(Adds background, quotes and details) By Joe Bavier KINSHASA, Feb 27 (Reuters) - The World Bank will give a $100 million emergency grant to help cash-strapped Democratic Republic of Congo pay essential bills and teachers' salaries, the Bank said on Friday. The World Bank proposed the emergency funds earlier this month after the country's mining sector was hit by the financial crisis and foreign reserves dwindled to just $36 million, down from more than $225 million last April. Foreign investors flocked to Congo after elections in 2006 gave new hope to a country that is rich in copper, cobalt and a wealth of other minerals but has been plagued by insecurity. Export revenues have since contracted as companies scale back or put on hold projects due to plummeting commodity prices. "It is important that the World Bank and other partners accompany Congo through this period of turbulence," Marie Francoise Marie-Nelly, the Bank's country director in Congo, said in a statement released on Friday. The World Bank's headquarters in Washington approved the grant late on Thursday, it said. The money has been earmarked to help Congo import essential goods and pay teachers salaries as well as the government's water and electricity bills. Congo's foreign reserve levels amount to less than one day's worth of import cover for a country which has little manufacturing or agricultural capacity and depends heavily upon goods brought in from outside. The grant is the first concrete result of efforts by Congo to secure more than $420 million in grants and loans from donors. The IMF is condsidering extending Congo a $200 million loan from its Exogenous Shocks Facility, while the African Development Bank could soon approve a $60 million in funding. The EU is also poised to contribute 50 million euros ($63 million) in grants, but the plan must first be approved by Brussels at a meeting expected to take place next month. "FIREFIGHTING" Donors hope the loans will tide Congo over until mineral prices recover and Congo potentially qualifies for debt relief on some $10 billion of external debt. "There is no hard currency for urgently needed imports. There is even not enough money to pay salaries on time, to pay soldiers on time, to pay for the costs of running a government," Richard Zink, the EU's ambassador to Congo, told Reuters. "There is no one who will tell you this is a long-term solution. This is firefighting," he added. Mining revenues account for around 70 percent of foreign currency revenues and were meant to provide around 40 percent of the vast central African nation's $4.9 billion 2009 budget. In December Congo lowered this year's copper export forecast to 365,000 tonnes, from a pre-crash projection of 410,000 tonnes. Production forecasts for cobalt, which is widely used in electronics, were more than halved to 32,000 tonnes. The drop in reserves has led to Congo's franc currency losing over 20 percent of its value since late last year. In January, it spiked to 1,000 francs against the dollar, almost twice the relatively stable rate of 540 francs to the dollar maintained through much of 2008. According to Congo's Central Bank website, the franc was trading at 749 francs to the dollar on Friday. "A big shock on the economy today will trigger a slide of the macro-economic framework. We could end up with a Zimbabwe scenario," Michel Losembe, president of the Congolese Association of Banks, said. (Editing by David Lewis; Editing by Victoria Main)
Rwandan soldiers march past a crowd gathered to watch thousands of Rwandan troops returning home across the border at Goma in eastern Congo, February 25, 2009. Rwandan troops began withdrawing from ...
