IMF to Study Congo’s China Deal

From Reuters:

The International Monetary Fund’s country representative for Congo, Xavier Maret, said the $9 billion mining and infrastructure partnership with China signed by Kinshasa this year had raised questions about Congo’s level of indebtedness.

“With this question regarding the Chinese project, on the evaluation of certain problems relating to public debt, it is recommendable to await the results, as well as feasibility studies, to be able to draw conclusions,” he told a news conference in Kinshasa at the end of an IMF mission. […]

Explaining the fund’s questions over the deal with China, Maret said the IMF wanted to be clear about whether the financial obligations contracted by Congo should be categorised as public or private debt. It also needed to determine the implications of this for debt relief for Congo.

The IMF believed that as the Congolese state was giving certain guarantees to China in return for the loans and investment, the debt should be considered public debt.

Under the terms of the deal, Exim Bank of China has pledged financing for major road and rail construction projects in Congo and for the rehabilitation of its strategic mining sector, badly damaged by years of war, corruption and neglect.

In return, China’s Sinohydro Corp and China Railway Engineering Corp received a 68 percent stake in a joint venture with Congolese state copper miner Gecamines, with rights to two large copper and cobalt concessions. […]

From Sudan to Angola and South Africa, China has been pumping billions of dollars of loans, investments and aid into Africa in the last two years, looking to lock up oil and mineral supplies for its fast-growing economy.

African governments generally welcome China’s investments as coming unfettered by Western demands for good governance and transparency. Some analysts are already portraying the Chinese as Africa’s “new colonialists” as they scramble for the rich resources coveted in the past by European powers.

July 1, 2008 4:04 PM