Congo (Republic of the)

Accelerated growth on back of hydrocarbon development and economic diversification

Economic growth should continue to accelerate in 2025 as oil GDP recovers thanks to new drilling in old fields, maintenance of mature wells and the start-up of production from the Holmoni field (1.02 million barrels per year). The gas sector, driven by the Congo LNG (liquefied natural gas) project on the Marine XII offshore block, will see strong expansion, particularly with the launch of the second floating terminal (Nguya FLNG) by 2025, bringing total LNG production capacity to 4.5 billion cubic meters. This project will help solve electricity supply problems and position the country as a net LNG exporter. In short, oil and gas projects will attract FDI, thanks to measures such as contract transparency and tax breaks. This can be seen from new investments of USD 600 million by TotalEnergies to maintain production from the Moho-Nord field, and USD 140 million by China Oil Natural Gas Overseas (COGO) Holding United to develop four oil wells in the Conkouati-Koui and Nanga III fields. Economic diversification will continue to represent the core of the 2024-2026 Development Plan reforms. In 2025, non-hydrocarbon growth will be stimulated by agriculture, supported by the government through initiatives such as tariff exemptions, the opening of protected agricultural zones and agricultural mechanisation centres. The aim is to improve food security and reduce imports of agricultural products by stepping up production. The Congo is also home to vast mineral reserves (iron ore, potash, bauxite, cobalt), but exploitation is essentially small-scale and artisanal due to poor transport infrastructure. However, several new mines, such as the Mbalam-Nabeba mining project, which has been in operation since May 2024 and has a capacity of 35 million tonnes of iron per year, should strengthen the sector, supported by improvements in transport and energy infrastructure. Domestic demand, meanwhile, will be boosted by clearing domestic arrears, and increasing social spending and public investment.

Inflationary pressures eased in 2024, partly as a result of lower global commodity prices, although they persisted as a result of higher fuel prices after subsidies were stopped. In 2025, inflation is expected to ease to the 3% target set by the CEMAC on back of the BEAC's restrictive monetary policy. The BEAC has maintained its main key rate at 5%, but because the CFA franc is pegged to the euro, it will follow in the ECB’s footsteps. However, if the FED decides to impose fewer interest-rate cuts, there is a risk that the CFA franc will depreciate more sharply than expected against the dollar, leading to imported inflation.

Fragile public and current-account surpluses, on top of a heavy public debtload

Under the USD 455 million Extended Credit Facility (ECF) programme with the IMF due to expire in January 2025, the authorities have strengthened their fiscal position through consolidation measures, including the reduction of fuel subsidies in 2023. However, public spending will remain high in 2025 as the authorities continue to prioritise social spending to help the country’s poorest citizens, particularly in the health and education sectors. Capital expenditure will also be undertaken as part of the 2024-2026 Development Plan. In terms of public revenue, progress has been made in mobilising tax revenues, thanks in particular to a reduction in tax exemptions, recovery of tax arrears and an increase in non-oil revenues associated with the expansion of the gas and mining sectors. However, the erosion of oil revenues due to the fall in oil prices will affect revenues (oil accounts for 60% of tax revenues), notwithstanding the expected increase in oil production. This will lead to a slight reduction in the budget surplus in 2025, although it will remain high thanks to the rationalisation of public spending and improved mobilisation of non-oil revenues. With debt servicing absorbing more than 60% of revenues, the Congo encountered difficulties in honouring certain maturities on the domestic market in 2024, and will have to face large-scale maturities over the next two years. Outstanding domestic and regional debt stood at FCFA 2,314 billion (USD 3.7 billion) at the end of September 2024, of which 62.7% is due to be repaid by the end of 2026. In order to reduce this concentration of short-term repayments, the government, as part of the National Treasury Optimisation Programme (PNOT), very recently restructured 85% of this debt, i.e., the portion held by the banks. The average maturity has been extended from 2.6 years to 6.4 years, with savings on debt servicing of around CFAF 700 billion over the 2024-2028 period. Public debt (59% domestic or regional) as a share of GDP should fall by 2025 owing to continued fiscal consolidation and the authorities' plan to clear all domestic arrears by 2031.

In 2025, the expected increase in gas and mining exports will only partially offset the decline in oil export revenues (80% of Gabon's exports). At the same time, imports of goods and services will remain robust as a result of diversification of the economy and the development of the hydrocarbon sector. Deficits in primary income and services will weigh on the current account surplus due to the increase in profit repatriation and investment by oil companies. Foreign exchange reserves will remain under pressure due to the economy's dependence on imports. On average, they will represent only two months of import cover in 2025, which is less than the internationally recognised minimum of three months.

President serving his fourth five-year term, clouded by poor governance

Re-elected in 2021 with 88.6% of the vote, President Denis Sassou-Nguesso and the Congolese Labour Party (PCT) will retain their grip on power in 2025. The lack of respect for democratic standards, poor public services and endemic corruption and poverty will fuel growing social frustration and sporadic protests. The authorities will continue to clamp down on such unrest to prevent it developing into a serious threat to the government. Although the Constitution allows the President to run for a fifth term in 2026, his advanced age (82 at the time of the poll) could prove an obstacle and a possible dynastic succession would face fierce opposition. The likelihood of a military coup remains low as the PCT is dominated by military officers. In the parliamentary elections scheduled for 2027, the PCT is likely to retain a large majority, with the polls unlikely to be fair due to continuing restrictions on the opposition campaign and recurring accusations of electoral fraud.

The government will continue to focus on its relationship with China, its main partner for oil exports (24% in 2023) and a major source of imports, as it seeks to stimulate foreign investment in hydrocarbons and its nascent mining sector. In September 2024, the two heads of state agreed to extend their cooperation in trade, investment and finance with a view to further promoting the liberalisation and facilitation of these sectors. Ties between the Congo and Russia go back a long way. Russia is involved in the construction of Congolese infrastructure (hydroelectricity, roads, etc.) through the supply of equipment and materials, as well as in the agricultural, mining and oil sectors, while providing diplomatic and military support. In 2024, the two countries approved the construction of an oil pipeline between Pointe-Noire and Brazzaville. France will remain an important partner despite strained relations with it and other Western partners due to ongoing investigations into the President's family and corruption in general.

Last updated: January 2025