In order to get a chance to have 11 bil­lion dol­lars of debt for­given, the Demo­c­ra­tic Repub­lic of Congo had to sac­ri­fice 3 bil­lion dol­lars in infra­struc­ture improve­ment financed by China.

An agree­ment that would have allowed China to build cop­per mines in Congo in exchange for 3 bil­lion dol­lars in infra­struc­ture had to be altered. The Inter­na­tional Mon­e­tary Fund wouldn’t grant debt for­give­ness unless the deal was changed.

For a fur­ther expla­na­tion of the announce­ment, we go to this snip­pet from Finan­cial Times reporter Bar­ney Jopson.

Under the orig­i­nal deal, a con­sor­tium of state-owned Chi­nese com­pa­nies agreed to build roads, rail­ways, hos­pi­tals and uni­ver­si­ties in return for the right to develop a cop­per and cobalt mine.

But pres­sure to alter it had come from west­ern donors that refused to offer Congo relief on his­toric debt of $11bn because of con­cerns over state finan­cial guar­an­tees the deal con­tained, which could threaten Congo’s abil­ity to man­age its debt.

“Dur­ing our visit, the author­i­ties … told us that the part­ners have accepted the amend­ments in the project of the Sino-Congolese agree­ment, includ­ing the removal of the government’s guar­an­tee on the min­ing project,” Mr Ames said.

Congo is eager to take advan­tage of a debt relief scheme for poor coun­tries and to access new forms of west­ern devel­op­ment aid, but it can­not do so until the IMF approves a new pro­gramme for the coun­try, which it had not been ready to do.

The $9bn financ­ing was split into three tranches of $3bn: one for set­ting up the min­ing oper­a­tion and two for nation­wide infra­struc­ture invest­ments, includ­ing more than 3,500km of roads and nearly 3,000km of railways.

But Jean-Claude Masangu, gov­er­nor of Congo’s cen­tral bank, told the same press con­fer­ence that the sec­ond $3bn infra­struc­ture part of the project, which had also raised IMF con­cerns, had been suspended.

The IMF and the Paris Club of cred­i­tors had led west­ern oppo­si­tion to the state guar­an­tees in the over­all deal, which ear­marked gov­ern­ment rev­enues and made China a priv­i­leged creditor.

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