CREFDL Report Reveals DRC’s $5 Billion Budget Underperformance in 2023
In a press release dated Thursday, March 21, 2023, the Center for Research in Public Finance and Local Development (CREFDL) delivered a troubling evaluation of the execution of the 2023 Finance Law in the Democratic Republic of Congo (DRC).
The organization highlighted a staggering shortfall of $5 billion in revenues and a budget deficit of $1.2 billion, marking the first deficit since 2011.
According to the CREFDL, the government only managed to mobilize $9.8 billion out of the planned $14.8 billion, resulting in a disappointing achievement rate of 65.9%.
The organization attributed this poor performance to inadequate financial management by government authorities, who are subject to potential sanctions under Article 129 of Law No. 11/011 dated July 13, 2011, concerning public finances.
With expenditures totaling $11 billion, the $1.2 billion budget deficit reflects subpar financial management practices. This deficit prompted a significant increase in borrowing from the domestic market, further weakening the Congolese economy.
Furthermore, the CREFDL raised concerns about the surge in exceptional expenses, which soared to $2.4 billion compared to the planned $601.7 million.
This blatant violation of public finance laws, particularly Articles 39, 40, and 41, was justified by funding for elections, military operations, and humanitarian aid. However, the CREFDL argued that elections cannot be deemed exceptional expenses as they are mandated by the Constitution.
The mismanagement of public finances has had dire consequences on the DRC’s economy, including the depreciation of the Congolese Franc and exchange rate instability. The absence of a cohesive budget exacerbates the situation, undermining the country’s financial governance.
Looking ahead to 2024, the CREFDL noted ongoing challenges with state revenues and expenditures. Linear forecasts project revenues and expenditures to be around $2.4 billion during this period.
However, the principle of sincerity stipulates that the accounts of the central government, provinces, and decentralized territorial entities must accurately reflect the financial situation and assets.
To address these issues and improve revenue mobilization, the CREFDL proposed several recommendations to the DRC government and the Court of Auditors.
These include rationalizing public spending, prioritizing population needs, recovering unrealized revenues from 2023, avoiding inflated figures, and presenting an accurate financial snapshot. Additionally, the Court of Auditors should conduct a comprehensive audit of 2023 revenue generation.
