Narrative
Full Description
Project narrative
On June 19, 2006, China Eximbank and the Republic of Congo signed an RMB 250 million government concessional loan (GCL) agreement [CHINA EXIMBANK GCL N°. 15 (2006) TOTAL No. (157)] for the MA60 Aircraft Acquisition Project. This loan was subsequently approved by a Republic of Congo decree (Decree 2007-319) on July 2, 2006. The loan carried the following terms: a maturity of 20 years, a grace period of 8 years, a 2% interest rate, a 0% default (penalty) interest rate, a management fee of 3.50%, and a commitment fee of 0.30%. The loan was to be used by the borrower to finance a commercial contract [N° ATE-CON-05M0165] between China National Aero-Technology Import & Export Corporation (CATIC, Chinese: 中航技进出口有限责任公司) and the Republic of Congo’s Ministry of of Transport and Civil Aviation, which was signed on December 13, 2005. The purpose of this project was to facilitate the acquisition of two MA60 aircraft to expand Air Congo’s existing fleet of aircraft. CATIC was the contractor responsible for implementation. The MA60s were manufactured by Xi'an Aircraft International Corporation. The aircraft were successfully delivered on September 2, 2007. However, there are some indications that the China Eximbank loan for the MA60 Aircraft Acquisition Project may have financially underperformed vis-a-vis the original expectations of the lender. In 2020, China Eximbank and the Republic of Congo signed a debt suspension agreement as part of the G-20 Debt Service Suspension Initiative (DSSI). Under the terms of the agreement, the lender agreed to suspend principal and interest payments due between May 1, 2020 and December 31, 2020 under multiple buyer’s credit loan (BCL) agreements and multiple government concessional loan (GCL) agreements (as captured via Record ID#95566 and ID#95571). Debt service payments under many of these loan agreements were again deferred in 2021 (as captured via Record ID#95573, 95572, 95570, and 95568). The IMF assessed the Republic of Congo to be in debt distress in 2021, 2022, and 2023.
Staff comments
1. This project is also known as the MA 60 Aircraft Acquisition Project or the MA-60 Aircraft Acquisition Project. The French project title is Project D'Acquisition D'Aeronefs MA 60. 2. In the database of Chinese loan commitments that SAIS-CARI released in July 2020, it identifies the loan commitment year as 2007. However, AidData records the loan commitment year as 2006 based on the precise date (June 19, 2006) when the loan agreement [CHINA EXIMBANK GCL N°. 15 (2006) TOTAL No. (157)] was signed. 3. The loan agreement can be accessed in its entirely via https://www.dropbox.com/s/cubdwica82budzg/2006%20China%20Eximbank%20Loan%20to%20Republic%20of%20Congo.pdf?dl=0..