China agrees to restructure Republic of Congo’s debt, African nation says
- Deal was reached in Beijing last week, Congolese government spokesman Thierry Moungalla says
- Restructuring was a prerequisite of possible bailout from the International Monetary Fund
China has agreed to restructure the debt owed by the Republic of Congo – one of a series of preconditions sought by the International Monetary Fund before it grants the debt-laden central African nation a bailout.
The restructuring was agreed on Monday at a meeting between a high-level Congo government delegation and officials in Beijing, Congolese government spokesman Thierry Moungalla said. The details of the restructuring were not immediately available, he said.
The OPEC member owes state-owned Chinese entities and other creditors including commodity traders Glencore Plc and Trafigura Beheer BV more than US$9 billion. The government has been trying to secure funding from the IMF since March 2017 to revive an economy that barely grew in 2018, after contracting in the two previous years as oil prices declined.
“Congo has just scaled a major hurdle with this debt restructuring with China because it was the most important of the debts that we had to restructure and which was also an obstacle to obtaining the bailout agreement with the IMF,” Moungalla said.
Chinese entities account for about 34 per cent of Congo’s external debt, he said.
China is the largest single creditor nation to African countries, accounting for about 20 per cent of the continent’s external debt, according to the Jubilee Debt Campaign. The discussions between Congolese and Chinese authorities echo similar talks taking place with officials from Zambia, which is seeking a debt swap to ease pressure on its foreign reserves.
Congo’s external debt to China is estimated at 1.6 trillion CFA francs (US$2.73 billion), according to a February 2018 report by the French Embassy in Congo, which cited the finance ministry. Private creditors like Glencore and Trafigura are owed 1.2 trillion CFA francs, it said.
Congo also has a US$322 million Eurobond maturing in 2029. The price has soared to 87 cents on the dollar from 79 cents since late April.
The government will now focus on dealing with debts owed to private creditors, which also include Nigerian lender UBA Plc, Moungalla said, without providing further details.
The IMF said in November that Congo’s government must take a series of steps before it agreed to a bailout, including reforms to improve governance and transparency, adjustments to the state budget. It has also requested assurances from creditors before it considers a bailout.
“Creditors would need to provide credible and explicit financing assurances, including debt relief, before Congo’s request for a programme can be presented to the IMF executive board,” the fund said last month.