The decline in international oil pricesover the past two years has resulted into an economic crisisin the Republic of Congo that could forestall thetransformation efforts to move the country towards highermiddle income status. A key strategy that government haspursued in recent years has been to adjust the fiscal policyto provide more resources for capital development in linewith the National Development Plans. This strategy isexpected to be continued into the medium term in order toaddress the binding constraints on growth, most notably thecountry’s huge infrastructure deficit. However, theintention to increase the level of capital investment hasneither been matched by similar ones to raise investments inhuman capital development nor with effort to make publicspending more efficient and effective. This third Edition ofthe Congo Economic Update discusses the importance ofundertaking fiscal adjustments to accommodate the newreality of lower oil revenues and to shift into a morebalanced and inclusive development strategy. This editionargues that the current fiscal crisis in Congo resultingfrom the decline in global oil prices will make it difficultfor the country to sustain fast growth unless the countryadopts more prudent fiscal management and a balancedapproach that builds both physical capital and achievessignificant improvements to human capital. Therefore, adeliberate effort has to be made to ensure that the fiscaladjustments do not result in major decreases to the level ofexpenditure on health and education. In addition, thegovernment must implement measures to improve the level ofefficiency and effectiveness of spending in these sectors.
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