## 1. Global Mean Temperature Increase by 2100

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---

### A. The impact of climate change on the Republic of Congo
- Absent remedial action, the Earth’s temperature is projected to rise 3oC by 2100 (relative to 2020), after rising only 1oC over the past two centuries.
- Accelerated warming and subsequent rise in rainfall anomalies in the Republic of Congo are harming:
  - crop nutrient content and yields,
  - livestock,
  - fisheries,
  - biodiversity,
  - land use.
- Increased frequency and intensity of flooding:
  - During 2000–18, an annual average of 7,000 people suffered from floods.
  - Severe flooding in 2019 and 2020 affected 100,000–160,000 people in the North.
  - Immediate emergency assistance (mostly WFP) amounted to about $7.5 million (0.07 percent of GDP).
  - The government estimates another $500 million (5 percent of GDP) is needed for affected families and climate-resilient reconstruction (temporary housing, new resilient housing, relocation).
- Distributional impacts:
  - Poorer households are the most adversely affected; health and education impacts reduce productivity and have long-term effects.
  - Food insecurity example: rose from 19 percent in 2014 to 48 percent in the Likouala region following the 2019–20 floods.
  - Using Gabon’s 2017 household survey as proxy, over a third of the population suffers a major price shock and/or irregular rainfall and flooding every year.
- Macroeconomic and fiscal pressures after natural disasters:
  - Reduced economic activity → subdued tax revenues.
  - Increased spending needs for post-disaster relief and reconstruction; crowding out of other development spending.
  - Increased imports for food and reconstruction raise current account pressures, partially offset by depressed agricultural exports.
  - Financial system stability generally less affected due to poorer households’ limited access to finance.

### B. Implications of global climate change action and global oil market dynamics
- Global mitigation context:
  - Combining April 2021 NDCs and other commitments in 131 countries, global temperature would still rise by 2oC above pre-industrial average by 2100.
  - IEA Sustainable Development Scenario (SDS) would limit global temperature increases by 2100 to less than 1.65oC above pre-industrial average (with a 50 percent probability).
  - SDS requires reducing net global CO2 emissions from the energy sector from 35.8 billion tons in 2019 to 10 billion tons in 2050 and to zero by 2070.
- Global oil demand and production scenarios (2015–2050):
  - If IEA SDS prevails, global oil production will fall from around 90 to nearly 70 million barrels per day between 2020 and 2040.
  - Under IEA SPS (stated policies, broadly consistent with 2oC by 2100), oil production would continue to grow before settling around 110 million barrels per day by 2040.
  - Under IEA CPS (current policies as of 2019), oil production would near 125 million barrels per day by 2040.
  - Technological advances (renewables, electric vehicles, LNG vessels), energy efficiency, CCS, and carbon credit markets influence pace of decline.
  - Carbon taxation will lower oil prices; only low-cost producers (GCC on-shore, U.S. shale) more likely to survive; other producers may reduce government take to remain competitive.
- Specific implications for the Republic of Congo:
  - Congo relies on oil receipts for 90 percent of its export revenues and 60 percent of its fiscal revenues.
  - Production is set to peak in 2024 and then decline to a steady state in 2040 at 60 percent of peak production (driven by depletion and lack of profitable investment).
  - Risk of stranded assets is low, but new investments to maintain production are at risk as multinational oil companies shift to high-yield projects.
  - Under IMF carbon tax scenario (carbon tax rising quickly to $75 a ton in 2030) and associated assumptions:
    - Assuming oil prices decline to $55 per barrel by 2040, Congo’s oil revenue declines could range between $25 to $30 million each year during 2022–40.
    - Export declines could range between $90 and $110 million each year during 2022–40.
  - Macroeconomic risks absent diversification:
    - Economic growth likely to suffer from reduced oil sector activity and spillovers to non-oil sector.
    - Depressed domestic demand and low fuel prices likely to contain inflationary pressures.
    - Financial sector: weaker asset quality, lower profitability, higher provisioning, increased risk aversion, higher interest rates.
    - Fiscal: large revenue declines + sizable domestic and external debt imply drastic reductions in fiscal spending; wages constitute one third of non-interest government spending.
    - Debt sustainability prospects jeopardized; sovereign risk premia likely to rise; pressures to roll over debt at expensive rates.
    - Current account and international reserves will erode; regional reserve contributions decline.
    - Political and social tensions could intensify; alternatively, weakened vested interests in oil could enable structural reforms.
- Congo’s role as carbon absorber:
  - Two thirds of the country is covered by dense tropical forest; on a net basis, Congo absorbs about 1.5 percent of annual global carbon emissions.
  - The Congo basin (across several countries) absorbs 3 percent of global emissions; peatlands may imply substantially more absorption.
- Carbon markets and compensation issues:
  - International carbon credit markets are nascent; no internationally determined price.
  - Carbon credits are generated for changes in emissions absorbed relative to a baseline year, not for the absolute net amount absorbed annually.
  - Authorities estimate that if credits were based on net annual absorption, Congo could gain $80 to $90 billion per year; relative to a 2005 baseline, Congo could gain $80 million from selling carbon credits.
  - Authorities argue current rules overlook the costs Congo incurred preserving forests and foregone resource extraction revenues.

### C. Policy implications and priorities
- Policy aims: support adaptation, mitigation, and manage fallout from reduced global oil demand; prioritize coordination to complement growth and poverty reduction.
- Existing national measures:
  - National Resilience Strategy (Contribution Determinée au Niveau National) recognizes adaptation and mitigation needs, including an estimate of over $4 billion in adaptation needs (largely to build resilient infrastructure).
  - An emissions strategy to be shared during COP26.
- Implementation constraints:
  - Pace of implementation depends on progress in domestic revenue mobilization and development partner support.
- Policy challenges and considerations:
  - Accelerate adaptation to cope with more frequent/intense natural disasters (e.g., flooding).
  - Pursue economic diversification to reduce dependence on oil (given exposure: 90 percent of export revenues; 60 percent of fiscal revenues).
  - Engage with international carbon market developments to seek fair compensation for carbon sequestration services provided by forests.
  - Prepare fiscal and debt management strategies to handle sustained oil revenue declines and protect priority spending (noting wages are one third of non-interest spending).
  - Strengthen social protection and disaster response financing to protect poorest households vulnerable to climate shocks.

---

### 11. Building resilience to climate

### Key findings on resilience and food security
- Building resilience to climate change is critical to improving food security and the prosperity of households and businesses.
- Recent research (AFR REO 2020) finds that the negative impact of floods and storms on per capita annual medium-term growth can be substantially reduced by closing gaps with average emerging markets and developing economies in healthcare, education, access to finance, and use of modern agricultural equipment.
- Example impacts and magnitudes:
  - These factors can raise Congo’s resilience to floods by 40 percent.
  - Illustration: raising health care to the EMDE average increases resilience of medium-term per capita GDP growth to floods by 0.06 percent while the adverse medium-term per capita GDP growth impact from a given flood is 0.2 percent; then health care improves resilience by 24 percent (= 0.06/0.2).

### Practical resilience measures and agricultural adaptation
- Structural and infrastructure improvements:
  - More robust homes and other structures that facilitate food storage significantly raise food security and, combined with good sanitation and drainage, prevent injuries and disease and facilitate access to safe drinking water.
  - Better quality and coverage of irrigation systems and use of machinery improve resilience of agricultural production (consistent water flow, creation of dikes, erosion protection, deeper seed planting). This requires sufficient rural electricity provision and associated legislation to incentivize supply.
- Agricultural inputs and information:
  - Use of improved seeds, fertilizer, insecticide, and erosion protection can reduce weather sensitivity of crops, while monitoring environmental effects of inputs.
  - Better mobile phone coverage would (i) broaden the reach of early warning systems; and (ii) provide farmers with latest information on food prices and weather to optimize planting, irrigating, and fertilizing decisions.
- Disaster preparedness and social protection:
  - More effective early warning systems and disaster responses are needed, including greater coordination across disaster risk management sectors, documentation of food and nutrition needs during disasters, and contingency plans in all districts and high-risk zones.
  - Stepped up social assistance and access to finance (Staff Report for 2021 Article IV, Annex 5) would help households and businesses implement recommendations and partially compensate for lost incomes and purchasing power when a climate shock hits.
  - Insurance can serve similar objectives but requires reducing high risk premiums and raising financial literacy.

### Forest management and carbon market opportunities
- PRONAR and carbon absorption:
  - More assertive implementation of the 2011 National Afforestation and Reforestation Program (PRONAR) will help expand carbon absorption capacity by 10 million tCO2e (equivalent to one fifth of Congo’s annual emissions).
  - PRONAR aims to develop one million hectares of multipurpose forest and agroforestry plantations via public and private partners; commitments to date only cover 70,000 hectares—Total (40,000), Brazzaville plantation company (10,000), and Cofor (20,000).
- Financing and regulatory reforms:
  - Revise government rules on donor financing for animal and tree conservation to allow private financing coupled with revenue sharing requirements with local communities.
- Preparations for international carbon credit markets:
  - Design and operationalize monitoring systems (e.g., document submission to REDD+ including a Forest Reference Level and a Safeguards Report) to enable credit issuance and payments.
  - Create a registry that tracks generation, sales, and retirement of credits capable of managing various types of credits (carbon, biodiversity, and other sustainable development credits) and baselines.
  - Consider regional collaboration to influence international carbon credit market design, including lobbying to:
    - modify the carbon credit definition to reflect the actual amount of emissions absorbed (rather than change relative to a baseline year);
    - modify the system to account for past preservation efforts of Congo basin countries (apply benchmark years tied to just before relevant environmental laws);
    - have higher values placed on credits related to forest preservation; and
    - ensure the carbon credit definition is broad enough to include forestry companies’ waste wood products for electricity generation and the recycling of sawdust waste into briquettes used by households.
  - Developing a domestic carbon trading system could assign value to Congo’s carbon credits and be linked to other regional systems (Senegal, Cote d’Ivoire, and South Africa).

### New growth engines to offset reduced oil revenues
- Strategic priorities and environmental safeguards:
  - Quickly build new growth engines while applying environmental impact assessments to minimize new emissions.
- Potential agribusiness and nature-based opportunities:
  - Capitalize on successes in new juice and yoghurt ventures and traditional milling (number of companies have tripled). Bean yields supported by EU and WFP; a South African joint venture is scaling up farmer fertilizer demonstrations.
  - Develop artisanal fishing to benefit rural communities with minimal environmental impact; artisanal growth requires financial support (recent support from European Union and French Development Agency).
  - Expand wood product businesses using logs from young logged forests (less than 10 years since logging). Commercial sales of these wood products have increased by over 10 percent per year since 2014.
  - Raise international visibility for nature tourism (gorillas, pristine coastline, Congo river and basin) and explore integration into regional tourist routes; a single tourism window and touristic engineering company have been established to facilitate efforts.
  - Explore mining options that do not require deforestation and leverage existing oil infrastructure; simultaneously introduce regulations to limit environmental damage and ensure transparency, and reform the tax system to maximize revenue or profit-sharing for the government.
  - Ongoing private interest and projects noted: Sapro (Mayoko mine deposit), Zanaga Iron Ore and Glencore (iron ore permits), Sangha Mining Development (iron ore deposit), and consideration of a Chinese ore processing plant for copper and zinc.

### Energy sector policies for adaptation and mitigation
- Expand energy component of the National Resilience Strategy to develop rural energy sources based on more cost-effective solar or wind power.
- Remove energy subsidies and introduce carbon taxation to improve mitigation, support a better business environment, and create fiscal space:
  - Phase out highly generous transfers to the oil refinery.
  - Implement the 2005 price-based regulatory framework for fuel prices (including a smoothing mechanism) as referenced in IMF Country Report No. 20/27.
  - Reform urban electricity billing and coverage to reflect actual consumption with a view to recovering production costs to incentivize energy efficiency and reduce cost; protect vulnerable groups with targeted social assistance.
  - Introduce carbon taxation (which currently does not exist in Congo) as a top-up to the excise tax applied to fuel products; first, more actively collect VAT on fuel imports and locally refined fuel products by taxing value addition at each stage, requiring appropriate legislation and strengthened tax administration.
- Improve governance and transparency in oil sector companies:
  - Avoid further SNPC investment in oil production projects not considered profitable by the private sector to reduce contingent liabilities.
  - Base decisions on SNPC production timing on market factors such as profitability and the company’s risk profile.
  - Gradually wind down unprofitable SOEs through disinvestment, privatization, or shutdowns.
  - Enhance transparency in government distribution of wealth by automatic allocation of some oil revenues (or savings from elimination of subsidies) towards social programs (health, education, targeted social assistance).

### Public investment management and financing
- Strengthen public investment management to implement resilience, forestry, and diversification projects:
  - Develop a public sector investment plan with a pipeline of projects promoting resilient infrastructure, forestry, and economic diversification, including full costing and maintenance costs.
  - Integrate these projects into core public financial management (PFM), investment, and debt management frameworks to access and manage substantial required spending.
  - Improved PFM and debt management practices can unlock financing from global climate funds.

### Development partner support and financing needs
- The National Resilience Strategy identifies $5.4 billion of climate-related projects, of which over $4 billion worth of projects are for raising resilience to climate change.
- Domestic measures (domestic revenue mobilization, improved spending efficiency supported by Fund technical assistance, carbon taxation, and reduced energy subsidies) will not be sufficient given debt sustainability constraints; greater concessional and grant financing from development partners is needed.
- Up-front investment in resilience can yield long-term savings measured by reduced disaster relief spending that can be six times the up-front investment cost for floods (IMF SSA REO April 2020).
- Recent mitigation support examples:
  - IPAD’s adaptation funds for rural farmers: $29 million.
  - FAO and CAFI financing: $47 million for emission reduction by 17 million tons over the next twenty years by transforming rural slash and burn practices toward agroforestry.
- Regional project efforts:
  - Heads of States from CEMAC, Angola, Burundi, DRC, Rwanda, Tanzania and Zambia aim to launch credible projects in 2022 financed by the Blue Fund (Fonds Bleu, initiated by the President in 2017), though creating a unified platform is proving challenging.

*International Monetary Fund, “Climate Change Adaptation and Transition: Issues in a Low-Income Oil Exporting Country” (Republic of Congo), September 10, 2021.*

### 1. Global Mean Temperature Increase by 2100______________________________________________ 2

### 1. Global Mean Temperature Increase by 2100

### A. The impact of climate change on the Republic of Congo
- Absent remedial action, the Earth’s temperature is projected to rise 3oC by 2100 (relative to 2020), after rising only 1oC over the past two centuries.
- Accelerated warming and subsequent rise in rainfall anomalies in the Republic of Congo are harming:
  - crop nutrient content and yields,
  - livestock,
  - fisheries,
  - biodiversity,
  - land use.
- Increased frequency and intensity of flooding:
  - During 2000–18, an annual average of 7,000 people suffered from floods.
  - Severe flooding in 2019 and 2020 affected 100,000–160,000 people in the North.
  - Immediate emergency assistance (mostly WFP) amounted to about $7.5 million (0.07 percent of GDP).
  - The government estimates another $500 million (5 percent of GDP) is needed for affected families and climate-resilient reconstruction (temporary housing, new resilient housing, relocation).
- Distributional impacts:
  - Poorer households are the most adversely affected; health and education impacts reduce productivity and have long-term effects.
  - Food insecurity example: rose from 19 percent in 2014 to 48 percent in the Likouala region following the 2019–20 floods.
  - Using Gabon’s 2017 household survey as proxy, over a third of the population suffers a major price shock and/or irregular rainfall and flooding every year.
- Macroeconomic and fiscal pressures after natural disasters:
  - Reduced economic activity → subdued tax revenues.
  - Increased spending needs for post-disaster relief and reconstruction; crowding out of other development spending.
  - Increased imports for food and reconstruction raise current account pressures, partially offset by depressed agricultural exports.
  - Financial system stability generally less affected due to poorer households’ limited access to finance.

### B. Implications of global climate change action and global oil market dynamics
- Global mitigation context:
  - Combining April 2021 NDCs and other commitments in 131 countries, global temperature would still rise by 2oC above pre-industrial average by 2100.
  - IEA Sustainable Development Scenario (SDS) would limit global temperature increases by 2100 to less than 1.65oC above pre-industrial average (with a 50 percent probability).
  - SDS requires reducing net global CO2 emissions from the energy sector from 35.8 billion tons in 2019 to 10 billion tons in 2050 and to zero by 2070.
- Global oil demand and production scenarios (2015–2050):
  - If IEA SDS prevails, global oil production will fall from around 90 to nearly 70 million barrels per day between 2020 and 2040.
  - Under IEA SPS (stated policies, broadly consistent with 2oC by 2100), oil production would continue to grow before settling around 110 million barrels per day by 2040.
  - Under IEA CPS (current policies as of 2019), oil production would near 125 million barrels per day by 2040.
  - Technological advances (renewables, electric vehicles, LNG vessels), energy efficiency, CCS, and carbon credit markets influence pace of decline.
  - Carbon taxation will lower oil prices; only low-cost producers (GCC on-shore, U.S. shale) more likely to survive; other producers may reduce government take to remain competitive.
- Specific implications for the Republic of Congo:
  - Congo relies on oil receipts for 90 percent of its export revenues and 60 percent of its fiscal revenues.
  - Production is set to peak in 2024 and then decline to a steady state in 2040 at 60 percent of peak production (driven by depletion and lack of profitable investment).
  - Risk of stranded assets is low, but new investments to maintain production are at risk as multinational oil companies shift to high-yield projects.
  - Under IMF carbon tax scenario (carbon tax rising quickly to $75 a ton in 2030) and associated assumptions:
    - Assuming oil prices decline to $55 per barrel by 2040, Congo’s oil revenue declines could range between $25 to $30 million each year during 2022–40.
    - Export declines could range between $90 and $110 million each year during 2022–40.
  - Macroeconomic risks absent diversification:
    - Economic growth likely to suffer from reduced oil sector activity and spillovers to non-oil sector.
    - Depressed domestic demand and low fuel prices likely to contain inflationary pressures.
    - Financial sector: weaker asset quality, lower profitability, higher provisioning, increased risk aversion, higher interest rates.
    - Fiscal: large revenue declines + sizable domestic and external debt imply drastic reductions in fiscal spending; wages constitute one third of non-interest government spending.
    - Debt sustainability prospects jeopardized; sovereign risk premia likely to rise; pressures to roll over debt at expensive rates.
    - Current account and international reserves will erode; regional reserve contributions decline.
    - Political and social tensions could intensify; alternatively, weakened vested interests in oil could enable structural reforms.
- Congo’s role as carbon absorber:
  - Two thirds of the country is covered by dense tropical forest; on a net basis, Congo absorbs about 1.5 percent of annual global carbon emissions.
  - The Congo basin (across several countries) absorbs 3 percent of global emissions; peatlands may imply substantially more absorption.
- Carbon markets and compensation issues:
  - International carbon credit markets are nascent; no internationally determined price.
  - Carbon credits are generated for changes in emissions absorbed relative to a baseline year, not for the absolute net amount absorbed annually.
  - Authorities estimate that if credits were based on net annual absorption, Congo could gain $80 to $90 billion per year; relative to a 2005 baseline, Congo could gain $80 million from selling carbon credits.
  - Authorities argue current rules overlook the costs Congo incurred preserving forests and foregone resource extraction revenues.

### C. Policy implications and priorities
- Policy aims: support adaptation, mitigation, and manage fallout from reduced global oil demand; prioritize coordination to complement growth and poverty reduction.
- Existing national measures:
  - National Resilience Strategy (Contribution Determinée au Niveau National) recognizes adaptation and mitigation needs, including an estimate of over $4 billion in adaptation needs (largely to build resilient infrastructure).
  - An emissions strategy to be shared during COP26.
- Implementation constraints:
  - Pace of implementation depends on progress in domestic revenue mobilization and development partner support.
- Policy challenges and considerations (implied by analysis):
  - Accelerate adaptation to cope with more frequent/intense natural disasters (e.g., flooding).
  - Pursue economic diversification to reduce dependence on oil (given exposure: 90 percent of export revenues; 60 percent of fiscal revenues).
  - Engage with international carbon market developments to seek fair compensation for carbon sequestration services provided by forests.
  - Prepare fiscal and debt management strategies to handle sustained oil revenue declines and protect priority spending (noting wages are one third of non-interest spending).
  - Strengthen social protection and disaster response financing to protect poorest households vulnerable to climate shocks.

*International Monetary Fund, “Climate Change Adaptation and Transition: Issues in a Low-Income Oil Exporting Country” (Republic of Congo), September 10, 2021.*

### 11. Building resilience to climate

### 1cogea2021002 - 11. Building resilience to climate

### Key findings on resilience and food security
- Building resilience to climate change is critical to improving food security and the prosperity of households and businesses.
- Recent research (AFR REO 2020) finds that the negative impact of floods and storms on per capita annual medium-term growth can be substantially reduced by closing gaps with average emerging markets and developing economies in healthcare, education, access to finance, and use of modern agricultural equipment.
- Example impacts and magnitudes:
  - These factors can raise Congo’s resilience to floods by 40 percent.
  - Illustration: raising health care to the EMDE average increases resilience of medium-term per capita GDP growth to floods by 0.06 percent while the adverse medium-term per capita GDP growth impact from a given flood is 0.2 percent; then health care improves resilience by 24 percent (= 0.06/0.2).

### Practical resilience measures and agricultural adaptation
- Structural and infrastructure improvements:
  - More robust homes and other structures that facilitate food storage significantly raise food security and, combined with good sanitation and drainage, prevent injuries and disease and facilitate access to safe drinking water.
  - Better quality and coverage of irrigation systems and use of machinery improve resilience of agricultural production (consistent water flow, creation of dikes, erosion protection, deeper seed planting). This requires sufficient rural electricity provision and associated legislation to incentivize supply.
- Agricultural inputs and information:
  - Use of improved seeds, fertilizer, insecticide, and erosion protection can reduce weather sensitivity of crops, while monitoring environmental effects of inputs.
  - Better mobile phone coverage would (i) broaden the reach of early warning systems; and (ii) provide farmers with latest information on food prices and weather to optimize planting, irrigating, and fertilizing decisions.
- Disaster preparedness and social protection:
  - More effective early warning systems and disaster responses are needed, including greater coordination across disaster risk management sectors, documentation of food and nutrition needs during disasters, and contingency plans in all districts and high-risk zones.
  - Stepped up social assistance and access to finance (Staff Report for 2021 Article IV, Annex 5) would help households and businesses implement recommendations and partially compensate for lost incomes and purchasing power when a climate shock hits.
  - Insurance can serve similar objectives but requires reducing high risk premiums and raising financial literacy.

### Forest management and carbon market opportunities
- PRONAR and carbon absorption:
  - More assertive implementation of the 2011 National Afforestation and Reforestation Program (PRONAR) will help expand carbon absorption capacity by 10 million tCO2e (equivalent to one fifth of Congo’s annual emissions).
  - PRONAR aims to develop one million hectares of multipurpose forest and agroforestry plantations via public and private partners; commitments to date only cover 70,000 hectares—Total (40,000), Brazzaville plantation company (10,000), and Cofor (20,000).
- Financing and regulatory reforms:
  - Revise government rules on donor financing for animal and tree conservation to allow private financing coupled with revenue sharing requirements with local communities.
- Preparations for international carbon credit markets:
  - Design and operationalize monitoring systems (e.g., document submission to REDD+ including a Forest Reference Level and a Safeguards Report) to enable credit issuance and payments.
  - Create a registry that tracks generation, sales, and retirement of credits capable of managing various types of credits (carbon, biodiversity, and other sustainable development credits) and baselines.
  - Consider regional collaboration to influence international carbon credit market design, including lobbying to:
    - modify the carbon credit definition to reflect the actual amount of emissions absorbed (rather than change relative to a baseline year);
    - modify the system to account for past preservation efforts of Congo basin countries (apply benchmark years tied to just before relevant environmental laws);
    - have higher values placed on credits related to forest preservation; and
    - ensure the carbon credit definition is broad enough to include forestry companies’ waste wood products for electricity generation and the recycling of sawdust waste into briquettes used by households.
  - Developing a domestic carbon trading system could assign value to Congo’s carbon credits and be linked to other regional systems (Senegal, Cote d’Ivoire, and South Africa).

### New growth engines to offset reduced oil revenues
- Strategic priorities and environmental safeguards:
  - Quickly build new growth engines while applying environmental impact assessments to minimize new emissions.
- Potential agribusiness and nature-based opportunities:
  - Capitalize on successes in new juice and yoghurt ventures and traditional milling (number of companies have tripled). Bean yields supported by EU and WFP; a South African joint venture is scaling up farmer fertilizer demonstrations.
  - Develop artisanal fishing to benefit rural communities with minimal environmental impact; artisanal growth requires financial support (recent support from European Union and French Development Agency).
  - Expand wood product businesses using logs from young logged forests (less than 10 years since logging). Commercial sales of these wood products have increased by over 10 percent per year since 2014.
  - Raise international visibility for nature tourism (gorillas, pristine coastline, Congo river and basin) and explore integration into regional tourist routes; a single tourism window and touristic engineering company have been established to facilitate efforts.
  - Explore mining options that do not require deforestation and leverage existing oil infrastructure; simultaneously introduce regulations to limit environmental damage and ensure transparency, and reform the tax system to maximize revenue or profit-sharing for the government.
  - Ongoing private interest and projects noted: Sapro (Mayoko mine deposit), Zanaga Iron Ore and Glencore (iron ore permits), Sangha Mining Development (iron ore deposit), and consideration of a Chinese ore processing plant for copper and zinc.

### Energy sector policies for adaptation and mitigation
- Expand energy component of the National Resilience Strategy to develop rural energy sources based on more cost-effective solar or wind power.
- Remove energy subsidies and introduce carbon taxation to improve mitigation, support a better business environment, and create fiscal space:
  - Phase out highly generous transfers to the oil refinery.
  - Implement the 2005 price-based regulatory framework for fuel prices (including a smoothing mechanism) as referenced in IMF Country Report No. 20/27.
  - Reform urban electricity billing and coverage to reflect actual consumption with a view to recovering production costs to incentivize energy efficiency and reduce cost; protect vulnerable groups with targeted social assistance.
  - Introduce carbon taxation (which currently does not exist in Congo) as a top-up to the excise tax applied to fuel products; first, more actively collect VAT on fuel imports and locally refined fuel products by taxing value addition at each stage, requiring appropriate legislation and strengthened tax administration.
- Improve governance and transparency in oil sector companies:
  - Avoid further SNPC investment in oil production projects not considered profitable by the private sector to reduce contingent liabilities.
  - Base decisions on SNPC production timing on market factors such as profitability and the company’s risk profile.
  - Gradually wind down unprofitable SOEs through disinvestment, privatization, or shutdowns.
  - Enhance transparency in government distribution of wealth by automatic allocation of some oil revenues (or savings from elimination of subsidies) towards social programs (health, education, targeted social assistance).

### Public investment management and financing
- Strengthen public investment management to implement resilience, forestry, and diversification projects:
  - Develop a public sector investment plan with a pipeline of projects promoting resilient infrastructure, forestry, and economic diversification, including full costing and maintenance costs.
  - Integrate these projects into core public financial management (PFM), investment, and debt management frameworks to access and manage substantial required spending.
  - Improved PFM and debt management practices can unlock financing from global climate funds.

### Development partner support and financing needs
- The National Resilience Strategy identifies $5.4 billion of climate-related projects, of which over $4 billion worth of projects are for raising resilience to climate change.
- Domestic measures (domestic revenue mobilization, improved spending efficiency supported by Fund technical assistance, carbon taxation, and reduced energy subsidies) will not be sufficient given debt sustainability constraints; greater concessional and grant financing from development partners is needed.
- Up-front investment in resilience can yield long-term savings measured by reduced disaster relief spending that can be six times the up-front investment cost for floods (IMF SSA REO April 2020).
- Recent mitigation support examples:
  - IPAD’s adaptation funds for rural farmers: $29 million.
  - FAO and CAFI financing: $47 million for emission reduction by 17 million tons over the next twenty years by transforming rural slash and burn practices toward agroforestry.
- Regional project efforts:
  - Heads of States from CEMAC, Angola, Burundi, DRC, Rwanda, Tanzania and Zambia aim to launch credible projects in 2022 financed by the Blue Fund (Fonds Bleu, initiated by the President in 2017), though creating a unified platform is proving challenging.

*Source: 1cogea2021002 - 11. Building resilience to climate (International Monetary Fund).*

---


_Source: https://www.imf.org/-/media/files/publications/cr/2021/english/1cogea2021002.pdf_