S&P Global Ratings on Aug. 4 downgraded the Democratic Republic of the Congo's short-term foreign- and local-currency sovereign credit ratings to CCC+/C from B-/B and raised the outlook to stable from negative.
Political risk is on the rise, particularly due to an impasse on the scheduling of the presidential elections, initially set for November 2016, the agency said. The deadlock has blocked access to IMF support and foreign financial donors needed to boost foreign reserves. Political gridlock and social unrest in the context of deteriorating living conditions could intensify interethnic and separatist tensions across the country and in surrounding regions, S&P warned.
The accelerated fall in copper prices has also pressured the Congolese franc. Inflation has risen sharply, reaching 31% as of the end of 2016.
S&P expects the country's weak external position to persist in the 2017-2020 period.
The stable outlook reflects that no commercial debt is maturing in the coming year and that exports should benefit from stabilizing copper and rising cobalt prices, the rating agency added.
S&P Global Ratings and S&P Global Market Intelligence are owned by S&P Global Inc.