The Democratic Republic of the Congo (DRC) is facing a growing fiscal dilemma in 2025, as public expenditures surge ahead of revenue growth. Despite steady improvements in tax mobilization, rising state obligations have deepened the budget deficit, forcing policymakers in Kinshasa to make tough choices between economic stimulus, national security, and compliance with macroeconomic benchmarks set by international partners.
Tax collection improves under pressure
Revenue agencies—including the Directorate General of Taxes (DGI), the Directorate General of Customs and Excise (DGDA), and the Directorate General of Administrative, Judicial, and Domain Revenues (DGRAD)—have reported stronger performance this year. Key drivers include an expanded tax base, partial digitalization of fiscal procedures, and stricter enforcement against informal export channels, particularly in the mining regions of Katanga and Kivu. International price trends have also played a role, with elevated copper and cobalt prices boosting earnings from the extractive sector. However, this revenue stream remains vulnerable to market volatility and growing competition from alternative battery materials.
Security and salaries drive public spending surge
On the expenditure side, pressures are intensifying. The ongoing conflict in eastern DRC, where the Armed Forces (FARDC) face armed groups and the M23 insurgency in North Kivu, is consuming significant resources. The prolonged state of emergency, repeatedly extended since 2021, has further inflated the security budget beyond initial forecasts. Rising payroll costs present another challenge: salary increases for teachers, judges, and other civil servants, along with new hires in defense and healthcare, have swollen the wages category. Social unrest continues to push for further concessions, making fiscal discipline harder to maintain. Emergency spending on recurrent flooding and mass displacements in the east has added to the strain. Subsidies—especially those supporting fuel prices—are also straining public finances, while critical public investments, despite legal protections, are being deferred to fund essential current expenditures.
Deficit deepens amid funding challenges
The widening gap between revenue and spending is forcing the government to rely more on domestic borrowing and central bank financing. This approach, already flagged by the International Monetary Fund (IMF) during reviews of the Extended Credit Facility program, is pushing domestic interest rates higher and putting pressure on the Congolese franc. The Central Bank of Congo (BCC) has responded by tightening monetary policy to stabilize the currency. Another consequence is the accumulation of unpaid bills owed to domestic suppliers, undermining the viability of small and medium-sized enterprises and eroding confidence in public procurement.
In the coming months, the Congolese government must act decisively to curb tax exemptions, accelerate the rollout of electronic invoicing, and prevent further wage increases without reigniting social unrest. The credibility of the macroeconomic framework agreed with international lenders—including the IMF and the World Bank—will depend on the government’s ability to restore fiscal balance in the second half of the year.
