China, who is playing the role of Good Samaritan to an increasing number of African countries is developing cold feet in the case of Congo-Brazzaville, which has indicated its preference to close the loan deal the IMF, that come with conditions and strings. Many in the diplomatic circles feel that this is the first time such things are happening in the recent past. There is a sound rationale behind the stand of the debt-ridden Congo though some believe that it does not have any other go while seeking loans to tide over its heavy debt burden. China holds more than a third of the country’s external debt, which is not really comfortable in any situation. China has been lending to countries that produce and export raw materials, particularly oil, in recent years. After Venezuela’s non-payment, there appears to be a re-thinking on the part of Beijing also not to increase further its exposure in Africa as also in other debt-ridden countries without solid collaterals. Accumulation of debt is not a new trend for Congo Brazzaville. In 2005, the country had gone for a significant debt reduction under the Heavily Indebted Poor Countries (HIPC) initiative, which had seen a considerable reduction in its external debt.
The small oil-rich Central African country in 2014 faced the full brunt of the drop in crude oil prices This unexpected and very sudden drop, bore a big hole in the remittances of the country. As a result, GDP halved. Debt burden increased to 110% of GDP in 2017. More than a third of the debt had fallen into the hands of Chinese. In absolute terms, its debt burden was US$2 billion. To relieve the pangs on the economy, on account of the increasing debt burden, particularly on the inflation and depleting foreign exchange reserves, the Congolese government called on the IMF. The agreement reached remained in limbo on account of the condition imposed by the IMF that the debt must be sustainable, repayable and the country has to follow the reform path to create avenues for development. Debt restructuring is a must under that dispensation. Going by the past experience, China does not lend on such terms. It always keeps its interest intact while lending. A case in point is Sri Lanka. As a guarantee against lending, the island country had to give China control of a
deepwater port for 99 years. It seems that Brazzaville is reluctant to play that reckless game: at least that is what experts say.
