The Republic of Congo has set up a team to advice government on ways to get out of huge foreign debt owed to mainly China and international commodity trading companies.
Parliament and President Denis Sassou Nguesso first approved the law establishing the ‘Comité national de la dette publique’ or National Committee on Public Debt (CNDP) 11 years ago. However, it was not operationalised.
On May 28, the committee comprising officials selected from various government agencies met for the first time and has since been operating daily.
“We are relaunching the CNDP because it is well-known that the burden of debt hampers our ability to move towards development and success,” said Ignrid Ebouka-Babackas Minister of Planning, Statistics and Regional Integration, according to local media.
Oil producing Congo-Brazzaville has foreign debt of $9.1billion, according to the International Monetary Fund. About $2.4billion is owed to China alone.
As of October 2018, the debt was actually 110% of the country’s GDP.
Government has been in talks with the IMF since early 2017 to help come up with ways to restructure the debt with its creditors. However, there has been little progress – meaning the financial support government would have received from the Fund may not come soon.
France, Congo-Brazzaville’s colonial master, said in mid April that it was ready to review its debt of 135m euros as soon as it concludes stimulus package from the IMF.
Early last month, the central African nation announced it had reached agreement with the Export-Import Bank of China (EximBank) to restructure its debt. No details were provided.
“The agreement, which the government considers crucial for our country, is the result of two years of negotiations….[it] promises interesting prospects for further negotiations with our technical financial partners particularly the IMF and the World Bank,” government said in a statement at the time.
For its first meeting, the debt committee adopted what was described as “procedure manual” to be basis for all agencies planning to acquire foreign funding.
“This meeting is very important for our country, which for a long time, has faced the challenge of effectively coordinating debt policy, and management of budget and monetary policy,” said Minister Ebouka-Babackas.
“When the economy is in crisis, the GDP reduces, and we feel the debt is becoming unsustainable…” she said.
Congo-Brazzaville has been severely hit by fall in oil prices globally. Government revenue dropped from $6.3 billion in 2013 to $2.5 billion in 2016.
The IMF and Government have refused to release details on the creditors, but some of the debt is thought to be owed to commodity trading companies, which extended credit to the government guaranteed by future oil revenues.
If Congo defaults on these debts, say observers, the companies will be able to claim this oil money, further swallowing up the government’s revenue.