Democratic Republic of the Congo vs. Central African Republic

The economy of the Democratic Republic of the Congo - a nation endowed with vast natural resource wealth - continues to perform poorly. Systemic corruption since independence in 1960, combined with countrywide instability and intermittent conflict that began in the early-90s, has reduced national output and government revenue, and increased external debt. With the installation of a transitional government in 2003 after peace accords, economic conditions slowly began to improve as the government reopened relations with international financial institutions and international donors, and President KABILA began implementing reforms. Progress on implementing substantive economic reforms remains slow because of political instability, bureaucratic inefficiency, corruption, and patronage, which also dampen international investment prospects.

Renewed activity in the mining sector, the source of most export income, boosted Kinshasa's fiscal position and GDP growth until 2015, but low commodity prices have led to slower growth, volatile inflation, currency depreciation, and a growing fiscal deficit. An uncertain legal framework, corruption, and a lack of transparency in government policy are long-term problems for the large mining sector and for the economy as a whole. Much economic activity still occurs in the informal sector and is not reflected in GDP data.

Poverty remains widespread in DRC, and the country failed to meet any Millennium Development Goals by 2015. DRC also concluded its program with the IMF in 2015. The price of copper - the DRC's primary export - plummeted in 2015 and remained at record lows during 2016-17, reducing government revenues, expenditures, and foreign exchange reserves, while inflation reached nearly 50% in mid-2017 - its highest level since the early 2000s.

Subsistence agriculture, together with forestry and mining, remains the backbone of the economy of the Central African Republic (CAR), with about 60% of the population living in outlying areas. The agricultural sector generates more than half of estimated GDP, although statistics are unreliable in the conflict-prone country. Timber and diamonds account for most export earnings, followed by cotton. Important constraints to economic development include the CAR's landlocked geography, poor transportation system, largely unskilled work force, and legacy of misdirected macroeconomic policies. Factional fighting between the government and its opponents remains a drag on economic revitalization. Distribution of income is highly unequal and grants from the international community can only partially meet humanitarian needs. CAR shares a common currency with the Central African Monetary Union. The currency is pegged to the Euro.

Since 2009, the IMF has worked closely with the government to institute reforms that have resulted in some improvement in budget transparency, but other problems remain. The government's additional spending in the run-up to the 2011 election worsened CAR's fiscal situation. In 2012, the World Bank approved $125 million in funding for transport infrastructure and regional trade, focused on the route between CAR's capital and the port of Douala in Cameroon. In July 2016, the IMF approved a three-year extended credit facility valued at $116 million; in mid-2017, the IMF completed a review of CAR's fiscal performance and broadly approved of the government's management, although issues with revenue collection, weak government capacity, and transparency remain. The World Bank in late 2016 approved a $20 million grant to restore basic fiscal management, improve transparency, and assist with economic recovery.

Participation in the Kimberley Process, a commitment to remove conflict diamonds from the global supply chain, led to a partially lifted the ban on diamond exports from CAR in 2015, but persistent insecurity is likely to constrain real GDP growth.

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