A near-fivefold rise in reserves since 2020 owes more to institutions than to the mines.

By Kanisa Magazine · January 2022

The Banque Centrale du Congo held US$3,482.81 million in international reserves on 21 January 2022, equal to 3.03 months of imports. At the end of 2020 the same line read US$708.89 million, or 0.65 months. The cushion is nearly five times larger, and most of the jump was never earned at a mine gate.

It arrived through institutions. The IMF allocated special drawing rights at the end of August 2021, worth about US$1.5 billion to Congo, and the country’s Extended Credit Facility, approved on 15 July 2021, put a US$1.52 billion, 36-month programme behind the central bank. January’s external account is therefore a story about who holds the dollars and what they are meant to do.

A buffer built in a single quarter

Reserves rose from US$1.23 billion in June to US$3.29 billion in September 2021 and have barely moved since.

The BCC’s weekly digest records US$1,229.44 million on 29 June 2021 and US$3,293.72 million on 30 September. By 31 December the figure was US$3,465.65 million, and the January readings sat in a narrow band between US$3,454 million and US$3,483 million. A jump of more than US$2 billion in one quarter, followed by calm, is the signature of a one-off balance-sheet event rather than a trade surplus. Bloomberg reported that the allocation helped almost double reserves, with Kinshasa and the Fund planning talks on how to spend it.

Allocations count before they are spent

Special drawing rights are a claim on the Fund’s members; turning them into import dollars is a separate decision.

Of the US$2.77 billion gained since end-2020, the US$1.5 billion allocation accounts for roughly 54 per cent. The remainder reflects programme money and the central bank’s own foreign-currency position. Special drawing rights lift the headline immediately, but they only pay for fuel, flour or machinery once the central bank or the Treasury exchanges them for hard currency. Until that happens, the reserve is a promise of liquidity, not a pile of cash at the border, and the pace of conversion decides how much of the 3.03 months is usable.

What the dollars stand against

Copper and cobalt supply more than 80 per cent of exports, so a large buffer guards a narrow door.

The World Bank’s country partnership framework puts copper and cobalt at more than 80 per cent of exports. The BCC’s provisional table shows 2021 copper output at 1,896,100 tonnes, up 18.4 per cent on 1,601,208 tonnes in 2020, and cobalt at 98,445 tonnes, up 13.7 per cent. Yet cover slipped from 3.29 months at 31 December to 3.03 months on 21 January while the dollar stock edged up half a per cent. Imports are growing faster than the buffer, which is what a recovering, dollar-hungry economy looks like.

The exchange-rate reading

The official dollar stood at 1,999.19 francs and the interbank average at 2,035.33, a gap of 1.8 per cent.

The BCC’s operational rate for 21 January was 1,999.19 francs to the dollar and 2,268.13 to the euro. Banks quoted an interbank average of 2,035.33 for the dollar. The central bank’s policy rate was 7.5 per cent, down from 8.5 per cent in the reading of 28 December. Easing with reserves this high signals confidence that the franc’s anchor is secure, though the 1.8 per cent gap shows the market still prices a small premium on dollars.

What a treasurer does with thirteen weeks of cover

Budget at the market rate, treat the official rate as the anchor, and track weeks of imports rather than the dollar total.

The digest rounds the cushion to 13 weeks of imports. That is comfortable by the standards of 2020, when cover was under three weeks, but it is thinner than the US$3.5 billion headline suggests once the 54 per cent that came from the allocation is treated as a reserve of last resort. Importers should price contracts at the interbank level near 2,035, not the official 2,000. Exporters invoicing in dollars should keep local costs in francs where they can. The next test is whether programme reviews keep delivering money while imports climb; watch the cover ratio, not the dollar total.