Friday, October 20, 2023

Republic of Congo higher fuel costs due to IMF


In the Republic of Congo, diesel prices have risen by 25 percent in October, marking another increase following a hike in January. Similarly, since July, the pump price of gasoline has also surged by 25 percent.

Authorities in Brazzaville attribute the soaring fuel prices to recommendations made by the International Monetary Fund (IMF) in 2019 under the Extended Credit Facility (ECF), which provided financial assistance to the Republic of Congo, grappling with a severe economic crisis and unsustainable debt (more than 80% of the GDP). Among the IMF-recommended reforms was the removal of fuel subsidies.

However, the Congolese branch of What You Pay coalition (PCQVP) vehemently opposes these fuel price increases.

"We have the right as an oil-producing country to sell petroleum products at lower prices in our nation. Why are we asked to sell these products at the same price as on international markets? Are we not capable of refining petroleum products for our domestic consumption to eliminate the need for subsidies? If we can refine oil for our local use, then subsidies will vanish," said Brice Mackosso, deputy chairman of PCQVP coalition.

"We believe that the fight against corruption in the oil sector will bring sufficient revenue to the State's budget. We call for the prohibition of petroleum product exports. We urge the government to consider a report from the ITE of Congo and the International ITE Secretariat on fiscal modelling, showing that the Republic of Congo loses about $1 billion annually due to high costs, tax prices, and the threshold of high costs" added Brice.

The Congolese government has implemented a series of measures to mitigate the impact of potential inflation, which would be particularly detrimental to the population. However, the Congolese civil society believes that the of addressing this crisis remains the fight against corruption.’

'It was during this period of beating about the bush for economic direction that the IMF and the World Bank joined in the fray. They came along with a novel package that was going to miraculously propel African economies to the highest degree of development. This new policy was the Structural Adjustment Programme (SAP). This SAP idea condemned the previous method of development as unworkable and maintained instead that making structural changes, including the expansion and re-orientation of production, was the only way forward. African nations were to put the production of “non-traditional exports” and tourism into a higher gear. Thus in a country like Ghana where the traditional exports were mainly cocoa, timber and gold, under the SAP crops like pepper, pineapples, yams, maize, and oranges were to be turned into cash crops and exported. SAP also stipulated that private capital was to be the “engine of growth” and that “governments have no business doing business”. It did not however take long for the people to understand that they were once again fooled by official policy. Hardship and suffering increased a thousandfold. The masses had been moved from the frying pan into the fire.’

From the Socialist Standard October 2001

Pity the Continent

If ever a continent cried out for justice, for help and, more, for Socialism, it is Africa, a land of 30 million square miles, 54 nations, a thousand languages and 642 million people; a land geographically as rich in diversity as it is in fauna and flora; a land organically as rich in oil and coal as it is in gold and diamonds, and yet, paradoxically, the poorest continent on Earth.

For over a hundred years a spectre has haunted Africa — the demon of world capitalism that sees Africa only as a source of profit, cheap commodities, a gullible market for western exports and an easily exploitable population ruled by corrupt leaders.

The age of overt colonialism may have gone, when the European powers raped and carved up Africa, each with vested interests backed up by huge armies, but now there are new colonists who can do ten times as much damage with the flick of a pen — the World Bank and the IMF.

In ten years, loans given by the IMF and the World Bank have tripled Africa’s debt burden to $180 billion — a figure that represents more than Africa’s aggregate net income. Debt repayments currently stand at $11 billion a year — a staggering four rimes more than what Africa spends on health and welfare.

Since the mid-1980s, African governments have repaid the IMF $2 billion than they have received in loans — a system that is so severe that every adult and child in Tanzania and Zambia owe their nations' external debtors twice their yearly earnings.

African governments secure loans unwittingly to the detriment of their respective nations because they believe this is the only way to domestic stability. Most are forced into accepting loans on terms and conditions regarding policies they would not have hitherto adopted: the privatisation of state-owned industries, the introduction of new constitutions and drastic reductions in public expenditure which hit health and education programmes the hardest.

In the past ten years about 30 African nations have come to regret the acceptance of IMF and World Bank advice. Living standards have dropped by two per cent annually, while unemployment has quadrupled to 100 million, with real wages falling by 30 percent. Africa is now worse off than it was 25 years ago. The June issue of New African declared that "the average African has 10 percent less food to eat than twenty years ago”.

The Guardian (20 July) reported how "in myriad cases, bank projects, supposedly targeted at the poorest of Africa’s poor, not only increased inequality and hunger, but exacerbated ethnic conflicts . . . Across Africa, projects funded by the bank have become synonymous with financial mismanagement, environmental degradation, the displacement of vulnerable populations and corruption”.

Eighteen African nations are amongst the world's poorest 20, 30 amongst the world’s poorest 40. Africa with eight times the land area of the USA and twice its population has only one percent of world trade, while American capitalists are top of the world trade league. In 1991, the total GNP for Africa south of the Sahara, excluding South Africa, was $204.7 billion — only slightly higher than that of tiny Belgium with a population of 10 million. Within six years 300 million Africans will be living below the subsistence level.

Myth of overpopulation

Africa has a population of 642 million. Considering Africa is three times the size of China, it has one sixth the Chinese population per square mile. Yet some experts point to African overpopulation as one of its problems. This is pure fallacy. While 50 percent of Africans are undernourished, it is widely known that the continent is capable of sustaining a population several times its present size were Western farming methods applied there.

While millions were dying in the Ethiopian famine eight years ago. the Ethiopian government were exporting thousands of tonnes of lentils to the West. In 1991, Zimbabwe was forced, by the World Bank, to sell one million tonnes of surplus grain to meet debt repayments. A year later a drought hit southern African cutting Zimbabwe’s grain output by 60 percent, with disastrous effects.

If anything, the problem facing Africa is western capitalism. Shortages of food and overpopulation do not even enter the equation. Guy Arnold, writing in New African in September believes "an enormous deception has been practised upon Africa since I960. It is that all the interference by the World Bank, the IMF and the Paris Club has been for Africa’s advantage".

"Africa", Arnold says, “ is not at all interested in such donor prescriptions, but is obliged to accept them because it is heavily in debt and debt is a primary instrument of control."

This is an intrinsic fact of capitalist society: the wealthy control the poor.

Africa is a land of plenty and only Socialism could truly release its productive potential to the benefit of its people. For a hundred years the West has carved up Africa, diseased its flesh and drained its life-blood. Reforms and loans will only ever be the sticking plaster over the gunshot wound.’

John Bissett

From the Socialist Standard October 1994

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