NewsEast & Horn AfricaSecond budget cut for Congo Republic as oil price fall bites

Sun,19Nov2017

Posted on Thursday, 02 June 2016 10:48

Second budget cut for Congo Republic as oil price fall bites

By Christian Elion

File photo©ReutersCongo Republic's government is proposing to cut spending in the current 2016 budget by around 9 percent, repeating a similar mid-year revision made last year as low oil prices cut into revenues, the communications minister said.

Initially set at 2.333 trillion CFA francs ($4 billion), spending under the revised budget will drop to 2.122 trillion CFA francs, Thierry Moungalla said on state television late on Wednesday following a cabinet meeting.

the government plans to maintain a high level of investment in order to permit the state to support economic activity 

 

"Despite the delicate situation, the government plans to maintain a high level of investment in order to permit the state to support economic activity and continue to play a role to stimulate growth," he said.

Moungalla said gross domestic product (GDP) was expected to grow by 4.4 percent this year due to increased oil production of more than 94 million barrels, up from 89 million barrels in 2015. He did not give a comparative growth figure from last year, but a government economist said the Congolese economy had expanded by 2.6 percent in 2015.

Oil accounts for around 65 percent of the Central African nation's GDP.

Congo is on track to reverse a decline in production and leapfrog Equatorial Guinea to become sub-Saharan Africa's third-largest crude producer by 2017. However, crude markets collapsed in the first half of this year, cutting into the revenues of producer countries.

Oil and gas revenues were reduced to 544 billion CFA francs from 754 billion CFA francs in the revised budget, which must now be approved by parliament. Nearly a year ago, Congo cut its 2015 budget spending by around 12 percent, also due to low oil prices.

The original 2016 budget already contained a 14 percent reduction in spending compared to the 2015 spending plan following the mid-year revision.

Moody's downgraded Congo's rating to B2 with a negative outlook on April 29 on expectations that the government balance sheet would continue to deteriorate substantially in 2016 and 2017 amid the oil price shock. 



Subscriptions Digital EditionSubscriptions PrintEdition

FRONTLINE

NEWS

POLITICS

HEALTH

SPORTS

BUSINESS

SOCIETY

TECHNOLOGY

COLUMNISTS

Music & Film

SOAPBOX

Newsletters

Keep up to date with the latest from our network :

subscribe2

Connect with us