Statement at the end of an IMF Staff Visit to the Republic of Congo
BRAZZAVILLE, Republic of Congo, November 22, 2013/African Press Organization (APO)/ -- A team of the International Monetary Fund (IMF) led by Ms. Dalia Hakura, Mission Chief for the Republic of Congo, visited Brazzaville during November 12-20, 2013. Ms. Anne-Marie Gulde-Wolf, Deputy Director of the African Department, joined part of the staff visit. The mission reviewed recent macroeconomic developments and the near-term outlook, discussed the 2014 draft budget, and sought the authorities' input on the agenda for the 2014 Article IV consultation with the Republic of Congo, planned for April 2014. The mission met with the President of the National Assembly, Honorable Mr. Koumba, State Minister of Economy, Finance, Planning, Public Portfolio and Integration, Mr. Ondongo, Minister at the Presidency in Charge of Territory Planning and Large Projects, Mr. Bouya, Special Advisor to the President, Mr. Gokana, Deputy Minister in Charge of Planning and Integration, Mr. Mokoko, President of the Economic Commission of the National Assembly, Mr. Mavoungou, First Deputy National Director of the BEAC, Mr. Bopounza, President of the BDEAC, Mr. Adande, and other senior officials. The mission also met with representatives of the private sector and development partners.
At the end of the mission, Ms. Hakura made the following statement in Brazzaville:
“Macroeconomic performance continues to be broadly satisfactory. Growth is projected at 3.4 percent in 2013. Congo's currently exploited oil fields are aging, depressing oil production. However, a recent oil discovery might boost production in the medium-term. Non-oil growth is projected to be buoyed by favorable developments in agriculture, construction, and a carryover of the large increase in government spending in 2012 related to reconstruction activity in the aftermath of the ammunition depot explosion as well as significant other public investment. Inflation decelerated from 7.5 percent in December 2012 to 2 percent in September 2013 (year on year), before rising to 5 percent in October 2012. The mission notes that while large arrears payments for social benefits and payments to suppliers were essential, they have held back the buildup of fiscal savings and international reserves so far this year. The mission congratulates the authorities on the recent favorable sovereign credit rating from international rating agencies.
“For the 2014 budget, the authorities are encouraged to continue with the implementation of the recently introduced fiscal rule. This would contribute to strengthen fiscal savings and international reserves to address oil revenue volatility and exhaustibility concerns. Moreover, as large arrears payments have hindered fiscal savings in 2013, the mission recommends that an audit of outstanding domestic arrears be conducted as a matter of priority and agreement on a repayment plan be reached.
“While the Republic of Congo's medium-term prospects remain promising given its large natural resource endowment, it remains of paramount importance for the country to continue to build up fiscal and external buffers. The Republic of Congo is facing an uncertain external environment. The uncertain global economic outlook could have an important bearing on commodity prices and have significant spillover effects globally and on the Republic of Congo. The Republic of Congo should prepare for these potential external shocks by reducing oil dependence through the diversification of the economy and by increasing policy buffers.
“The Republic of Congo's debt profile has improved significantly since the achievement of the HIPC completion point in 2010 and subsequent HIPC/MDRI debt relief. Total external public debt is now below 30 percent of GDP and the country continues to rely mainly on concessional borrowing. In this context, the Republic of Congo should continue to adhere to a prudent borrowing policy to prevent a rapid accumulation of external debt so as to preserve long-term debt sustainability.
“The authorities have launched important initiatives to boost inclusive nonoil growth and address deep-seated structural weaknesses. The authorities should persevere with their efforts. The action plan to improve the business climate, supported by the International Finance Corporation, is well underway. The World Bank's 2014 Doing Business report acknowledges recent reforms to make it easier to start a business, pay taxes, and trade across borders. Nevertheless, the report still ranks the Republic of Congo's business climate among the most challenging in the world. That said, the authorities have recently launched implementation of the CEMAC directives on public financial management. Social safety net programs are being expanded. Technical and vocational education is being boosted to reduce the mismatch between the needs of the labor market and the contents of the education system.
“The implementation of the Republic of Congo's important agenda of macroeconomic and structural reforms would also benefit from enhanced coordination and monitoring. The long delays in data availability hamper the timely analysis and adjustment of macroeconomic policies. In this regard, the mission welcomes the authorities' efforts to strengthen the National Institute of Statistics.
“We would like to express our sincere appreciation to the authorities of the Republic of Congo and our other counterparts for their hospitality and the productive and candid nature of our discussions.”