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China intends to restructure Congo’s debt.

China intends to restructure Congo’s debt

Congolese Prime Minister Anatole Collinet Makosso conceded on Monday the financial struggles his country is handling and pledged to reduce a debt that has lately risen.

In a speech by Anatole Collinet Makosso, it became apparent that financial challenges, complicated by the health disaster, have raised the country’s debt and reduced the country’s ability to service it. 

He acknowledged that the country must consequently do everything reasonable to make the public debt sustainable. 

The country’s debt currently holds at nearly CFA Francs 6 trillion as of 31 December 2020, or 98% of GDP.

This address by Prime Minister Makosso comes after Chinese President Xi Jinping granted to a restructuring of Congo’s huge debts which limits this Central African country from reopening negotiations with the International Monetary Fund (IMF).

Congolese Finance Minister Rigobert Roger Andely stated President Denis Sassou Nguesso had “raised the problem” through telephone communication with Xi, “proposing a second restructuring” of the debt.

 Andely told reporters that President Xi Jinping accepted the application

Andely told experts from both the Chinese and Congolese parties would be credited with fixing the provisions of the new deal.

In 2019, China had previously done so, which enabled the country to enter into an Extended Credit Facility-focused program with the IMF and unhitch a $449 million loan.

However, Congo’s debt was since then estimated at 110% of the Gross Domestic Product (GDP), pushing the IMF to reconsider the country’s economy as “unsustainable”.

The IMF has discontinued its help. The country is twice hit by the economic and health pressure due to the decline in oil prices and the spread of Covid-19.

China is owed by Congo 1,300 billion CFA francs , which translates to 2 billion dollars, according to the government, while the country’s total debt now reaches 6,016.5 billion CFA francs which is higher than 10 billion dollars as at December 31, 2020.

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