October 25, 2016 / 2:53 PM / in 4 years

Congo government proposes 14 pct budget cut for 2017

KINSHASA (Reuters) - Democratic Republic of Congo’s government has proposed a 2017 budget that would reduce spending by about 14 percent, Prime Minister Augustin Matata Ponyo said on Tuesday.

The budget proposal sent to parliament calls for spending around 5.7 trillion Congolese francs ($5.2 billion), down from 6.6 trillion francs in 2016.

Matata told local radio station TopCongo FM the reduction was caused by continuing weakness in the price of key exports like copper and oil. That weakness led the government to slash its original 2016 budget by 22 percent in May.

Congo, Africa’s top copper producer, depends on extractive industries. Oil and mining account for some 95 percent of export revenues.

Low commodity prices and production cutbacks at major mines forced the government to cut its economic growth forecast for this year by more than half, from 9 to 4.3 percent.

A lack of foreign currency has also pushed inflation from less than 1 percent last year to 5.4 percent this year, according to the latest government estimate.

Matata, credited with overseeing macroeconomic stability from 2012 until this year, is set to be replaced in the next two weeks by an opposition leader as part of a multi-party accord struck earlier this month.

($1 = 1,091.7 Congolese francs)

Reporting By Aaron Ross; Editing by Emma Farge, Larry King

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