{
  "title": "IMF Executive Board Concludes 2021 Article IV Consultation with the Republic of Congo",
  "publication": "IMF News, September 28, 2021",
  "sourceUrl": "https://www.imf.org/en/news/articles/2021/09/28/pr21277-congo-imf-executive-board-concludes-2021-article-iv-consultation-with-the-republic-of-congo",
  "canonical": "https://www.imf.org/en/news/articles/2021/09/28/pr21277-congo-imf-executive-board-concludes-2021-article-iv-consultation-with-the-republic-of-congo",
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  "summary": "Overall growth projected to be around zero percent in 2021.",
  "publishDate": "2021-09-28",
  "sections": [
    {
      "heading": "Economic outlook and key indicators",
      "content": "- Overall growth projected to be around zero percent in 2021.\n- Positive non-oil economic growth expected in 2021, buoyed by:\n  - easing of lockdowns,\n  - gradual vaccine rollout,\n  - social spending,\n  - domestic arrears repayments,\n  - some expansion of agricultural and mining activities.\n- Oil sector developments:\n  - Contraction of oil production has slowed as oil field access and investment normalize.\n  - Value of oil revenues and exports are rising on the back of higher oil prices.\n- Price and external balances:\n  - Subdued inflation: 2 percent (2021, as stated in the text).\n  - Current account surplus: 12 percent of GDP (2021, as stated in the text)."
    },
    {
      "heading": "Fiscal position and debt",
      "content": "- Fiscal stance:\n  - Fiscal policy balances the fight against the pandemic, support for recovery, and prudent debt management.\n  - The non-oil primary deficit is expected to widen to 17 percent of non-oil GDP in 2021, driven by spending on social assistance, health care, education, and infrastructure.\n  - Grants from development partners are lower than last year.\n  - Non-oil revenues are improving.\n  - Reductions in transfers and subsidies to state-owned enterprises and cuts in goods and services spending are helping create fiscal space.\n  - The non-oil deficit is mainly financed by improved oil revenues.\n- Debt and arrears:\n  - Debt sustainability has been restored though significant debt vulnerabilities remain.\n  - Overall debt anticipated at 84 percent of GDP by end-2021.\n  - Substantial repayments of domestic arrears and external debt have been facilitated by restructuring of external commercial loans, improved debt management, fiscal discipline, and oil revenue windfalls.\n  - Immediate liquidity needs supported by the G20 Debt Service Suspension Initiative (DSSI).\n  - Liquidity risks and vulnerabilities to negative oil price shocks are elevated.\n  - Pending clearance of external arrears and conclusion of remaining restructuring negotiations, debt is classified as being in “distress”."
    },
    {
      "heading": "Executive Board assessment and policy recommendations",
      "content": "- General assessment:\n  - Directors agreed the Republic of Congo has been hit hard by the COVID-19 pandemic and oil price shocks.\n  - The recovery is expected to take hold in 2022, while considerable uncertainty surrounds the outlook.\n  - Achieving the growth needed to exit fragility and sustain progress in poverty reduction will require strong efforts to address structural impediments, build climate resilience, and diversify the economy.\n  - Strengthened governance and transparency is critical to secure financing from the Fund and development partners.\n  - Directors welcomed the authorities’ intention to engage in discussions with the Fund on a possible Extended Credit Facility arrangement.\n- Fiscal and debt-related recommendations:\n  - Continue near-term fiscal support for the recovery through increased spending on health and social assistance, and payment of domestic arrears.\n  - Pursue medium-term fiscal consolidation, enhanced debt management and transparency, and non-oil revenue mobilization.\n  - Recommend a comprehensive review of the fiscal regime of the oil sector.\n  - Reduce transfers to state-owned enterprises (SOEs).\n  - Improve public investment efficiency.\n  - Support authorities’ plan to use the newly allocated SDRs for critical social programs given financing constraints.\n- Financial sector and governance:\n  - Welcome efforts to reduce financial sector vulnerabilities, including domestic arrears clearance.\n  - Continued close monitoring of the banking sector due to still high non-performing loans.\n  - Urge further efforts to improve governance and transparency.\n  - Welcome progress toward adopting a new anti-corruption law and encourage implementation of anti-corruption architecture.\n  - Support measures to improve SOE governance and enhance public financial management more broadly.\n- Structural reforms:\n  - Emphasize advancing structural reforms to support economic diversification and adaptation to climate change.\n  - Encourage improving the business environment, facilitating private sector investment, and fostering competitiveness."
    },
    {
      "heading": "Risks, uncertainties, and medium-term challenges",
      "content": "- Key risks and uncertainties:\n  - New waves of the pandemic.\n  - Volatile oil revenue prospects.\n  - Climate change shocks.\n  - Successful implementation of reforms.\n- Medium- and long-term challenges:\n  - Exiting fragility while adapting to climate change and reduced oil revenues in response to the global transition to low-carbon economies.\n  - Non-oil economic growth is expected to gradually recover driven by economic diversification and resilience-building, benefiting from continued governance and business environment reforms, increased social and infrastructure spending, and prudent debt management.\n- Upside possibilities:\n  - Investment in mining and oil and gas could rise with new field discoveries.\n  - Accelerated reform implementation could catalyze more concessional financing.\n\nSource: Press Release No. 21/277, IMF, September 28, 2021.\n\n---\n\n\n References\n\n- https://www.imf.org/-/media/images/imf/bios/imfboard.jpg\n- The Executive Board\n- Republic of Congo and the IMF\n- IMF Policy Advice -- A Factsheet\n- Press Releases\n- PRESS CENTER\n- G20 Debt Service Suspension Initiative\n- http://www.IMF.org/external/np/sec/misc/qualifiers.htm\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2021/09/28/pr21277-congo-imf-executive-board-concludes-2021-article-iv-consultation-with-the-republic-of-congo"
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    "Published: September 28, 2021",
    "Overall growth projected to be around zero percent in 2021.",
    "Positive non-oil economic growth expected in 2021, buoyed by:",
    "Oil sector developments:",
    "Price and external balances:",
    "Fiscal stance:",
    "Debt and arrears:",
    "General assessment:",
    "Fiscal and debt-related recommendations:",
    "Financial sector and governance:",
    "Structural reforms:",
    "Key risks and uncertainties:",
    "Medium- and long-term challenges:",
    "Upside possibilities:",
    "[https://www.imf.org/-/media/images/imf/bios/imfboard.jpg](https://www.imf.org/-/media/images/imf/bios/imfboard.jpg)",
    "[The Executive Board](https://www.imf.org/external/np/sec/memdir/eds.aspx)",
    "[Republic of Congo and the IMF](http://www.imf.org/external/country/COG/index.htm)",
    "[IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)",
    "[Press Releases](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[G20 Debt Service Suspension Initiative](https://www.imf.org/en/About/FAQ/sovereign-debt)",
    "[http://www.IMF.org/external/np/sec/misc/qualifiers.htm](http://www.imf.org/external/np/sec/misc/qualifiers.htm)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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