IMF sees signs of economic and political improvement

The IMF has expressed "guarded optimism" about the economic and political situation in the Republic of Congo (ROC), which is the fourth-largest producer of oil in sub-Saharan Africa. But IMF executive directors warned that "key social indicators have continued to deteriorate, and the external debt burden is heavy". The country shows "strong growth" in agriculture, commerce and transportation, according to a public information notice issued by the IMF this month following the conclusion of an Article IV Consultation. During 2000-03, non-oil real GDP increased by about 10 percent on average annually. The macroeconomic situation has strengthened and inflationary pressures have eased, helped by a more reliable supply line from Pointe-Noire to the capital, Brazzaville, and a strengthening of the euro. The IMF sees hope that the country is "on the cusp of a structural break from the previous pattern of intermittent outbreaks of civil conflict". The conflict broke out among ethnic-based militias in 1997, which also included Angolan forces, exiled soldiers from Rwanda, the Democratic Republic of the Congo, the Central African Republic and alleged international mercenaries. With the help of Angolan troops, the then president, Denis Sassou-Nguesso, emerged victorious, and peace agreements were signed in late 1999. The IMF directors expressed ongoing concern that the country had incurred new debts that could not be rescheduled, saying, "More could have been done in implementing reforms." "Tax collection improved in 2003 from the exceptionally poor performance of 2002, but remained weak relative to the 2003 budget," they noted. They therefore called for more fiscal vigilance, stressing the importance of strengthening non-oil revenue collection "by reducing the widespread use of ad hoc tax and customs exemptions, and by centralising revenue collection at the treasury". They also urged the authorities to reduce the high cost of doing business in the ROC. Most of the IMF’s directors agreed that the favourable oil market "could have been used more effectively to reduce external arrears and normalise relations with the international community". Despite recent efforts to enhance transparency in the oil sector, the directors noted severe limitations in access to information at the national oil company. A recent audit revealed poor management and accounting practices. Bank deposits decreased by 8 percent in 2003, but the recent privatisation of the last remaining state-owned bank, Crédit pour l'agriculture, l'industrie et le commerce, coupled with continuing improvements in non-oil sectors, should strengthen confidence in the banking sector, the IMF said.