Country Report Congo (Brazzaville) April 2009

Outlook for 2009-10

The president, Denis Sassou-Nguesso, and his ruling coalition will continue to dominate the political scene in 2009-10, as he is expected to be re-elected by a landslide in the presidential poll, scheduled to take place in July. Although the stability of the peace process is a source of concern, the Economist Intelligence Unit does not expect a new civil conflict to erupt in the Pool region. Although there is a risk that fiscal slippages by the government will force the IMF to declare that the country's poverty reduction and growth facility is off track, we expect the government to meet most of its targets as it wants to achieve completion point under the heavily indebted poor countries initiative in 2010. Despite a slowdown in economic activity in the non-oil sector, real GDP is forecast to continue to grow strongly, by 7.5% in 2009 and 8% in 2010, because of a significant expansion in oil production. Inflation is forecast to decline to an average of 3% in 2009, owing to a significant fall in oil and food prices on international markets, before rising slightly, to 3.5%, in 2010 as oil prices rise.

The political scene

Political parties have forged new alliances ahead of the presidential election, which is scheduled to take place in July. Mr Sassou-Nguesso has secured support for his re-election bid from several former opposition parties, most importantly the Mouvement congolais pour la democratie et le developpement integral. The divided opposition has failed to unite behind a single candidate, but it has continued to demand the creation of an independent electoral commission to guarantee free and fair elections.

Economic policy

The National Assembly has approved the 2009 budget, which projects a dramatic fall in oil revenue and a moderate increase in capital spending. The IMF has continued to urge the government to step up economic reforms. The reputation of the regional central bank, Banque des etats de lAfrique centrale, has been tarnished after it emerged that it had placed some of its members' foreign-exchange assets in risky financial instruments.

The domestic economy

According to official estimates, real GDP grew by 6.4% in 2008, largely owing to a significant expansion in oil production. Oil subsidies represented an estimated 8.3% of non-oil GDP in 2008. A Canadian company has obtained a licence to exploit a large potash deposit near the port of Pointe Noire.

Foreign trade and payments

The Paris Club has agreed to write off US$805m of Congolese external debt and to restructure an additional US$155m. As a result, the country's debt/GDP ratio has declined from 104% in 2005 to an estimated 51% in 2008.

This report covers the following industry codes:
SIC Code: 10
NAICS Code: 212