Abstract
This paper examines the Republic of Congo’s 2003 Article IV Consultation and a New Staff-Monitored Program (SMP). Performance under IMF-supported programs and recent SMPs was disappointing. Major progress has been made in consolidating security and peace, and in establishing democratic institutions. The public finances deteriorated in 2002, reflecting a combination of expenditure overruns and a drop in non-oil revenue collection. The drop in non-oil revenue was more pronounced at customs, owing to large-scale fraud and widespread use of ad hoc exemptions. As a result, most targets under the 2002 SMP were missed.
1. Since the staff report was circulated to the Executive Board on June 2, 2003, the following information has become available. It does not change the thrust of the staff appraisal.
2. Preliminary information indicates satisfactory performance during January–March 2003 under the staff monitored program (SMP). All quantitative targets have been exceeded (Table 1). The outcome reflects the government’s continued strong effort to restore fiscal discipline and extends the positive developments observed in the fourth quarter of 2002. Between the third quarter of 2002 and end-March 2003, the non-oil primary deficit—an indicator of fiscal effort which excludes volatile fiscal oil revenue and related expenditure—was cut in half (see Figure 1). The strong fiscal performance allowed the government to reduce domestic and external payment arrears, as well as its indebtedness to the banking system.
Republic of Congo: Quantitative Indicators, 2002–03 1/
(In billions of CFA francs; cumulative from the beginning of calendar year)
Data for 2002 are preliminary.
Excluding IMF credit. The indicator will be adjusted downward for higher-than-projected relief on scheduled debt service payments.
Excluding rescheduling arrangements and disbursements from the Fund, but including debt with maturities of more than one year.
Concessional debt is defined as debt with a grant element of at least 50 percent, calculated on the basis of currency-specific discount rates based on the OECD commercial interest reference rates (CIRRs).
On a contracting or guaranteed basis. Excluding debt related to normal import transactions.
The target will be adjusted downward to reflect higher-than-expected nonproject financing and debt relief, and upward for lower-than expected nonproject financing and debt relief.
Defined as revenue excluding grants, minus noninterest current expenditures, domestically financed capital expenditure, and net lending on a commitment basis. It will be adjusted upward for higher-than-expected oil revenue, calculated as a ratio of projected oil revenue times actual oil price divided by projected oil price (in CFA francs).
Republic of Congo: Quantitative Indicators, 2002–03 1/
(In billions of CFA francs; cumulative from the beginning of calendar year)
| 2002 | 2003 | |||||||
|---|---|---|---|---|---|---|---|---|
| Dec. | Mar. | Jun. | Sep. | Dec. | ||||
| Prel. | Prog. | Adj. prog. | Est. | Met | Prog. | Indicative | ||
| Net claims of the banking system on the central government (ceiling) 2/ | 163 | 159 | 159 | 127 | Yes | 159 | 159 | 157 |
| New medium- and long-term nonconcessional external debt (including leasing) contracted or guaranteed by the government (ceiling) 3/4/ | 217 | 0 | 0 | 0 | Yes | 0 | 0 | 0 |
| New nonconcessional debt (including leasing) with an original maturity of less than one year (ceiling) 4/5/ | 0 | 0 | 0 | 0 | Yes | 0 | 0 | 0 |
| Stock of external arrears 6/ | 2,394 | 2,423 | 2,423 | 2,398 | Yes | 2,469 | 2,496 | 2,542 |
| Net reduction in domestic arrears (floor; - =increase) | 10 | 0 | 0 | 8 | Yes | 0 | 0 | 0 |
| Primary fiscal balance (floor) 7/ | 26 | 34 | 62 | 80 | Yes | 81 | 136 | 191 |
| Central government wage bill (ceiling) | 120 | 30 | 30 | 30 | Yes | 60 | 90 | 120 |
| Memorandum items: | ||||||||
| Oil revenue | 398 | 94 | 122 | 146 | 188 | 281 | 375 | |
| Debt relief | 11 | 0 | … | 0 | 0 | 0 | 0 | |
| Nonproject external financing | 217 | 0 | … | 0 | 0 | 0 | 0 | |
| External debt arrears payment | 6 | 0 | … | 6 | 0 | 0 | 0 | |
| Petroleum price Brent (US$/barrel), cumulative average | 25 | 22 | … | 31 | 22 | 22 | 22 | |
| Exchange rate (CFAF/US$) | 697 | 670 | … | 611 | 670 | 670 | 670 | |
| Petroleum price Brent (thousand CFAF/barrel), cumulative average | 17 | 15 | … | 19 | 15 | 15 | 15 | |
Data for 2002 are preliminary.
Excluding IMF credit. The indicator will be adjusted downward for higher-than-projected relief on scheduled debt service payments.
Excluding rescheduling arrangements and disbursements from the Fund, but including debt with maturities of more than one year.
Concessional debt is defined as debt with a grant element of at least 50 percent, calculated on the basis of currency-specific discount rates based on the OECD commercial interest reference rates (CIRRs).
On a contracting or guaranteed basis. Excluding debt related to normal import transactions.
The target will be adjusted downward to reflect higher-than-expected nonproject financing and debt relief, and upward for lower-than expected nonproject financing and debt relief.
Defined as revenue excluding grants, minus noninterest current expenditures, domestically financed capital expenditure, and net lending on a commitment basis. It will be adjusted upward for higher-than-expected oil revenue, calculated as a ratio of projected oil revenue times actual oil price divided by projected oil price (in CFA francs).
Republic of Congo: Quantitative Indicators, 2002–03 1/
(In billions of CFA francs; cumulative from the beginning of calendar year)
| 2002 | 2003 | |||||||
|---|---|---|---|---|---|---|---|---|
| Dec. | Mar. | Jun. | Sep. | Dec. | ||||
| Prel. | Prog. | Adj. prog. | Est. | Met | Prog. | Indicative | ||
| Net claims of the banking system on the central government (ceiling) 2/ | 163 | 159 | 159 | 127 | Yes | 159 | 159 | 157 |
| New medium- and long-term nonconcessional external debt (including leasing) contracted or guaranteed by the government (ceiling) 3/4/ | 217 | 0 | 0 | 0 | Yes | 0 | 0 | 0 |
| New nonconcessional debt (including leasing) with an original maturity of less than one year (ceiling) 4/5/ | 0 | 0 | 0 | 0 | Yes | 0 | 0 | 0 |
| Stock of external arrears 6/ | 2,394 | 2,423 | 2,423 | 2,398 | Yes | 2,469 | 2,496 | 2,542 |
| Net reduction in domestic arrears (floor; - =increase) | 10 | 0 | 0 | 8 | Yes | 0 | 0 | 0 |
| Primary fiscal balance (floor) 7/ | 26 | 34 | 62 | 80 | Yes | 81 | 136 | 191 |
| Central government wage bill (ceiling) | 120 | 30 | 30 | 30 | Yes | 60 | 90 | 120 |
| Memorandum items: | ||||||||
| Oil revenue | 398 | 94 | 122 | 146 | 188 | 281 | 375 | |
| Debt relief | 11 | 0 | … | 0 | 0 | 0 | 0 | |
| Nonproject external financing | 217 | 0 | … | 0 | 0 | 0 | 0 | |
| External debt arrears payment | 6 | 0 | … | 6 | 0 | 0 | 0 | |
| Petroleum price Brent (US$/barrel), cumulative average | 25 | 22 | … | 31 | 22 | 22 | 22 | |
| Exchange rate (CFAF/US$) | 697 | 670 | … | 611 | 670 | 670 | 670 | |
| Petroleum price Brent (thousand CFAF/barrel), cumulative average | 17 | 15 | … | 19 | 15 | 15 | 15 | |
Data for 2002 are preliminary.
Excluding IMF credit. The indicator will be adjusted downward for higher-than-projected relief on scheduled debt service payments.
Excluding rescheduling arrangements and disbursements from the Fund, but including debt with maturities of more than one year.
Concessional debt is defined as debt with a grant element of at least 50 percent, calculated on the basis of currency-specific discount rates based on the OECD commercial interest reference rates (CIRRs).
On a contracting or guaranteed basis. Excluding debt related to normal import transactions.
The target will be adjusted downward to reflect higher-than-expected nonproject financing and debt relief, and upward for lower-than expected nonproject financing and debt relief.
Defined as revenue excluding grants, minus noninterest current expenditures, domestically financed capital expenditure, and net lending on a commitment basis. It will be adjusted upward for higher-than-expected oil revenue, calculated as a ratio of projected oil revenue times actual oil price divided by projected oil price (in CFA francs).
Republic of Congo—Non-Oil Primary Deficit, Quarterly, 2001–03
In percent of non-oil GDP
Citation: IMF Staff Country Reports 2003, 193; 10.5089/9781451808537.002.A002
Republic of Congo—Non-Oil Primary Deficit, Quarterly, 2001–03
In percent of non-oil GDP
Citation: IMF Staff Country Reports 2003, 193; 10.5089/9781451808537.002.A002
Republic of Congo—Non-Oil Primary Deficit, Quarterly, 2001–03
In percent of non-oil GDP
Citation: IMF Staff Country Reports 2003, 193; 10.5089/9781451808537.002.A002
3. Progress in structural reform implementation has also been encouraging (Table 2). The financial audit of the national oil company, Société Nationale des Pétroles du Congo (SNPC), was launched in March 2003. A preliminary report is expected in mid-June 2003 and the final report in mid-July. The restructuring plan of the remaining commercial bank (Créditpour l’Agriculture, l’Industrie et le Commerce-CAJC) is expected to be completed on schedule. The authorities provided the staff on June 6, 2003, with a draft of the evaluation of the 2001 Convention between the SNPC and the Government, due under the SMP by end-May. There were delays in payments on current debt obligations vis-à-vis the African Development Bank (AfDB) in January and March; payments were, however, fully up to date by May 12. In addition, the Congo reduced its stock of nonreschedulable arrears by CFAF 6 billion during the first quarter of 2003.
Republic of Congo: Structural Indicators for January–June 2003
Republic of Congo: Structural Indicators for January–June 2003
| Measure | Schedule | Status |
|---|---|---|
| Payment of all debt service due to multilateral creditors and of debt service due on nonreschedulable debt to Paris Club creditors. | Continuously | Delays in payments to AfDB occurred in January and March; payments were brought fully up to date by mid-May |
| Submission by the external auditors to the Government of the draft report (as stipulated in contract) on the national oil company (SNPC)’s 1999–2000 accounts and its 2001 consolidated accounts. | June 2003 | |
| Submission by the SNPC to the Government of its 2002 consolidated financial statements as required by law. | June 2003 | |
| Completion of the privatization of the CAIC (commercial bank) | June 2003 | |
| Report on an in-depth evaluation of the effectiveness of the June 2001 Convention between the government and the SNPC (following the outline provided by IMF staff). | May 2003 | Pending, draft completed on June 6, 2003 |
| Audit of the off-budget capital expenditures during 2000–02. | June 2003 | |
| Centralization of all government revenues in, and execution of all payments through the treasury account. | Continuously | Yes |
| No settlement of budget expenditures through the direct transfer of government revenue by oil companies. | Continuously | Yes |
| No contracting of any form of oil-collateralized debt (new or refinanced). | Continuously | Yes |
| Monthly provision to the IMF staff of all information necessary for the monitoring of the program. | Continuously | Yes, with some delays |
Republic of Congo: Structural Indicators for January–June 2003
| Measure | Schedule | Status |
|---|---|---|
| Payment of all debt service due to multilateral creditors and of debt service due on nonreschedulable debt to Paris Club creditors. | Continuously | Delays in payments to AfDB occurred in January and March; payments were brought fully up to date by mid-May |
| Submission by the external auditors to the Government of the draft report (as stipulated in contract) on the national oil company (SNPC)’s 1999–2000 accounts and its 2001 consolidated accounts. | June 2003 | |
| Submission by the SNPC to the Government of its 2002 consolidated financial statements as required by law. | June 2003 | |
| Completion of the privatization of the CAIC (commercial bank) | June 2003 | |
| Report on an in-depth evaluation of the effectiveness of the June 2001 Convention between the government and the SNPC (following the outline provided by IMF staff). | May 2003 | Pending, draft completed on June 6, 2003 |
| Audit of the off-budget capital expenditures during 2000–02. | June 2003 | |
| Centralization of all government revenues in, and execution of all payments through the treasury account. | Continuously | Yes |
| No settlement of budget expenditures through the direct transfer of government revenue by oil companies. | Continuously | Yes |
| No contracting of any form of oil-collateralized debt (new or refinanced). | Continuously | Yes |
| Monthly provision to the IMF staff of all information necessary for the monitoring of the program. | Continuously | Yes, with some delays |
