The board of the International Monetary Fund (IMF) has approved a $455 million loan for the Republic of Congo with the objective of extending fiscal relief and stimulating re-growth for the hard-hit economy of the central African country. Congo’s economy has been adversely impacted by the pandemic and the loan is vital for the country with a 52.5% poverty rate.
Under the Extended Credit Facility (ECF), the loan structure includes $90 million allocated immediately, with the remaining balance to be disbursed over a period of three years.
Following a virtual mission conducted by a high-level IMF delegation in collaboration with the government of Congo in October and November 2021, a staff-level agreement was reached between both parties to commence a three-year program supported by the ECF arrangement to aid the country to overcome the challenges brought forth by the Covid-19 pandemic.
Commenting on the agreement, IMF Deputy Managing Director Kenji Okamura said that the Congolese economy “…is expected to strengthen in the second half of the year, supported by vaccine rollout, social spending, and domestic arrears…”, noting however that the “…nascent recovery is facing significant risks, including a possible worsening of the pandemic (and) continued volatility in oil prices.”
The agreement recommends focusing on social and infrastructure spending in the health, education, and agricultural sector to foster “…economic resilience and enhancing inclusive growth,” in parallel to reducing non-priority spending and driving revenue mobilization.
In addition, the agreement proposes a reassessment of the oil sector’s fiscal regime, with recommendations to remove value-added tax (VAT) exemptions for the industry while establishing a uniform system for tax expenditures.
According to IMF estimates, the economy of Congo is expected to grow by 2.4% in 2022.
The first-ever Congo International Energy Summit taking place in Brazzaville on the 15th – 17th of June 2022 will reunite regional and international government representatives and industry leaders to discuss the future role of natural gas as a regional and continental solution to address energy poverty, among many other issues.