Press Release No. 07/196

Press Release: Statement of the IMF Mission to the Republic of Congo

September 19, 2007

(REVISED)

The following statement was issued today in Brazzaville by Mr. Joannes Mongardini, IMF Mission Chief for the Republic of Congo:

"An IMF mission visited Pointe Noire and Brazzaville during September 10-19, 2007. The mission met with H.E. President Sassou-N'guesso, Prime Minister Mvouba, Senior Planning Minister Moussa, Finance Minister Issoïbeka, other senior officials, and members of the private sector and civil society. The mission undertook a first assessment under the staff-monitored program (SMP) approved in June 2007, the successful implementation of which would lay the basis for resumption of discussions under the IMF's Poverty Reduction and Growth Facility.¹

"In our discussions, the authorities noted some positive economic developments, despite setbacks. Buoyant nonoil activity broadly offset the decline in oil production associated with maturing oil fields and an accident on a major oil platform in May, resulting in flat overall growth in the first half of 2007. Consumer price inflation continued to moderate to about 2 percent year-on-year in June 2007. Higher international oil prices more than offset the decline in oil production, leading to a large external current account surplus.

"The mission found that there has been progress in some areas under the SMP, but slippages have also occurred. With regard to progress, the authorities have published a diagnostic study on the economic viability of CORAF and an audit of oil costs for 2004 and 2005. Presidential decrees have also been signed to establish the national committees of the Extractive Industries Transparency Initiative. At the same time, however, the SMP went off-track in the first half of 2007 mainly because of significant fiscal slippages. In addition, some structural reforms have been partially implemented or delayed. Accordingly, the discussions on the first assessment under the staff-monitored program could not be concluded. Discussions will continue at the time of the IMF and World Bank Annual Meetings in Washington next month."

¹ The PRGF is the IMF's concessional facility for low-income countries. PRGF-supported programs are based on country-owned poverty reduction strategies adopted in a participatory process involving civil society and development partners and articulated in a Poverty Reduction Strategy Paper (PRSP). This is intended to ensure that PRGF-supported programs are consistent with a comprehensive framework to foster growth and reduce poverty. PRGF loans carry an annual interest rate of 0.5 percent and are repayable over 10 years with a 5½-year grace period on principal payments.