DRC Government Suspends VAT Exemption on Imports of Mining Companies

In a correspondence dated July 31, 2020 and addressed to his colleague from Finance ministry, the Minister of the Budget wrote: “The Council of Ministers has decided, during its 41st meeting and within the framework of the mobilization of state revenue by the financial authorities, the suspension of the exemption from VAT on the imports by mining companies. To this end, I ask you to proceed with the execution of this measure, without delay, and in accordance with the decision of the Council of Ministers ”. 

This decision comes as the government adopted, during its 42nd meeting of the Council of Ministers on July 31, a package of measures to stabilize the Congolese franc, revive the national economy and increase the mobilization of public revenue.

The DRC has shown a weak mobilization of public revenue since the beginning of the year, particularly following the covid-19 health crisis which imposed not only the state of emergency between March 24 and July 21, 2020 but also lockdown in certain units of production.

The Public Treasury shows a revenue gap of more than 2.6 billion USD during the first half of 2020. Indeed, the budget monitoring reports indicate an overall level of expenditure of around 3,350,608,435,571 FC (1.718 billion USD) against the linear forecast of 8,612,624,023,644 FC (4.416 billion USD) in the first half of 2020, i.e. an execution rate of only 38.9%.

More specifically, in internal resources, government public expenditure amounted to 3,156,764,192,824 FC against linear forecasts of 7,435,923,385,994 FC, i.e. an achievement rate of 42.5%, as of June 30, 2020. This level of spending was dictated by the weakness in public revenue mobilization. This weak mobilization of resources is also observed among the external partners of the Democratic Republic of the Congo who have only contributed to the national budget to the tune of 193 844 242 824 FC (99.407 million USD) on linear forecasts of 1 176 700 637 650 FC (603.436 million USD), i.e. an execution rate of barely 16.5%, by the end of June 2020.

Suffice to say that the government is showing a decline in its financial resources, both internal and external.

The government’s third-quarter 2020 Budget Commitment Plan (PEB) caps public spending at FC 2,157,069,000,000 (USD 1.1 billion).