Congo, Africa's leading copper producer, has been hard-hit by the
downturn since last year in commodities markets. The oil and mining
sectors account for some 98 percent of its export earnings.
Congo PM proposes deep budget cuts, warning of hyperinflation(VOA News)
Democratic Republic of Congo's
prime minister proposed cutting operating costs of government
ministries and other public services by 30 percent on Monday, warning of
a risk of hyperinflation if the government failed to act.
The
government announced earlier this month that it would propose a 22
percent reduction to its initial 8.48 trillion Congolese franc ($8.9
billion) budget for the year, largely because of low global metals
prices.
Congo, Africa's leading copper producer,
has been hard-hit by the downturn since last year in commodities
markets. The oil and mining sectors account for some 98 percent of its
export earnings.
Prime Minister Augustin Matata Ponyo
presented details of the revised budget to parliament on Monday, which
must debate and then vote on the proposal. The plan includes slashing
spending on healthcare equipment by over 90 percent.
"If
nothing is done, we run the risk of suffering from the hyperinflation
that is hitting other countries, and of reliving the nightmare of the
1990s," Matata told lawmakers.
Inflation in
autocrat Mobutu Sese Seko's Congo, then known as Zaire, hit an all time
high rate of nearly 24,000 percent in 1994, sending the local economy
crashing.
The government's most recent inflation projection foresaw a rate of 1.4 percent in 2016.
However,
after years of near total exchange rate stability, declining reserves
of foreign currency have placed pressure on the franc, causing it to
lose more than 2.5 percent of its value against the dollar this year.
Matata
also said that Congo would scale back the size of a planned
international bond issue to finance infrastructure projects from 653
billion to 256 billion francs.
(951.9 francs = 1 dollar)
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