Study On The Risk Management Of The Republic Of Congo's External Debt

HIPC~1 and MDRI~2 have played an important role in reducing the external debt of developing countries,which is considered unsustainable.This relief has allowed recipient countries to restore their financial situation and thus get back on the road to development.However,the pursuit of the development goals set by the countries consisted in carrying out major projects in the sectors of education,health,economy and many others in order to eradicate poverty and thus improve living conditions of the populations.With insufficient national savings and difficulties in mobilizing funds,countries have turned to different bilateral and commercial creditors for a new round of financing.The Republic of Congo,one of the beneficiary countries that has reached the completion point of the initiatives,saw its external debt reduced in 2010,from $ 6694 million in 2004 to $ 2406 million or 19.4% of gross domestic product.In the interest of achieving the Millennium Development Goals and,in a complicated economic environment marked by falling oil prices,the country has re-leveraged itself to finance these infrastructure projects.Continued indebtedness,following repeated budget deficits,has increased the ratio of the stock of external debt to GDP reaching in 2017 a rate above 100%;this situation leads to macroeconomic imbalances and threatens the country's financial security by creating various risks.It is therefore very important to carry out relevant research on the management of the external debt risk of the Republic of Congo in order to control the factors that negatively impact the debt and thus contribute to the restoration of the country's macroeconomic balances.This paper examines the risk of the external debt of the Republic of Congo in terms of scale risk,structural risk,liquidity risk and settlement risk.In order to better understand the problems that lead to an increase in the external debt risk of the Republic of Congo,we have constructed,through relevant indicators,a system for assessing the risks of foreign debt.Then,we used factor analysis by the objective weighting method to calculate the overall level of the external debt risk of the Republic of Congo,and we used SPSS statistical software 25.0 for the processing of our data.Our results show that the overall risk of the Republic of Congo's external debt in 2017 is no longer low,it is moderate.As a result,managers need to pay attention to changes in the size of the external debt,which has a large impact on overall risk and leads to liquidity and external debt risk.The debt structure as a whole presents less risk;the term and interest rate structure are reasonable,but the source and the money structures require diversification so as not to cause an increase in the size of the debt in the near future.An optimization of the external debt structure is therefore necessary;to this must be added the efforts in the diversification of the national economy in order to eliminate dependence on oil exports for a better management of the risk of the external debt of the Republic of Congo.