Title: The Congolese government plans to issue financial securities to compensate for budget deficits
Introduction :
The Congolese government faces budget deficits caused by weak public revenues. To remedy this, it plans to raise a total amount of 470 billion Congolese Francs (CDF), or $232.5 million, on the local financial market of indexed Treasury bonds and Treasury bills. These issues are scheduled between August and September 2023, according to the indicative calendar of the Central Bank of Congo. In this article, we will take a closer look at this government strategy and its implications for the Congolese economy.
Development :
The economic context and budget deficits:
The weak mobilization of public revenue by the base services has led to budget deficits for the Congolese government. These deficits have an impact on the capacity to finance public expenditure, thus jeopardizing the country’s economic and social development. To deal with this situation, the government has decided to issue financial securities.
Indexed treasury bonds and treasury bills:
The Congolese government plans to issue indexed treasury bonds and treasury bills to raise funds in the local financial market. Treasury bonds are medium- or long-term redeemable debt securities issued by the public treasury. Treasury bills are short-term repayable debt securities. Both types of securities are generally available to investors, either through syndication or through auction.
Issuance schedule and amount to be raised:
According to the indicative timetable of the Central Bank of Congo, the government plans to raise an amount of CDF 470 billion on the domestic market between August and September 2023. This issue aims to fill budget gaps and ensure financing public spending. However, it should be pointed out that the government did not make any issues in July 2023 due to the tax deadline relating to the payment of the second installment of income and profit tax.
Impact on the Congolese economy:
Fundraising by the Congolese government through the issuance of financial securities can have a significant impact on the country’s economy. On the one hand, it will strengthen the government’s financial resources and reduce budget deficits. On the other hand, it could stimulate economic activity by offering investment opportunities to local financial market players. However, it should be noted that the success of these issuances will depend on investor confidence and the government’s ability to maintain sound and transparent fiscal policies..
Conclusion :
The Congolese government faces budget deficits and plans to raise funds through the issuance of financial securities. This measure aims to offset the weakness of public revenue and ensure the financing of public expenditure. The issuance of securities such as indexed treasury bonds and treasury bills will allow the government to mobilize financial resources to support the Congolese economy. However, the success of these issues will depend on investor confidence and responsible fiscal management by the government.