CONGO REPUBLIC

RISK RATING
Severe
Default High Risk Score 9.00
Normal Average 5.65
Weighted Average 5.30
RISK RATING HISTORY
RISK RATING SCALE

Risk Rating Scale

Severe: 8.0 to 10
High: 6.0 to 7.9
Elevated: 4.0 to 5.9
Moderate: 2.0 to 3.9
Low: 0.0 to 1.9
EXCHANGE RATE
Country Outlook

The Republic of Congo‚Äôs country risk outlook has deteriorated significantly since the outbreak of COVID-19. With already unsustainable levels of debt ‚Äď estimated to have potentially reached 104 percent ‚Äď the economy has suffered further from volatility in the price of oil, a resource on which 60 percent of GDP depends. A major recession is now expected to ensue as the country heads to the polls in 2021. Another concern is the fact that repayments of unguaranteed prepaid oil debt to traders, remain unresolved despite months of negotiations. This lack of agreement has stalled IMF payments under the ECF programme from 2019. Politically, the ruling party will press ahead with the vote in the first quarter of 2021, which will allow President Sassou-Nguesso to stay in power. Growing evidence of state corruption in the midst of an economic crisis is further likely to drive dissatisfaction with the incumbent and trigger protests and strikes.

  • President Denis Sassou-Nguesso is once again the candidate of the ruling Parti Congolais du Travail (PCT)‚Äôs to contest the 2021 elections, after more than three decades in power. the opposition continues to remain fragmented, which serves to the benefit of the incumbent as does his party‚Äôs majority in the National Assembly. Nevertheless, the president has taken additional steps to secure his tenure next year. Such steps have included the continued imprisonment of opposition figures deemed a threat to the current administration. Given the economic crisis along with the Congo‚Äôs severe lack of readiness to combat an upswing in COVID-19 infections, the risk of violent unrest as a result of rising anti-government sentiment is sustained over the coming months.
  • There is high likelihood of violence around the 2021 elections. The president‚Äôs re-election in 2016 triggered significant unrest in the capital, Brazzaville, and prompted armed conflict in the Pool Region of the country. A lack of funding has delayed the implementation of a 2018 peace deal with these so-called ‚ÄėNinjas‚Äô. Any spoilers in this regard are likely to take the form of protests, strikes and potential incidents of munity among security forces. Any public sector cutbacks and job losses, the phasing out of subsidies, and reduction in public spending, as well as a simultaneous hike in taxes, will trigger protests and riots in Brazzaville and other cities.
  • The macroeconomic performance prior to COVID-19 was already under major strain. One of the biggest setbacks concerned the accumulation of high levels of undisclosed debt. The discovery of undisclosed debt ‚Äď along with failed negotiations on commercial debt deals ‚Äď prompted the IMF to halt the release of its second tranche of funding as per its ECF programme. Without additional funding, the Congo is ultimately unable to finance the response needed to combat the virus. As such, the Congo has sought once again to settle negotiations over its debt with China ‚Äď accounting for 43 percent of debt service ‚Äď and various energy traders (Glencore, Orion, Trafigura) as requested by the IMF so that it could access additional funding from the international institution.
CUMULATIVE AND DAILY COVID-19 INFECTIONS AND DEATH RATE
INTERNATIONAL MONETARY FUND | DATAMAPPER
Risk Perils
Political Instability
5.5
Expropriation, Nationalisation, Confiscation & Deprivation
4.0
Contract Frustration & Breach
4.5
Taxation
6.0
Bribery & Corruption
7.0
Regulatory Burden
5.0
Strikes, Riots & Civil Commotion
5.5
Security
3.0
Sovereign Default
9.0
Economic Volatiliy
7.0

Risk Rating Scale (small)

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