On Thursday 22 October 2020, the Minister Delegate in charge of the Budget, Ludovic Ngatsé, presented the 2nd Draft Amending Finance Act 2020 in the plenary session of the National Assembly's budget session, which opened on last October 15. 

The revised estimates for the year 2020 are based on realistic assumptions both from the point of view of the parameters of the oil sector (production: 119 million barrels; barrel price: USD 38; exchange rate: 1$=580 FCFA) and those of the non-oil sector. Keeping all proportion to the margin, seasonality and the effects of COVID-19 also influenced the new forecasts.

Thus, the 2nd amending finance bill for the year 2020 includes a state budget which foresees: in budgetary resources, a level of 1,525 billion 297 million FCFA francs, against 1,082 billion 903 million FCFA previously projected, i.e. an increase of 442 billion 394 million FCFA, induced by the increase in tax revenue of 218 billion 481 million FCFA and other revenue of 314 billion 717 million FCFA, of which 270 billion 272 million FCFA more in oil revenue.

 In budgetary expenditure, an envelope of 1,630 billion FCFA, against 1,862 billion 643 million FCFA, a decrease of 232 billion 643 million FCFA.

General budget expenditure is down sharply by 151 billion 839 million FCFA, in line with the decline in investment, by 165 billion FCFA, due to the weak mobilisation of external financing and the reduction in the financial burden of the debt by 24 billion 339 million FCFA. All these reductions could not be compensated for by the increase in the level of transfers, by 30 billion FCFA, and the increase in other expenditure (former common charges), by 10 billion FCFA.

As for the Special Treasury Accounts, they have been reduced by 80 billion 804 million FCFA, as a consequence of the weak mobilization of donations to finance the Covid-19 Fund and the National Solidarity Fund for Economic Recovery.

This new version of the Finance Law shows a budget deficit of 104 billion 703 million FCFA, as against 779 billion 740 million FCFA previously, a clear improvement of 675 billion 037 million FCFA.

By nature of revenue, the variations of this new finance law are as follows:

- Tax revenue, projected at 572 billion 522 million FCFA, against 353 billion 845 million FCFA previously, including 472 billion 522 million FCFA for internal taxes and duties and 100 billion FCFA for customs duties, against respectively 269 billion 917 million FCFA and 83 billion 928 million FCFA;

 - Donations and legacies, projected at 56 billion FCFA, against 92 billion FCFA, i.e. 28 billion FCFA for the COVID Fund and the National Solidarity Fund, and 28 billion FCFA for ordinary donations;

- Other receipts, estimated at 841 billion 878 million FCFA, against 582 billion 161 million FCFA, including a sum of 778 billion FCFA in oil receipts, 24 billion 100 million FCFA in receipts from services and 2 billion FCFA in various royalties;

- Social contributions, maintained at 54 billion 897 million FCFA.

By nature of expenditure, the variations of this new rectifying finance law are as follows:

- Financial charges on debt: a decrease of 24 billion 339 million FCFA, from 100 billion 339 million FCFA to CFA 76 billion FCFA in the present version of the amended finance law;

- Staff costs: a slight decrease of 0.65%, from 386 billion FCFA to 383,500 million FCFA;

- Goods and services: stabilised at 179 billion 860 million FCFA;

- Transfers: increase of 30 billion, from 459 billion 220 million FCFA to 489 billion 220 million FCFA;

- Other expenditure (common charges): fixed at 60 billion FCFA, against 50 billion FCFA, an increase of 10 billion FCFA;

- Investments: sharp reduction from 495 billion FCFA to 330 billion FCFA, i.e. 165 billion FCFA less;

- Expenditure of the annexed budgets and the Special Treasury Accounts: planned at 111 billion 420 million FCFA, against 192 billion 224 million FCFA, including 105 billion 232 million FCFA for the Special Treasury Accounts. This gives an overall negative budget balance of 104 billion 703 million FCFA.

This 2nd Finance Bill also includes financing and cash charges of 807 billion FCFA, consisting of the redemption of the external debt (610 billion FCFA) and the internal debt (120 billion FCFA), while observing a moratorium on the bond loan (Ecobank) of 52 billion FCFA. A guarantee of 25 billion FCFA is maintained, with a view to operating the support mechanism for enterprises severely affected by the response measures to the Covid-19 pandemic.

Cash resources are made up of long-term loans (272 billion FCFA), issues of bonds and notes (150 billion FCFA), a BDEAC loan (15 billion FCFA) and the repayment of state loans (15 billion FCFA).

However, there remains a financing requirement of 355 billion FCFA, to which must be added the budget deficit of 104 billion 703 million FCFA. The result is a financing gap of 459 billion 703 million FCFA, which should be closed, thanks to the successful development of negotiations with financial partners, by budgetary support from the IMF (100 billion FCFA), the World Bank (57 billion FCFA), the African Development Bank (47 billion FCFA), the restructuring of traders' debt (70 billion FCFA) and the moratorium under the G20 initiative (129 billion FCFA).

Orientation of the Economic Policy Within the Framework of the 2nd Amending Finance Bill 2020

It should be noted that the budgetary choices covering the period under review will be in line with the main thrusts of the National Development Plan (NDP), namely: strengthening governance in all its forms; in-depth reform of the education system and skills and vocational training; and diversification of the economy based on growth-enhancing sectors.

In view of the health, social, economic and financial crisis environment, the economic policy aims, firstly, to stabilise the Congolese economy and, secondly, to revive economic activity.

With regard to stabilisation, the government intends to maintain budgetary discipline through rigorous management of public finances, by setting expenditure at a realistic level of resource mobilisation. In order to achieve this general objective, fiscal policy would, in the medium term, pursue the following specific objectives: reducing the non-oil primary deficit; improving transparency and budgetary discipline; and making public debt sustainable.

With regard to the recovery component of Congolese economic policy, the Government aims to fulfil the main political commitments of His Excellency Mr Denis Sassou-N'Guesso, President of the Republic, Head of State, giving priority to spending of a social nature and only investment spending that promotes a return to activity and employment and, consequently, inclusive growth.

This is the case for the work to improve the technical facilities of the Brazzaville University Hospital and the extension of healthcare provision, with the completion of two general hospitals (one in Brazzaville and the other in Pointe-Noire), and for the financing of the operationalisation of the Universal Health Insurance Fund (CAMU).

Other investments to relaunch activities are aimed at continuing the completion of a few major projects. Notably: The Central Market of

Pointe-Noire, the Special Economic Zone (SEZ) of Maloukou and the rehabilitation and resizing works of the National Road N°2 (Brazzaville-Ouesso), in order to fluidify traffic between Ouesso- Brazzaville and Pointe-Noire.

Furthermore, the operation to clear the domestic debt, for an envelope of 300 billion FCFA, raised on the CEMAC sub-regional financial market, in compliance with BEAC regulations and in accordance with the Programme's commitments with the IMF, should, on the one hand, promote economic recovery by paying directly from the resource to economic operators who will have to reinvest in the country, and, on the other hand, contribute to cleaning up the local banking system, thus offering more opportunities for banks to finance the economy.

Minister Ludovic Ngatsé took advantage of the presentation of this 2nd draft rectified budget of the Congolese State for the financial year 2020 to remind all his compatriots and economic agents that since the first day of this health crisis at Coronavirus last March, under the supervision of the President of the Republic and under the coordination of Prime Minister Clément Mouamba, the government has been present to support businesses through fiscal support measures. Other stimulus measures, he announced, are planned within the framework of the National Solidarity Fund. These measures could be implemented if the mobilization process, currently under negotiation within the framework of the Programme with the IMF, and if other concessional financing succeeds before the end of 2020.

As a reminder, the 1st Amending Finance Bill 2020 had been adopted by both houses of Parliament last May, following the shock of the Covid-19 pandemic that broke out in Congo last March. It amounted to 1,083 billion FCFA in revenue and 1,863 billion FCFA in expenditure. 

The Press Office of the Ministry of Finance