IMF programme ‘positive’ for Congo Republic's lowly credit rating

LONDON: Congo Republic's recently-agreed $450 million IMF support programme is a positive step for the country's lowly credit rating, agency Moody's said on Thursday.

Moody's currently rates Congo at Caa2, which is at the lower end of the 'junk' grade bracket and just above the level where a default is seen as imminent.

The International Monetary Fund finalised a three-year programme with the central African country last week following an agreement struck by the government in April to restructure some $2 billion in debt to China.

"Combined with the restructuring of debt owed to China, the IMF programme will be positive for private creditors," Moody's said in a report, as it should help ease its funding squeeze.

The oil producer has been hard hit by the fall in crude prices that had been going on until early this year. Government debt rose to as high as 130% of GDP in 2017 from 48% in 2014, and foreign exchange reserves dropped to as low as $300 million in March.

Despite the lift of the IMF support, the implementation of the required structural reforms would be difficult, Moody's cautioned, given Congo's very weak institutional framework.

It also stressed that its restructuring deal with China only pushed out the time it has to pay the debt rather than writing any of it off.

"Given our forecast for Brent prices to decline from $72 per barrel in 2018 to $65 in 2019, external liquidity pressures will likely remain," Moody's said.