Statement by Mr. Mohamed-Lemine Raghani, Executive Director for the Republic of Congo and Mr. Sidi Bouna Senior Advisor to the Executive Director January 17, 2020

2019 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for the Republic of Congo


2019 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for the Republic of Congo


On behalf of our Congolese authorities, we would like to thank staff for the candid policy discussions held in Brazzaville during the 2019 Article IV consultation and for the in-depth analysis in the reports and the Selected Issues Paper (SIP).

The Congolese economy is recovering steadily from the severe crisis that hit the country after the 2014 oil price shock. Key macroeconomic indicators point to a continued improvement in Congo’s overall economic performance, in particular, with respect to the fiscal and external positions. Strong adjustment measures combined with higher oil production have contributed to this achievement.

The authorities reiterate their determination to pursue the sound policies agreed under the ECF approved last July to restore the country’s macroeconomic stability while contribute to the economic recovery of the CEMAC region. Fiscal discipline and far-reaching governance reforms will be pursued. Moreover, to further reduce the burden of external debt, the authorities are also actively seeking an agreement with the country’s oil traders on the restructuring of Congo’s commercial debt which is essential to finalizing the discussions related to the first review under the ECF. They are hopeful that an agreement with oil traders will be reached during the first quarter of 2020.

The Fund’s continued assistance is critical to help address Congo’s considerable challenges that still lie ahead. As the economic adjustment continues, the authorities will maintain a close engagement with the Fund whose advice they view as instrumental in their efforts to ensure fiscal and debt sustainability, strengthen governance, and foster stronger and more inclusive growth.

Recent Economic Developments, Outlook, and Risks

Congo’s macroeconomic performance has improved further in 2019. Growth strengthened to 2.2 percent in 2019 from 1.6 percent in 2018 while non-oil GDP rose, for the first time since 2015, reaching 0.8 percent. Inflation has remained contained at 1.9 percent in 2019. The fiscal stance has also strengthened in 2019 under tighter expenditures control. The non-oil primary deficit narrowed to 24.8 percent of non-oil GDP in 2019 from 28.1 percent in 2018. The current account surplus remained elevated in 2019, as in 2018, driven by high oil exports. The country’s net foreign assets have increased, leading to a higher contribution to regional central bank’s foreign exchange reserves.

The gradual recovery of the Congolese economy is projected to continue over the medium term, supported by the reforms and policies implemented under the ECF, as well as an increase in oil production. The expected progress in the clearance of domestic arrears should also reinvigorate activity in the non-oil sectors and strengthen the financial sector.

The authorities broadly share the staff’s assessment of the risks to the outlook, especially the risks stemming from potential global oil price volatility as well as delays in donor support which could affect program implementation. They are confident that the policies and reforms envisaged under the ECF and the efforts to accumulate larger buffers at the regional central bank will help mitigate identified risks.

Fiscal Policy

The Republic of Congo has undertaken substantial fiscal consolidation over the past few years to adjust to lower and volatile global oil prices, by drastically cutting expenditures, mainly capital spending. The non-oil primary fiscal deficit has narrowed considerably year after year since the 2014 oil shock, and the country’s public debt has declined significantly, particularly in 2018.

The authorities intend to continue on the path of fiscal adjustment with a view to achieving more sustainable fiscal and debt positions over the medium-term. The authorities are aware that this will require reaching a favorable agreement with the country’s commercial creditors to bring overall external debt down to 30 percent of GDP in NPV terms within the next three years. In addition, they are cognizant that additional efforts are needed to expand the fiscal space for social spending, which ended the year lower than the authorities had initially planned, and for infrastructure spending which declined substantially in recent years, affected by the sizeable fiscal adjustment.

Fiscal adjustment is being rebalanced through an increase in non-oil revenues and tighter control of current expenditures. The 2020 budget adopted by Parliament in December 2019 is in line with program objectives. It targets higher non-oil revenues and streamlined current spending, including through new important measures to reduce subsidies to state-owned enterprises. The reduction of tax exemptions also envisaged under the 2020 budget will significantly contribute to raising tax revenue. In this regard, we welcome the relevant analysis contained in the Selected Issues Paper (SIP) which provides valuable insights on specific and effective measures to improve revenue performance in Congo.

The authorities underline the importance of the donor community’s support to their adjustment efforts. Providing the much-needed budget support in a timely manner is critical to achieve the objectives of the program, including the social spending targets and the clearance of external arrears, given the country’s current extremely tight fiscal position.

Financial Sector

The overall solvency of the banking system continues to be sound although non-performing loans (NPLs) remain elevated. The latter continue to weigh on banks’ balance sheets, thereby constraining the important role the Congolese financial sector could play in support of the recovery. As the rise in NPLs is largely the result of the accumulation of domestic arrears by the public sector, the expected clearance of these arrears will significantly contribute to reinforcing the banking sector. Furthermore, the authorities, in collaboration with the regional banking commission (COBAC), are considering options to address the difficulties of two non-systemic banks.

Structural Reforms

Improving governance and diversifying the economy away from oil is at the core of the authorities’ reform agenda. They plan to continue making progress in these important areas with the objective of attracting more diverse private investments and enhancing the resilience of the economy.

Significant reforms have been undertaken in the areas of governance reform and transparency over the past few years. The authorities will continue reinforcing the anti-corruption framework and promoting transparency in the management of the oil sector. They will adopt the decrees needed for the Anti-Corruption High Authority and the Transparency Commission to effectively carry out their mandate while providing them with adequate resources to become fully operational. The authorities look forward to the IMF’s technical assistance to further improve public financial management (PFM), including ensuring that all outstanding payments from previous years’ budgets are adequately addressed and setting up appropriate safeguards in line with international best practices.

The authorities are determined to accelerate the diversification of the economy by promoting key sectors which have significant potential based on the country’s comparative advantage. Their efforts in this area are mainly geared towards developing more productive agricultural and forestry activities. To this end, they will invest in enabling infrastructure, particularly transportation, and expand power generation and distribution. The authorities will also promote transparency in these sectors while improving the business environment, notably by simplifying the licensing procedures and addressing weaknesses in areas identified in the World Bank’s “Doing Business” reports with the assistance of development partners, with a view to further attracting private investments and fostering jobs creation.


The Congolese authorities have made important strides in stabilizing the economy and raising the country’s growth prospects. Notwithstanding, they are aware that more remains to be done to achieve higher, sustained, and more inclusive growth. To accelerate progress towards program objectives they will maintain a close engagement with the Fund and call on the international community to continue supporting their reform agenda under the ECF.