INTERNATIONAL DEVELOPMENT ASSOCIATION INTERNATIONAL MONETARY FUND THE DEMOCRATIC REPUBLIC OF THE CONGO Joint World Bank-IMF Debt Sustainability Analysis 1 April 2020 Prepared jointly by the staffs of the International Development Association (IDA) and the International Monetary Fund (IMF) Approved by Marcello Estevão (IDA), Annalisa Fedelino and Seán Nolan (IMF) The Democratic Republic of the Congo Joint Bank-Fund Debt Sustainability Analysis Risk of external debt distress Moderate Overall risk of debt distress Moderate Granularity in the risk rating Some space to absorb shocks Application of judgement No DRC’s debt is assessed to remain sustainable with a moderate risk of debt distress under the COVID-19 pandemic shock although its debt-carrying capacity remains weak.2 The new baseline in this Staff Report is shown as a stress test in the figures and tables herein, together with the scenarios of the previous Debt Sustainability Analysis (DSA) of December 2019. The main channels through which the pandemic affects DRC’s economy are through lower commodity prices, and supply and demand disruptions in the local economy. The larger current account deficit and especially the less favorable fiscal position in the new baseline give rise to larger financing needs. Still, typical debt and debt-service ratios remain within reasonable bounds as the shock is not as extreme as the standard exports shock. The shock reflects currently available information. Given the rapidly evolving nature of the COVID-19 crisis, risks are heavily tilted to the downside. 1 The COVID-19 Pandemic scenario is based on the projections described in the Staff Report, while other scenarios, including the baseline in this Annex, are based on the DSA of the previous Staff Report of December 2019 (See Country Report No. 19/388). 2 DRC’s Composite Indicator (CI) score is 2.03, corresponding to a weak debt-carrying capacity as confirmed by the October 2019 WEO assumptions and 2018 Country Policy and Institutional Assessment (CPIA). Annex Figure 1. Democratic Republic of the Congo: Indicators of Public and Publicly Guaranteed External Debt under Alternatives Scenarios, 2019‒29 PV of debt-to GDP ratio PV of debt-to-exports ratio 35 300 30 250 25 200 20 150 15 100 10 5 50 Most extreme shock: Exports Most extreme shock: Exports 0 0 2019 2021 2023 2025 2027 2029 2019 2021 2023 2025 2027 2029 Debt service-to-exports ratio Debt service-to-revenue ratio 18 16 16 14 14 12 12 10 10 8 8 6 6 4 4 2 2 Most extreme shock: Exports Most extreme shock: Exports 0 0 2019 2021 2023 2025 2027 2029 2019 2021 2023 2025 2027 2029 Baseline Historical scenario Most extreme shock 1/ Threshold 1 Covid-19 Borrowing assumptions on additional financing needs resulting from the stress Customization of Default Settings tests* Size Interactions Default User defined Shares of marginal debt No No External PPG MLT debt 100% Tailored Stress Terms of marginal debt Combined CL Yes Avg. nominal interest rate on new borrowing in USD 1.9% 1.9% Natural disaster n.a. n.a. USD Discount rate 5.0% 5.0% Commodity price No No Avg. maturity (incl. grace period) 29 29 Market financing n.a. n.a. Avg. grace period 5 5 Note: "Yes" indicates any change to the size or * Note: All the additional financing needs generated by the shocks under the stress tests interactions of the default settings for the stress tests. are assumed to be covered by PPG external MLT debt in the external DSA. Default terms "n.a." indicates that the stress test does not apply. of marginal debt are based on baseline 10-year projections. Sources: Country authorities; and staff estimates and projections. 1/ The most extreme stress test is the test that yields the highest ratio in or before 2029. The stress test with a one-off breach is also presented (if any), while the one-off breach is deemed away for mechanical signals. When a stress test with a one-off breach happens to be the most exterme shock even after disregarding the one-off breach, only that stress test (with a one-off breach) would be presented. 2/ The magnitude of shocks used for the commodity price shock stress test are based on the commodity prices outlook prepared by the IMF research department. 2 Annex Figure 2. Democratic Republic of the Congo: Indicators of Public Debt Under Alternative Scenarios, 2019‒29 PV of Debt-to-GDP Ratio 40 35 30 25 20 15 10 5 Most extreme shock: Exports 0 -5 -10 2019 2021 2023 2025 2027 2029 PV of Debt-to-Revenue Ratio Debt Service-to-Revenue Ratio 250 60 200 50 150 40 100 30 50 20 0 Most extreme shock: Exports 10 Most extreme shock: Combined contingent liabilities -50 0 2019 2021 2023 2025 2027 2029 2019 2021 2023 2025 2027 2029 Baseline Most extreme shock 1/ TOTAL public debt benchmark Historical scenario 1 Covid-19 Borrowing assumptions on additional financing needs resulting from the Default User defined stress tests* Shares of marginal debt External PPG medium and long-term 39% 39% Domestic medium and long-term 0% 0% Domestic short-term 61% 61% Terms of marginal debt External MLT debt Avg. nominal interest rate on new borrowing in USD 1.9% 1.9% Avg. maturity (incl. grace period) 29 29 Avg. grace period 5 5 Domestic MLT debt Avg. real interest rate on new borrowing 0.0% 0.0% Avg. maturity (incl. grace period) 1 1 Avg. grace period 0 0 Domestic short-term debt Avg. real interest rate 0.1% 0.1% * Note: The public DSA allows for domestic financing to cover the additional financing needs generated by the shocks under the stress tests in the public DSA. Default terms of marginal debt are based on baseline 10-year projections. Sources: Country authorities; and staff estimates and projections. 1/ The most extreme stress test is the test that yields the highest ratio in or before 2029. The stress test with a one-off breach is also presented (if any), while the one-off breach is deemed away for mechanical signals. When a stress test with a one-off breach happens to be the most exterme shock even after disregarding the one-off breach, only that stress test (with a one-off breach) would be presented. 3 Annex Table 1. Democratic Republic of the Congo: External Debt Sustainability Framework, Baseline Scenario, 2019‒29 (in percent) Actual Projections Average 8/ Historical Projections 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2039 External debt (nominal) 1/ 17.6 16.9 13.7 14.3 13.8 13.4 12.1 10.8 9.7 8.6 7.8 7.4 6.9 6.5 4.9 23.3 10.1 Definition of external/domestic debt Residency-based of which: public and publicly guaranteed (PPG) 17.6 16.9 13.7 14.3 13.8 13.4 12.1 10.8 9.7 8.6 7.8 7.4 6.9 6.5 4.9 23.3 10.1 Is there a material difference between the No two criteria? Change in external debt 4.2 -0.7 -3.2 0.6 -0.6 -0.3 -1.3 -1.3 -1.1 -1.1 -0.8 -0.5 -0.5 -0.4 -0.1 Identified net debt-creating flows 2.0 0.0 -1.5 0.0 0.3 -0.6 -1.1 -1.3 -1.1 -1.2 -1.5 -1.4 -1.6 -1.8 -2.0 -1.7 -1.0 Non-interest current account deficit 4.1 3.2 4.6 3.3 4.1 3.5 3.0 2.6 2.6 2.4 2.0 2.0 1.7 1.4 0.5 4.2 2.6 Deficit in balance of goods and services 6.1 3.7 3.6 2.4 3.4 4.1 3.6 3.3 3.3 3.1 2.6 2.6 2.3 2.0 0.9 4.4 3.0 Exports 32.8 31.0 34.1 26.2 23.5 23.9 24.7 25.2 25.8 24.9 24.9 24.9 24.5 24.5 16.1 Debt Accumulation Imports 38.9 34.7 37.7 28.7 26.9 28.0 28.3 28.5 29.1 28.0 27.6 27.5 26.9 26.5 17.0 2.5 60 Net current transfers (negative = inflow) -3.6 -3.4 -2.6 -1.3 -1.6 -2.8 -2.9 -2.9 -2.9 -2.8 -2.8 -2.7 -2.7 -2.6 -1.9 -4.2 -2.5 of which: official -3.2 -1.9 -0.6 -0.8 -1.4 -2.6 -2.6 -2.6 -2.7 -2.6 -2.6 -2.5 -2.5 -2.4 -1.9 2.0 50 Other current account flows (negative = net inflow) 1.6 2.8 3.5 2.2 2.3 2.2 2.3 2.2 2.2 2.1 2.1 2.1 2.1 2.0 1.5 4.0 2.2 Net FDI (negative = inflow) -2.5 -2.8 -2.7 -3.2 -3.6 -3.9 -3.7 -3.5 -3.4 -3.3 -3.2 -3.2 -3.1 -3.0 -2.3 -4.0 -3.4 1.5 Endogenous debt dynamics 2/ 0.5 -0.4 -3.3 -0.2 -0.2 -0.3 -0.4 -0.3 -0.3 -0.3 -0.2 -0.2 -0.2 -0.2 -0.2 40 Contribution from nominal interest rate 0.1 0.1 0.1 0.4 0.2 0.2 0.2 0.2 0.1 0.1 0.1 0.1 0.1 0.1 0.1 1.0 Contribution from real GDP growth -0.3 -0.6 -0.8 -0.6 -0.4 -0.5 -0.6 -0.5 -0.5 -0.4 -0.3 -0.3 -0.3 -0.3 -0.2 30 Contribution from price and exchange rate changes 0.8 0.2 -2.6 … … … … … … … … … … … … 0.5 Residual 3/ 2.2 -0.7 -1.7 0.7 -0.8 0.3 -0.2 -0.1 0.1 0.1 0.7 0.9 1.1 1.4 1.9 -4.8 0.4 of which: exceptional financing 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 20 0.0 Sustainability indicators -0.5 10 PV of PPG external debt-to-GDP ratio ... ... 9.9 9.9 9.5 9.1 8.1 7.0 6.2 5.3 4.7 4.3 3.9 3.7 2.9 PV of PPG external debt-to-exports ratio ... ... 28.9 37.9 40.6 38.2 32.6 27.8 24.0 21.2 18.7 17.2 16.1 15.0 17.7 -1.0 0 PPG debt service-to-exports ratio 2.2 1.9 1.4 4.8 5.7 5.6 5.1 4.9 4.1 4.5 3.5 2.4 2.3 2.0 1.5 2019 2021 2023 2025 2027 2029 PPG debt service-to-revenue ratio 6.4 6.1 4.8 11.3 11.1 11.1 10.0 9.5 8.0 8.6 6.8 4.6 4.6 4.0 2.0 Gross external financing need (Mil ion of U.S. dollars) 813.1 366.3 1084.4 690.3 951.5 541.1 328.9 184.8 181.9 149.9 -286.9 -480.1 -646.3 -949.0 -2593.4 Debt Accumulation Grant-equivalent financing (% of GDP) Key macroeconomic assumptions Grant element of new borrowing (% right scale) Real GDP growth (in percent) 2.4 3.7 5.8 4.5 3.2 3.5 4.5 4.3 4.6 4.1 4.1 4.2 4.2 4.3 5.3 6.1 4.1 GDP deflator in US dollar terms (change in percent) -5.6 -1.0 18.3 1.4 2.1 1.4 1.0 1.7 1.0 1.5 1.5 1.5 1.5 1.6 1.8 3.2 1.5 Effective interest rate (percent) 4/ 0.4 0.3 0.4 3.2 1.7 1.5 1.5 1.4 1.3 1.3 1.3 1.3 1.2 1.1 1.5 0.4 1.5 External debt (nominal) 1/ Growth of exports of G&S (US dollar terms, in percent) 14.9 -3.0 38.0 -18.7 -5.4 6.5 9.2 8.4 7.9 2.2 5.7 5.7 4.3 5.8 0.0 12.9 2.9 of which: Private Growth of imports of G&S (US dollar terms, in percent) 11.5 -8.3 36.1 -19.5 -0.9 9.0 6.8 7.0 7.7 1.7 4.0 5.6 3.6 4.6 0.4 9.6 2.7 16 Grant element of new public sector borrowing (in percent) .. .. .. 24.7 23.0 37.4 49.2 43.2 40.8 39.4 40.2 40.8 41.3 40.4 34.9 ... 38.2 Government revenues (excluding grants, in percent of GDP) 11.2 9.8 10.0 11.0 12.2 12.2 12.6 12.9 13.2 13.1 12.9 12.9 12.4 12.5 12.0 11.9 12.5 14 Aid flows (in Mil ion of US dollars) 5/ 1040.5 754.2 537.1 612.4 990.9 1434.2 1227.7 1298.9 1409.5 1474.9 1559.7 1649.5 1744.4 1835.2 3271.6 12 Grant-equivalent financing (in percent of GDP) 6/ .. .. .. 1.2 1.7 2.1 1.9 2.0 2.0 2.0 2.0 2.0 2.0 2.0 1.9 ... 1.9 Grant-equivalent financing (in percent of external financing) 6/ .. .. .. 46.6 62.6 70.0 88.8 88.1 88.1 87.9 88.2 88.4 88.7 88.6 89.0 ... 80.5 10 Nominal GDP (Mil ion of US dollars) 36,640 37,615 47,099 49,906 52,591 55,159 58,251 61,814 65,316 69,020 72,978 77,217 81,742 86,605 162,413 Nominal dollar GDP growth -3.4 2.7 25.2 6.0 5.4 4.9 5.6 6.1 5.7 5.7 5.7 5.8 5.9 5.9 7.2 9.6 5.7 8 6 Memorandum items: PV of external debt 7/ .. .. 9.9 9.9 9.5 9.1 8.1 7.0 6.2 5.3 4.7 4.3 3.9 3.7 2.9 4 In percent of exports .. .. 28.9 37.9 40.6 38.2 32.6 27.8 24.0 21.2 18.7 17.2 16.1 15.0 17.7 2 Total external debt service-to-exports ratio 2.2 1.9 1.4 4.8 5.7 5.6 5.1 4.9 4.1 4.5 3.5 2.4 2.3 2.0 1.5 PV of PPG external debt (in Mil ion of US dollars) 4642.2 4962.8 5021.2 5033.1 4693.4 4333.3 4039.4 3652.1 3396.1 3312.4 3223.8 3177.1 4629.3 0 (PVt-PVt-1)/GDPt-1 (in percent) 0.7 0.1 0.0 -0.6 -0.6 -0.5 -0.6 -0.4 -0.1 -0.1 -0.1 0.1 2019 2021 2023 2025 2027 2029 Non-interest current account deficit that stabilizes debt ratio -0.2 3.9 7.8 2.7 4.6 3.8 4.4 3.9 3.6 3.5 2.8 2.4 2.2 1.8 0.6 Sources: Country authorities; and staff estimates and projections. 0 [ publ 1// Includes both ate( sector g iρc(andg)privƐα g ρ gdebt. )]/( external ρ) t es p e ous pe od debt ato, t o a te est ate; g ea G g o t ate, ρ g o t ate o G de ato U.S. do a te s, Ɛ o a app ecato o t e oca cu e cy, a d α s a e o oca cu e cy de o ated e te a debt tota e te a debt. 3/ Includes exceptional financing (i.e., changes in arrears and debt relief); changes in gross foreign assets; and valuation adjustments. For projections also includes contribution from price and exchange rate changes. 4/ Current-year interest payments divided by previous period debt stock. 5/ Defined as grants, concessional loans, and debt relief. 6/ Grant-equivalent financing includes grants provided directly to the government and through new borrowing (difference between the face value and the PV of new debt). 7/ Assumes that PV of private sector debt is equivalent to its face value. 8/ Historical averages are generally derived over the past 10 years, subject to data availability, whereas projections averages are over the first year of projection and the next 10 years. 4 Annex Table 2. Democratic Republic of the Congo: Public Sector Debt Sustainability Framework, Baseline Scenario, 2019‒2 (In percent) Actual Projections Average 6/ 2016 2017 2018 2019 2020 2021 2022 2023 2024 2029 Historical Projections Public sector debt 1/ 17.6 16.9 20.3 21.3 21.2 20.3 18.1 16.2 14.3 8.5 23.9 14.9 Definition of external/domestic Residency- of which: external debt 17.6 16.9 13.7 14.3 13.8 13.4 12.1 10.8 9.7 6.5 23.3 10.1 debt based of which: local-currency denominated Change in public sector debt 4.2 -0.7 3.4 1.0 -0.1 -0.9 -2.1 -1.9 -2.0 -0.9 Is there a material difference Identified debt-creating flows 3.3 -3.6 -4.6 1.2 -1.7 -1.4 -1.9 -1.9 -1.9 -1.5 -4.8 -1.5 No between the two criteria? Primary deficit 0.2 -1.6 -0.4 1.8 -0.6 -0.4 -0.9 -0.8 -1.1 -1.0 -1.9 -0.7 Revenue and grants 14.0 11.7 11.1 11.8 13.5 13.8 14.3 14.7 15.1 14.3 14.4 14.2 of which: grants 2.8 2.0 1.1 0.8 1.4 1.6 1.7 1.8 1.8 1.8 Public sector debt 1/ Primary (noninterest) expenditure 14.2 10.1 10.7 13.6 12.9 13.4 13.4 13.8 14.0 13.3 12.4 13.5 Automatic debt dynamics 3.1 -2.0 -4.2 -0.5 -1.1 -1.0 -1.0 -1.0 -0.8 -0.5 of which: local-currency denominated Contribution from interest rate/growth differential -0.4 -0.9 -1.2 -0.9 -1.1 -1.1 -1.2 -1.0 -0.9 -0.5 of which: foreign-currency denominated of which: contribution from average real interest rate -0.1 -0.2 -0.3 0.0 -0.4 -0.4 -0.3 -0.3 -0.2 -0.1 of which: contribution from real GDP growth -0.3 -0.6 -0.9 -0.9 -0.7 -0.7 -0.9 -0.7 -0.7 -0.4 25 Contribution from real exchange rate depreciation 3.5 -1.1 -3.0 ... ... ... ... ... ... ... Other identified debt-creating flows 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 20 Privatization receipts (negative) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 15 Recognition of contingent liabilities (e.g., bank recapitalization) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Debt relief (HIPC and other) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 10 Other debt creating or reducing flow (please specify) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Residual 0.9 2.9 8.0 0.2 1.6 0.5 -0.1 0.0 0.1 0.6 -1.1 0.5 5 Sustainability indicators 0 PV of public debt-to-GDP ratio 2/ ... ... 16.5 17.2 17.3 16.3 14.3 12.7 10.9 5.8 2019 2021 2023 2025 2027 2029 PV of public debt-to-revenue and grants ratio … … 148.8 145.9 127.9 118.0 100.4 86.3 72.5 40.6 Debt service-to-revenue and grants ratio 3/ 5.1 5.1 4.3 4.7 11.3 20.8 20.7 19.4 18.5 11.3 Gross financing need 4/ 0.9 -1.0 0.1 2.3 0.9 2.5 2.1 2.0 1.7 0.6 of which: held by residents of which: held by non-residents Key macroeconomic and fiscal assumptions 25 Real GDP growth (in percent) 2.4 3.7 5.8 4.5 3.2 3.5 4.5 4.3 4.6 4.3 6.1 4.1 Average nominal interest rate on external debt (in percent) 0.4 0.4 0.4 3.2 1.7 1.5 1.5 1.4 1.3 1.2 0.4 1.6 20 Average real interest rate on domestic debt (in percent) -3.8 -29.8 -22.7 -2.9 -5.3 -3.9 -3.4 -3.9 -3.0 -3.0 -11.6 -3.5 Real exchange rate depreciation (in percent, + indicates depreciation) 26.8 -6.7 -19.0 … ... ... ... ... ... ... -1.8 ... 15 Inflation rate (GDP deflator, in percent) 4.3 43.1 29.8 3.0 5.7 4.9 4.6 5.3 4.5 5.1 15.4 4.9 10 Growth of real primary spending (deflated by GDP deflator, in percent) -14.2 -26.1 12.1 32.3 -2.1 7.5 4.7 7.7 5.6 5.0 4.0 6.5 Primary deficit that stabilizes the debt-to-GDP ratio 5/ -4.0 -0.9 -3.7 0.7 -0.6 0.5 1.3 1.0 0.9 -0.1 -2.9 0.4 5 PV of contingent liabilities (not included in public sector debt) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0 2019 2021 2023 2025 2027 2029 Sources: Country authorities; and staff estimates and projections. 1/ Coverage of debt: The central, state, and local governments, central bank, government-guaranteed debt, non-guaranteed SOE debt . Definition of external debt is Residency-based. 2/ The underlying PV of external debt-to-GDP ratio under the public DSA differs from the external DSA with the size of differences depending on exchange rates projections. 3/ Debt service is defined as the sum of interest and amortization of medium and long-term, and short-term debt. 4/ Gross financing need is defined as the primary deficit plus debt service plus the stock of short-term debt at the end of the last period and other debt creating/reducing flows. 5/ Defined as a primary deficit minus a change in the public debt-to-GDP ratio ((-): a primary surplus), which would stabilizes the debt ratio only in the year in question. 6/ Historical averages are generally derived over the past 10 years, subject to data availability, whereas projections averages are over the first year of projection and the next 10 years. 5 Annex Table 3. Democratic Republic of the Congo: Sensitivity Analysis for Key Indicators of Public and Publicly Guaranteed External Debt, 2019‒2 (In percent) Projections 1/ 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 PV of debt-to GDP ratio Baseline 10 10 9 8 7 6 5 5 4 4 4 A. Alternative Scenarios A1. Key variables at their historical averages in 2019-2029 2/ 10 9 9 8 8 7 7 7 7 8 9 A2. Alternative Scenario : Covid-19 10 11 11 10 9 8 6 6 5 5 5 B. Bound Tests B1. Real GDP growth 10 10 10 9 8 7 6 5 5 4 4 B2. Primary balance 10 11 12 12 11 11 10 9 9 8 8 B3. Exports 10 17 27 26 24 23 22 21 19 18 17 B4. Other flows 3/ 10 11 12 11 10 9 8 8 7 7 6 B5. Depreciation 10 12 9 8 7 6 5 4 3 3 3 B6. Combination of B1-B5 10 15 15 13 12 11 10 9 8 8 7 C. Tailored Tests C1. Combined contingent liabilities 10 11 12 12 11 10 9 9 8 8 8 C2. Natural disaster n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. C3. Commodity price 10 11 12 11 10 9 8 7 6 6 5 C4. Market Financing n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Threshold 30 30 30 30 30 30 30 30 30 30 30 PV of debt-to-exports ratio Baseline 38 41 38 33 28 24 21 19 17 16 15 A. Alternative Scenarios A1. Key variables at their historical averages in 2019-2029 2/ 38 39 36 32 30 28 28 28 30 32 35 A2. Alternative Scenario : Covid-19 38 51 49 40 34 28 24 21 19 18 17 B. Bound Tests B1. Real GDP growth 38 41 38 33 28 24 21 19 17 16 15 B2. Primary balance 38 45 50 48 45 41 40 37 35 34 32 B3. Exports 38 105 243 222 205 191 186 176 164 154 144 B4. Other flows 3/ 38 48 52 46 40 36 33 30 28 26 25 B5. Depreciation 38 41 31 25 21 17 14 12 11 10 9 B6. Combination of B1-B5 38 71 55 72 64 58 54 49 45 42 40 C. Tailored Tests C1. Combined contingent liabilities 38 49 51 47 43 40 38 35 34 33 31 C2. Natural disaster n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. C3. Commodity price 38 51 54 46 40 35 32 29 26 24 22 C4. Market Financing n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Threshold 140 140 140 140 140 140 140 140 140 140 140 Debt service-to-exports ratio Baseline 5 6 6 5 5 4 5 4 2 2 2 A. Alternative Scenarios A1. Key variables at their historical averages in 2019-2029 2/ 5 6 5 5 4 4 4 3 2 2 2 A2. Alternative Scenario : Covid-19 5 7 7 6 6 4 5 4 3 3 2 B. Bound Tests B1. Real GDP growth 5 6 6 5 5 4 5 4 2 2 2 B2. Primary balance 5 6 6 5 5 5 5 4 3 3 3 B3. Exports 5 9 15 16 15 13 14 14 15 15 14 B4. Other flows 3/ 5 6 6 5 5 4 5 4 3 3 3 B5. Depreciation 5 6 6 5 5 4 4 3 2 2 2 B6. Combination of B1-B5 5 7 9 8 8 7 7 7 5 5 4 C. Tailored Tests C1. Combined contingent liabilities 5 6 6 5 5 4 5 4 3 3 2 C2. Natural disaster n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. C3. Commodity price 5 6 6 6 5 5 5 4 3 3 3 C4. Market Financing n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Threshold 10 10 10 10 10 10 10 10 10 10 10 Debt service-to-revenue ratio Baseline 11 11 11 10 9 8 9 7 5 5 4 A. Alternative Scenarios A1. Key variables at their historical averages in 2019-2029 2/ 11 11 10 9 8 7 7 6 4 4 4 A2. Alternative Scenario : Covid-19 11 12 13 11 11 9 10 8 6 6 5 B. Bound Tests 11 12 13 11 11 9 10 8 6 6 5 B1. Real GDP growth 11 12 12 11 10 9 9 7 5 5 4 B2. Primary balance 11 11 11 11 10 9 10 8 6 7 6 B3. Exports 11 12 14 15 14 12 13 13 14 14 13 B4. Other flows 3/ 11 11 11 11 10 9 9 8 6 6 6 B5. Depreciation 11 14 14 12 11 10 10 8 5 5 4 B6. Combination of B1-B5 11 12 13 12 11 10 10 10 7 7 7 C. Tailored Tests C1. Combined contingent liabilities 11 11 11 11 10 9 9 8 5 5 5 C2. Natural disaster n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. C3. Commodity price 11 12 12 12 11 9 10 8 6 6 5 C4. Market Financing n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Threshold 14 14 14 14 14 14 14 14 14 14 14 Sources: Country authorities; and staff estimates and projections. 1/ A bold value indicates a breach of the threshold. 2/ Variables include real GDP growth, GDP deflator (in U.S. dollar terms), non-interest current account in percent of GDP, and non-debt creating flows. 3/ Includes official and private transfers and FDI. 6 Annex Table 4. Democratic Republic of the Congo: Sensitivity Analysis for Key Indicators of Public Debt, 2019‒2 (In percent) Projections 1/ 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 PV of Debt-to-GDP Ratio Baseline 17 17 16 14 13 11 9 8 7 7 6 A. Alternative Scenarios A1. Key variables at their historical averages in 2019-2029 2/ 17 15 11 8 5 3 1 -1 -2 -3 -4 A2. Alternative Scenario : Covid-19 17 19 18 16 15 14 13 12 12 11 11 B. Bound Tests B1. Real GDP growth 17 18 19 17 16 15 14 13 13 13 12 B2. Primary balance 17 21 23 21 18 16 15 13 12 11 10 B3. Exports 17 23 32 30 28 26 24 22 20 19 17 B4. Other flows 3/ 17 19 20 18 16 14 13 11 10 9 8 B5. Depreciation 17 19 17 14 12 10 8 6 4 3 2 B6. Combination of B1-B5 17 19 18 15 13 11 9 8 7 6 5 C. Tailored Tests C1. Combined contingent liabilities 17 24 22 20 18 16 14 13 12 11 10 C2. Natural disaster n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. C3. Commodity price 17 18 19 18 18 17 16 16 15 15 15 C4. Market Financing n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. TOTAL public debt benchmark 35 35 35 35 35 35 35 35 35 35 35 PV of Debt-to-Revenue Ratio Baseline 146 128 118 100 86 72 63 56 50 47 41 A. Alternative Scenarios A1. Key variables at their historical averages in 2019-2029 2/ 146 109 82 56 35 18 6 (5) (13) (21) (28) A2. Alternative Scenario : Covid-19 5 13 26 23 22 23 24 23 20 19 17 B. Bound Tests B1. Real GDP growth 146 135 134 120 109 98 92 89 87 88 84 B2. Primary balance 146 155 168 144 125 109 98 91 84 81 73 B3. Exports 146 172 230 207 188 170 160 151 139 132 119 B4. Other flows 3/ 146 140 142 124 108 94 84 77 69 65 58 B5. Depreciation 146 141 123 102 83 65 51 40 30 22 12 B6. Combination of B1-B5 146 140 131 105 87 71 60 53 47 44 38 C. Tailored Tests C1. Combined contingent liabilities 146 176 160 137 120 104 94 86 80 77 70 C2. Natural disaster n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. C3. Commodity price 146 145 144 136 127 116 110 106 103 105 101 C4. Market Financing n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Debt Service-to-Revenue Ratio Baseline 5 11 21 21 19 19 17 15 13 12 11 A. Alternative Scenarios A1. Key variables at their historical averages in 2019-2029 2/ 5 10 17 15 12 11 9 6 4 3 3 A2. Alternative Scenario : Covid-19 5 13 26 23 22 23 24 23 20 19 17 B. Bound Tests B1. Real GDP growth 5 12 24 27 27 28 27 26 24 24 23 B2. Primary balance 5 11 40 50 37 29 24 20 17 17 16 B3. Exports 5 11 22 24 22 21 19 19 19 19 18 B4. Other flows 3/ 5 11 21 21 20 19 17 16 14 13 13 B5. Depreciation 5 12 23 20 21 19 18 16 12 11 10 B6. Combination of B1-B5 5 11 20 29 23 20 17 15 12 12 11 C. Tailored Tests C1. Combined contingent liabilities 5 11 54 40 31 26 22 19 15 14 13 C2. Natural disaster n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. C3. Commodity price 5 12 23 23 29 32 31 30 27 27 26 C4. Market Financing n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Sources: Country authorities; and staff estimates and projections. 1/ A bold value indicates a breach of the benchmark. 2/ Variables include real GDP growth, GDP deflator and primary deficit in percent of GDP. 3/ Includes official and private transfers and FDI. 7