Republic of Congo: Staff Report for the 2010 Article IV Consultation and Fourth Review Under the Three-Year Arrangement Under the Extended Credit Facility, and Request for Modification of Performance Criterion
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In this study, economic performance remained robust throughout the global downturn, and shows signs of further strengthening. In 2010, the external position improved significantly, as fiscal surpluses raised official foreign assets, and the Highly Indebted Poor Countries (HIPC) debt relief significantly reduced external liabilities. Macroeconomic stability is well established, and the external position has improved. Private sector development has reduced oil dependence and is assuring sustained poverty-reducing growth. Efforts should be supported by policies to increase the private sector’s access to credit, and deepen financial intermediation to improve the financial performance of state-owned enterprises.

Abstract

In this study, economic performance remained robust throughout the global downturn, and shows signs of further strengthening. In 2010, the external position improved significantly, as fiscal surpluses raised official foreign assets, and the Highly Indebted Poor Countries (HIPC) debt relief significantly reduced external liabilities. Macroeconomic stability is well established, and the external position has improved. Private sector development has reduced oil dependence and is assuring sustained poverty-reducing growth. Efforts should be supported by policies to increase the private sector’s access to credit, and deepen financial intermediation to improve the financial performance of state-owned enterprises.

Annex I—Republic of Congo: Relations with the Fund

(As of November 30, 2010)

I. Membership Status: Joined: 07/10/1963; Article VIII

II. General Resources Account:

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III. SDR Department:

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IV. Outstanding Purchases and Loans:

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V. Latest Financial Arrangements:

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Formerly PRGF

VI. Projected Payments to Fund: (without HIPC assistance)

(SDR million; based on existing use of resources and present holdings of SDRs):

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VII. Implementation of HIPC Initiative:

The Republic of Congo reached the completion point under the enhanced HIPC Initiative in January 2010.

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VIII. Implementation of Multilateral Debt Relief Initiative (MDRI):

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IX. Safeguards Assessments:

The Bank of the Central African States (BEAC) is the regional central bank of the Central African States. The most recent safeguards assessment of the BEAC was completed on July 6, 2009. The findings of this assessment indicate that implementation of previous safeguards recommendations on financial reporting, internal audit, and internal control has been limited, and that the changing risk profile of the BEAC foreign exchange holdings requires further actions to strengthen safeguards at the BEAC. Subsequent to revelation of Paris office fraud, a series of initial measures and longer term safeguard measures were agreed between IMF and BEAC in order to continue with country programs. In December 2009, BEAC adopted an action plan with the aim of reforming its own governance, and strengthening key safeguards. While implementation of the 2009 action plan is still in progress, BEAC adopted additional measures to address the weaknesses highlighted by the first special audit.

X. Exchange Rate Arrangement:

Congo’s currency is the CFA franc, which is pegged to the Euro at a fixed rate of CFAF 655.957 = Euro 1. Congo does not impose any restrictions on the making of payments and transfers for current international transactions.

XI. Article IV Consultations:

Consultations with Congo are on a 24-month cycle, based on the Board decision on consultation cycles in program countries. The 2008 consultation discussions and request for a new three-year Extended Credit Facility (ECF) arrangement were held in Brazzaville on May 21–30 and August 21–27, 2008. The staff report (www.imf.org) was considered by the Executive Board on December 8, 2008.

XII. FSAP Participation : N/A.

XIII. Technical Assistance :

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XIV. Resident Representative:

The resident representative, Mr. Oscar Edgardo Melhado Orellana, took up his assignment in September 2009.

Annex II—Republic of Congo: JMAP Implementation Matrix

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Annex III Republic of Congo—Statistical Issues

As of December 8, 2010

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Republic of Congo: Table of Common Indicators Required for Surveillance

As of May 10, 2010

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Includes reserve assets pledged or otherwise encumbered as well as net derivative positions.

Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.

Foreign, domestic bank, and domestic non-bank financing.

The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.

Including currency and maturity composition.

Includes external gross financial asset and liability positions vis-à-vis nonresidents.

Daily (D), Weekly (W), Monthly (M), Quarterly (Q), Annually (A); Irregular (I); Not Available (NA).

1

Assistance committed under the original framework is expressed in net present value (NPV) terms at the completion point, and assistance committed under the enhanced framework is expressed in NPV terms at the decision point. Hence these two amounts can not be added.

2

Under the enhanced framework, an additional disbursement is made at the completion point corresponding to interest income earned on the amount committed at the decision point but not disbursed during the interim period.

3

The MDRI provides 100 percent debt relief to eligible member countries that qualified for the assistance. Grant assistance from the MDRI Trust and HIPC resources provide debt relief to cover the full stock of debt owed to the Fund as of end-2004 that remains outstanding at the time the member qualifies for such debt relief.

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Republic of Congo: 2010 Article IV Consultation and Fourth Review Under the Three-Year Arrangement Under the Extended Credit Facility, and Request for Modification of Performance Criteria—Staff Report; Staff Supplement; Public Information Notice and Press Release on the Executive Board Discussion; and Statement by the Executive Director for the Republic of Congo.
Author:
International Monetary Fund