|Select Economic and Financial Indicators||2014||2015||2016||2017e||2018f|
|Real GDP (% change)||6.8||2.6||-2.8||-3.6||2.8|
|GDP (USD bn)||14.1||8.6||7.9||7.8||8.0|
|Fiscal Balance (% GDP)||-11.3||-41.7||-12.9||-1.8||3.8|
|Broad Money (% change, end period)||13.1||-11.2||-15.4||-3.3||-6.3|
|Exports (USD bn)||9.6||5.4||4.3||5.1||6.7|
|Imports (USD bn)||9.3||8.2||8.9||5.3||4.8|
|Current Account Balance (% GDP)||-11.6||-42.9||-70.1||-15.9||2.5|
|FX Reserves (USD bn, end period)||6.2||2.2||1.5||1.0||1.0|
|Exchange Rate (average)||496.16||594.11||597.41||588.92||565.09|
|Oil production (mn bpd)||0.28||0.28||0.31||0.34||0.35|
Real GDP: Rising oil production, with the on-streaming of Total’s 100kbpd Moho Nurd field and Eni’s 25kbpd Nenemarine field, which cumulatively raise oil production by 36% and by extension in oil GDP (55% of output) buoy prospects for the Congo’s economy in 2018. However, headline growth is likely to remain weak due to stagnant non-oil economic activity where negative aftershocks from deep fiscal retrenchment in 2017 are likely to remain. We expect non-oil output to remain in recession as Congo undertakes deep structural reforms to enable it meet onboarding requirements to qualify for an Extended Credit Facility (ECF) from IMF. In all, while we expect Congo to exit recession in 2018, the underlying picture remains soft with headline growth likely to print at 0.3% (2017e: -4.4%).
Inflation: A largely stable currency backdrop and continued fiscal consolidation points to subdued inflationary expectations. However, likely price increases to utility prices as part of reforms reduce arrears and funding shortfalls to public owned utility companies is likely to pose modest inflationary pressures. In all, we expect headline inflation to remain anchored within the 3% convergence band (2018f: 0.3%, 2017e: 0.2%).
Fiscal balance: Following the 44% slash in fiscal spending in 2017, the Denis Sassou-Nguesso government has maintained the path of fiscal consolidation with a proposed 7.6% cut in government spending to XAF1.4tr in 2018. On the revenue side, higher oil production and rising crude prices inform a rise in fiscal revenues to XAF1.6trn and a projected fiscal surplus of 2% of GDP in 2018 as against an estimated deficit of 7.5% in 2017 (2016: 23.4%). Adjusting for grants, as Congo has commenced an application for an IMF extended credit facility in 2017, the forecast fiscal surplus is larger at 2.6% of GDP (2017e: 7.1%).
Current account: Stronger oil prices and increased production from the new oil fields cascades to an optimistic outlook for oil exports (70% of exports). On the import side, lower construction-related imports as the government trims capital spending and a tight monetary policy stance to curb USD demand points to subdued imports in 2018. In sum, we see higher prospects for the current account to swing into a surplus (2018f: 2.5% of GDP) from a deficit over the last four years.
Key downside risks stem from steep declines in oil prices which could impact economic activity. In addition, the political situation remains tense as certain parts of the Congo are under attack from militant groups opposed to the ruling party.
Exchange Rate Structure
|Target||XAF655.957 to EUR1|
|Type of intervention||Via Central Bank|
|FX Products||Spot||Forwards||Non-deliverable Forwards||Options||Swaps|
|Daily trading volume (USD mn)||n/a||n/a|
|Average trade size (USD mn)||n/a|
|FX Market Structure||BEAC’s exchange regime is free of restrictions on payments and transfers for current international transactions, apart from restrictions maintaned for security.|
|Non-resident FX Regulations||Spot||Forwards||Non-deliverable Forwards||Options||Swaps|
|Trade and FDI flow||No restrictions||n/a|
|Resident FX Regulations||Spot||Forwards||Non-deliverable Forwards||Options||Swaps|
|Trade and FDI flow||No restrictions||n/a|
|Primary Market||Treasury bills||Treasury notes||Treasury bonds||Central Bank bills||OMOs|
|End use||Government financing||Government & infrastructure financing|
|Maturity structure||91- to 364-days||2- to 5-yrs|
|Daily trading volume||Limited trading||n/a|
|Average trade size||Limited trading|
|Ecobank local affiliate contact details:|
Ecobank Tchad, Avenue Charles de Gaulle, N’Djaména
Tel: +235 22 52 43 14 / 20 / 21
|Democratic Republic of Congo Debt||2014||2015||2016||2017e||2018f|
|Government debt (% GDP)||17.5||16.1||16.8||17.0||15.8|
|External debt (official creditors, % GDP)||13.7||12.5||11.6||11.2||10.9|
|External public debt stock (USD bn)||4.9||4.8||4.5||4.5||4.5|
|Share of total sub-Sahara debt (%)||2.0||1.8||1.5||1.4||1.3|
Hydrocarbon & mineral production
Republic of Congo is Sub-Saharan Africa’s fourth largest oil producer, with estimated output of 305,000 bpd in 2016. Production has been on the rise as several new fields have been brought online. As these fields ramp up output, Republic of Congo could become the sub-region’s third largest oil producer, after Nigeria and Angola. Republic of Congo acts as a hub for oil rigs and vessels operating in the Gulf of Guinea, which is reflected in the country’s trade flow data. Republic of Congo’s only refinery, the 21,000-bpd Congolaise de Raffinage (CORAF), supplies around 70% of the country’s demand for petroleum products, with the balance being imported. Republic of Congo consumed 655,000 tonnes of petroleum products in 2016, a 13% decline on the previous year.
Republic of Congo has rich mineral resources, including diamonds, gold, copper, iron ore, phosphate and potash. The country produced an estimated 12,100 carats of diamonds in 2016. Copper production has risen sharply in recent years, with an estimated 319,000 tonnes of refined copper being exported in 2016. Republic of Congo also exported one tonne of gold in 2016, as well as 4,531 tonnes of tin (to Malaysia and Thailand) and small quantities of zinc and niobium. Numerous licences have been awarded to mining companies and exploration is under way, but commercial production is unlikely in the short term.
Soft commodity production
Republic of Congo lacks a developed agricultural sector and most output is of staple foods for domestic consumption. The country’s only significant non-hydrocarbon commodity output is raw timber, with annual output of around 500,000 tonnes, although large volumes of wood are cut and traded informally across the region.
Republic of Congo’s imports totalled US$4.6bn in 2016, 45% less than the total value exported in 2013. This reflected the slump in imports of drilling platforms & rigs, from an estimated US$5.4bn in 2013 to just US$1.2bn in 2016, as drilling activity in the Gulf of Guinea slowed in response to weak global oil prices. Republic of Congo is heavily reliant on imports of capital and consumer goods, food and industrial raw materials. The country imported machinery and vehicles worth US$743mn in 2016, along with US$370mn of electronics and US$95mn of pharmaceuticals, reflecting the underdevelopment of its local manufacturing sector. Imports of industrial raw materials were dominated by iron & steel (US$333mn) and plastics (US$91mn). Given the country’s limited agricultural output, Republic of Congo imports large volumes of food, including US$149mn worth of meat, US$57mn of fish and US$152mn of cereals & flour in 2016.
Republic of Congo’s exports totalled US$4.7bn in 2016, 21.2% lower than the previous year, reflecting the slump in oil export revenues. Crude oil is the country’s single most valuable export, worth US$3.2bn in 2016 (down from a peak of US$7.9bn in 2013), most of which went to China, Australia and Italy. Copper has emerged in recent years as the country’s key hard mineral export, worth US$933mn in 2016. Other mineral exports include tin ore (US$46mn), gold (US$46mn) and diamonds (US$23mn). The country’s only significant soft commodity export is timber, worth US$325mn in 2016, although large illicit volumes are not captured by official data.