Pressed by the IMF to reach an agreement with its creditors Glencore and Trafigura, the Republic of Congo wants to resolve this dispute before a meeting with the multilateral financial institution in April.
During a weekend visit to Paris (France), the head of the Société nationale des pétroles du Congo (SNPC) confirmed to Reuters agency that negotiations were under way with the two commodity traders to restructure the $1.7 billion debt owed to them by the country. The company chief said the Republic of Congo’s lawyers are currently working with representatives of Glencore and Trafigura to get all the parties talking, « with the government’s objective being to reach an agreement with them before the next IMF review in April. For Brazzaville, the stakes are indeed high. After validating, in July 2019, a three-year programme of $448.6 million for the Republic of Congo and releasing a first tranche of $44.9 million, the IMF submitted the next disbursements to an agreement with Glencore and Trafigura. Hence the urgency for the Congolese authorities to find, before the fateful date of the meeting with the IMF, a compromise with the two giants of international trade, which have not yet communicated on this outstanding issue.
Not sure, however, whether an agreement will be reached in the short term. In January, previous talks between the Republic of Congo and Swiss traders had failed after the latter rejected the Congolese proposal to write off the debt owed, i.e. to record a repayment value lower than the real value of the sums lent. Although the discount would have allowed the Congolese state to reduce its debt service burden, the operation would have been carried out to the detriment of Trafigura and Glencore, who did not listen to it in that way.
It remains to be seen whether the recent fall in oil prices, which will further reduce the Congo’s financial resources, will make these creditors – or the IMF – more accommodating. The country, which in 2019 recorded production of about 342,000 barrels per day, is estimated by the IMF to have a total debt of nearly $9.5 billion, or 85.5 per cent of its GDP.