Republic of The Congo - Economy

Economy

Main article: Economy of the Republic of the Congo

The economy is a mixture of village agriculture and handicrafts, an industrial sector based largely on petroleum, support services, and a government characterized by budget problems and overstaffing. Petroleum extraction has supplanted forestry as the mainstay of the economy. In 2008, oil sector accounted for 65% of the GDP, 85% of government revenue, and 92% of 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. The government has mortgaged a substantial portion of its petroleum earnings, contributing to a shortage of revenues. The January 12, 1994, devaluation of Franc Zone currencies by 50% resulted in inflation of 46% in 1994, but inflation has subsided since.

Economic reform efforts continued with the support of international organizations, notably the World Bank and the International Monetary Fund. The reform program came to a halt in June 1997 when civil war erupted. When Sassou Nguesso returned to power at the end of the war in October 1997, he publicly expressed interest in moving forward on economic reforms and privatization and in renewing cooperation with international financial institutions. However, 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 problems of stimulating recovery and reducing poverty, despite record-high oil prices since 2003. Natural gas and diamonds are also recent major Congolese exports, although Congo was excluded from the Kimberley Process in 2004 amid allegations that most of its diamond exports were in fact being smuggled out of the neighboring Democratic Republic of Congo; it was re-admitted to the group in 2007.

The Republic of the Congo also has base metal, gold, iron and phosphate deposits. The country is a member of the Organization for the Harmonization of Business Law in Africa (OHADA). The Congolese government has signed an agreement to lease 200,000 hectares of land to South African farmers to reduce its dependence on imports.

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