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.
Subscribe to:
Posts (Atom)