Moody’s changes outlook on the DR Congo’s Ba3 rating to negative; rating affirmed

Brazzaville, DR Congo, Capital Markets in Africa —- The rating outlook on the Democratic Republic of the Congo issuer rating of Ba3 was changed to negative from stable and Ba3 rating was affirmed the rating by Moody’s rating agency on November 13 2015.  

Moody’s Rating Agency attributed the negative outlook to  increasing uncertainty regarding the government’s capacity to consolidate its finances amid a protracted oil price shock that has depressed the fiscal and growth outlook, diminishing a historical credit strength supporting the Ba3 rating.  The press release stated that:

“The key drivers behind the affirmation of ROC’s Ba3 rating are: (1) Moody’s central expectation that government debt metrics will stop deteriorating from 2017 onward; and (2) limited external risks despite low oil prices due to ROC’s membership of the Economic and Monetary Union of Central Africa (CEMAC in French) and the franc Zone.”

However, the Republic of the Congo’s country and deposits ceilings remain unchanged at Baa3.

What could move the Rating up/down
Given the negative outlook, an upward movement in the rating is unlikely at this point in time. However, achievement of fiscal consolidation that contains the government’s funding requirements and arrests the upward debt trajectory would support the stabilization of the outlook. Similarly, progress in diversifying the economy and government revenue reliance away from the oil sector would be credit positive.

Conversely, downward rating pressures will increase if the upward trajectory of government debt metrics fails to reverse as foreseen under Moody’s central scenario.

Some Economic Statistics: 
GDP per capita (PPP basis, US$): 6,635 (2014 Actual) (also known as Per Capita Income)

Real GDP growth (% change): 6.8% (2014 Actual) (also known as GDP Growth)
Inflation Rate (CPI, % change Dec/Dec): 0.5% (2014 Actual)
Gen. Gov. Financial Balance/GDP: -5.3% (2014 Actual) (also known as Fiscal Balance)
Current Account Balance/GDP: -5.5% (2014 Actual) (also known as External Balance)
External debt/GDP: [not available]
Level of economic development: Low level of economic resilience
Default history: At least one default event (on bonds and/or loans) has been recorded since 1983.

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