- Prime minister says no funds will go to recurrent expenditure
- Debt levels have remained low after Paris Club writeoff
The Democratic Republic of Congo is preparing to sell almost $1 billion of bonds on international markets for the first time next year to invest in projects that will help boost economic growth, Prime Minister Matata Ponyo said.
“We are in the process of working with external advisers to identify what is possible,” he said in an interview Thursday in the capital, Kinshasa, without naming the consultants. “We will try to raise just under $1 billion. It will allow us to mobilize funds to stimulate the economy through infrastructure investments.”
The funds will be allocated only to projects that have the potential to expand the economy and will not go toward recurrent expenditure, Ponyo said. The government of Africa’s biggest copper producer in November lowered its growth forecast for 2015 to 7.7 percent from a previous estimate of 8.4 percent as metal prices tumbled. The country is rebuilding after being shattered by two civil wars that ended in 2003 and killed millions of people.
The 2016 Budget presented to parliament by the Prime Minister in October outlined that 653.4 billion Congolese francs ($707 million) will be raised through bond sales on international markets. The plan to raise foreign debt comes as the DRC heads for presidential elections next year in which incumbent Joseph Kabila has yet to publicly confirm whether he will step down when his mandate ends in 2016.
Standard & Poor’s rates Congo B-, six levels below investment grade, with a stable outlook. The Congolese franc was unchanged at 928 per dollar as of 2:12 p.m. in Kinshasa. The currency has weakened 1.8 percent this year, the fifth-best performer among 24 African currencies tracked by Bloomberg.
The country’s assessment is restrained by weak institutional and governance standards, political instability, the lowest gross domestic product per capita of any nation rated by S&P and dependence on foreign direct investment to fund its current account deficit, the company said on Aug. 14. The country’s “rapid” growth rates, low levels of government debt since the Paris Club of creditor nations and Brazil canceled $7.35 billion of external borrowings, and small budget deficits add support to the DRC’s rating, S&P said.
“You have to be careful,” Ponyo said, in reference to interest payments on debt. "As soon as you sign the counter starts."