Congo: Promoting Inclusive Growth and Enhancing Governance

IMF News, July 24, 2019

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The Republic of Congo is the largest oil producer in the Central African Economic and Monetary Community (CEMAC) region and is still recovering after a severe economic crisis caused by the oil price shock of 2014.
The IMF approved financial assistance for the country under its Extended Credit Facility (ECF).
The IMF-supported program extends about $449 million to the Republic of Congo.
The IMF now has a program in place with five of the six CEMAC countries.
Program discussions took over two years due to the magnitude of the 2014 oil shock, limited institutional capacity, serious governance and transparency concerns, and the need to secure financing assurances, including debt relief from key creditors, especially China.

Formulating policies to generate higher and more inclusive growth, including spending on programs that protect the poor and vulnerable groups.
Maintaining fiscal discipline to restore debt sustainability.
Special emphasis on structural reforms to improve governance and transparency.

Structural and governance actions identified and advanced:
- Preparation of audited reports about the sale of oil reserves.
- Publication of contracts in the oil sector.
- Elimination of off-budget spending.
- Establishment of a new anti-corruption commission with investigative powers.
- Requirement for senior government officials to declare their assets.
- Reform of the statutes of the national oil company (SNPC), which will now have its accounts audited every year.
- Preparation of detailed reports sent to Parliament on the use of oil revenues, oil-related debt, and large infrastructure projects.
- Publication of more economic data on the government website and preparation of a first audit on domestic arrears.
The program includes about 10 decisive structural reforms to improve governance and transparency.

The program aims to promote inclusive growth and protect vulnerable groups.
It includes an increase in cash transfers for poor households, women, and other vulnerable groups.
The program identifies policies intended to boost economic growth and create more jobs.
Additional measures will be defined over time, with IMF staff sensitive to advice from civil society organizations and encouraging strengthened dialogue between authorities and civil society.

The government approved and implemented prudent budgets in 2018 and 2019, leading to a fiscal surplus in 2018 and a sharp decline in public debt.
Part of the fiscal improvement reflects rising oil prices; the government also contained spending.
Going forward, emphasis will be on boosting non-oil revenues and containing transfers and subsidies in the oil sector to free resources for public investment and social programs.
Congo needs to finalize its strategy to restructure its commercial debt to ensure debt sustainability.

IMF staff worked closely with authorities to present a strong package of structural reforms and governance actions to the IMF Executive Board.
IMF staff will monitor commitments through bi-annual reviews, advising authorities on progress and suggesting corrections if necessary.
Engagements will include representatives of civil society groups, parliamentarians, academics, and youth leaders as part of the review process.
The program will contribute to the accumulation of reserves at the regional central bank and play a key role in supporting the economic strategy endorsed by CEMAC heads of state at the Yaoundé summit of December 2016.
The IMF-supported program aims to boost economic confidence in Congo and demonstrate regional coordination in responding to the 2014 oil-price-triggered crisis.

International Monetary Fund