Previous Quarterly Editions
Expropriation Risk: 68 69 68 68 ►Political Violence Risk:59 57 57 57 ►Terrorism Risk:35 35 35 33 ►Exchange Transfer and Trade Sanction Risk: 73 73 73 73 ►Sovereign Default Risk:83 83 83 83 ►
TREND ►
Protest intensity to date* 2022 2023 Low Low Unrest risk in 2024**Cost of living: -Anti-austerity: High
*Note: Protest intensity is calculated based on ACLED. **Risk levels are calculated by WTW. Where data are missing no risk level will be displayed. For details of 'anti-austerity' calculations, see the essays in the introduction; for details of 'cost-of-living' calculations, see the previous edition of the Index.
The Republic of Congo has one of the highest debt-to-GDP ratios in the six-nation Central African Economic and Monetary Community (CEMAC) region. The country’s public debt — which fell from 102% of GDP at the end of 2021 to 94% at the end of 2022 — remains above the 70% debt limit set by the central bank of CEMAC. The drop in the debt-to-GDP ratio was largely due to a combination of higher oil prices, improved debt management and debt restructuring agreements aimed at restoring the sustainability of the country’s public debt.
The country is under intense pressure from the International Monetary Fund (IMF) to cut back significantly public spending in 2023 and the years ahead. Subsidies to the National Petroleum Company of Congo (SNPC) for the importation of fuel, tax exemptions on basic food products, support for the supply of electricity and other social spending weighs heavily on public finances.
The IMF therefore wants subsidies to the SNPC to be stopped as well as the SNPC's value-added tax and customs duty exemptions. The IMF also wants a gradual deregulation of fuel prices and an end to subsidies for fuel and public transport.
In return, the IMF wants the money to be spent directly on social programs rather than subsidies, which tend to benefit also the well-to-do.
In an attempt to cut back on fuel subsidy, the government announced in June 2023 a second increase of 25% in the price of petrol fuel after a 5% increase in January and a plan to raise the price of diesel between September and October. This decision to increase fuel prices could have been a key driver in the release of the fourth disbursement by the IMF in July from the US$450 million three-year (2022 – 2024) Extended Credit Facility (ECF).
Latest figures show that 52.5% of Congo’s population live below the poverty line. The country lost 28% of GDP during the recession years from 2015 to 2021. The anemic growth of 1.7% in 2022 and projected growth of around 4% for the period 2023 – 2024 would hardly compensate for the lost years of growth. The third largest producer in sub-Saharan Africa, Congo is racing against time to diversify its economy away from its heavy reliance on the oil sector, which accounts for almost half of the country’s GDP and 80% of its exports.
With the cost of living still high, the government will struggle to end its subsidies during the life of the current ECF from the IMF. In its July report, the IMF raised concerns that the government had met only two of the five performance requirements relating to budget management and debt servicing. The past three ECFs in 2004, 2008 and 2019 were all prematurely interrupted because Congo was unable to fulfill its part of the contract due to the inability and/or unwillingness of the government to cut significantly public spending and improve governance.
Expropriation risk in the Republic is moderate. The risk is largely concentrated in the extractives sector — on which the government is heavily dependent. The government has the tendency unilaterally to revise contractual arrangements, although over the years cases of expropriation have been rare in the country.
The improvement in public finances due to the oil windfall in 2022 could ease pressure in the near term on the government to go after companies with arbitrary demands of payment of backdated tax arrears.
Rumors of a military coup in Congo in September 2023 emerged while President Denis Sassou Nguesso was away attending the United Nations General Assembly. The rumors, dismissed by the government, underline the growing concerns over the coup contagion, spreading gradually across the West and Central African regions — where eight successful military coups have taken place since August 2020.
In power since 1997, President Nguesso was reelected for another five-year term after a landslide victory in the first round of the March 2021 presidential election. At the legislative elections in July 2022 and the senate elections in August 2023, the president’s ruling Congolese Labor Party (known as PCT) secured a parliamentary majority, winning 111 out of the 151 seats and a senate majority of 52 of 72 seats.
There are no indications of imminent political threats to the president, while political violence has plummeted following the imprisonment of General Jean-Marie Michel Mokoko and the signing of the cease-fire and cessation of hostilities agreement in December 2017 between the government and Frederic Bintsamou, alias Pastor Ntumi, who waged a rebellion to oust Nguesso from power.
There are instances, however few, of attacks by pirates both offshore and in the Pointe-Noire anchorage area. No piracy incident was reported in 2022, while only one incident took place in 2021. Nevertheless, anchored container ships face risk from robbers seeking to steal ships’ stores.
There are no emerging sanctions risks at present. As a CEMAC member, the Republic’s foreign exchange regulation is directed by the bloc’s Bank of Central African States.
A new foreign currency exchange regulation took effect in March 2019, which requires companies in the Republic to seek central bank authorization before opening offshore current accounts. Firms also must seek renewal every two years of the permission to maintain foreign currency accounts in the CEMAC area.
However, the central bank has granted several concessions to resident companies that are operating in the mining and hydrocarbons sectors, significantly reducing the risks around capital controls and exchange transfers for the extractive industry — which is a major revenue earner for the Republic.
The Republic of Congo’s public debt continues to fall, dropping again from 102% in 2021 to 90% in 2022. The government seems to be on track to bring down public debt from 99% to 71% of GDP between 2022 and 2027. The gradual reduction has come from cuts in public expenditure. Even so, this is still above the CEMAC’s 70% debt-to-GDP ratio limit.
Recent debt restructuring agreements with private firms and with China, as well as high oil prices and improved debt management, have restored the sustainability of the country’s public debt, according to the IMF. The Republic’s three-year ECF aims to help the country pursue policy to diversify its economy and strengthen management of public finances, governance and financial sector reforms.
Overall, the Republic has a poor credit track record, having twice defaulted on its outstanding US$363 million Eurobond.
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