- Congo Brazzaville's main creditor nations have decided to cancel US$ 1,570 million of the poor country's external debt. A further US$ 1,450 million in debt are to be rescheduled to given Congolese authorities an opportunity to lower repayments and invest in social structures and economic development.
This major debt cancellation for Congo Brazzaville was announced by the so-called Paris Club today. The Paris Club is an association of the world's major industrialised countries, which also are the leading creditor nations. The Paris Club acts as a group considering debt cancellation for poor and heavily indebted countries that have reformed their economy in line with demands from the IMF.
Congo Brazzaville, according to the Paris Club, indeed had implemented "economic and financial recovery" efforts in the course of the last two years. The war-ravaged oil producing country has closely followed economic reform prescriptions of the IMF and managed to turn a poor economic trend into substantial growth.
Even the Congolese oil sector, previously known as a stronghold of corruption, has changed into one of the world's most transparent, according to the last IMF reviews of Congo Brazzaville. The IMF recently thus recommended a debt cancellation for the impoverished country, holding that Brazzaville authorities now were spending funds on poverty reduction.
The new agreement offered by the Paris Club treats a total amount of US$ 3 billion of debt, cancelling US$ 1,570 million and rescheduling US$ 1,450 million. This gives Congolese authorities a strongly reduced repayment burden. 67 percent of commercial credits are cancelled. The remaining amounts are rescheduled over 23 years, with 6 years of grace.
This means that Congo Brazzaville's debts to Paris Club creditors are cut from around US$ 3,730 million down to around US$ 770 million. With more economic reforms implemented in Brazzaville, the Paris Club stated that it would extend the agreement to a 90 percent cut of all debts by the country.
The creditor nations "stressed the importance" they attached to "the continued satisfactory implementation" of Congo Brazzaville's economic programme and its poverty reduction strategy. The IMF is to oversee Brazzaville's poverty policies and budget spending also during the next years to assure that authorities keep in line with promised reforms.
The total stock of Congo Brazzaville's external public sector debt was estimated as of end 2003 to be US$ 8,570 million. The World Bank has already cancelled parts of Brazzaville's debts and Congolese authorities are now to seek comparable treatment from its other external creditors.
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