Since his reclaiming of power in 1997, President Sassou has made some dramatic changes. He has gained more and more power in Republic of the Congo, and it looks as if he isn't going to lose it for a while. While the negative account balance has been shrinking, the debt still remains, and RoC is relying on bailouts from the World Bank and the International Monetary Fund. Now RoC Government has recently been readmitted to the Kimberly Process, an international multi-stakeholder initiative designed to stem the trade of conflict diamonds. Congo had been suspended from the Kimberley Process in 2004, after reviews showed its diamond exports vastly outnumbered its production capacity. Congo’s government estimates current diamond capacity to be 5,000 carats, with a potential for up to 100,000 carats.
RoC is working on repairing their debt, but they are only focused on making money through international trade. They are not even trying to increase the local economy. Barely 25% of the GDP is generated locally. Everything else is from national trade. This poses a big problem. With all of the unrest within the Country, and with Sassou gaining more power, countries are going to begin to turn away from trading with RoC. It would be very easy for France to halt trade with them, and this would be devastating for the economy as a whole -- severely decreasing the GDP. Overall, RoC faces many economic dangers, and it will be very interesting to see how everything plays out.
Taken from GlobalEDGE.
Tuesday, May 10, 2011
International Trade
Republic of the Congo has a dependency quotient of around 74%. This is taken by adding together the exports and imports, and dividing by the GDP. It gives an idea as to how much of the GDP depends on trade with other countries. If RoC were to lose their ability to trade with other countries, they would lose 74% of their GDP. France alone holds about 20% of the total exports and imports, and if RoC were to lose only that trade partner, their economy would be devastated. International trade is vital in keeping Republic of the Congo alive.
taken from the CIA Factbook.
taken from the CIA Factbook.
Macroeconomic policy
Since 1997, President Sassou has established an authoritarian regime. He overthrew the current president, Pascal Lissouba who followed Sassou, but didn't bring much change or improvement. Sassou prevented Lissouba and others from running in the election in 2002, accept for one opponent who withdrew from the race. Sassou recieved 90% of the vote. "A new constitution, agreed upon by referendum in January 2002, granted the president new powers, extended his term to seven years, and introduced a new bicameral assembly. International observers took issue with the organization of the presidential election as well as the constitutional referendum, both of which were reminiscent in their organization of Congo's era of the single-party state."
Information taken from Wikipedia.
Information taken from Wikipedia.
Currency
The currency used is the Communaute Financiere Africaine franc (XAF). Information is limited as to how the currency compares in use to the USD. One USD is about 447.158 XAF. the inflation rate is 4% and the PPP is $3,949.00 USD. The national debt has decreased dramatically recently. In 2009 the account balance sat at $ -1.195 billion and it 2010 at $-569 million, the debt has been slashed in half. The major banks were privatized in 1996 in order to improve banking problems, and this has helped dramatically. This private bank system is more like what is used in France and the US.
Taken from CIA Factbook and Globaledge
Taken from CIA Factbook and Globaledge
Employment
While the unemployment rate is not provided, it must be fairly high. The economy is based primarily on Petroleum with French, Italian, and US companies doing most of the business.
in the 1990s, the major employer in the Congo was state bureaucracy, employing 80,000 people. The payroll amounted to more than 20% of the GDP, and the world bank stepped in and encouraged reforms to reduce this percentage.
Reform was going well by 1996 when major banks were privatized and their debt was restructured, but war broke out in 1997.
"In March 2006, the World Bank, International Monetary Fund (IMF), and the Paris Club group of official creditor countries approved interim debt relief for Congo under the Heavily Indebted Poor Countries (HIPC) Initiative, noting that Congo had performed satisfactorily on an IMF-supported reform program and developed an interim Poverty Reduction Strategy."
Taken from GlobalEdge.
in the 1990s, the major employer in the Congo was state bureaucracy, employing 80,000 people. The payroll amounted to more than 20% of the GDP, and the world bank stepped in and encouraged reforms to reduce this percentage.
Reform was going well by 1996 when major banks were privatized and their debt was restructured, but war broke out in 1997.
"In March 2006, the World Bank, International Monetary Fund (IMF), and the Paris Club group of official creditor countries approved interim debt relief for Congo under the Heavily Indebted Poor Countries (HIPC) Initiative, noting that Congo had performed satisfactorily on an IMF-supported reform program and developed an interim Poverty Reduction Strategy."
Taken from GlobalEdge.
Thursday, March 10, 2011
Socio-Cultural Context
"After three coup-ridden but relatively peaceful decades of independence, the former French colony experienced the first of two destructive bouts of fighting when disputed parliamentary elections in 1993 led to bloody, ethnically-based fighting between pro-government forces and the opposition." (Taken from BBC.)
Republic of the Congo is obviously going through some strange times government-wise. The people have all wrangled with a number of different government types over the past twenty years, but they seem to be in pretty good shape economically. Their exports are far greater than their imports, and the constitutional system set up in 2002 seems to be working. Stay tuned for more information.
Duncan
Republic of the Congo is obviously going through some strange times government-wise. The people have all wrangled with a number of different government types over the past twenty years, but they seem to be in pretty good shape economically. Their exports are far greater than their imports, and the constitutional system set up in 2002 seems to be working. Stay tuned for more information.
Duncan
Government
Government type: Republic
Legal system: "based on French civil law system and customary law; has not accepted compulsory ICJ jurisdiction"
Suffrage achieved at age: 18
President: Denis SASSOU-Nguesso
President is elected by popular vote for a seven year term.
Bicameral Parliament with a senate and a National Assembly.
"The economy is a mixture of subsistence agriculture, an industrial sector based largely on oil and support services, and government spending. Oil has supplanted forestry as the mainstay of the economy, providing a major share of government revenues and exports. In the early 1980s, rapidly rising oil revenues enabled the government to finance large-scale development projects with GDP growth averaging 5% annually, one of the highest rates in Africa. Characterized by budget problems and overstaffing, the government has mortgaged a substantial portion of its oil earnings through oil-backed loans that have contributed to a growing debt burden and chronic revenue shortfalls. Economic reform efforts have been undertaken with the support of international organizations, notably the World Bank and the IMF. However, the reform program came to a halt in June 1997 when civil war erupted. Denis SASSOU-NGUESSO, who returned to power when the war ended in October 1997, publicly expressed interest in moving forward on economic reforms and privatization and in renewing cooperation with international financial institutions. Economic progress was badly hurt by slumping oil prices and the resumption of armed conflict in December 1998, which worsened the republic's budget deficit. The current administration presides over an uneasy internal peace and faces difficult economic challenges of stimulating recovery and reducing poverty. The drop in oil prices during the global crisis reduced oil revenue by about 30%, but the subsequent recovery of oil prices has boosted the economy's GDP and near-term prospects. In March 2006, the World Bank and the International Monetary Fund (IMF) approved Heavily Indebted Poor Countries (HIPC) treatment for Congo, receiving $1.9 billion in debt relief under the program in 2010."
This information was taken from The CIA World Factbook.
Legal system: "based on French civil law system and customary law; has not accepted compulsory ICJ jurisdiction"
Suffrage achieved at age: 18
President: Denis SASSOU-Nguesso
President is elected by popular vote for a seven year term.
Bicameral Parliament with a senate and a National Assembly.
"The economy is a mixture of subsistence agriculture, an industrial sector based largely on oil and support services, and government spending. Oil has supplanted forestry as the mainstay of the economy, providing a major share of government revenues and exports. In the early 1980s, rapidly rising oil revenues enabled the government to finance large-scale development projects with GDP growth averaging 5% annually, one of the highest rates in Africa. Characterized by budget problems and overstaffing, the government has mortgaged a substantial portion of its oil earnings through oil-backed loans that have contributed to a growing debt burden and chronic revenue shortfalls. Economic reform efforts have been undertaken with the support of international organizations, notably the World Bank and the IMF. However, the reform program came to a halt in June 1997 when civil war erupted. Denis SASSOU-NGUESSO, who returned to power when the war ended in October 1997, publicly expressed interest in moving forward on economic reforms and privatization and in renewing cooperation with international financial institutions. Economic progress was badly hurt by slumping oil prices and the resumption of armed conflict in December 1998, which worsened the republic's budget deficit. The current administration presides over an uneasy internal peace and faces difficult economic challenges of stimulating recovery and reducing poverty. The drop in oil prices during the global crisis reduced oil revenue by about 30%, but the subsequent recovery of oil prices has boosted the economy's GDP and near-term prospects. In March 2006, the World Bank and the International Monetary Fund (IMF) approved Heavily Indebted Poor Countries (HIPC) treatment for Congo, receiving $1.9 billion in debt relief under the program in 2010."
This information was taken from The CIA World Factbook.
Imports and Exports
Major Imports: capital equipment, construction materials, foodstuffs
Money Spent on Imports: $3.607 billion
Major Exports: petroleum, lumber, plywood, sugar, cocoa, coffee, diamonds
Money Made on Exports: $9.2 billion
Note the following graph depicting a possible supply and demand situation for the Republic of the Congo.
The Information here has been taken from the CIA World Fact Book.
History
The CIA World Factbook says the following about Republic of the Congo:
"Upon independence in 1960, the former French region of Middle Congo became the Republic of the Congo. A quarter century of experimentation with Marxism was abandoned in 1990 and a democratically elected government took office in 1992. A brief civil war in 1997 restored former Marxist President Denis SASSOU-NGUESSO, and ushered in a period of ethnic and political unrest. Southern-based rebel groups agreed to a final peace accord in March 2003, but the calm is tenuous and refugees continue to present a humanitarian crisis. The Republic of Congo was once one of Africa's largest petroleum producers, but with declining production it will need new offshore oil finds to sustain its oil earnings over the long term."
"Upon independence in 1960, the former French region of Middle Congo became the Republic of the Congo. A quarter century of experimentation with Marxism was abandoned in 1990 and a democratically elected government took office in 1992. A brief civil war in 1997 restored former Marxist President Denis SASSOU-NGUESSO, and ushered in a period of ethnic and political unrest. Southern-based rebel groups agreed to a final peace accord in March 2003, but the calm is tenuous and refugees continue to present a humanitarian crisis. The Republic of Congo was once one of Africa's largest petroleum producers, but with declining production it will need new offshore oil finds to sustain its oil earnings over the long term."
Demography
Here are some relevant facts about Republic of the Congo. Taken from the CIA World Factbook.
Population: 4,243,929
Median Age: 17
Urbanization: 62% of population
Life expectancy: 55 Years
Labor Force: 1.514 million
Population: 4,243,929
Median Age: 17
Urbanization: 62% of population
Life expectancy: 55 Years
Labor Force: 1.514 million
Wednesday, March 9, 2011
Geography
Here is a little information on the Geography of the Republic of Congo.
Check out this map: Click here for the link.
This is a picture of the capitol Brazaville. Here is the link.
Here is a logging opperation in the Congo Basin. And the link.
Check out this map: Click here for the link.
This is a picture of the capitol Brazaville. Here is the link.
Here is a logging opperation in the Congo Basin. And the link.
Welcome
Hello Readers! My name is Duncan Becker, and this is a blog for my Economics class project. I will be posting various points of information in regards to the economy of the Republic of Congo. I hope you enjoy.
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