Heavily Indebted Poor Countries
Debt Cancellation: A New Era for the DRC?
Countries: Democratic Republic of the Congo
Recently, international creditors forgave almost $20 billion in foreign debt amassed by the Democratic Republic of the Congo. The debt was mostly accumulated under the former president, Mobutu Sese Seko, and is considered odious debt as the money was used for the President's personal amusement rather than for the benefit of the populace.
The timing of Congo's debt relief is fortuitous as the country's economy needs as much help as it can get. The country consistently lands near the bottom of the World Bank’s “Ease of Doing Business” rankings and is plagued by persistent internal conflict.
But maybe the DRC just got its big break: escaping the chains of debt may allow the country to take the first steps towards economic development and progress. The head of the central bank and monetary policy committee, Jean-Louis Kayembe wa Kayembe, certainly thinks so.
[The] cancellation of the debt which have a positive impact on central bank reserves and will also allow the state to create budgetary space...for the battle against poverty and for infrastructure, given a durable growth for the wellbeing of the population.
There are some concerns about corruption, governance and human rights abuses in the DRC. Critics argue that debt cancellation should have been used as leverage to encourage reform in the country. However, debt relief should allow for some improvements in the government's ability to implement more progressive and pro-poor policies.
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