An International Monetary Fund (IMF) mission led by Alex Segura-Ubiergo
visited Brazzaville during November 6-14 to continue discussions toward a
possible arrangement under the Extended Credit Facility (ECF). The proposed
ECF-supported program aims to help the Republic of Congo restore
macroeconomic stability and achieve higher and more inclusive growth. In
particular, the program seeks to restore debt sustainability and targets a
wide range of reforms to improve governance, reduce corruption, and achieve
greater transparency and efficiency in the management of public resources,
especially in the oil sector. The successful implementation of the program
will also contribute to the external stability of the Central African
Economic and Monetary Union (CEMAC) and build on the collective efforts of
the other member states and regional institutions of the currency union.
At the conclusion of the IMF staff visit, Mr. Segura-Ubiergo issued the
following statement:
“Economic activity is stabilizing, but this reflects diverging trends in
the oil and non-oil sectors. While growth in the oil sector is strong, the
non-oil sector remains in a deep recession with a recovery which is likely
to be slower than previously expected. As a result, overall growth is
unlikely to exceed 1 percent in 2018 – one percentage point lower than
earlier projections. Growth could recover further and reach about 3 percent
in 2019, supported by rising oil production and recovering non-oil growth.
“Inflation is projected to remain below 2 percent, and the strong expansion
in oil exports is expected to help produce the first surplus in the
external current account since 2014. Financial conditions remain very
tight, and non-performing loans are rising.
“Fiscal consolidation efforts have continued, but efforts are likely to
fall short of earlier commitments for 2018. The non-oil primary deficit is
expected to decline from 35.7 percent of non-oil GDP in 2017 to 31.5
percent in 2018, this adjustment being about half the level that had been
previously expected.
“While the authorities have contained spending levels, non-oil revenues are
projected to decline by 6 percent of non-oil GDP compared with 2017 --
about 20 percent lower than the initial target for the year. At the same
time, thanks to a substantial expansion in oil revenues, the overall fiscal
balance is expected to shift into surplus in 2018.
“To address non-oil revenue underperformance in 2018, a number of
administrative and institutional issues will require immediate action. For
2019, the mission recommended adjustments to the draft budget, to
incorporate the impact of lower economic activity on non-oil revenues, and
the need to reduce non-priority spending. Reforms are needed to reduce fuel
subsidies and increase the efficiency of decentralized government units
that continue to register operational deficits. At the same time, there is
a need to protect critical social spending in favor of the most vulnerable
groups of the population.
“Substantial progress has been achieved in the implementation of the
authorities’ structural reform agenda, including the publication of a
diagnostic study on governance, the introduction of a legal requirement to
publish annual audited financial statements of the Congolese national oil
company (SNPC), and the online publication of production sharing agreements
in the oil sector. Additional progress is needed to strengthen the legal
frameworks for the Commission on Transparency and the asset declarations
regime, and to increase transparency in the management and accounting of
oil revenues.
“The IMF team will continue discussions with the authorities on the
remaining steps needed to bring the Republic of Congo’s request for a
three-year arrangement under the Extended Credit Facility to the
consideration of its Executive Board. This will require some adjustments to
the 2019 Draft Budget, implementation of reforms to improve governance and
transparency, and the provision of explicit assurances on financing from
external official creditors, including debt relief, which is needed to
restore debt sustainability.
“The mission would like to thank the Congolese authorities for the
constructive discussions and warm hospitality.”
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The mission met with Prime Minister Clement Mouamba, the Minister
of Finance and Budget Calixte Nganongo, State Minister of Economy
Gilbert Ondongo, the Minister of Planning, Statistics and Regional
Integration Ingrid Olga Ebouka, the Deputy National Director of
BEAC, and other senior government officials, representatives of the
private sector, civil society, and international development
partners.
