Congo Republic plans to increase its budget by more than a third this year despite low oil prices, according to a draft report seen by Reuters, as President Denis Sassou Nguesso aims to win favour ahead of an expected bid to prolong his 31-year rule.
Tne budget is set to swell to 3.77 trillion CFA Francs ($6.23 billion) from 2.72 trillion CFA Francs last year, and includes a 25 percent increase in public-sector salaries even as oil revenues slide.
A finance ministry official confirmed the figures but declined to comment further as he was not authorised to speak to the press.
The increase comes as Congo and other resource-rich African countries grapple with a slump in commodities prices, including the steepest oil price rout in a generation, which has squeezed export profits and slowed growth.
The Central African oil producer is the most resource-dependent country in the world, even relative to major producers like Nigeria and Saudi Arabia, according to the World Bank, with commodities accounting for nearly 60 percent of economic output.
The former French colony has been hit hard by the drop in Brent crude prices since mid-2014, from around $115 a barrel to about $30 now. The country’s economic growth slowed to 1 percent in 2015 from 6.8 percent in 2014 and the fiscal deficit nearly doubled, the International Monetary Fund said.
Its veteran president is set to seek re-election in March after winning a referendum marred by violence that allowed him to stand for a third consecutive term.
His ruling Congolese Party of Labour (PCT) has sought to play down the country’s exposure to the oil price rout, citing rising output and investment in other sectors.
“He wants to send the message that the economy is still robust and continues to grow due to rising oil production and that spending can continue as before,” said Christoph Wille, senior analyst for Africa at Control Risks, a consultancy.
The 2016 budget shows an increase in spending on government salaries to 401 billion CFA Francs ($664.14 million)from 369 billion CFA francs last year. Costs of debt servicing will also increase.
However, investment is set to slip 13 percent to 1.49 trillion CFA francs, although costs were exceptionally high last year as Congo prepared to host the Africa Cup of Nations.
The budget assumes an oil price of $45 a barrel, the draft document showed, lower than last year’s $50 a barrel but still significantly higher than the current price.
Congo Republic aims to reverse declining oil production over the next few years as multi-billion dollar projects such as Total’s $10 billion Moho project become operational.
Another licensing round is planned this year.
The budget predicts a dip in oil revenues to 732 billion CFA Francs ($1.21 billion) from 887 billion CFA Francs ($1.46 billion) in 2015, as higher output fails to offset weak prices.
The country has sought to diversify its economy by increasing investments in infrastructure as well as in mining and forestry sectors.
MORE BORROWING? Some analysts say the country will struggle to stay within the confines of the budget without resorting to more borrowing.
Oil-reliant neighbours Gabon and Cameroon last year issued bonds worth hundreds of million dollars, although Congo has not yet followed suit.
“This process (of borrowing) is very opaque but the assumption is that they (Congo) get lots of loans from China and companies in the infrastructure sector,” said Wille.
The finance ministry official declined to comment on the country’s recent and future borrowing.
The budget, approved already by parliament, has not yet received final approval from the president but this is widely seen as a formality.
Sassou Nguesso is one of a growing list of African leaders such as Rwanda’s Paul Kagame and Burundi’s Pierre Nkurunziza seeking to extend their rules into third terms, leading in some cases to unrest.
With the opposition deeply divided, the 71-year-old who has ruled for all but five years since 1979 and survived a civil war is widely expected to win re-election in March.
Violence broke out during the November referendum, with at least four people killed as security forces clashes with protesters.*
