The Paris Club of creditor nations has agreed to restructure the external debt of the Democratic Republic of Congo. It said Thursday almost half of the nearly $7 billion debt owed by the DRC will be written off or rescheduled.
Guillaume Lacaille, a Nairobi-based analyst with International Crisis Group, says the debt relief is a positive step for Congo's President Joseph Kabila. He says much of Congo's debt was accrued during the presidency of Mobutu Sésé Seko.
"When the transition started in the country that ended up with the democratic election of President Kabila, the load was already very heavy. So it's not bad thing that the government of the Congo will not have to pay for debts raised during Mobutu's era," said Lacaille.
At the end of June 2009, Congo's debt to the Paris Club stood at $ 6.9 billion. $1.3 billion of that total has now been canceled and $1.7 billion has been rescheduled. Debt service repayments have been deferred until July 2012.
Lacaille says the debt relief won't necessarily free up new money because up until now Congo has had a limited capacity to repay them. But he says the debt relief will put Congo in a better position to attract loans from international donors. "It's not so much that a lot of money is being paid servicing the debt, it's much more that the Congo [will] have access to new money in the moment that is critical for the political life of the country," he said.
This money, he says, should be used to help Congo build a national infrastructure with much needed schools and hospitals. "The problem being that Congo is still suffering from corruption, it's still suffering from governance issues and it's very very difficult considering all these issues to make sure that the money is being well spent for the population," said Lacaille.
The Paris Club is an informal group of creditor governments from large industrialized countries. The Club says it will be ready in the future to offer Congo further debt relief.