Strategic monetary management and macroeconomic stabilization in the Democratic Republic of Congo: a 25-year VECM analysis of five structural episodes (2001-2025)

Abstract

This paper frames 25 years (2001Q1-2025Q4) of Central Bank of Congo (BCC) monetary management as a strategic management problem, evaluating its indirect liquidity management strategy across five structurally distinct episodes: (i) post-stabilization (2001-2012); (ii) record-low rate era (2013-2015); (iii) politico-monetary crisis (2016-2018); (iv) COVID-19 shock (2019-2021); (v) inflationary surge and 25% rate (2022-2025). A VECM estimated on 100 quarterly observations confirms: a significant disinflationary policy rate effect (–0.020; t = 6.35; p < 1%); exchange rate channel dominance (0.624, doubled vs. 2001-2012); near-unit petroleum pass-through (0.896); and 25-year structural stability (Johansen trace = 104.32, p = 0.0001; Chow p = 0.784; CUSUM stable). Drawing on strategic management frameworks (Bryson, 2018; Mintzberg, 1994), five strategic imperatives are identified for 2026-2035: interest rate credibility reinforcement, active exchange rate management, structural de-dollarization, energy diversification, and enhanced monetary communication strategy.