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Moody's revises rating outlook on DRC to negative


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Moody's revises rating outlook on DRC to negative

Moody's lowered the rating outlook on the Democratic Republic of the Congo to negative from stable, citing a significant rise in macroeconomic volatility and external pressures amid the country's increasingly polarized political scene.

As part of the outlook revision, Moody's affirmed the long-term issuer rating at B3.

The rating agency said macroeconomic volatility is likely to remain high until the presidential elections that are scheduled for Dec. 23, 2018, as the relationship between the ruling Alliance of the Presidential Majority party and the opposition becomes more uneasy.

The increased polarization of the country's domestic political environment is damaging the economy, international support and credit profile, Moody's added.

"While Moody's doesn't anticipate a further escalation into a more confrontational scenario now that an election date has been announced and given the opposition remains fragmented, the current degree of political uncertainty threatens to further negatively affect the economy as large foreign investments are likely to be delayed until the elections," Moody's said. "The exchange rate remains vulnerable to further deterioration in the political situation."

The country's real GDP growth is projected to remain low by historical standards, increasing to 3% in 2018, according to Moody's. In 2017, a year marked by political uncertainty surrounding the elections, real GDP growth is estimated to have reached only 2.6%.

Moody's also expects inflation to remain elevated at 38% in 2018 and 25% in 2019.