This archive report was first published on 12 July 2019.
On July 11, 2019, the International Monetary Fund's (IMF) executive board approved a bailout worth nearly $449 million for OPEC member Congo Republic, potentially setting a precedent for other nations struggling under the weight of large debts to China.
Congo's economy suffered from a sharp drop in crude prices in 2014, and debt levels had ballooned to 118 percent of GDP by 2017. Despite its oil-producing neighbors securing IMF programs, Congo's negotiations for a bailout dragged on for two years.
The IMF demanded that Congo ensure the long-term sustainability of its debt as a precondition for a three-year extended credit facility program.
As part of the restructuring deal, repayment of 944 billion CFA francs will be extended an additional 15 years. Congo must pay off a third of that amount by the end of 2021, and China will not reduce the amount of principal owed.
IMF Deputy Managing Director Mitsuhiro Furusawa said, "The recent agreement to restructure the Republic of Congo's bilateral debt should be accompanied by continued good-faith efforts to restructure commercial debt."
Many observers see Congo as a test case for the IMF, with a number of African countries facing unsustainable debt resulting from commercial borrowing and Chinese lending expected to turn to the IMF for help in the coming years.
