Republic of Congo economy hit hard by drop in oil prices

The financial crisis that has been precipitated by a drop in prices of oil, the main source of revenue for the Republic of Congo, has hit the country's economy hard, with the stoppage of construction works as well as job layoffs.

The situation which has mostly affected petroleum companies as well as construction firms, has led to a sharp rise in inflation rates.

"Employees of SONAREP petroleum company are entering a second month without salaries, while those working on Mengo-Kundi-Bindi project are going into the sixth month without salaries," a company employee who did not wish to be named told Xinhua.

The sector contributes over 90 percent of the country's exports, 75 percent of public revenue and accounts for 60 percent of the Gross Domestic Product.

The impact of petroleum crisis on the Republic of Congo, the fourth oil producer in Sub-Saharan Africa, is being felt across the country.

For sometime, work on several infrastructure projects has been stopped despite assurances by the government to proceed with its development plan in the sector.

Companies in road construction sector have been particularly affected by the work stoppage.

In Brazzaville, the degradation of main streets is enough evidence of lack of funding to rehabilitate them.

The worrying situation has alarmed some countries whose companies are partnering with the Republic of Congo in infrastructure construction.

Speaking recently at his farewell party in the Republic of Congo, France's Ambassador to Brazzaville Jean Pierre Vidon alerted the Congolese authorities on this situation of non-payment of French companies which were currently experiencing financial difficulties.

To address the challenge, the French diplomat called for opening of dialogue between the French firms and the concerned authorities to find a compromise on the situation.

For the first time in years, the Republic of Congo is susceptible to experiencing a financial recession that might worsen if not checked.

The long term prospects for Republic of Congo's risk status will depend on the developments in the global oil prices and the government's capacity to accelerate the process of economic diversification.

Due to the economic environment characteriZed by a drop in oil prices, the World Bank recently urged the Congolese government to rationalize public investments in high potential sectors such as agriculture to support its economy.