World

China agrees to restructuring of vast debts owed by Congo-Brazzaville

The Central African nation’s tab had risen to  about 110% of gross domestic product, a level deemed “unsustainable” by the International Monetary Fund

China on Monday agreed in principle to a restructuring of the debts of the African republic of the Congo, an issue which was blocking negotiations with the International Monetary Fund, a minister said.

Chinese President Xi Jinping on Monday signed off on the deal during a call with President Denis Sassou Nguesso who had raised the problem, Congo officials said.

“This restructuring is to allow the country to have a few more resources to deal with its own internal needs and to lift this obstacle to good relations with the IMF,” Congolese finance minister Rigobert Roger Andely said.

Experts from Congo – sometimes known as Congo-Brazzaville to distinguish it from the Democratic Republic of the Congo, which has Kinshasa as its capital – would meet with their Chinese counterparts to fix the conditions of the new agreement.

China had already restructured its debts in 2019 to allow the  oil producer to unlock an IMF loan of $449 million.
Since then, Congo’s debts have risen to some 110 % of gross domestic product (GDP) – a level deemed “unsustainable” by the IMF, Prime Minister Anatole Collinet Makosso told parliament.

The global lender considers 70% of GDP to be the usual limit in central Africa, the premier said.

The IMF suspended its payments to Brazzaville, hitting the economy hard at a time when it was already suffering due to the Covid-19 crisis and falling oil prices.

Congo owes China 1.3 trillion CFA francs ($2.4 billion), but its overall debts had climbed to 10 billion euros by the end of 2020.

Beijing has often faced accusations of “debt-trap diplomacy” due to the scale of its lending to developing countries in Africa and elsewhere, as well as the secretive nature of the loan contracts.

George Russell

George Russell is a freelance writer and editor based in Hong Kong who has lived in Asia since 1996. His work has been published in the Financial Times, The Wall Street Journal, Bloomberg, New York Post, Variety, Forbes and the South China Morning Post.

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