Standard & Poor’s downgraded Congo’s foreign currency ratings from B-/B to SD/D (selective default) in the long and short term respectively.

“On June 30, 2016, the Republic of Congo failed to make a principal and interest payment on its $478 million notes due 2029n, which were issued under a restructuring of London Club debts in 2007,” S&P said.

The bond had a 30-day grace period which expired on July 30, without Congo being able to clear its debts.

The Central African nation has now been put in default by the US ratings agency which indicated that once Congo clears its debt, it will reassess its ratings. The reassessment of course would depend on the risk weighing on the remaining bond, ease to access capital markets and the country’s general sovereign profile.

Congo whose economy depends greatly on oil is still expecting dividends from investments made in other sectors. Taking advantage of the crisis during which the barrel of oil traded at more than $100, the Congolese government launched major works not only to boost infrastructures across the nation, but also in preparation of African Games which it is soon to host.

According to most recent economic forecasts re-taken by S&P, the Republic of Congo must make significant efforts to honour its commitments. Investments which drove the nation’s growth but also degraded its external position should drop to 32% of GDP in 2018, against 42% in 2014. Meanwhile, its current account should widen to -29% of GDP before climbing back up in 2018. As for foreign direct investments, they should represent only 11% of GDP.

Idriss Linge