Four effects, measured apart: price, volume, imports and financing each pull the external position a different way.

By Kanisa Magazine · August 2021

Congo’s external account in August 2021 is being carried by four forces moving in different directions. Copper volumes were running 14.2 per cent above last year, copper prices had slid 13.6 per cent from their May peak, fuel imports were getting dearer, and new financing was lifting reserves faster than any export receipt could. The BCC’s digest of 25 August lets each be measured separately, which matters because they point to different decisions.

Read together, the account is healthy but not yet self-financing: the reserve build owes more to the IMF and to central-bank purchases than to the trade balance.

Price: off the peak, still above the start of the year

Copper closed at US$8,776 a tonne on 20 August, down from US$10,160 at the end of May.

The London Metal Exchange copper price fell from US$9,781 a tonne on 30 July to US$8,776 on 20 August, a drop of 10.3 per cent in three weeks. It remained 12.5 per cent above the US$7,803.50 recorded on 31 December. Cobalt, which the digest quotes at US$51,200 a tonne for the 99.30 per cent grade, held much of its gain, against US$41,245 at the end of January. Coltan rose to US$92 a pound from US$83.50 on 30 July, and Brent crude slid from US$75.20 to US$65.08.

A country that sells copper and buys fuel gets a partial offset: copper’s fall trims receipts while Brent’s fall eases the fuel bill, so the terms of trade moved by less than either price alone.

Volume: the part that kept growing

Cumulative copper output to July was 1.04 million tonnes, up 14.2 per cent.

Provisional output in the digest, for January to July, was 1,039,670 tonnes of copper against 910,443 tonnes a year earlier, and 52,246 tonnes of cobalt against 47,895 tonnes, a rise of 9.1 per cent. Gécamines’ own copper rose from 13,612 to 21,934 tonnes, a 61 per cent gain, though it remains a small share of the total next to its partners’ 1,017,737 tonnes.

Volume is the cushion against the price slide. At 14 per cent more tonnes, a copper price that is 12 per cent above its January level still delivers materially higher receipts than a year ago, even after August’s drop. The caveat is that the digest’s output figures are provisional and the cobalt rise is slower than copper’s.

Imports: the bill is structural

Manufactured goods and staple foods dominate what Congo buys abroad.

Trade officials have framed the problem plainly. Minister of Foreign Trade Jean-Lucien Bussa said that more than US$1.5 billion a year is spent on imported food, and that mining and petroleum make up 96 per cent of primary exports, as Africanews reported on 25 August. Manufactured goods account for 70 per cent of imports and staple foods for 25 per cent.

Fuel adds a price channel. A Ministry of Economy revision effective 28 July raised pump prices in the southern zone, where petrol rose from CDF 1,820 to CDF 2,100 a litre. Brent’s August drop gives importers some relief, but only if the ministry’s price structure follows it down.

Financing: the reserves story

The BCC’s own reserves reached US$1.8 billion on 20 August from US$0.5 billion in March.

On the BCC’s strict measure, reserves went from US$505.71 million on 31 March to US$1,801 million on 20 August, equal to 1.71 months of imports. The broad measure, which adds banks’ foreign-currency deposits, is larger but is not the BCC’s to spend. That growth sits alongside the IMF’s July approval of a US$1.52 billion Extended Credit Facility, whose first disbursement was meant to reinforce reserves, and heavy BCC dollar purchases. The IMF’s general SDR allocation, effective 23 August, comes next.

For a miner, trader or importer, the decision rule follows. Plan on volumes, not on May’s copper price. Lock fuel and freight contracts while Brent is near US$65. Treat a reserve cushion that rests on official financing as a window to settle dollar obligations on favourable terms, and as a reason to expect a tighter BCC if copper falls below US$8,000.