Reserves are four and a half times their December level, but the build owes most to the IMF and BCC purchases.

By Kanisa Magazine · September 2021

Congo’s reserves stood at US$3,298 million on 24 September, more than four and a half times the US$709 million of 31 December 2020. The BCC’s digest of 29 September gives the number; the arithmetic behind it is less flattering to exports than the headline suggests. Roughly half of the build came from a single IMF allocation of Special Drawing Rights, a further share from the IMF’s July disbursement, and most of the remainder from the central bank’s own dollar purchases. Mineral receipts supplied the conditions for those purchases, not the cushion directly.

For anyone pricing a dollar obligation, that distinction decides how far to trust the number.

A rough account of where US$2.6 billion came from

One allocation, one disbursement and a year of central-bank buying explain most of the build.

Strict reserves rose by US$2,589 million over the nine months. Financial Afrik reported that the IMF’s SDR allocation was worth about US$1.5 billion, and Radio Okapi’s report on the record carried the same SDR figure of roughly US$1.5 billion. The IMF’s July approval of the Extended Credit Facility released about US$217 million at once. From the digest’s turnover table, the BCC bought about US$1.1 billion of dollars from January to September and sold about US$0.1 billion, a net of close to US$1.0 billion. Those three items sum to about US$2.7 billion, a little more than the rise itself, which leaves a small allowance for payments such as debt service.

This is the writer’s reconciliation, not a BCC statement, and it carries that margin of error. It makes the point: almost 60 per cent of the rise was an allocation that exporters did not earn.

Prices: the export side is strong

Cobalt is up 66 per cent this year and copper 19 per cent, but both eased in September.

The BCC’s price table shows London copper at about US$9,250 a tonne in the last week of September, against US$7,803.50 on 31 December. Cobalt, in the 99.30 per cent grade the digest follows, stood at US$52,990 a tonne against US$32,000. Coltan reached US$88 a pound from US$51. Gold went the other way, to US$1,751 an ounce from US$1,889. Brent crude, the import-side price that matters for fuel, rose to US$78 a barrel from US$51.52.

Mining is still the earner, and reserves are now ample by the government’s own yardstick. A report on the ministerial council of 17 September said the reserve level was a record for Congo and that the government had set a mid-July target of three months of imports on own resources. At 3.13 months on 24 September, the target had been met.

Volume, and what the digest does not yet show

The cumulative output table still ends in July, and only mining reports for 2021.

The digest’s production table repeats July’s cumulative numbers: 1,039,670 tonnes of copper and 52,246 tonnes of cobalt for the first seven months, 14.2 and 9.1 per cent above the previous year. Entries for 2021 coffee, cocoa, palm oil and flour are blank. The external account therefore rests on one sector’s data, with the rest of the economy visible only in the import bill.

What the buffer permits, and what it does not

Official money buys time to build export receipts, not a substitute for them.

Broad reserves, which add banks’ foreign-currency deposits, were US$10.6 billion, or 10.06 months of imports, but the strict US$3.3 billion is the BCC’s own. That reserve gives the BCC room to keep the franc steady through a short copper slump, a position the country did not have at the start of the year. It does not repay the SDR charges that will arise if the allocation is spent, and it does not substitute for the volumes the mines must keep delivering.

A treasury team should therefore track three lines on one page: the strict reserve figure, the BCC’s weekly purchases, and copper and cobalt prices. Expect currency risk to stay low while all three hold, and treat any quarter in which official inflows stop and purchases fall as the moment to re-price dollar commitments.