The last month has treated Republic of Congo’s President Denis Sassou Nguesso kindly. His debt-stressed administration has struggled to cope with the impact of lower oil prices – only this year has the International Monetary Fund (IMF) seen early signs of stabilisation after a deep recession since 2015 – and criticism of poor governance. Brazzaville had run out of money to repay external debt – much of it contracted in pre-financing arrangements with China and Swiss oil trading houses – and had struggled to convince the IMF and other creditors it was sincere about meeting commitments to control its debt and spending (AE 386/17, 374/19). But since late April the government has agreed to reschedule some $2bn-3bn of Chinese debt, opened talks with oil trader creditors, received confirmation that the IMF is finalising a new three-year extended credit facility and welcomed African Development Bank president Akinwumi Adesina in Sassou’s booming home town of Oyo.
Brazzaville has promised to be more transparent in its deals, more rigorous in its governance and that a higher proportion of spending will go to health, education and uplifting the poor. The language is familiar for those who followed the debt crisis which led to Congo benefiting from the Heavily Indebted Poor Countries debt relief initiative in 2006. Brazzaville has retained the same debt advisers, Paris-based Lazard Frères and lawyers Cleary Gottlieb. Other old friends working on the dossier included former IMF managing director Dominique Strauss-Kahn and controversial oil trader and Sassou’s lead debt adviser Lucien Ebata.
The IMF board has scheduled 5 July to approve the new programme. The government is committed to giving the National Assembly reports detailing pre-financing contracts with state oil company Société Nationale des Pétroles du Congo (SNPC), ‘special agreements’ to finance infrastructure from oil revenues, and all Ministry of Public Works projects implemented in 2014-17. KPMG – which has been involved in previous transparency studies – has been doing new audits of oil deals.
Details of SNPC deals and infrastructure financing should give a much better view of Chinese financing. According to the Extractive Industries Transparency Initiative, China buys some 37% of its crude from Congo, paying revenues to the Export-Import Bank of China, which signed the debt deal in Brazzaville. Chinese involvement is a critical element in the global shift towards dealing with Brazzaville as Chinese lending has operated in parallel with the Bretton Woods system.
In Oyo on 12 May Adesina made major new AfDB commitments while expressing his “great confidence in [Sassou’s] leadership and the excellent work and efforts of the government”. The AfDB plans to substantially increase its development assistance, from $290m to $1.7bn, Adesina said.
This spending hike falls within the framework of the recent AfDB commitment to invest $4.4bn in Central African infrastructure over the next seven years. Whether headline projects like the bridge linking Brazzaville to Kinshasa will be built is questionable, in countries with highly constrained absorptive capacity. Arguably the most critical deficit in Central Africa is that of governance, and while stability is essential to improve living standards and drive investment, it is legitimate to ask whether giving elites with long histories of corruption more money that help to keep them in power will have the long-term benefits desired.
Shortly after the welter of debt deal announcements, the Congo-B top team left for Moscow, where Sassou met President Vladimir Putin, SNPC discussed oil blocks and pipeline construction with Russian companies and defence minister Charles Richard Mondjo discussed a new package of arms imports.
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