A cheaper barrel and dearer copper rebuilt part of the cushion, which still covers 2.6 months.

By Kanisa Magazine · November 2023

Congo’s reserves rose to US$4.77 billion on 24 November, a gain of US$170 million in five weeks, and the reason lies in three prices rather than in any single export. Brent fell 12 per cent over the period, copper gained almost 6 per cent, and cobalt stayed pinned within a few dollars of US$33,000 a tonne.

Reserves still cover only 2.58 months of imports on the Banque Centrale du Congo’s reckoning, below the 2.71 months of August. November’s external account is a story of a cushion that stopped shrinking, not one that has been rebuilt.

The three prices that moved the account

Cheaper fuel and dearer copper helped; cobalt did nothing.

The BCC’s weekly commodity table shows LME copper at US$8,330 a tonne on 24 November, against US$7,880 on 20 October. Brent was US$80.09 a barrel, against US$91.30 over the same dates, and US$92.56 at the end of September. Cobalt on the LME was US$33,015 a tonne, against US$32,990 in October, and 36 per cent below the US$51,515 at which it started the year. Coltan held at US$97 a pound and gold at US$2,011 an ounce. For a country that imports almost all its fuel and exports copper, a 12 per cent fall in oil and a 6 per cent rise in copper in a single month is a favourable shift in terms of trade, and it appears in the reserve line within weeks.

What the minister blames, and what the table shows

Government sees cobalt’s collapse as the franc’s root problem; the digest shows cobalt has stabilised, at a low level.

Finance Minister Nicolas Kazadi, quoted by Actualité.cd on 29 November, said the franc had been pressed by cobalt’s slump from about US$81,000 a tonne in March 2022 to US$31,000 a year later, among other factors. That is the minister’s account and the BCC tables are consistent with the scale of the move. The point for the account is that the drop is behind, not ahead: cobalt has barely moved for two months at about US$33,000. What the metal cannot do is repair the damage already done to receipts. A producer now earns about 36 per cent less per tonne than at the start of the year.

The measurement trap

Two reserve numbers, US$4.6 billion and US$5.0 billion, are both right, and they mean different things.

The IMF’s staff-level agreement of 31 October gave international reserves of about US$5.0 billion at end-October. The BCC’s digest shows US$4.61 billion on 31 October. The gap is probably definitional: the BCC series deducts the foreign-currency accounts of residents held at the bank, according to the digest’s own notes, and the IMF release does not say which measure it uses. The same statement, which expects growth above 6 per cent this year, lists a persistently high current-account deficit, falling cobalt prices and a revenue shortfall as the difficult setting, and notes SDR 152.3 million becomes available on completion of the review, expected by the Board in mid-December.

The financing leg

An IMF tranche in December would add to reserves, but it is a loan, not an export receipt.

The external account has four legs: price, volume, imports and financing. November showed price and import relief. Volume is rising on copper. Financing is the leg that decides whether the cushion grows. Programme disbursements lift reserves, but only exports and capital inflows lift them in a lasting way.

For a businessperson, the consequence is practical. Importers can plan on a slightly calmer second half of December if oil stays near US$80, but should not assume it, because 2.58 months of cover is thin. Exporters and contractors with dollar invoices should keep dollar balances offshore or in local dollar accounts rather than converting early. And anyone budgeting for 2024 should work from copper near US$8,000, cobalt near US$30,000 and reserves under three months, until the digest shows otherwise.