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Country Risk Service Congo (Brazzaville) 1st Quarter Updater

  • ID: 3090058
  • Country Profile
  • Region: Democratic Republic of Congo, Republic of Congo
  • 20 Pages
  • The Economist Intelligence Unit
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Congo's sovereign risk rating was downgraded to CCC in late 2016, as the global oil price slump has put severe pressure on the fiscal and current accounts. The Economist Intelligence Unit estimates that both will remain firmly in deficit in 2017, although a partial recovery in oil revenue will help to narrow the shortfalls slightly. Congo's foreign-exchange reserves plummeted in 2016, and the state will have to continue to borrow to cover this gap.

The current-account deficit remains wide, at an estimated 9.7% of GDP in 2016, and the sharp drop in foreign-exchange reserves has eroded Congo's buffer against external shocks. The CFA franc is pegged to the euro and guaranteed by the French Treasury, which, under normal conditions, provides an element of currency stability. However, Congo's foreign reserves have eroded to a risky level for a country with a pegged currency, which will remain a concern.

Banking sector risk was also downgraded in late 2016, to CCC, as weak oil revenue is contributing to a build-up of public domestic debt arrears. There is an increasing risk that the state will crowd out lending to the private sector, as the public finances remain under strain. The rate of non-performing loans will have risen in 2016 (from 4.6% in 2015) amid rapid growth in private credit.
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Country Risk Service Congo (Brazzaville) 1st Quarter Updater

Risk assessment
Sovereign risk
Currency risk
Banking sector risk
Political risk
Economic structure risk

Definitions
Sovereign risk
Currency risk
Banking sector risk
Political risk
Economic structure risk
Overall country risk

Central scenario for 2017-18: Political stability

Central scenario for 2017-18: Election watch

Central scenario for 2017-18: International relations

Central scenario for 2017-18: Policy trends

Central scenario for 2017-18: Fiscal policy

Central scenario for 2017-18: Monetary policy

Central scenario for 2017-18: Economic growth

Central scenario for 2017-18: Inflation

Central scenario for 2017-18: Exchange rates

Central scenario for 2017-18: External sector

Key risk indicators

Ratings summary

Quarterly indicators

International assumptions summary

Economic structure

Public finances

Exchange rates, interest rates and prices

Financial sector

Current account

International liquidity

Foreign payment and liquidity indicators

External trade

External financing requirement

External debt stock

External debt service
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