KINSHASA (Reuters) - World Bank President Robert Zoellick on Monday cited signs of progress in talks to adjust a $9 billion infrastructure-for-minerals deal between China and Democratic Republic of Congo that has raised IMF concerns.
The International Monetary Fund fears the contract, which uses Congo’s mineral reserves as a guarantee for infrastructure projects, could plunge the central African nation deeper into debt and have delayed forgiveness of most of the $10 billion Congo already owes.
“We’ve been able to make some good progress with the DRC and China on this investment,” Zoellick told Reuters on the trip.
“The latest we’ve heard is that the Chinese firm is willing to adjust to have the guarantees only cover the infrastructure and not the mining operation and if we’re able to get that turned around then we can proceed with debt forgiveness.”
Chinese officials in Kinshasa had no immediate comment on the terms of the contract.
Congolese officials have said the government will not incur further debt as a result of the deal and that the infrastructure projects are necessary to rebuild the vast country after decades of dictatorship and a devastating 1998-2003 war.
Yet IMF Managing Director Dominique Strauss-Kahn said during a trip to Congo in May that problems remained and that he was not able to take a decision on the debt relief.
Zoellick was in Congo as part of a three-country tour to assess how countries are coping with the global financial crisis and what the poverty-fighting institution can do to help.
Sub-Saharan Africa has shown continuous growth of more than 5 percent annual for more than a decade and many experts thought the region would avoid the worst of the crisis. But a collapse in global trade and drop in global commodity prices has hit government revenues, while a withdrawal by investors from risk and a global credit squeeze has seen investment decline sharply.