IMF: Oil boosts Congo growth
Dakar- Congo Brazzaville is on track to be Africa's fastest growing economy this year but should temper its investment spending, in part because key oil revenues are consistently coming in below expectations, the International Monetary Fund said.
The IMF trimmed Congo's 2010 growth forecast to 10.6% from 12.1% and boosted its 2011 growth forecast to 8.7% from 6.6% as increases in oil production have taken longer than anticipated.
"Developments in the international markets have been overall favorable for oil exporters like Republic of Congo," the IMF's resident representative Oscar Melhado told Reuters in an interview.
"However, oil revenues received are systematically lower than projected. This is an issue of concern," he said.
The major sub-Saharan oil exporter is the only African country projected by the IMF to have double-digit growth this year, and its 2011 forecast is second only to Ghana where an onset of commercial oil output is expected to propel its growth toward 20%.
"The new forecast is based on a different profile of oil production with lower production in 2010 and higher production in 2011," Melhado said, adding 2010 average output would hit a record near 340 000 barrels per day.
Melhado said Congo's oil production would peak in 2011 near 370 000 bpd due to new output from fields operated by Total, Murphy, ENI and TEP-Congo, before output falls into decline.
He said Congo should aim to diversify its economy away from oil by developing itself as a regional transport hub, boosting its agriculture sector, and exploring possibilities in eco-tourism.
Congo's government late last year voted to double its annual budget to $6.38bn, banking on an expected increase in oil output to 350 000 bpd from around 300 000 bpd in 2009.
But Melhado said Congo's revenues from oil in the first half of 2010 were running about a third below forecast at $1.41bn.
He said the IMF had recommended Congo temper its 2010 spending, as well as its 2011 draft budget.
"On the investment programme we agree with scaling it up, but not to the magnitude initially proposed by the authorities of about 50% of the level executed in 2009. A more prudent level is in our view acceptable," he said.
Oil dominates the national economy but makes little difference to the lives of ordinary Congolese, most of whom still live off subsistence agriculture.
The country was rocked by a short but bloody civil war in 1997 that brought President Denis Sassou-Nguesso to power, leaving the capital Brazzaville in ruins.
Much of Congo is barely inhabited tropical jungle, with most of its four million people living in the southwest between Brazzaville and the main port city Pointe-Noir.
"While we fully understand the large development needs the country faces, the oil resources that Congo has will have been for naught if they do not result in higher potential future growth and lower poverty," Melhado said.
"The mission's key recommendation was to strike an appropriate balance between development needs and fiscal sustainability," he said.
Among the country's key challenges is availability of power. A Chinese funded hydroelectric project - Imboulou - came on line this year but has been unable to provide power to Brazzaville because of a lack of transmission lines.
"It would take still some years until all the grids in the cities are fully operational," Melhado said.
Congo's remaining debt was cancelled by creditors earlier this year, and with oil revenues funding the budget and a stabilization account at the central bank, the IMF sees little risk of new debt in the near-term, Melhado said.