The central bank’s own dollar stock rose US$456 million in May, nearly two-thirds of it in three days.

By Kanisa Magazine · May 2021

The Banque Centrale du Congo’s own dollar stock rose from US$784 million at the end of April to US$1,240 million on 28 May, a gain of US$456 million in a month. The BCC’s weekly statistical digest records the move but does not say what caused it, and the pattern is odd enough to deserve a close look.

The digest of 28 May lists the strict line at US$923 million on 18 May, then US$948 million on 25 May. After that it reads US$1,075 million on 26 May, US$1,232 million on 27 May and US$1,240 million on 28 May.

About US$292 million of the month’s gain arrived in the last three trading days, nearly two-thirds of it. That timing points to a lump rather than a trend.

From half a month of imports to five weeks

Cover lifted from under a month at the end of April to five weeks by 28 May.

The strict line stood at US$505.71 million at the end of March, equal to 0.48 months of imports. By the end of April the digest shows US$783.70 million, or 0.74 months. By 28 May import cover was five weeks. The BCC reported to its monetary policy committee, according to DeskEco, a figure of US$710.32 million for the end of April, a 40.59 per cent rise on March. The digest’s later number for the same date is higher. This piece uses the digest, and the difference is a reminder to confirm which series a contract or covenant refers to.

The broad reserve series, which includes the banks’ foreign-currency deposits, is left blank for May.

Prices that did not do it

Cobalt fell and copper was flat in May, so export prices do not explain the build.

The commodity table shows a mixed month. LME copper was US$9,990 a tonne on 30 April and US$10,032.50 on 28 May, after a peak of US$10,465 on 19 May. LME cobalt fell from US$47,140 to US$43,615 a tonne, and the London cathode quote from US$50,508 to US$44,923. Gold rose from US$1,766 to US$1,894 an ounce, and coltan from US$70 to US$78 a pound.

If reserves had tracked export prices, a month of falling cobalt would have trimmed them. They rose by more than half instead.

A mine that had not yet shipped

Kamoa-Kakula began producing concentrate on 25 May, which is too late to appear in May’s reserves.

The month’s mining headline was the start of Kamoa-Kakula. International Mining reported on 26 May that first ore entered the concentrator on 20 May, months ahead of schedule. The Phase 1 plant has a capacity of 3.8 million tonnes of ore a year, and Ivanhoe guided to 80,000 to 95,000 tonnes of contained copper in 2021. The project is held 39.6 per cent each by Ivanhoe and Zijin, with the Congolese government owning 20 per cent.

That guidance counts for the second half of the year, since concentrate has to be produced, shipped and sold before it becomes dollars. May’s build came from somewhere else.

How a reserve is actually built

A reserve rises when dollars reach the BCC through banks or the Treasury and are not spent.

Dollars arrive through two doors. Commercial banks that hold surplus dollars can sell them to the BCC. The Treasury can receive dollar payments and leave them in its account. They leave through imports, debt service and government spending. A jump of US$292 million in three days looks like a single large inflow, or a transfer between accounts, rather than the sum of ordinary weeks.

The digest does not say which. Readers should treat the level as real and the cause as unconfirmed.

What to do with a bigger cushion

Take the comfort on tail risk, but wait for June before treating the trend as settled.

Importers get a better safety margin. Five weeks of cover makes a sudden franc collapse less likely than it looked at two weeks. Lenders and treasurers should not yet treat the build as durable, because three unexplained days produced nearly two-thirds of the month’s gain.

The checkpoint is the June digest. If the strict line holds above US$1.2 billion as the Kamoa-Kakula concentrate starts to flow, the build is structural. If it slips back toward US$900 million, the late jump was a one-off.