Republic of Congo: Sixth Review Under the Three-Year Arrangement Under the Extended Credit Facility, Request for Waivers of Nonobservance of Performance Criteria, and Financing Assurances Review

The fifth review of a three-year Extended Credit Facility (ECF) arrangement (SDR 324 million, 200 percent of quota) was concluded on July 10, 2024. Resilient activity in the non-hydrocarbon sector supported economic growth in 2024, while oil production continued to surprise on the downside. Inflationary pressures abated in 2024 on the back of moderating import costs, but the current account weakened driven by softening terms of trade, especially in the hydrocarbon sector. Meanwhile, low execution of capital and social spending and stronger-than-expected tax and hydrocarbon revenues improved the non-hydrocarbon primary deficit in the first half of 2024 by 2.4 percent of non-hydrocarbon GDP compared to the fifth ECF review (CR 24/251), with the annual projection set at 9 percent of non-hydrocarbon GDP. However, liquidity pressures heightened in 2024, and this, combined with expected large repayments of domestic debt falling due in 2025–26, prompted the authorities to initiate in October 2024 a domestic debt reprofiling operation, partially postponing the amortization of government treasuries beyond 2029. Public debt continued to be assessed as sustainable but “in distress” due to recurrent instances of new external arrears, which are expected to be cleared before the board date, and uncertainty about the timeline to resolve domestic arrears.