The World Bank and DRC are aiming to complete debt relief for the central African state by next March, World Bank President Robert Zoellick said.
The relief would cover some $7 billion (R57 billion) of non-commercial loans from the IMF, World Bank and bilateral debt held bilaterally with governments. The savings to Congo would amount to $400 million (R3267 million) a year in payments.
Zoellick said there had been progress in talks between Congo and China on amending a $9 billion infrastructure-for-minerals deal, components of which have held up the debt relief accord.
“It may be ambitious but we said we should try to accelerate (debt relief) by March next year,” Zoellick told reporters after talks with Congolese President Joseph Kabila.
“We have had good discussions with the DRC and the Chinese about maintaining the Chinese investment in a way that is also supportive of the debt relief,” Zoellick added after talks with Kabila the east of the country.
The International Monetary Fund fears the contract, which uses Congo’s mineral reserves as a guarantee for infrastructure projects, could plunge the central African nation deeper into debt and has delayed forgiveness of most of the $10 billion (R81 billion) Congo already owes.
A mission from the IMF is currently in Congo.
Negotiations
Agreed early last year, the contract with China is a cornerstone of Kabila’s post-conflict reconstruction policy following decades of dictatorship and a 1998-2003 war that left the former Belgian colony’s infrastructure in ruins.
The deal is comprised of two phases of infrastructure projects with a total price tag of $6 billion aimed at rehabilitating thousands of kilometres of road and rail connections and constructing schools and hospitals.
An additional $3 billion (R24 billion) is slotted toward developing new Chinese copper and cobalt mines in Congo’s mineral-rich Katanga province, where reserves will serve to pay back the costs of those projects.
“Our understanding is that the Congolese discussed with their Chinese counterparts the removal of the second phase of infrastructure projects and the removal of the government guarantee on the mining component,” Brian Ames, the IMF’s mission chief for DRC, told Reuters.
“These two issues are critical to making the cooperation agreement consistent with debt sustainability,” he said, adding that the IMF was still waiting for confirmation of the outcome of the negotiations between Congo and China.
Wei Sheng Zi, head of the economic section of China’s embassy in Congo, confirmed the Chinese companies partnered with Congolese state miner Gecamines had agreed to remove the guarantee on the costs of mining development.
However, he said the second phase of infrastructure projects was still expected to go ahead.
“As far as I know, for the second phase, we have not cancelled. We are discussing the list of projects. As this isn’t a definitive list, probably, there will be some modifications there as well,” Wei said.
Pic: Infarstructure
