(3-minute read)
· Congolese Prime Minister Anatole Collinet Makosso stated that his country is facing financial difficulties and assured that he would reduce the growing external debt by taking appropriate measures.
· The debt currently stands at nearly 6,000 billion CFA francs as of December 31, 2020, which is 98% of GDP—an unhealthy proportion.
· The country’s effort is to bring it below the CEMAC community standard, set at 70% of GDP.
Congolese Prime Minister Anatole Collinet Makosso stated that his country is facing financial difficulties and assured that he would reduce the growing external debt by taking appropriate measures. He further stated that the current crisis is exacerbated by the health crisis. Due to internal problems and the increasing resources needed to pull the country out of the health crisis, debt has risen recently. The debt currently stands at nearly 6,000 billion CFA francs as of December 31, 2020, which is 98% of GDP—an unhealthy proportion. The country’s effort is to bring it below the CEMAC community standard, set at 70% of GDP.
Chinese President Xi Jinping recently agreed to a debt restructuring for Congo, preventing the Central African country from resuming negotiations with the International Monetary Fund (IMF). This initiative was welcomed by Congolese Prime Minister Makosso. It is important to note that, during a recent phone conversation, Congolese President Denis Sassou N’Guesso raised the debt problem with Chinese President Xi Jinping, who agreed to consider a second loan restructuring.
This restructuring should allow the country to have some additional resources to meet its own internal needs and remove this obstacle to good relations with the IMF. Chinese and Congolese parties will meet to set the terms of the new agreement. Already in 2019, China restructured Congo’s debt, allowing the country to enter into an Extended Credit Facility program with the IMF to obtain a $449 million loan from the IMF. Since then, Congo’s debt has increased and is currently estimated at 110% of Gross Domestic Product (GDP). The IMF considers such debt levels to be unsustainable.
Meanwhile, Congo owes China 1,300 billion CFA francs ($2 billion), according to the government. The country’s overall debt currently stands at 6,016.5 billion CFA francs (over $10 billion) as of December 31, 2020.