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Republic of Congo: Second Review Under the Three-Year Arrangement Under the Poverty Reduction and Growth Facility—Informational Annex

Author(s):
International Monetary Fund
Published Date:
February 2010
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Annex I—Republic of Congo: Relations with the Fund

(As of September 30, 2009)

I. Membership Status: Joined: 07/10/1963; Article VIII

II. General Resources Account:

SDR MillionPercent Quota
Quota84.60100.00
Fund holdings of currency84.0399.33
Reserve tranche position0.580.68

III. SDR Department:

SDR MillionPercent Allocation
Net cumulative allocation79.69100.00
Holdings70.0987.95

IV. Outstanding Purchases and Loans:

SDR MillionPercent Quota
PRGF arrangements26.0030.73

V. Latest Financial Arrangements:

TypeApproval DateExpiration DateAmount Approved (SDR Million)Amount Drawn (SDR Million)
PRGF12/08/200812/07/20118.462.42
PRGF12/06/200406/05/200854.9923.58
PRGF06/28/199606/27/199969.4813.90

VI. Projected Payments to Fund: (without HIPC assistance)

(SDR million; based on existing use of resources and present holdings of SDRs):

Forthcoming
20092010201120122013
Principal1.573.144.724.72
Charges/interest0.070.160.150.120.11
Total0.071.733.294.844.82

VII. Implementation of HIPC Initiative:

The Republic of Congo reached the decision point under the enhanced HIPC Initiative in March 2006.

I. Commitment of HIPC assistanceEnhanced Framework
Decision point dateMarch 2006
Assistance committed by all creditors (US$ million)11,679.00
Of which: IMF assistance (US$ million)8.08
(SDR equivalent in millions)5.64
Completion point dateFloating
II. Disbursement of IMF assistance (SDR million)
Assistance disbursed to the member0.08
Interim assistance0.08
Completion point balance--
Additional disbursement of interest income2--
III. Implementation of Multilateral Debt Relief Initiative (MDRI)Not applicable

VIII. Safeguards Assessments:

The Bank of the Central African States (BEAC) is the regional central bank of the Central African States. The most recent safeguards assessment of the BEAC was completed on July 6, 2009. The findings of this assessment indicate that implementation of previous safeguards recommendations on financial reporting, internal audit, and internal control has been limited, and that the changing risk profile of the BEAC foreign exchange holdings requires further actions to strengthen safeguards at the BEAC. Furthermore, BEAC initiated a number of structural and internal reforms during 2007 aimed at increasing member representation on governance bodies, strengthening management, and enhancing risk management and controls. Several of these reforms remain a work in progress, and should be impacted by the ongoing investigations into the Paris fraud case and the measures taken after the conclusions of these investigations.

IX. Exchange Rate Arrangement:

Congo’s currency is the CFA franc, which is pegged to the Euro at a fixed rate of CFAF 655.957 = Euro 1. Congo does not impose any restrictions on the making of payments and transfers for current international transactions.

X. Article IV Consultations:

Consultations with Congo are on a 24-month cycle, based on the Board decision on consultation cycles in program countries. The 2008 consultation discussions and request for a new three-year Poverty Reduction and Growth Facility (PRGF) arrangement were held in Brazzaville on May 21–30 and August 21–27, 2008. The staff report (www.imf.org) was considered by the Executive Board on December 8, 2008.

XI. FSAP Participation: N/A.

XII. Technical Assistance:

SubjectDepartmentStaff MemberDate
Assist the National Accounts Team in finalizing the analysis of main aggregates of 2006 NA estimatesSTAMr. Gbossa (head), AFRITAC CAug/Sept. 2009
Assess the country’s domestic tax system and tax policyFAD and AFRITAC WestMessrs. Montagnat-Rentier (head)July 2009
Assist National Accounts Team with analysis of main aggregates of 2006 NA estimates and train NA team in synthesis of accountsSTAMr. Gbossa (head), AFRITAC CApril 2009
Follow-up on reforms for the modernization of tax and customs administrations

Identifying strategic priorities for the next 3-4 years
FAD and AFRITAC WestMessrs. Montagnat-Rentier, Lefebvre and KoukpaizanMarch 2009
Follow-up mission on the implementation of statistics TA programsAFRITAC CMr. BonkoungouMarch 2009
Processing and monitoring of fiscal informationAFRITAC CMr. PenanjeAugust 2008
Budget functional classificationAFRITAC CMrs. Lokpe and NguenanJuly 2007
Poverty and Social Impact AnalysisFADMr. Gillingham, Ms. Lacoche, Mr. ManningNovember 2007
Public expenditure managementFADMr. BouleyAugust 2006
Resident advisor on real sectorSTAMr. GbossaSince February 2006
Modernization of tax and customs administrationsFADMessrs. Montagnat-Rentier, Lesprit and BoililFebruary 2004
Follow-up missionFADMr. LepageNovember 2003
Budget functional classificationFADMessrs. Bouley, Helis, and LepageOctober 2003
Balance of payments statistics

Multisector statistics
STA

STA
Mr. Dessart

Messrs. Marie, Maiga, and Mmes. Fisher, Matei, Razin, and Balvani
February 2007

May 2002
Resident expert on statisticsSTAMr. MetreauSince October 2001
Balance of paymentsSTAMr. FiévetJune 2001
Budget, tax, and customsFADMessrs. Bouley, Moussa, Brik, and Mrs. TricoireApril–May 2001
Resident tax expertFADMr. Laurent1995–97
Tax administrationFADMr. GrandcolasNov. 1995–Apr. 1996
Tax administrationFADMessrs. Grandcolas and CastroNovember 1994

XIII. Resident Representative:

The resident representative, Mr. Oscar Edgardo Melhado Orellana, took up his assignment in September 2009.

Annex II—Republic of Congo: JMAP Implementation Matrix

TitleProductsMission timingExpected delivery
A. Mutual information on relevant work programs
Bank work program in next 12 monthsCountry Partnership Strategy

PRSP Progress Report/JSAN
May 2009

June 2009
June 2009

June 2009
AAA

Dialog on Governance/HIPC

Public Expenditure Review

Employment and Growth Study



June 2009

June 2009

May 2010


December 2009

December 2009

May 2011
New Lending:

-Urban & Water Development (Investment)

-Economic Diversification Project (TA)

-Supplemental to Governance and Transparency Project

-Regional Telecommunication Project


March 2009

December 2009

March 2010

2010


January 2010

May 2010

July 2010

FY11
IMF work program in next 12 monthsSecond review under the PRGF arrangementSeptember 2009November 2009
Third review under the PRGF arrangementFebruary 2010June 2010
Fourth review under the PRGF arrangementSeptember 2010November 2010
B. Requests for work program inputs
Fund request to Bank (with summary justification)Collaborate on the LIC-DSASeptember 2009December 2009 (with Completion Point)
Bank request to Fund (with summary justification)Collaborate on review of progress on implementation of HIPC triggersNovember 2009December 2009 (with Completion Point)
Collaboration on the LIC-DSASeptember 2010October 2010
C. Agreement on joint products and missions
Joint products in next 12 monthsHIPC Completion Point documentNovember 2009 (Joint mission)December 2009
LIC-DSA for Completion PointSeptember 2009December 2009 (with Completion Point)
JSAN on PRSP Annual Progress ReportJune 2009December 2009 (with Completion Point)

Annex III—Statistical Issues

1. Data provision has some shortcomings, but is broadly adequate for surveillance purposes. In the context of surveillance, long delays in the provision of national accounts, balance of payments and government finance statistics are particularly problematic. The statistical infrastructure is being rebuilt after the civil strife of the late 90’s, during which administrative infrastructure suffered severe damage and many records were lost. Since October 2001, an STA multisector statistics advisor (MSA) has been assisting the authorities with the macroeconomic statistics.

2. A STA multi-sector mission in May 2002 conducted an assessment of the statistical system. The mission’s general finding was that macroeconomic statistics were weak and suffered from the absence of a national statistical program and shortages of financial, physical, and human resources. It recommended measures for improvement, which were being followed up by the statistical advisor up to end-2008 and currently through technical assistance by AFRITAC Central. Some important steps have been achieved in the implementation of the recommendations, including work to revise the national accounts and move to the SNA93 system of accounts. In addition, the authorities adopted recently a new statistical framework law, which aims at reorganizing the institutional set-up for collection, treatment and analysis of statistical information, and coordination across central ministries. For operationalizing the law, a new strategy for developing statistical capacity has been launched, with support of development partners.

3. The Republic of Congo participates in the General Data Dissemination System (GDDS) since November 5, 2003. However, the metadata posted on the Fund’s Dissemination Standards Bulletin Board (DSBB) has not been updated or certified since 2003.

Real sector statistics

4. National accounts data are weak, with inconsistencies, both internally and with balance of payments statistics. Estimates for the informal sector are based on information that dates back to 1978. The Directorate General of Statistics (DGS) of the Ministry of Finance (MoF) provides Fund missions with a breakdown of GDP by expenditures and sectors, both in nominal and real terms. In the framework of moving to the SNA93 system of accounts, the DGS completed the national accounts estimates for 2005 (the new base year) and for 2006, with the assistance of the resident statistical expert and Central AFRITAC. Subsequently, a national workshop was organized in August 2009 to validate the new estimates. Authorities are currently working with the central AFRITAC to revise the national accounts’ estimates back to 2000 and forward to 2008.

5. Annual data on employment in the central government are available from the MoF, but are not consistent with data from the civil service roster of the Ministry of the Civil Service. As part of the structural reforms undertaken in the context of the post-conflict program, the government completed an audit of public service employees and established a new civil service payroll roster. Data on employment in the private sector are not available.

6. Movements in the prices of commodities consumed by households are recorded for the capital city of Brazzaville (weights for 1977 and price reference period of December 1977) and the second-largest city of Pointe Noire (price reference period of January 1996 and weights for 1989). Weights no longer reflect current household consumption patterns. Data are compiled on a monthly basis. The authorities intend to compile a CPI that is harmonized with other countries in the Central African Economic and Monetary Community (CEMAC).

Government finance statistics

7. Compilation of government finance statistics (GFS) has benefited from recent efforts to increase the comprehensiveness of the data through the adoption of systematic compilation practices. The increased interagency cooperation is in line with the recommendations of the May 2002 multisector mission, which recommended that systematic procedures be established for the compilation of government finance statistics, based, to the extent possible, on a unified set of accounting and administrative records using the GFSM 2001 classifications.

8. The Republic of Congo has reported (in September 2008) GFS data to STA for fiscal years 2004 and 2005 using the GFSM 2001 template, and indicate that data for 2006 and 2007 will be reported no later than June 2009. High-frequency fiscal data has not yet been reported for publication in IFS. The compilation of GFS statistics to be reported to the Fund should be carried out in close cooperation with the compilers of the TOFE.

9. Progress is underway to address these shortcomings. In February/March 2003, a FAD follow-up mission found that most of the recommendations of the 2001 FAD mission on expenditure management, in particular with regard to the centralization of all government revenue and execution of public expenditure through the budget, are being implemented, and steps have been taken to computerize expenditure chain accounting.

10. The Caisse congolaise d’amortissement (CCA) produces comprehensive data on the outstanding stock of external public debt, including arrears and their composition, together with detailed projections on debt service due. These data are provided to Fund missions. However, the debt-stock data cannot be reconciled with flow data in the balance of payments. The CCA also produces domestic debt data. Concerns still exist with regard to the reconciliation of fiscal and monetary statistics.

11. There is no centralized, comprehensive database on the operations of public enterprises. However, some information has been made available to Fund missions by individual enterprises. TOFE compilers do not have access to relevant financial statements of the Société nationale des pétroles congolais, which carries out several operations on behalf of the government (notably in the oil sector).

Monetary and financial statistics

12. The Bank of Central African States (BEAC) regularly reports monetary, interest rates, and exchange rate statistics for publication in IFS, but delays occur sometimes in the submission of data to STA. The accuracy of national monetary statistics may be affected by large cross-border movements of BEAC issued banknotes among the CEMAC member countries. However, the Republic of Congo is moderately affected by such movements: 6.2 percent of banknotes issued in the Congo by the BEAC national directorate circulate in Cameroon and 1.2 percent in Gabon, while currency in circulation in the Republic of Congo includes 2.3 percent of banknotes from Cameroon and 3.2 percent from Gabon. The magnitude of banknote movements between the Republic of Congo and CEMAC member countries other than Cameroon and Gabon is very small.

13. In this regard, the BEAC started in mid-2007 a project to migrate monetary statistics of member countries of the CEMAC to the methodology in the Monetary and Financial Statistics Manual (MFSM). As a part of this project, a regional workshop was organized by the BEAC in December 2007 to finalize the mapping of source data from commercial banks to the MFSM concepts and framework. STA participated in this workshop to provide guidance and advice. Submission of data by the BEAC using the standardized report forms is pending.

External sector statistics

14. As in other CEMAC countries, the national agency of the BEAC is responsible for the collection and the dissemination of balance of payments statistics. The balance of payments statistics are prepared on an annual basis while the compilation system has been specifically designed to produce quarterly data. Since 1995, data are being prepared using the Balance of Payments Manual, Fifth Edition. The BEAC provides annual estimates on exports and imports of goods and services and on capital flows other than public debt. Balance of payments data for 1995 through 2005 are published in the Fund’s International Financial Statistics (IFS), and STA is working with the authorities in updating the data series.

15. In May 2002, a technical assistance mission found the compilation system and procedures to be conceptually sound but flawed in their application due to the absence of documented sources and methods, understaffing, and insufficient training. This situation resulted in significant delays in the production of balance of payments statistics and, in general, poor monitoring of the quality of the input data provided by respondents. Furthermore, the opacity surrounding certain transactions in the oil sector introduces an important element of imprecision. In addition, net investment flows are overestimated by significant unrecorded disinvestment operations that are part of the tax regime arrangements obtained by oil-drilling nonresident companies. In February 2007, a follow-up STA balance of payments statistics mission made a number of recommendations aimed at improving institutional arrangements for balance of payments statistics compilation and validation. Progress in this regard has been slow, consequently delaying the process for finalizing BOP data for 2005–08.

Republic of Congo: Table of Common Indicators Required for SurveillanceAs of October 31, 2009
Date of latest observationDate receivedFrequency of Data7Frequency of Reporting7Frequency of publication7
Exchange RatesCurrentCurrentDDD
International Reserve Assets and Reserve Liabilities of the Monetary Authorities1June-2009Sept-2009MMM
Reserve/Base MoneyJune-2009Sept-2009MMM
Broad MoneyJune-2009Sept-2009MMM
Central Bank Balance SheetJune-2009Sept-2009MMM
Consolidated Balance Sheet of the Banking SystemJune-2009Sept-2009MMM
Interest Rates2June-2009Sept-2009MMM
Consumer Price IndexJuly-2009Sept-2009MMM
Revenue, Expenditure, Balance and Composition of Financing3–General Government4N/AN/AN/AN/AN/A
Revenue, Expenditure, Balance and Composition of Financing3–Central GovernmentAugust-2009Oct-2009MMQ
Stocks of Central Government and Central Government-Guaranteed Debt5June-2009Sept-2009QQQ
External Current Account BalanceDec-2008June-2009AAA
Exports and Imports of Goods and ServicesJune-2009Sept-2009AAA
GDP/GNP2008Sept-2009AAA
Gross External DebtJune-2009Sept-2009QQQ
International Investment Position6NANANA

Includes reserve assets pledged or otherwise encumbered as well as net derivative positions.

Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.

Foreign, domestic bank, and domestic non-bank financing.

The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.

Including currency and maturity composition.

Includes external gross financial asset and liability positions vis-à-vis nonresidents.

Daily (D), Weekly (W), Monthly (M), Quarterly (Q), Annually (A); Irregular (I); Not Available (NA).

Includes reserve assets pledged or otherwise encumbered as well as net derivative positions.

Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.

Foreign, domestic bank, and domestic non-bank financing.

The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.

Including currency and maturity composition.

Includes external gross financial asset and liability positions vis-à-vis nonresidents.

Daily (D), Weekly (W), Monthly (M), Quarterly (Q), Annually (A); Irregular (I); Not Available (NA).

1

Assistance committed under the original framework is expressed in net present value (NPV) terms at the completion point, and assistance committed under the enhanced framework is expressed in NPV terms at the decision point. Hence these two amounts can not be added.

2

Under the enhanced framework, an additional disbursement is made at the completion point corresponding to interest income earned on the amount committed at the decision point but not disbursed during the interim period.

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