China's vast investment in Africa hits a snag in Congo

BEIJING – China's investment strategy of throwing money at developing countries appears to have hit a snag in the Republic of Congo as the central African nation is seeking an IMF bailout.

The IMF places conditions on its loans to force governments to take measures to boost their finances. In addition, as the IMF can only lend if it judges that a country's debt load is sustainable, a bailout may be accompanied by a restructuring of government debt. Julien Marcilly, the chief economist at Coface, a firm that provides payment insurance for French companies, said that China "went full-tilt on lending in recent years, often to countries which produce and export raw materials, in particular oil."

"It was an expected and very brutal drop in prices, which was ironically linked to a slowdown in China," noted Marcilly. The Congolese government reached an agreement with IMF negotiators a year ago, but the terms need to be approved by the IMF's governing board.A French source confirmed that the IMF programme is contingent on Congo-Brazzaville's debt becoming sustainable, which means that a deal has to be reached with China on cutting the amount owed or pushing back payments.

"For the United States it out of the question that the IMF rescues a country that is in debt to China," the specialist said.

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