BRAZZAVILLE – Congo Republic's government said on Wednesday it planned to cut spending next year by 8.6% to 1.38-trillion CFA francs ($2.5-billion), following a 45% cut to the 2017 budget this month, as it seeks an International Monetary Fund bailout.
The economy has been badly hit by low oil prices and poor fiscal management, causing total government revenue to slide by nearly a third since 2015 and public or publicly-guaranteed debt to surge to around 110% of GDP.
In a statement announcing the budget proposal, government spokesperson Thierry Moungalla said the economy would contract by 4.6% this year but should recover to grow by 0.7% in 2018 as crude production picks up at Total's Moho Nord offshore field.
Moungalla said the government planned to run a 219 billion-CFA franc surplus in order to reduce public debt and adhere to principles agreed with the IMF during a two-week mission earlier this month.
That visit ended without a deal as the IMF said the government needed to do more to restore debt sustainability and strengthen governance. Congo is regularly singled out by anti-corruption groups for the opaque management of its oil sector.
Holders of Congo's Eurobond are closely following the government's efforts to get back on top of its debt, which have been complicated by a $1-billion legal dispute in a US court.