The oil-producing central African country seeks IMF bailout to help with debt stock of which two-thirds is Chinese
China’s investment strategy of throwing money at developing countries appears to have hit a snag in the Republic of Congo as the central African nation is seeking an IMF bailout.
The IMF places conditions on its loans to force governments to take measures to boost their finances. In addition, as the IMF can only lend if it judges that a country’s debt load is sustainable, a bailout may be accompanied by a restructuring of government debt. The situation is all the more worrying as the Republic of Congo in 2005 was one of the countries that benefited from an international debt relief initiative for the world’s poorest countries. Its foreign debt was brought down from 119% of annual economic output to just 33%.
About one-third of the country’s debt is in Chinese hands, or about $2bn, said the specialist in relations between China and Africa. “For the US it is out of the question that the IMF rescues a country that is in debt to China,” the specialist said.
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