Re Approved by: Prepared by the staff of the International Development Association (IDA) and the Marcello Estevão and Abebe Adugna International Monetary Fund (IMF). (IDA) and Vitaly Kramarenko and Gavin Gray (IMF) REPUBLIC Risk of external debt distress In Debt Distress Overall risk of debt distress In Debt Distress Granularity in the risk rating Sustainable Application of judgment No The overall and external debt1 of the Republic of Congo are classified as “in distress”, pending finalization of debt restructuring agreements with one external commercial creditor and clearance of arrears, but debt is assessed as “sustainable”. For the debt restructuring under discussion, an agreement in principle (AIP) was reached in early 2021 but was not approved by the creditor’s underlying lenders and discussions continue. About 14 percent of the bilateral debt service due in 2021, including to China, has been rescheduled under the DSSI. Restructured debt, fiscal discipline, higher oil prices, and improved debt management —including restricting new external financing to concessional terms—are projected to help all external liquidity and solvency indicators fall below the thresholds by 2026. 2 Oil price assumptions (including relatively high medium-term oil prices) and projections of growth in the non-oil economy, coupled with increased debt service (tied to high oil prices), are expected to reduce the public debt-to-GDP ratio and support no new accumulation of domestic arrears. Nevertheless, there are major external and overall debt-related risks, as signaled by the PV of public debt to GDP indicator exceeding its benchmark until 2030 and the external debt-service-to revenue breaching its threshold through 2025. Even though the PV of public debt breaches its benchmark extensively, it is assessed as sustainable given that the liquidity risks are mitigated by i) the steady and significant declines in the relevant ratios going forward, ii) availability of financing from Congolese financial markets. Immediate liquidity needs in 2020 –21 were also supported by the DSSI. The debt sustainability 1 >>> assessment is highly vulnerable to negative oil price shocks. Tighter conditions in regional markets (CEMAC banking systems) could be a downside risk if the government’s financing needs exceed the current baseline projections. Going forward, the authorities are encouraged to continue pursuing fiscal consolidation, enact policies for diversification to reduce risks and prepare for reduced long-term oil production and demand, finalize the pending restructuring agreement, clear domestic arrears, and continue enhancing debt management. 1. The coverage of public debt in this DSA is limited to central government debt but includes oil- backed debt contracted by the national oil company (SNPC), the largest state-owned enterprise. State and local governments in Congo are not allowed to borrow and depend on local taxes and transfers from the central government. Debt from oil-backed pre-financing arrangements contracted with oil traders through SNPC and guaranteed by the central government is included in the analysis and is the main source of non-central government debt. However, the debt of other state-owned enterprises (SOEs) and non-guaranteed debt of SNPC is not included in this analysis because of limited information on their debt and fiscal performance.1 Staff will continue efforts to compile information on SOEs to improve the scope of the DSA, in line with guidelines under the revised LIC-DSF. Supported by the FY 2021 performance and policy actions (PPA) under the World Bank’s Sustainable Dev elopment Finance Policy (SDFP), the authorities are making on-going efforts to address the limited coverage on SOE debt and financial performance. Efforts are also underway to centralize SOE debt information in a single debt database managed by the Congolese debt office and to include this information in annual debt reports. Technical assistance from the Fund and the World Bank is available to support these efforts, and preparation of a comprehensive debt management strategy is also part of the conditionality under the Extended Credit Facility Arrangement (ECF). In terms of the social security system, there are two entities: (i) a more autonomous CNSS that collects contributions to pay retirees from both the private sector and public enterprises; and (ii) the Caisse de Retraite des Fonctionnaires (CRF) for public administration employees. Both are under the wardship of the Ministry of Labor. In the past the government “borrowed” from the CNSS and some public enterprises did not make their contributions to the CNSS. As of now, the consolidated government debt is around CFAF 200 billion to the CNSS. Domestic debt includes these “social arrears”. 2. Contingent liabilities are elevated and pose a risk. The contingent liability stress test is customized to account for vulnerabilities associated with legally disputed claims of domestic arrears, non-guaranteed SOE debt, and litigated debt (Text Table 1). Non-guaranteed SOE debt is estimated at 27 percent of GDP, and under the stress test, it is assumed that one third of this amount could end up on the central government balance sheet (9 percent), while the rest can be paid through the liquidation of SOE assets. In addition, Congo’s total PPP capital stock is estimated at 5 percent of GDP, with 35 percent of this stock assumed to end up on the government balance sheet under the stress test. Debt vulnerabilities are also affected by claims of domestic arrears that were rejected by an audit but are being legally contested (about 7 percent of GDP), newly rejected domestic arrears claims under the current audit (about 12¼ percent of GDP) that could be legally contested, and an external arrears claim of 2¼ percent of GDP which is currently being litigated (and not included in the debt stock), adding up to 21½ percent of GDP for other elements of government debt.2 The contingent liability test is also calibrated to account for these potential risks to the public sector balance sheet. 2 >>> Subsectors of the public sector Sub-sectors covered 1 Central government X 2 State and local government 3 Other elements in the general government 4 o/w: Social security fund 5 o/w: Extra budgetary funds (EBFs) 6 Guarantees (to other entities in the public and private sector, including to SOEs) X 7 Central bank (borrowed on behalf of the government) 8 Non-guaranteed SOE debt 1 The country's coverage of public debt The central government, government-guaranteed debt Default Used for the Reasons for deviations from the default settings analysis Litigated debt; contested domestic debt under audit; rejected 2 Other elements of the general government not captured in 1. 0 percent of GDP 21.6 domestic arrears 3 SoE's debt (guaranteed and not guaranteed by the government) 1/ 2 percent of GDP 9.0 SOE's debt not guaranteed by the government 4 PPP 35 percent of PPP stock 1.60 5 Financial market (the default value of 5 percent of GDP is the minimum value) 5 percent of GDP 5 Total (2+3+4+5) (in percent of GDP) 37.2 1 The public debt coverage chart is updated to explicitly exclude subnational governments from the coverage. 3. Public debt in the Republic of Congo is expected to decline to 94 percent of GDP at end-2021 from 110 percent of GDP at end-2020. The decrease in the debt-to-GDP ratio primarily reflects efforts by the authorities to remain current on scheduled debt service payments. Lower than forecast project loan disbursements (with infrastructure and development projects cancelled or delayed due to the pandemic) and delays in budget support limited new external financing; however, the rescheduling of debt service under the DSSI and the issuance of new domestic debt helped alleviate financing pressures. • External debt decreased to 53 percent of GDP at end-September 2021 from 62 percent of GDP at end-2020. A large share of external debt is owed to China and Chinese companies (20 percent of GDP) and oil traders (12¼ percent of GDP, see Tables 1a and 1b). Under the proposed Fund- supported ECF program, the contracting of new external debt is restricted to be on concessional terms. • Building on the progress made in clearing external arrears, the authorities participated in the G20 DSSI liquidity support. During 2020–21, US$386 million of arrears and debt service payments were covered under the DSSI provided by Belgium, Brazil, China, France, India, Kuwait, Saudi Arabia, and Turkey. The authorities continue efforts to resolve remaining bilateral and commercial arrears (including US$99 million of pre-HIPC bilateral and US$102 of pre-HIPC commercial arrears).3 Recently, an agreement was concluded on arrears payments to Switzerland. Agreements have been reached, with signatures expected soon, on arrears payments to Belgium (not covered under the DSSI amounts above), India (for arrears not covered by the DSSI), Libya, and Russia. Moreover, $26 million in arrears to Chinese infrastructure companies were repaid in Q4 2020, and another $231 million (as of end-2020) in external commercial arrears were rescheduled as part of restructuring agreements reached with two external commercial creditors. The authorities are negotiating debt restructuring to resolve arrears of $536 million with one private creditor. Congo has $415 million of arrears to suppliers, of which US$293 million are part of a broader litigation case and US$102 million are pre-HIPC arrears for which the authorities have requested HIPC treatment. The authorities are also discussing resolution of remaining US$21 Million in arrears with 10 suppliers. 3 >>> • Arrears to Saudi Arabia and Kuwait that arose at the start of 2021 due to technical reasons were fully paid in the second half of 2021. Besides these, no new arrears were accumulated during 2021. • Domestic public debt decreased slightly from 48 percent of GDP at end-2020 to 46 percent of GDP at end-June 2021. Domestic debt at end-June 2021 involved borrowing from commercial banks (20 percent of GDP)—mainly in the form of bond issuances—commercial arrears currently (12 percent of GDP), statutory advances from the regional central bank (8 percent of GDP), and pension arrears and unpaid social benefits (6 percent of GDP).4 4. This debt sustainability analysis incorporates the impact of two restructuring agreements concluded with external private commercial creditors (oil traders). The restructuring agreement with one of these two creditors (a large oil trader) was signed in 2021Q1 —this agreement includes a nominal haircut, a maturity extension, and an interest rate reduction. The restructuring agreement with the other of these two creditors (a smaller oil trader) was signed in April 2020—this agreement included a substantial nominal haircut on the stock of outstanding debt, a maturity extension, and resolution of US$61 million in external arrears. The DSA does not incorporate the agreement in principle (AIP) that was reached in early 2021 with another large oil trader but was not approved by its underlying lenders; instead, the DSA includes the original agreement (which was set to expire at end-2020) and repayment of arrears during 2022–25 (where the arrears were accumulated during 2020–21 in connection with debt restructuring negotiations). 5. This debt sustainability analysis also incorporates the impact of the G20 Debt Service Suspension Initiative (DSSI). Under the DSSI, the authorities obtained relief of US$98 million of debt service due to bilateral creditors between May and December 2020 (equivalent to 1 percent of GDP), that was rescheduled under NPV-neutral terms. Under the second phase of DSSI, an additional US$105 million of debt service was rescheduled. Under the final DSSI extension, an additional US$56 million of debt service was rescheduled. Despite a contraction in GDP, the authorities devoted the resources freed by this initiative to increased spending in order to mitigate the health, economic, and social impact of the COVID- 19 pandemic. The DSA includes the rescheduling—according to published terms—of all eligible debt, with the exception of debt under the Strategic Partnership loans from China, which the creditors have not agreed to reschedule and for which the authorities have continued making repayments . 6. Weaknesses in public debt management and reporting remain. While the authorities published the terms of the 2019 debt restructuring agreement with China, operationalization of the agreement implied lower short-term liquidity relief than initially assessed. Moreover, the authorities continued accumulating excess deposits in the escrow account in China during 2020—though these have been eliminated in 2021. In addition, the emergence of a contested claim has increased the stock of contingent liabilities; this claim has been included in the ongoing audit of domestic arrears. Technical assistance in the areas of debt management and reporting is already underway in various areas of debt management and debt reporting in the context of the Multipronged Approach to Debt Management. 4 >>> Volume of New Debt in 2022 PPG External Debt USD million Percent By Sources of Debt Financing 136.5 100 Concessional Debt, of which 136.5 100 Multilateral debt 105.0 77 Bilateral debt 31.5 23 Other 0.0 0 Non-Concessional Debt, of which 0.0 0 Semi-concessional 0.0 0 Commercial terms 0.0 0 By Creditor Type 136.5 100 Multilateral 105.0 77 Bilateral - Paris Club 31.5 23 Bilateral - Non-Paris Club 0.0 0 Other 0.0 0 Uses of Debt Financing 136.5 100 Infrastructure 0.0 0 Social Spending 0.0 0 Budget Financing 136.5 100 Other 0.0 0.0 By the Type of Interest Rate Fixed Interest Rate 105.0 Variable Interest Rate 31.5 Unconventional Loans 0.0 By Currency USD denominated loans 105.0 Loans denominated in other currency 31.5 5 >>> Increase(+) Sep 2021 (Excl. unrestructured pre- End-2020 stock /Decrease(-) in September 2021 stock HIPC arrears) 2021 CFAF USD percent percent CFAF percent CFAF billion CFAF billion USD million USD million billion million of GDP of GDP billion of GDP Milliards Millions % du Milliards de Milliards de Millions de % du PIB Milliards Millions de % du PIB Total 744 1380 13 -30 714 1301 10.3 604 1099 8.7 Multilateral and other creditors 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 IMF 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 World Bank 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 IFAD 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 AfDB 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Others 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Bilateral 119.9 222.4 2.0 -4.3 115.5 210.3 1.7 61.0 111.1 0.9 Paris Club 41.1 76.2 0.7 3.2 44.3 80.6 0.6 44.3 80.6 0.6 Brazil 1/ 25.2 46.7 0.4 1.3 26.5 48.2 0.4 26.5 48.2 0.4 Belgium 1/ 10.5 19.4 0.2 7.3 17.8 32.4 0.3 17.8 32.4 0.3 France 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Switzerland 5.4 10.1 0.1 -5.4 0.0 0.0 0.0 0.0 0.0 0.0 Russia 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Non-Paris Club 78.8 146.1 1.3 -7.5 71.2 129.7 1.0 16.7 30.4 0.2 United Arab Emirates 12.3 22.9 0.2 0.6 13.0 23.6 0.2 0.6 1.1 0.0 Angola 39.0 72.4 0.7 2.0 41.0 74.7 0.6 2.0 3.6 0.0 China 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 India 1/ 11.4 21.2 0.2 2.3 13.7 24.9 0.2 13.7 24.9 0.2 Kuwait 0.0 0.0 0.0 0.1 0.1 0.1 0.0 0.1 0.1 0.0 Saudi Arabia 0.0 0.0 0.0 0.3 0.3 0.6 0.0 0.3 0.6 0.0 Turkey 12.8 23.8 0.2 -12.8 0.0 0.0 0.0 0.0 0.0 0.0 Postal debt 3.1 5.8 0.1 0.0 3.1 5.7 0.0 0.0 0.0 0.0 Private Creditors 624 1157.6 11 -25 599 1090 8.6 543 988 7.8 CMEC and Chinese companies 2/ 0 0.0 0 67 67 122 1.0 67.0 122 1.0 Eurobond (London Club) 0 0.0 0 0 0 0 0.0 0.0 0 0.0 Afreximbank 0 0.0 0 0 0 0 0.0 0.0 0 0.0 Oil traders 396 734.1 7 -92 304 553 4.4 304 553 4.4 Suppliers 3/ 228 423.5 4 0 228 415 3.3 172.1 313 2.5 Sources: Congolese authorities and IMF staff estimates. 1 As of end-2021 arrears to Brazil (projected at $112 million) are expected to be treated under the DSSI. Part of the arrears to India are also expected to be treated under the DSSI and the rest through a payment agreement. Similarly, a separate agreeement has been reached, with signatures expected shortly, for arrears payments to Belgium that are not covered under the DSSI (projected at $36 million by end-2021). 2 China Machinery Engineering Corporation, previously classified as official bilateral debt. 3 Includes disputed debts and pre-HIPC claims. 6 >>> 7. Box 1 summarizes the main assumptions for key macroeconomic variables in the scenario underpinning the DSA: • Growth in 2020 was substantially lower than the pre-pandemic forecast in the 2019 Article IV, given the effects of the pandemic on oil production and the non-oil sector. As the recovery takes hold, growth is expected to peak at 6.5 percent of GDP in 2024, primarily on the back of increased oil production. Over the long-term growth will average 3.2 percent driven by declining oil production as oil reserves deplete. • The government is implementing a vaccination program, expecting to cover 60 percent of the population by end-2022. • A substantially weaker fiscal position emerged in 2020 compared to the pre-pandemic forecast (2019 Article IV), given pandemic-related spending needs and the effect of the recession on revenues. After the pandemic subsides, the authorities are assumed to continue implementing fiscal adjustment to restore long-term fiscal sustainability and support building of regional international reserves. • Balance of payments (BOP) and budget support, other than ECF disbursements, are not expected until the second half of 2022 (Text Table 4). In 2020 and 2021, disbursements were lower than previously anticipated because of delays in both budget support and project financing, the latter related to the pandemic. The decline in disbursements beyond 2026 is in line with the authorities’ commitment to pursue prudent external borrowing. • The DSA assumes that Congo continues to obtain the bulk of new external financing on concessional terms in the medium term; the grant element increases progressively and averages 43 percent over 2027–29.5 After 2029, new disbursements are assumed to become less concessional, bringing the grant element to about 27 percent over 2030–40. 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 Total External Bilateral and Multilateral 230 672 703 576 323 291 251 260 227 217 212 Project Financing 230 262 297 312 323 291 251 260 227 217 212 Of which: Multilateral and other creditors 116 122 142 156 166 133 143 152 119 109 104 IMF 0 0 0 0 0 0 0 0 0 0 0 IDA 71 66 69 71 81 52 62 71 54 60 67 IBRD 45 42 52 63 63 59 59 59 49 39 29 Others 0 14 21 21 22 21 22 21 16 9 8 Official bilateral 114 140 155 156 157 158 108 108 108 108 108 Paris Club 50 37 50 50 50 50 0 0 0 0 0 France 50 37 50 50 50 50 0 0 0 0 0 Non-Paris Club 64 103 105 106 107 108 108 108 108 108 108 China 64 103 105 106 107 108 108 108 108 108 108 General Budget Financing 0 411 407 264 0 0 0 0 0 0 0 IMF 0 281 95 95 0 0 0 0 0 0 0 Other Development Partners 0 130 312 168 0 0 0 0 0 0 0 Sources: IMF and WB staff calculations and projections. 7 >>> Non-oil sector: Non-oíl real GDP is projected to grow only slightly by 0.9 percent in 2021, due to the continued impact of the pandemic and spillovers from low oil production (related to lower investments in the oil sector). In 2022, assuming the pandemic subsides, recovery of the non-oil sector is projected to take hold. Non-oil growth is projected to improve gradually to 4.8 percent by 2026 (averaging 4 percent during 2022–26), as investment recovers, the implementation of structural reforms bears fruit, (specially to protect and develop human capital and infrastructure and improve the business environment) and the economy diversifies in line with the commitments of the CEMAC Heads of State in August 2021. The CEMAC Heads of State have committed to implement priority structural reforms to allow stronger, more inclusive and more sustainable growth with an emphasis on improving the management of public funds and governance (e.g., improving the preparation of public investment projects, strengthening the financial oversight of SOEs), business environment reforms and regional integration as well as human capital (e.g. greater focus on primary health care, social protection, and improving market relevance of professional training). Beyond 2026, non-oil growth is projected to average 5 percent—somewhat lower than the historical average of 5.3 percent over 2008 –17 but higher than the non-oil GDP growth in the 2021 Article IV framework —on the back of structural reforms and diversification efforts. Near-term downside risks are elevated given uncertainties related to the pandemic, low vaccination rates,1 and oil prices and production, but medium-term risks are balanced, as governance reforms and the implementation of efforts to diversify and build resilience to climate change are expected to support development of the non-oil sector. GDP is expected to slow down for a brief period between 2032 and 2036 due to reduced oil production and rebounds thereafter when non-oil growth spurred by diversification efforts starts to dominate the sharp decline in oil production. Vaccination: The government aims to vaccinate 60 percent of the population by end-2022—costing $88 million (0.7 percent of GDP, Proposed ECF Arrangement Staff Report, Text Table 1). The World Bank and the African Union are coordinating to finance the EVAX scheme, covering one million people, with $12 million in World Bank financing. China and Russia are covering 1.1 million people. Oil production and prices (applying October 2021 WEO projections): Oil production in 2021 remained subdued due to a slowdown in production owing to government efforts to collect taxes from the oil companies and the negative impact of the pandemic on oil production-related investments. Accordingly, oil production in 20212 was less than in 2020 but is expected to recover from 2022. Production is projected to peak at 125 million barrels by 2024 with new fields coming online and then to steadily decline to about 11 million barrels in 2041, barring new oil discoveries. High volatility of international oil prices and production uncertainties are substantial near-term risks; however, the contribution of oil to overall GDP, as well as exports and revenue, is expected to decline over the next 20 years, reducing long-term risks related to oil price volatility. Inflation: Overall inflation is expected to remain moderate, averaging 2.7 percent (y/y) in 2022; inflation is expected to gradually increase to 3 percent by 2023 and remain close to 3 percent over the long term, consistent with the CEMAC’s convergence criteria of a 3 percent ceiling. Current account balance: A current account surplus of 13.4 percent of GDP is anticipated for 2021, up from a balanced current account (-0.1 percent of GDP) in 2020. The surplus is primarily linked to the rebound in global oil prices in 2021. The current account is projected to remain in surplus over 2021 –23 given high oil prices and slow recovery in the non-oil sector. With the decline in oil production, the current account is also expected to be in deficit from 2024. The current account deficit is projected to average 2.2 percent of GDP over 2027–41, reflecting a long-term decline in oil production. Continued investment efforts as part of the diversification strategy will keep imports elevated, only partly offset by increased exports. Economic diversification continues to support projected GDP growth. Fiscal policy aims to reduce the debt burden and support growth. The Republic of Congo is a lower middle-income economy. Between 2015 and 2020, the real GDP growth rate averaged -5.3 percent following the decline in oil prices in 2014 and the country’s heavy reliance on oil. The COVID -19 pandemic and the attendant oil shocks are bringing unprecedented pressure to bear on the economy. The 10.3 percent decline in real GDP per capita in 2020 raised the poverty rate from 48.5 percent in 2019 to 52.5 percent. With rising oil prices and revenues, the authorities are committed to reduce substantially the stock of external and domestic arrears in the medium-term. The gradual clearance of domestic arrears should provide more liquidity to the private sector and banks, stimulating private investment and non-oil sector growth. The authorities also plan to expand the tax base by gradually reducing tax expenditures (estimated at more 8 >>> 10 percent of GDP) and improving tax administration (through the operationalization of the one-stop shop for tax payments and of the digital platforms for tax declarations). Greater fiscal revenue mobilization together with external borrowing on concessional terms will reduce the debt service burden and allow the financing of critical infrastructure projects, which in turn will support the government’s diversification strategy as outlined in the new development plan (2022–26). Since the pandemic began, fiscal outcomes have been heavily impacted by changes in oil revenues, external financing for capital projects, and reforms in oil-related transfers. A sharp decline in oil revenues weighed on the primary fiscal balance in 2020 while reduced foreign-financed capital spending improved the non-oil primary balance. Oil revenues halved relative to 2019. Non-oil revenues fell less, with the impact of non-oil economic contraction and lockdowns (affecting tax collection) partially mitigated by revenue-enhancing measures, such as the introduction of electronic payments and a broadening of the tax base (owing to on- going tax administration reforms). During 2021H1 (relative to 2020H1), the primary balance was boosted by higher oil revenues and a lower non-oil primary balance. Non-oil revenues remained stable, supported by gradual increases in non-oil economic activity and revenue-enhancing measures adopted over the past two years. However, spending (net of interest payments) declined due to savings from continued reforms in oil- related transfers. The shortfall in grants was mirrored in reduced externally financed capital spending. After the pandemic subsides, the authorities are assumed to continue implementing fiscal adjustment to restore long-term fiscal sustainability and support building of regional international reserves. A 3.9 percent of non-oil GDP (1 percent of GDP) improvement in the non-oil primary balance during 2021–26 (based on adopted measures—outlined in the ECF-supported program—and their lagged effects) supports this strategy. To this end, diligently pursuing reforms under the program and the revenue and expenditure reforms initiated over the past three years will be critical Domestic arrears payments: The authorities’ medium-term fiscal strategy prioritizes domestic arrears repayments—critical for economic and political confidence—while safeguarding social and domestically- financed capital spending and reflecting commitments to enhance debt sustainability. The authorities are developing a new domestic arrears repayments scheme which will begin in 2023. Should revenues fall short, domestic arrears repayments will be slowed. Clearance of domestic arrears is also helping alleviate macro- financial risks by reducing liquidity pressures and NPLs. Loan disbursements: The authorities’ reforms agenda, supported by the ECF arrangement, will catalyze concessional budget financing, which will help reduce debt vulnerabilities while supporting critical public investment to support economic diversification efforts as well as social spending to protect the most vulnerable—all of which will facilitate higher, more inclusive, resilient, and sustainable growth (Text Table 4). __________________________________ 8. Realism tools flag risks around the forecast, but there are mitigating factors. The fiscal adjustment- growth realism tool suggests that the projected growth path could be lower but staff assesses the projected growth and the fiscal path to be realistic and with a low near-term fiscal multiplier since growth is essentially driven by oil sector developments. Risks, including from negative oil price shocks, are largely mitigated by repayments to the largest external commercial creditor being tied to oil prices, a gradual increase of government deposits at BEAC, and the availability of financing from Congolese financial markets. Further, in the long-term, with structural and governance reforms and after exiting fragility, access to international capital markets can be a source of financing. Moreover, over the medium and long term, economic diversification efforts are supporting economic activity. Improvements in the primary surplus (owing to oil revenues in the near- and medium-terms and sustained consolidation efforts) is the main driver in reducing debt, with real GDP growth also contributing marginally (Figure 3). The realism tools show a history of large unexplained increases for external and public debt due to borrowing from the CEMAC regional market being classified as domestic debt in the DSA but as external debt in the balance of payments’ financial account. 9 >>> 2019 2020 2021 2022 2023 2029 2037 New Loan Disbursements (billions FCFA) Current DSA 99 349 353 113 101 2021 Article IV DSA 98 118 127 125 117 2019 Article IV DSA 443 507 385 168 5 126 155 Grant Element of New External Borrowing (in percentage points) Current DSA 35.2 32.9 32.2 36.7 29.2 2021 Article IV DSA 35.8 36.6 36.8 38.9 30.1 2019 Article IV DSA 30.7 30.1 32.1 36.4 497.0 25.2 25.5 Primary balance (percent of GDP) Current DSA 3.6 4.8 3.6 8.5 -1.2 2021 Article IV DSA 7.9 0.1 2.9 5.3 4.1 2.5 1.2 2019 Article IV DSA 10.6 9.9 9.4 9.4 8.6 4.8 2.6 Real GDP growth (percent) Current DSA -0.2 2.4 2.9 3.8 3.4 2021 Article IV DSA -0.4 -8.2 -0.2 2.3 2.7 -0.8 2.9 2019 Article IV DSA 2.2 4.6 1.9 0.0 1.3 2.4 3.3 Current Account Balance (percent of the GDP) Current DSA 13.4 5.5 0.3 -2.1 -2.9 2021 Article IV DSA 0.4 -0.1 12.1 6.5 1.6 -8.9 -18.7 2019 Article IV DSA 7.9 5.8 1.2 -2.1 -2.5 -10.6 -16.3 Oil prices (US dollars per barrel) Current DSA 65.7 64.5 61.3 59.7 70.0 2021 Article IV DSA 61.4 41.3 66.2 64.7 61.0 58.7 68.8 2019 Article IV DSA 61.8 57.9 55.3 54.6 54.7 61.6 72.2 Sources: Congolese authorities; IMF and WB staff calculations and projections. 9. The composite index (CI) is assessed at 2.31 and is based on the October 2021 World Economic Outlook (WEO) and 2020 World Bank Country Policy and Institutional Assessment (CPIA) data, indicating a weak debt carrying capacity for Congo. The methodology relies on computing a composite indicator (CI) based on information from the CPIA score, external conditions as captured by world economic growth, and country-specific factors, including import coverage of reserves. The Republic of Congo’s low CI score indicates a weak debt carrying capacity, reflecting mainly a low CPIA score and a low level of foreign reserves (Text Table 6). The CI score is similar to that in the previous DSA, which is based on the April 2021 WEO data, and the debt carrying capacity is unchanged compared to the previous (2021 Article IV) DSA. 10 >>> Components Coefficients (A) 10-year average CI Score components Contribution of values (B) (A*B) = (C) components CPIA 0.385 2.706 1.04 45% Real growth rate (in percent) 2.719 -0.856 -0.02 -1% Import coverage of reserves (in percent) 4.052 30.562 1.24 54% Import coverage of reserves^2 (in percent) -3.990 9.340 -0.37 -16% Remittances (in percent) 2.022 0.000 0.00 0% World economic growth (in percent) 13.520 3.137 0.42 18% CI Score 2.31 100% CI rating Weak Classification based on Classification based on Classification based on the Final current vintage the previous vintage two previous vintages Weak Weak Weak Weak 2.31 2.28 2.22 APPLICABLE APPLICABLE EXTERNAL debt burden thresholds TOTAL public debt benchmark PV of total public debt in PV of debt in % of percent of GDP 35 Exports 140 GDP 30 Debt service in % of Exports 10 Revenue 14 Source: IMF staff calculations. The CI cutoff value for medium debt carrying capacity is 2.69. 10. The DSA considers commodity price, natural disasters, and market financing shocks. Since oil exports represent more than 80 percent of Congo’s exports, the commodity price tailored stress test is triggered. Given susceptibility to natural disasters like floods, the natural disaster module is also triggered. Similarly, having issued a Eurobond (in the context HIPC debt restructuring), the market financing module is also activated. 11. Under the baseline, breaches of the present value (PV) of debt-to-GDP and both the external debt service indicators vis-à-vis Congo’s indicative thresholds are contained within 5 years (Figure 1). Under the current terms on the already restructured debt, all threshold breaches will be eliminated by 11 >>> 2026 under the baseline scenario. The PV of external debt-to-GDP is 44½ percent at end-2021 and is projected to decline but remain above the indicative threshold of 30 percent until 2024. The debt service- to-revenues ratio, at 33½ percent in 2021, is above the indicative threshold of 14 percent; this ratio is projected to decline to 9½ percent in 2026 (well below the 14 percent threshold), when most of the external commercial debt will have been repaid. In addition, the debt service-to-exports ratio is currently above its indicative threshold of 10 percent but is projected to decline below 10 percent by 2024 and remain below the threshold in subsequent years. The PV of debt-to-exports ratio is below its indicative threshold and projected to decline to an average of 45 percent over 2026-31. Text Table 7 highlights the changes between the current DSA and the 2021 Article IV DSA. 12. All indicators of external public debt breach their indicative thresholds in stress test scenarios (Figure 1). Standard shock scenarios examine the implications of various shocks to the debt and debt- service paths based on the historical volatility of the country’s economic indicators, resulting in sharp increases in the debt burden and liquidity indicators in all cases. The exports shock stress test is the most extreme for most indicators (all but the debt service-to-revenue ratio), reflecting the Republic of Congo’s high dependence on oil exports. A decline in exports to a level equivalent to one standard deviation below their historical average in the second and third years of the projection period would cause the PV of debt- to-exports ratio to rise and remain elevated over the medium term, while the PV of debt-to-GDP would peak at 98 percent. For the debt service-to–revenue ratio, a one-time depreciation has the largest impact. The commodity price shock, triggered due to Congo’s reliance on oil exports, also leads to prolonged breaches of liquidity indicators and the PV of debt-to-GDP. The market financing risk module indicates a moderate risk of heightened liquidity pressures. However, because of no plans to access international markets, a heightened market stress event would not have a substantial impact on debt burden indicators (Figure 5). 6 13. Reflecting unresolved external arrears to one external commercial creditor related to ongoing restructuring negotiations, the Republic of Congo is classified to be “in debt distress”. Pending confirmation of the implementation of the DSSI for all eligible debt, nearly all post-HIPC bilateral official arrears will have been cleared by end-2021. The clearance of remaining external arrears with suppliers and finalization of the debt restructuring agreement with the external commercial creditor would be required to end the ongoing episode of debt distress. As all the debt ratios are below the debt thresholds in 5 years, the debt is assessed to be sustainable. 12 >>> 2019 2020 2021 2022 2023 2026 2031 PV of Debt-to-GDP Ratio Current DSA 47.0 42.0 38.3 28.3 19.0 2021 Article IV DSA 61.5 45.2 38.0 32.2 20.7 18.0 2019 Article IV DSA 51.5 47.2 46.0 44.3 41.2 37.4 28.0 PV of Debt-to-Exports Ratio Current DSA 69.6 63.9 61.8 53.7 39.0 2021 Article IV DSA 111.9 67.0 58.5 52.8 40.7 56.0 2019 Article IV DSA 63.3 58.7 59.3 59.7 57.1 57.6 57.8 Debt Service-to-Exports Ratio Current DSA 9.9 12.7 11.3 4.5 3.8 2021 Article IV DSA 9.7 12.0 11.5 12.9 11.7 4.6 4.4 2019 Article IV DSA 14.4 12.6 9.6 8.7 6.0 5.4 5.4 Debt Service-to-Revenue Ratio Current DSA 29.0 33.3 28.5 10.0 7.7 2021 Article IV DSA 25.5 31.9 34.4 33.5 29.5 10.3 6.7 2019 Article IV DSA 37.3 32.3 23.1 19.1 12.6 9.7 6.7 Sources: Congolese authorities; IMF and WB staff calculations and projections. 14. An analysis of the Republic of Congo’s overall public debt highlights heightened overall debt vulnerabilities (Figure 2). The projected evolution of debt burden indicators suggests heightened vulnerabilities arising from public debt. Under the baseline scenario, the present value of public and publicly guaranteed debt-to-GDP (including domestic arrears and direct financing from BEAC) remains significantly above the 35 percent benchmark level associated with heightened vulnerabilities for countries with a weak debt carrying capacity until 2030 and then remains below the threshold for the remainder of the horizon. Even though the PV of public debt breaches its benchmark until 2030, it is assessed as sustainable given that liquidity risks are mitigated by i) its downward path going forward, and ii) availability of financing from Congolese financial markets. Immediate liquidity needs are also supported by the DSSI. This assessment of debt vulnerabilities is further supported by stress-tests; the growth shock stress test is the most extreme for public debt burden indicators, highlighting downside risk related to an inability to clear arrears if the growth remains subdued. The implementation of priority structural reforms results in stronger, more inclusive, and more sustainable growth under the baseline. In contrast, Historical scenarios point towards perennially rising PV of debt-to-GDP and PV of debt-to-exports ratios (Figure 2), which reflect large historical residuals and low growth rates. 15. The overall and external debt of the Republic of Congo are assessed to be sustainable, but debt is currently in distress. The assessment of debt distress is a result of the ongoing debt restructuring negotiations with one external commercial creditor and outstanding arrears to suppliers. Owing to higher oil prices and the downward trend in all the debt and solvency indicators, the breach in the debt service-to- 13 >>> revenue indicator is contained by 2026 and the breach in the present value of external debt-to-GDP indicator is below the threshold by 2025. These, combined with no new accumulation of domestic and external arrears, result in the overall and external debt being sustainable. 16. Risks of overall and external debt distress remain high given liquidity risks and vulnerability to negative oil price shocks. Liquidity risks, associated with an elevated public debt-to-GDP ratio (exceeding the threshold through 2030) and a large external debt service-to-revenue ratio (the indicator exceeds the threshold through 2025), are mitigated by the steady and significant declines in these ratios going forward, the availability of financing from Congolese financial markets, and access to the CEMAC regional financial market. Going forward, the authorities are encouraged to continue pursuing fiscal consolidation, enact policies for diversification to reduce risks and prepare for reduced long-term oil production and demand, finalize the pending restructuring agreement, clear arrears, and enhance debt management. 17. The authorities concurred with staff’s assessment that Congo is in debt distress, and that debt is sustainable owing to favorable oil prices and the authorities’ reform efforts. They expressed their commitment to maintain prudent fiscal and debt management policies and to continue pursuing their strategy to restructure Congo’s public debt in order to enhance debt sustainability. The authorities further committed to continue effort to improve debt management institutions and increase debt transparency. The authorities were also confident of adhering to all the future scheduled debt and not accumulating any new arrears. The authorities also indicated that macroeconomic assumptions underpinning the DSA analysis, including projections for oil production, should remain appropriately cautious while information on new oil discoveries is still being analyzed. The authorities agreed that while there are downside risks to the growth outlook, the Congolese economy has the potential to benefit from the development of new sectors, and from increased social spending and diversification efforts to cope with challenges facing oil sector in the context of climate change. 14 >>> PV of debt-to GDP ratio PV of debt-to-exports ratio 120 300 100 250 80 200 60 150 40 100 20 50 Most extreme shock is Exports Most extreme shock is Exports 0 0 2021 2023 2025 2027 2029 2031 2021 2023 2025 2027 2029 2031 Debt service-to-exports ratio Debt service-to-revenue ratio 30 45 40 25 35 20 30 25 15 20 10 15 10 5 5 Most extreme shock is Exports Most extreme shock is One-time depreciation 0 0 2021 2023 2025 2027 2029 2031 2021 2023 2025 2027 2029 2031 Baseline Historical scenario Most extreme shock 1/ Threshold Customization of Default Settings Borrowing Assumptions for Stress Tests* Size Interactions Default User defined Shares of marginal debt No No External PPG MLT debt 100% Tailored Tests Terms of marginal debt Combined CLs Yes Avg. nominal interest rate on new borrowing in USD 1.5% 1.5% Natural Disasters No No USD Discount rate 5.0% 5.0% Commodity Prices 2/ No No Avg. maturity (incl. grace period) 22 22 Market Financing No No Avg. grace period 5 5 Note: "Yes" indicates any change to the size or * Note: All the additional financing needs generated by the shocks under the stress tests are interactions of the default settings for the stress tests. assumed to be covered by PPG external MLT debt in the external DSA. Default terms of marginal "n.a." indicates that the stress test does not apply. debt are based on baseline 10-year projections. Sources: Country authorities; and staff estimates and projections. 1/ The most extreme stress test is the test that yields the highest ratio in or before 2031. Stress tests with one-off breaches are also presented (if any), while these one- off breaches are deemed away for mechanical signals. When a stress test with a one-off breach happens to be the most exterme shock even after disregarding the one- off breach, only that stress test (with a one-off breach) would be presented. 2/ The magnitude of shocks used for the commodity price shock stress test are based on the commodity prices outlook prepared by the IMF research department. 15 >>> PV of Debt-to-GDP Ratio 160 140 120 100 80 60 40 20 Most extreme shock is Growth 0 2021 2023 2025 2027 2029 2031 PV of Debt-to-Revenue Ratio Debt Service-to-Revenue Ratio 600 140 120 500 100 400 80 300 60 200 40 100 Most extreme shock is Growth Most extreme shock is Growth 20 0 0 2021 2023 2025 2027 2029 2031 2021 2023 2025 2027 2029 2031 Baseline Most extreme shock 1/ Public debt benchmark Historical scenario Borrowing Assumptions for Stress Tests* Default User defined Shares of marginal debt External PPG medium and long-term 40% 40% Domestic medium and long-term 55% 55% Domestic short-term 5% 5% Terms of marginal debt External MLT debt Avg. nominal interest rate on new borrowing in USD 1.5% 1.5% Avg. maturity (incl. grace period) 22 22 Avg. grace period 5 5 Domestic MLT debt Avg. real interest rate on new borrowing 3.1% 3.1% Avg. maturity (incl. grace period) 4 4 Avg. grace period 0 0 Domestic short-term debt Avg. real interest rate 3.1% 3.1% * Note: The public DSA allows for domestic financing to cover the additional financing needs generated by the shocks under the stress tests in the public DSA. Default terms of marginal debt are based on baseline 10-year projections. Sources: Country authorities; and staff estimates and projections. 1/ The most extreme stress test is the test that yields the highest ratio in or before 2031. The stress test with a one-off breach is also presented (if any), while the one-off breach is deemed away for mechanical signals. When a stress test with a one-off breach happens to be the most exterme shock even after disregarding the one-off breach, only that stress test (with a one-off breach) would be presented. 16 >>> External Debt Gross Nominal PPG External Debt Debt-creating flows Unexpected Changes in Debt 1/ (in percent of GDP; DSA vintages) (percent of GDP) (past 5 years, percent of GDP) 40 40 80 Residual proj. 20 30 Interquartile range 70 (25-75) Price and 60 exchange rate 0 20 50 Real GDP growth -20 10 Change in PPG debt 3/ 40 30 Nominal -40 interest rate 0 20 Current DSA -60 Median Previous DSA Current -10 10 account + FDI DSA-2015 -80 0 Change in PPG 5-year 5-year -20 Contribution of Distribution across LICs 2/ unexpected debt 3/ historical projected changes change change Public Debt Gross Nominal Public Debt Debt-creating flows Unexpected Changes in Debt 1/ (in percent of GDP; DSA vintages) (percent of GDP) (past 5 years, percent of GDP) Current DSA 100 Previous DSA proj. Residual 70 DSA-2015 Interquartile range 120 (25-75) 60 Other debt 100 creating flows 50 50 Real Exchange 80 rate depreciation 40 30 Change in debt 60 Real GDP growth 0 20 40 Real interest rate 10 20 Primary deficit -50 0 Median 0 5-year 5-year -10 2017 2024 2026 2016 2018 2019 2020 2021 2022 2023 2025 2027 2028 2029 2030 2031 Contribution of Distribution across LICs 2/ Change in debt historical projected unexpected change change -20 Sources: Country authorities; and staff estimates and projections. 1/ Difference between anticipated and actual contributions on debt ratios. Sources: Congolese authorities and IMF staff projections. 2/ Distribution across LICs for which LIC DSAs were produced. 3/ Given 1/ the relatively Difference low private between external debt anticipated for average and actual low-income countries, contributions on a ppt debtchange in PPG external debt should be largely explained by the drivers of the external debt dynamics ratios. equation. 2/ Distribution across LICs for which LIC DSAs were produced. 3/ Given the relatively low private external debt for average low-income countries, a ppt change in PPG external debt should be largely explained by the drivers of the external debt dynamics equation. 17 >>> Distribution 1/ 4 4 14 Projected 3-yr 2 12 adjustment 3-year PB adjustment greater than 2.5 In percentage points of GDP percentage points of GDP in approx. 0 3 10 top quartile -2 In percent 8 -4 2 6 -6 4 -8 1 -10 2 -12 0 0 2015 2016 2017 2018 2019 2020 2021 2022 Baseline Multiplier = 0.2 Multiplier = 0.4 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5 6.0 6.5 7.0 7.5 8.0 -4.5 -4.0 -3.5 -3.0 -2.5 -2.0 -1.5 -1.0 -0.5 More Multiplier = 0.6 Multiplier = 0.8 1/ Data cover Fund-supported programs for LICs (excluding emergency financing) approved since 1/ Bars refer to annual projected fiscal adjustment (right-hand side scale) and lines show 1990. The size of 3-year adjustment from program inception is found on the horizontal axis; the possible real GDP growth paths under different fiscal multipliers (left-hand side scale). percent of sample is found on the vertical axis. 30 4.0 3.0 2.0 1.0 0.0 Historical Projected (Prev. DSA) Projected (Curr. DSA) -1.0 10 -2.0 -3.0 -4.0 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 -5.0 -6.0 -10 -7.0 Gov. Invest. - Prev. DSA Gov. Invest. - Curr. DSA Priv. Invest. - Prev. DSA Priv. Invest. - Curr. DSA Contribution of other factors Contribution of government capital Sources: Congolese authorities and IMF staff estimates. 1/ Data covers Fund-supported programs for LICS (excluding emergency financing) approved since 1990. The size of 3-year adjustment for program inception is found on the horizontal axis, the percent of sample is found on the vertical axis. 2/ Bars refer to annual projected fiscal adjustment (right-hand side scale) and lines show possible real GDP growth paths under different fiscal multipliers (left-hand side scale). 3/ The changes in investment reflect a change in the methodology for computing the price index used to convert norminal investment to investment at constant prices; this does not reflect a change in actual investment rates. 18 >>> GFN 1/ EMBI 2/ Benchmarks 14 570 Values 11 n.a. Breach of benchmark No n.a. Potential heightened liquidity needs Moderate 1/ Maximum gross financing needs (GFN) over 3-year baseline projection horizon. 2/ EMBI spreads correspond to the latest available data. 50 PV of debt-to GDP ratio PV of debt-to-exports ratio 160 45 140 40 35 120 30 100 25 80 20 60 15 10 40 5 20 0 0 2021 2023 2025 2027 2029 2031 2021 2023 2025 2027 2029 2031 Debt service-to-exports ratio Debt service-to-revenue ratio 14 35 12 30 10 25 8 20 6 15 4 10 2 5 0 0 2021 2023 2025 2027 2029 2031 2021 2023 2025 2027 2029 2031 Baseline Market financing Threshold Sources: Country authorities; and staff estimates and projections. Note: Data Stream, https://www.federalreserve.gov/releases/h15/ EMBIG data for the Republic of Congo is not available. The bond, due to mature in 2029, was trading at a discount of 16 percent over par with an interest yield of 7.1 percent and an interest spread of 575 bps over 7-year US treasury bond as on December 3, 2021 19 >>> 2019 2020 Sep 30, 20212 CFAF USD percent CFAF USD percent CFAF USD percent billion million of GDP billion million of GDP billion million of GDP Total public debt 6122 10372 81.7 6533 12121 110.1 6858 12487 98.5 External debt 4265 7226 56.9 3705 6875 62.4 3686 6712 53.0 Of which: arrears 736 1248 9.8 744 1380 12.5 714 1301 0 10.3 0.0 Multilateral and other creditors 425 720 5.7 484 899 8.2 519 945 7.5 IMF 27.7 47 0.4 26.0 48 0.4 25.9 47 0.4 IDA/IBRD 142 240 1.9 185 343 3.1 217 396 3.1 AfDB 210 356 2.8 227 422 3.8 232 423 3.3 IFAD 14 23 0.2 14 26 0.2 15 26 0.2 Others 32 54 0.4 32 59 0.5 29 53 0 0.4 0.0 Official bilateral 1892 3206 25.3 1621 3007 27.3 1608 2928 23.1 Paris Club 244 414 3.3 239 443 4.0 240 437 3.4 Brazil 31 52 0.4 25 47 0.4 26 48 0.4 Belgium 92 156 1.2 86 160 1.5 87 159 1.3 France 96 163 1.3 105 195 1.8 106 193 1.5 Russia 18 31 0.2 17 31 0.3 17 31 0.2 Switzerland 7 12 0.1 5 10 0.1 4 7 0.1 Non-Paris Club 1648 2792 22.0 1382 2564 23.3 1368 2491 19.7 China 1402 2375 18.7 1139 2114 19.2 1112 2025 16.0 India 61 103 0.8 70 130 1.2 78 142 1.1 Kuwait 32 55 0.4 30 57 0.5 31 57 0.4 Turkey 48 81 0.6 43 81 0.7 44 80 0.6 Pre-HIPC arrears (not restructured) 106 179 1.4 99 183 1.7 103 187 1.5 Private Creditors 1948 3300 26.0 1600 2969 27.0 1559 2839 22.4 Chinese companies 311 527 4.2 242 450 4.1 276 502 4.0 London Club (eurobond) 174 295 2.3 148 274 2.5 144 262 2.1 Oil-prepurchased debt 1116 1890 14.9 907 1683 15.3 852 1552 12.2 Glencore 428 724 5.7 299 554 5.0 304 553 4.4 Trafigura 549 929 7.3 518 961 8.7 494 899 7.1 Orion 140 237 1.9 90 168 1.5 55 100 0.8 Afreximbank 116 197 1.6 75 138 1.3 59 107 0.8 Suppliers 230 390 3.1 228 423 3.8 228 415 3.3 Domestic debt1 1857 3146 24.8 2828 5246 47.6 3172 5775 45.6 BEAC advances 572 970 7.6 572 1061 9.6 572 1042 8.2 Domestic claims 2,3,4 250 423 3.3 897 1665 15.1 1365 2485 19.6 Arrears reported by CCA 1035 1754 13.8 1358 2520 22.9 1235 2248 17.7 Commercial 650 1102 8.7 955 1773 16.1 832 1514 11.9 Social and pensions 385 652 5.1 403 748 0 6.8 0 403 734 0 5.8 Sources: Congolese authorities and IMF staff estimates. 1 Data updated until the end of June 2021. 2 Revisions from Article IV reflect enhanced debt coverage of T-Bills and revisions on domestic bonds data from 2020 onwards. 3 Domestic arrears do not include audited arrears for 2019-2020 as they are not completed yet. 4 CEMAC regional market financing is classified as domestic debt in the DSA but as external debt in the balance of payments' financial account 20 >>> Debt Stock (end of period) Debt Service 2020 2020 2021 2022 2020 2021 2022 (Million US$) (Percent total debt) (Percent GDP)7 (US$) (Percent GDP) Total 12,121 100 110.1 1,332 1,182 1,795 12.9 9.3 13.6 External 6,875 57 62.4 881 850 1,111 8.5 6.7 8.4 Multilateral creditors2,3 899 7.4 8.2 37 34 37 0.4 0.3 0.3 IMF 48 0.4 0.4 … … … … … … … World Bank 343 2.8 3.1 … … … … … … … ADB/AfDB/IADB 422 3.5 3.8 … … … … … … … Other Multilaterals 85 0.7 0.8 … … … … … … … o/w: BDEAC 32 0.3 0.3 … … … … … … … IFAD 26 0.2 0.2 … … … … … … … Bilateral Creditors 3,007 24.8 27.3 602 363 356 5.8 2.9 2.7 Paris Club 443 3.7 4.0 195 23 107 1.9 0.2 0.8 o/w: France 195 1.6 1.8 … … … … … … … Belgium 160 1.3 1.5 … … … … … … … Non-Paris Club 2,564 21.2 23.3 407 340 249 3.9 2.7 1.9 o/w: China 2,114 17.4 19.2 … … … … … … … India 130 1.1 1.2 … … … … … … … Bonds 274 2.3 2.5 45 43 41 0.4 0.3 0.3 Commercial creditors2 2,969 24.5 27.0 196 410 681 1.9 3.2 5.1 Domestic 5246 43.3 47.6 452 332 685 4.4 2.6 5.2 T-Bills … … … … … … … … … … Bonds6 1665 13.7 15.1 431 310 654 4.2 2.4 4.9 Loans 1061 8.8 9.6 21 22 30 0.2 0.2 0.2 Memo items: Collateralized debt4 o/w: Related 1,683 … 15.3 … … … … … … … o/w: Unrelated … … … … … … … … … … Contingent liabilities o/w: Public guarantees … … … … … … … … … … o/w: Other explicit contingent liabilities5 298 … 2.7 Nominal GDP 10,329 … … … … … … … … … Sources: Congolese authorities and IMF staff estimates. 1/ As reported by Country authorities according to their classification of creditors, including by official and commercial. Debt coverage is the same as the DSA. 2/ A breakdown of commercial creditors, including debt owed to oil traders, is not shown in the table due to capacity constraints/confidentiality clauses. 3/ Multilateral creditors” are simply institutions with more than one official shareholder and may not necessarily align with creditor classification under other IMF policies (e.g. Lending Into Arrears). 4/ Debt is collateralized when the creditor has rights over an asset or revenue stream that would allow it, if the borrower defaults on its payment obligations, to rely on the asset or revenue stream to secure repayment of the debt. Collateralization entails a borrower granting liens over specific existing assets or future receivables to a lender as security against repayment of the loan. Collateral is “unrelated” when it has no relationship to a project financed by the loan. An example would be borrowing to finance the budget deficit, collateralized by oil revenue receipts. See the joint IMF-World Bank note for the G20 “Collateralized Transactions: Key Considerations for Public Lenders and Borrowers” for a discussion of issues raised by collateral. 5/ Includes other-one off guarantees not included in publicly guaranteed debt (e.g. credit lines) and other explicit contingent liabilities not elsewhere classified (e.g. potential 6/ Data on T-Bills and bonds are collected together. 7/ Calculated with debt stock and GDP in local currency units. 21 >>> Actual Projections Average 8/ Historical Projections 2018 2019 2020 2021 2022 2023 2024 2025 2026 2031 2041 External debt (nominal) 1/ 55.0 56.9 62.4 50.2 46.2 43.6 38.9 35.0 33.3 21.7 9.1 46.3 34.4 Definition of external/domestic debt Currency-based of which: public and publicly guaranteed (PPG) 55.0 56.9 62.4 50.2 46.2 43.6 38.9 35.0 33.3 21.7 9.1 46.3 34.4 Is there a material difference between the Yes two criteria? Change in external debt -9.4 1.9 5.5 -12.2 -4.0 -2.6 -4.7 -3.9 -1.7 -2.2 -0.9 Identified net debt-creating flows -14.4 -0.3 11.0 -17.5 -11.3 -6.8 -6.0 -1.1 -0.2 -3.0 -2.3 -1.0 -5.5 Non-interest current account deficit -1.5 -3.3 -0.6 -14.4 -6.7 -1.3 0.6 3.4 4.0 2.3 0.5 4.5 -0.6 Deficit in balance of goods and services -13.3 -14.3 -8.4 -22.7 -16.4 -10.7 -9.2 -5.2 -4.3 -5.7 -1.9 -1.9 -9.1 Exports 71.1 68.4 54.9 67.5 65.7 61.9 61.3 56.9 52.6 48.8 28.5 Debt Accumulation Imports 57.8 54.1 46.5 44.9 49.3 51.2 52.1 51.6 48.4 43.0 26.6 3.0 40 Net current transfers (negative = inflow) 3.2 2.6 -1.2 -0.5 -0.1 -0.2 -0.2 -0.3 -0.3 -0.4 -0.4 1.3 -0.3 of which: official 0.0 -0.7 -1.7 -0.9 -0.5 -0.6 -0.6 -0.7 -0.7 -0.8 -0.8 2.0 35 Other current account flows (negative = net inflow) 8.7 8.3 9.0 8.8 9.9 9.6 9.9 8.9 8.6 8.4 2.8 5.1 8.9 Net FDI (negative = inflow) -2.5 -3.5 -2.7 -4.2 -4.6 -5.2 -4.7 -4.4 -4.0 -4.7 -2.6 -8.5 -4.5 1.0 30 Endogenous debt dynamics 2/ -10.4 6.6 14.3 1.1 0.0 -0.3 -1.9 -0.2 -0.2 -0.6 -0.2 Contribution from nominal interest rate 1.6 2.9 0.8 1.0 1.2 0.9 0.7 0.6 0.2 0.3 0.1 0.0 25 Contribution from real GDP growth 2.5 0.3 5.7 0.1 -1.2 -1.3 -2.6 -0.8 -0.4 -0.9 -0.4 -1.0 20 Contribution from price and exchange rate changes -14.5 3.4 7.8 … … … … … … … … Residual 3/ 5.0 2.2 -5.5 5.3 7.3 4.1 1.3 -2.7 -1.5 0.7 1.4 5.4 1.8 -2.0 15 of which: exceptional financing 0.0 0.0 -2.5 1.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -3.0 10 Sustainability indicators -4.0 5 PV of PPG external debt-to-GDP ratio ... ... 62.2 47.0 42.0 38.3 33.3 29.5 28.3 19.0 8.4 PV of PPG external debt-to-exports ratio ... ... 113.3 69.6 63.9 61.8 54.3 51.9 53.7 39.0 29.4 -5.0 0 PPG debt service-to-exports ratio 8.6 9.7 14.0 9.9 12.7 11.3 9.6 8.6 4.5 3.8 3.1 2021 2023 2025 2027 2029 2031 PPG debt service-to-revenue ratio 24.6 25.5 37.3 29.0 33.3 28.5 23.9 20.2 10.0 7.7 4.4 Gross external financing need (Million of U.S. dollars) 286.2 -32.6 453.8 -1507.9 -386.7 84.1 270.6 614.8 376.0 -104.4 -481.2 Rate of Debt Accumulation Grant-equivalent financing (% of GDP) Key macroeconomic assumptions Grant element of new borrowing (% right scale) Real GDP growth (in percent) -4.8 -0.4 -8.1 -0.2 2.4 2.9 6.5 2.2 1.2 4.1 4.1 -1.4 3.1 GDP deflator in US dollar terms (change in percent) 29.1 -5.9 -12.1 22.9 1.9 1.3 1.6 2.0 2.3 2.8 2.9 0.5 4.2 Effective interest rate (percent) 4/ 3.1 5.0 1.1 1.9 2.4 2.1 1.8 1.6 0.7 1.4 1.5 1.8 1.5 External debt (nominal) 1/ Growth of exports of G&S (US dollar terms, in percent) 48.9 -9.9 -35.2 50.9 1.6 -1.7 7.1 -3.3 -4.2 5.2 4.0 -0.1 6.9 of which: Private Growth of imports of G&S (US dollar terms, in percent) 30.3 -12.3 -30.7 18.4 14.7 8.4 10.1 3.3 -3.0 5.2 3.1 -2.1 6.7 60 Grant element of new public sector borrowing (in percent) ... ... ... 35.2 32.9 32.2 33.6 35.2 35.5 28.6 29.2 ... 34.4 Government revenues (excluding grants, in percent of GDP) 24.8 26.0 20.6 23.1 25.2 24.6 24.7 24.1 23.6 24.4 20.2 30.0 24.3 50 Aid flows (in Million of US dollars) 5/ 190.1 250.8 475.4 246.8 288.8 416.5 386.5 294.3 277.0 241.0 391.1 Grant-equivalent financing (in percent of GDP) 6/ ... ... ... 1.4 2.1 2.1 1.7 1.3 1.2 1.0 0.9 ... 1.4 40 Grant-equivalent financing (in percent of external financing) 6/ ... ... ... 60.0 39.4 39.4 42.9 53.6 56.9 61.5 73.5 ... 54.3 Nominal GDP (Million of US dollars) 13,649 12,791 10,329 12,676 13,235 13,803 14,934 15,568 16,122 22,287 40,219 Nominal dollar GDP growth 22.9 -6.3 -19.2 22.7 4.4 4.3 8.2 4.2 3.6 7.0 7.2 -0.8 7.4 30 Memorandum items: 20 PV of external debt 7/ ... ... 62.2 47.0 42.0 38.3 33.3 29.5 28.3 19.0 8.4 In percent of exports ... ... 113.3 69.6 63.9 61.8 54.3 51.9 53.7 39.0 29.4 10 Total external debt service-to-exports ratio 8.6 9.7 14.0 9.9 12.7 11.3 9.6 8.6 4.5 3.8 3.1 PV of PPG external debt (in Million of US dollars) 6429.1 5959.0 5555.9 5280.6 4968.1 4594.2 4557.3 4240.8 3373.7 0 (PVt-PVt-1)/GDPt-1 (in percent) -4.6 -3.2 -2.1 -2.3 -2.5 -0.2 -0.5 -0.2 2021 2023 2025 2027 2029 2031 Non-interest current account deficit that stabilizes debt ratio 7.9 -5.3 -6.1 -2.2 -2.7 1.4 5.3 7.3 5.7 4.5 1.4 Sources: Country authorities; and staff estimates and projections. 0 1/ Includes both public and private sector external debt. 2/ Derived as [r - g - ρ (1+g)]/(1+g+ρ +gρ ) times previous period debt ratio, with r = nominal interest rate; g = real GDP growth rate, and ρ = growth rate of GDP deflator in U.S. dollar terms. 3/ Includes exceptional financing (i.e., changes in arrears and debt relief); changes in gross foreign assets; and valuation adjustments. For projections also includes contribution from price and exchange rate changes. 4/ Current-year interest payments divided by previous period debt stock. 5/ Defined as grants, concessional loans, and debt relief. 6/ Grant-equivalent financing includes grants provided directly to the government and through new borrowing (difference between the face value and the PV of new debt). 7/ Assumes that PV of private sector debt is equivalent to its face value. 8/ Historical averages are generally derived over the past 10 years, subject to data availability, whereas projections averages are over the first year of projection and the next 10 years. 22 >>> Actual Projections Average 6/ 2018 2019 2020 2021 2022 2023 2024 2025 2026 2031 2041 Historical Projections Public sector debt 1/ 77.1 81.7 110.1 93.9 89.9 84.5 76.0 73.6 74.0 34.0 31.5 66.9 67.7 Definition of external/domestic Currency- of which: external debt 55.0 56.9 62.4 50.2 46.2 43.6 38.9 35.0 33.3 21.7 9.1 46.3 34.4 debt based of which: local-currency denominated Change in public sector debt -17.1 4.6 28.4 -16.1 -4.0 -5.4 -8.5 -2.5 0.4 -6.7 0.0 Is there a material difference Identified debt-creating flows -17.4 -2.5 15.9 -15.1 -6.8 -4.4 -7.9 -3.0 -1.6 -10.8 -0.5 4.1 -8.0 Yes between the two criteria? Primary deficit -7.6 -7.9 -0.1 -3.6 -4.8 -3.6 -4.2 -2.5 -1.3 -9.2 0.8 0.9 -5.4 Revenue and grants 24.9 26.7 22.2 24.0 25.7 25.2 25.3 24.8 24.3 25.2 21.0 30.5 25.0 of which: grants 0.1 0.8 1.7 0.9 0.5 0.6 0.6 0.7 0.7 0.8 0.8 Public sector debt 1/ Primary (noninterest) expenditure 17.3 18.8 22.1 20.4 20.9 21.6 21.1 22.3 23.0 16.1 21.8 31.4 19.6 Automatic debt dynamics -9.8 5.5 16.5 -12.8 -2.0 -0.8 -3.7 -0.5 -0.3 -1.7 -1.2 of which: local-currency denominated Contribution from interest rate/growth differential -0.5 2.6 12.1 -6.6 -1.9 -1.3 -4.1 -0.7 -0.2 -1.5 -1.2 of which: foreign-currency denominated of which: contribution from average real interest rate -5.3 2.3 4.8 -6.8 0.3 1.2 1.1 0.9 0.7 0.1 0.1 of which: contribution from real GDP growth 4.8 0.3 7.2 0.2 -2.2 -2.5 -5.1 -1.6 -0.9 -1.6 -1.2 100 Contribution from real exchange rate depreciation -9.3 2.8 4.4 ... ... ... ... ... ... ... ... 90 Other identified debt-creating flows 0.0 0.0 -0.5 1.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.6 0.1 80 Privatization receipts (negative) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 70 60 Recognition of contingent liabilities (e.g., bank recapitalization) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 50 Debt relief (HIPC and other) 0.0 0.0 -0.5 1.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 40 Other debt creating or reducing flow (please specify) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 30 Residual 0.3 7.0 12.5 -7.2 2.7 -0.4 -0.3 0.7 2.0 4.0 0.4 2.6 0.5 20 10 Sustainability indicators 0 PV of public debt-to-GDP ratio 2/ ... ... 106.0 90.9 85.4 79.0 70.3 68.1 69.0 31.3 30.8 2021 2023 2025 2027 2029 2031 PV of public debt-to-revenue and grants ratio … … 476.6 379.1 332.4 313.6 278.3 274.1 284.1 123.9 146.8 Debt service-to-revenue and grants ratio 3/ 30.4 27.4 70.0 49.8 64.0 55.6 51.5 51.7 47.8 23.6 37.1 Gross financing need 4/ 0.0 -0.6 15.0 6.4 11.0 9.7 8.8 10.4 10.3 -3.2 8.6 of which: held by residents of which: held by non-residents Key macroeconomic and fiscal assumptions 1 Real GDP growth (in percent) -4.8 -0.4 -8.1 -0.2 2.4 2.9 6.5 2.2 1.2 4.1 4.1 -1.4 3.1 1 Average nominal interest rate on external debt (in percent) 2.9 5.2 1.1 1.8 2.4 2.1 1.8 1.6 0.7 1.4 1.5 1.9 1.4 1 Average real interest rate on domestic debt (in percent) -18.0 2.1 18.1 -12.2 1.1 3.1 3.2 3.1 2.9 1.7 0.6 1.0 1.0 1 Real exchange rate depreciation (in percent, + indicates depreciation) -13.7 5.0 7.2 … ... ... ... ... ... ... ... 3.1 ... 1 1 n.a. Inflation rate (GDP deflator, in percent) 23.4 -0.7 -13.8 17.5 0.8 -0.1 0.4 0.9 1.5 2.8 2.9 1.4 3.2 0 Growth of real primary spending (deflated by GDP deflator, in percent) -38.0 7.9 8.2 -8.1 4.9 6.3 4.2 8.3 4.1 2.0 9.5 1.9 0.3 0 Primary deficit that stabilizes the debt-to-GDP ratio 5/ 9.5 -12.5 -28.5 12.5 -0.8 1.8 4.4 0.0 -1.7 -2.5 0.8 -10.5 1.6 0 PV of contingent liabilities (not included in public sector debt) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0 0 2021 2023 2025 2027 2029 2031 Sources: Country authorities; and staff estimates and projections. 1/ Coverage of debt: The central, state, and local governments plus social security, central bank, government-guaranteed debt. Definition of external debt is Currency-based. 2/ The underlying PV of external debt-to-GDP ratio under the public DSA differs from the external DSA with the size of differences depending on exchange rates projections. 3/ Debt service is defined as the sum of interest and amortization of medium and long-term, and short-term debt. 4/ Gross financing need is defined as the primary deficit plus debt service plus the stock of short-term debt at the end of the last period and other debt creating/reducing flows. 5/ Defined as a primary deficit minus a change in the public debt-to-GDP ratio ((-): a primary surplus), which would stabilizes the debt ratio only in the year in question. 6/ Historical averages are generally derived over the past 10 years, subject to data availability, whereas projections averages are over the first year of projection and the next 10 years. 23 >>> Projections 1/ 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 PV of debt-to GDP ratio Baseline 47 42 38 33 30 28 27 25 23 21 19 A. Alternative Scenarios A1. Key variables at their historical averages in 2021-2031 2/ 47 49 49 48 44 42 42 42 41 40 38 0 #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A B. Bound Tests B1. Real GDP growth 47 50 54 47 42 40 37 35 32 29 27 B2. Primary balance 47 48 55 51 49 50 49 47 45 43 40 B3. Exports 47 67 102 93 88 86 83 78 72 65 59 B4. Other flows 3/ 47 52 59 53 49 48 46 43 40 36 33 B5. Depreciation 47 53 48 42 37 35 33 31 28 26 24 B6. Combination of B1-B5 47 64 75 68 63 61 58 55 50 45 41 C. Tailored Tests C1. Combined contingent liabilities 47 53 52 48 46 47 47 45 44 42 40 C2. Natural disaster 47 47 44 39 36 36 35 33 32 30 28 C3. Commodity price 47 48 49 45 42 41 39 37 35 32 30 C4. Market Financing 47 47 43 37 33 32 30 28 25 23 21 Threshold 30 30 30 30 30 30 30 30 30 30 30 PV of debt-to-exports ratio Baseline 70 64 62 54 52 54 50 48 45 42 39 A. Alternative Scenarios A1. Key variables at their historical averages in 2021-2031 2/ 70 75 80 78 78 80 80 82 82 80 78 0 70 62 58 52 49 49 45 43 39 36 33 B. Bound Tests B1. Real GDP growth 70 64 62 54 52 54 50 48 45 42 39 B2. Primary balance 70 72 89 83 86 94 92 91 89 86 82 B3. Exports 70 126 251 232 237 252 241 232 218 202 186 B4. Other flows 3/ 70 80 95 87 87 92 87 84 79 73 67 B5. Depreciation 70 64 61 54 51 53 50 47 45 42 39 B6. Combination of B1-B5 70 100 91 116 116 123 117 111 104 97 89 C. Tailored Tests C1. Combined contingent liabilities 70 81 83 78 82 90 88 88 87 85 83 C2. Natural disaster 70 72 72 65 65 70 67 66 64 62 59 C3. Commodity price 70 80 87 79 78 81 76 74 70 66 62 C4. Market Financing 70 64 62 54 52 54 50 48 45 42 39 Threshold 140 140 140 140 140 140 140 140 140 140 140 Debt service-to-exports ratio Baseline 10 13 11 10 9 4 4 4 4 4 4 A. Alternative Scenarios A1. Key variables at their historical averages in 2021-2031 2/ 10 13 13 12 11 6 6 7 8 9 9 0 10 12 11 9 8 4 4 4 4 4 3 B. Bound Tests B1. Real GDP growth 10 13 11 10 9 4 4 4 4 4 4 B2. Primary balance 10 13 12 11 10 6 6 6 7 7 7 B3. Exports 10 19 25 23 21 12 11 15 20 20 19 B4. Other flows 3/ 10 13 12 10 9 5 5 6 7 7 7 B5. Depreciation 10 13 11 10 9 4 4 4 4 4 4 B6. Combination of B1-B5 10 15 17 14 13 7 6 9 10 9 9 C. Tailored Tests C1. Combined contingent liabilities 10 13 12 10 9 5 5 5 5 5 5 C2. Natural disaster 10 13 12 10 9 5 4 4 4 4 4 C3. Commodity price 10 14 13 11 10 5 5 5 6 6 6 C4. Market Financing 10 13 11 10 9 4 4 4 4 4 4 Threshold 10 10 10 10 10 10 10 10 10 10 10 Debt service-to-revenue ratio Baseline 29 33 28 24 20 10 9 8 8 8 8 A. Alternative Scenarios A1. Key variables at their historical averages in 2021-2031 2/ 29 35 32 30 26 14 13 15 17 18 17 0 29 32 27 23 19 9 8 8 8 7 7 B. Bound Tests B1. Real GDP growth 29 39 40 34 28 14 12 12 12 11 11 B2. Primary balance 29 33 30 27 23 14 12 13 14 14 14 B3. Exports 29 40 41 37 32 18 16 20 27 26 24 B4. Other flows 3/ 29 33 29 26 22 12 10 13 15 14 13 B5. Depreciation 29 42 36 30 25 13 11 11 10 10 10 B6. Combination of B1-B5 29 39 39 34 29 15 13 17 19 18 17 C. Tailored Tests C1. Combined contingent liabilities 29 33 29 25 21 11 10 10 10 10 9 C2. Natural disaster 29 33 29 24 21 11 9 9 9 9 8 C3. Commodity price 29 37 33 29 24 12 10 11 12 12 11 C4. Market Financing 29 33 28 24 20 10 9 8 8 8 8 Threshold 14 14 14 14 14 14 14 14 14 14 14 Sources: Country authorities; and staff estimates and projections. 1/ A bold value indicates a breach of the threshold. 2/ Variables include real GDP growth, GDP deflator (in U.S. dollar terms), non-interest current account in percent of GDP, and non-debt creating flows. 3/ Includes official and private transfers and FDI. 24 >>> 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 PV of Debt-to-GDP Ratio Baseline 91 85 79 70 68 69 64 55 46 38 31 A. Alternative Scenarios A1. Key variables at their historical averages in 2021-2031 2/ 91 91 91 92 95 101 108 111 115 120 129 0 #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A B. Bound Tests B1. Real GDP growth 91 104 124 120 125 134 135 129 122 116 113 B2. Primary balance 91 99 112 102 100 100 94 84 74 64 57 B3. Exports 91 99 115 105 102 104 98 88 76 64 55 B4. Other flows 3/ 91 96 100 90 88 89 84 74 63 53 45 B5. Depreciation 91 95 86 75 70 69 63 54 44 34 27 B6. Combination of B1-B5 91 94 103 96 97 101 98 91 83 75 70 C. Tailored Tests C1. Combined contingent liabilities 91 117 110 99 96 97 91 81 71 62 55 C2. Natural disaster 91 95 89 80 77 79 74 65 56 47 41 C3. Commodity price 91 90 93 94 102 112 114 109 104 98 95 C4. Market Financing 91 85 79 70 68 69 64 55 46 38 31 Public debt benchmark 35 35 35 35 35 35 35 35 35 35 35 PV of Debt-to-Revenue Ratio Baseline 379 332 314 278 274 284 256 221 184 149 124 A. Alternative Scenarios A1. Key variables at their historical averages in 2021-2031 2/ 379 355 361 363 383 414 425 436 450 467 500 0 50 63 55 52 51 44 46 48 43 39 37 B. Bound Tests B1. Real GDP growth 379 405 488 470 497 545 529 507 481 456 444 B2. Primary balance 379 386 444 404 401 413 376 336 295 256 226 B3. Exports 379 387 455 414 413 427 391 349 301 254 219 B4. Other flows 3/ 379 372 395 357 354 367 334 294 251 209 178 B5. Depreciation 379 369 341 296 284 287 253 214 174 137 109 B6. Combination of B1-B5 379 368 408 380 389 415 391 360 328 297 276 C. Tailored Tests C1. Combined contingent liabilities 379 456 436 393 388 398 362 324 284 245 217 C2. Natural disaster 379 370 352 315 312 324 295 259 222 187 161 C3. Commodity price 379 385 407 409 439 483 462 434 412 390 377 C4. Market Financing 379 332 314 278 274 284 256 221 184 149 124 Debt Service-to-Revenue Ratio Baseline 50 64 56 51 52 48 52 53 43 33 24 A. Alternative Scenarios A1. Key variables at their historical averages in 2021-2031 2/ 50 68 61 65 73 72 85 98 96 96 99 0 50 63 55 52 51 44 46 48 43 39 37 B. Bound Tests B1. Real GDP growth 50 78 86 89 98 101 112 119 108 99 90 B2. Primary balance 50 66 75 85 86 85 83 78 67 55 44 B3. Exports 50 64 57 54 55 51 55 60 54 43 33 B4. Other flows 3/ 50 64 57 53 53 49 54 57 49 39 29 B5. Depreciation 50 68 65 61 61 52 54 54 44 34 25 B6. Combination of B1-B5 50 68 68 68 72 70 77 80 69 59 49 C. Tailored Tests C1. Combined contingent liabilities 50 66 89 82 86 86 75 73 60 48 36 C2. Natural disaster 50 67 68 64 65 62 62 62 51 40 30 C3. Commodity price 50 74 65 69 78 82 94 99 91 83 75 C4. Market Financing 50 64 56 51 52 48 52 53 43 33 24 Sources: Country authorities; and staff estimates and projections. 1/ A bold value indicates a breach of the benchmark. 2/ Variables include real GDP growth, GDP deflator and primary deficit in percent of GDP. 3/ Includes official and private transfers and FDI. 25 >>>