An International Monetary Fund team in the Congo Republic said on Thursday it was not ready to propose an aid programme for the debt-crippled country to the IMF board but did applaud reforms promised by Brazzaville to obtain a bailout.
Like other Central African oil producers, Congo has been hit hard by low crude prices. But while several regional neighbours, including Chad and Gabon, have secured bailouts from the IMF, talks with Congo have dragged on since last year.
The delay is largely due to the IMF’s demand that the government restructure its debt, which stood at $9.14 billion, or around 110 percent of GDP, by the end of July and which the Fund says is unsustainable.
Once compliance with all relevant IMF policies has been established, an arrangement to support Congo’s economic program would be proposed for the IMF Executive Board’s consideration.
The IMF wrapped up its latest visit to Congo on Wednesday.
“Staff understands that the authorities will continue to work in the coming weeks on implementing their comprehensive strategy to restore debt sustainability and ensure full program financing,” it said in a statement.
“Once compliance with all relevant IMF policies has been established, an arrangement to support Congo’s economic program would be proposed for the IMF Executive Board’s consideration.”
Congo is seeking to restructure its debt with commodities trading houses after borrowing $2 billion from merchants including Trafigura and Glencore. The bulk of its external debt, however, is owed to Chinese entities.
In a statement released late on Wednesday, Prime Minister Clement Mouamba said that any restructuring of the external debt would not affect multilateral creditors or holders of Congo’s Eurobond, which matures in 2029.
It added that the government expected the talks to “rapidly lead to the adoption” of a three-year programme with the IMF.
Government revenues have dropped by a third since world prices for crude plummeted in 2014 and 2015. The IMF said last year that the non-oil economy was expected to contract by 9.2 percent in 2017.
That hardship was exacerbated by Congo’s chronic governance problems, the Fund statement said.
“The authorities will need to take bold and immediate governance reforms to put into effect the government’s proclaimed intention to mark a break with past policies and practices,” it said.
The mission commended the government’s pledges to establish an independent anti-corruption body, oblige senior officials to declare their assets and foster transparency regarding natural resource management and large infrastructure projects.