent and well below the 8 percent growth estimate for 2008.
The revisions are largely due to the fall in mining revenues and highlight the weakness of the economy in the Central African country that had looked to booming commodity prices to help it recover from years of war and chaos, officials said.
“For 2009, we’ve revised the projection concerning growth to a figure of 2.7 percent,” Brian Ames, division chief in the IMF’s Africa Department, told reporters on Tuesday during a visit to the country. The drop was largely due a major dip in revenues from mineral exports, he said.
Inflation, which was pegged at around 28 percent last year, is likely to average near 25 percent in 2009, Ames said.
The global economic slowdown and financial crisis have crippled Congo’s mining-based economy as tumbling commodities prices have forced companies to scale down or suspend operations, strangling government revenues.
Late last year, the IMF cut its projection for 2009 direct foreign investment in Africa’s third largest country to $800 million from a previous forecast of $2.5 billion.
Import-dependent Congo’s foreign currency reserves had all but evaporated by early February, plunging from a 2008 high of around $270 million to just $30 million — the equivalent of less than a week of imports.
Last week, the IMF disbursed nearly $200 million in assistance from its Exogenous Shocks Facility, which is designed to speed financing to countries hurt by the worldwide slump.
The World Bank has given Congo $100 million in grants to pay teachers’ salaries and government utility bills. The African Development Bank and the European Union are expected to contribute an additional $150 million in emergency funding.
Congo is attempting to qualify for the cancellation of the majority of its $10 billion external debt.
But the IMF is concerned that a planned $9 billion Chinese mining and infrastructure deal may plunge Congo even deeper in debt. Congo said this week the deal would go ahead.
Analysts say the bailout plan will only provide a short-term fix for Congo’s economy, which has seen a sharp depreciation in its franc currency since the beginning of the year.
Long-term recovery will likely depend on an economic rebound among the emerging Asian economies that are the primary market for Congo’s copper, cobalt, and tin ore, they said.
Central Bank Governor Jean-Claude Masangu said the global financial crisis had highlighted weaknesses in the economy.
“We must ensure that that money is used to augment the country’s productivity and competitiveness,” he said.
“If we just keep importing onions, importing tomatoes, importing lettuce and water — things that we can make here — we are going to lose these reserves. Our economy must be diversified,” he added.