Republic of Congo: Fourth Review Under the Three-Year Arrangement Under the Extended Credit Facility, Requests for Modification of Performance Criteria, Waivers of Nonobservance of Performance Criteria, and Financing Assurances Review-Press Release; S

The third review of a three-year Extended Credit Facility (ECF) arrangement (SDR 324 million, 200 percent of quota) was concluded on July 19, 2023. The momentum in economic growth continues, while rising production costs push up inflation. In the first half of 2023, overperformance in oil and non-oil revenue, combined with tighter budget execution, improved the non-oil primary fiscal deficit by 0.6 percent of non-oil GDP compared to the Third Review (CR 23/271). However, higher-than-expected external debt service—due to contractual contingencies to oil prices—tightened the adjusted target for the non-oil basic primary balance, implying a miss of the target by 0.9 percent of non-oil GDP. Congo also accumulated less deposits at BEAC than initially targeted. Despite external arrears remaining below the de-minimis threshold, public debt is assessed as sustainable but “in distress” due to frequent accumulation of new external arrears and uncertainty about the size of domestic arrears.