By Joe Bavier
The Democratic Republic of Congo announced
on Tuesday it would downsize a controversial
infrastructure-for-minerals deal with China,
winning IMF assurances it could be
in line for swift debt relief.
The International Monetary Fund feared
the contract to use Congo's mineral reserves
as a guarantee for infrastructure projects
could plunge the African nation deeper
into debt and had delayed forgiveness
of most of the $10 billion Congo owes.
The changes will narrow to $6 billion
from $9 billion the value of the deal with China,
which has overtaken the United States
as Africa's top trading partner.
"During our visit the authorities ... told us
that the partners have accepted
the amendments in the project of
the Sino-Congolese agreement
including the removal of
the government's guarantee on
the mining project," IMF mission chief
for Congo Brian Ames told
reporters after talks in Kinshasa.
Congo central bank governor
Jean-Claude Masangu told the same
news briefing it would suspend
a $3 billion infrastructure phase
of the project that also raised IMF concerns.
"When the IMF services confirm that
the revised agreement is compatible
with the viability of the debt,
the Congolese authorities will be
in measure to solicit financial assurances
for (a new IMF) program from
the lenders of the Paris Club," said Ames.
"The administrative council of the IMF
will then rapidly be able to examine
the request for a new three-year
HIPC (Heavily Indebted Poor Countries)
program," he added of a plan
launched in 1996 to help
poor countries with their debt burden.
"Today, we have swept away all
the problems that the Chinese
contract could pose," said Masangu.
ON THE BACK-BURNERThe IMF did not detail the extent
of possible debt relief.
A figure of $7 billion worth of
non-commercial loans has previously
been mooted, which would save
Congo around $400 million in annual payments.
The IMF had previously cited the
two amendments as critical to ensuring
the deal would not add
to Congo's debt burden.
The contract with China is a cornerstone
of Congo's post-conflict reconstruction
policy following decades of dictatorship
and a 1998-2003 war that left
the former Belgian colony's infrastructure in ruins.
The deal was to have included two phases
of infrastructure projects with a total
price tag of $6 billion aimed at
rehabilitating thousands of kilometers
of road and rail connections and
constructing schools and hospitals.
"The second phase of infrastructure f
or three billion, we've put on
the back-burner," said Masangu. "
So with this three billion gone,
we are now talking about six billion."
In addition to the first phase of
infrastructure projects that will remain,
$3 billion is earmarked to develop
new Chinese copper and
cobalt mines in mineral-rich Katanga province.
"Concerning the mining project,
there was a guarantee from the state.
The Chinese partners are no longer
demanding a guarantee from the state.
We are left with an purely
commercial contract," said Masangu.
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