Fitch lowers rating of Congo face of declining oil revenues
New York – The rating agency Fitch downgraded Friday the rating of the Republic of Congo due to lower oil revenues and the deterioration of the fiscal situation.
the note goes to B with a negative outlook, which means it could be reduced again soon.
Fitch notes that the deficit budget ballooned to 10% of gross domestic product (GDP), according to official figures but nearly 18%, according to other calculations.
oil revenues, which accounted for three-quarters of revenue budget over the period 2010-2014, are the leading cause but also infrastructure spending for the 2015 All-Africa Games and the preparation of elections scheduled for this month.
The country’s authorities do not seem willing to take fiscal consolidation measures as reflected in the 2016 budget provides for a 15% increase in wages and public investment spending, Fitch notes.
to cope with declining revenues, the government used reserves of the Central Bank as well as he had at the Chinese Exim Bank. In doing so, the public sector is now in a net debt position for the first time since the debt reduction measures under the heavily indebted poor countries (HIPC) in 2010, notes the agency.
The Congolese authorities should therefore borrow regionally and with institutional creditors, pushing debt to over 50% of GDP in 2016 which is 7 percentage points more than previously envisaged.
Brazzaville, however, should benefit from its membership in the CFA franc zone, which reduces the risk of balance of payments crisis, says Fitch.
the Congolese president, Denis Sassou Nguesso, who has nearly 32 years power, confirmed in February his candidacy for a third term in the presidential election held this month
(© AFP / March 4, 2016 11:06 p.m.).
(AFP / 03.04.2016 11:08 p.m.) ->
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