Moody’s has raised the rating of the DRC
The financial rating agency Moody’s Investors Service on Friday raised the DRC’s rating from Caa1 to B3, outlook stable. The decision explains, the agency, is explained by the strengthening of the economic and budgetary prospects of the country favored by the institutional improvements supported by the program of the International Monetary Fund since July 2021. To this is added the good health of foreign exchange reserves. .
“At the same time, the national ceilings in local currency (LC) and in foreign currency (FC) of the DRC have been raised to B2 and B3, respectively, against B3 and Caa1 previously. The one-notch gap between the LC ceiling and the sovereign rating reflects a high degree of unpredictability in government actions, domestic political risk, as well as the economy’s significant exposure to the mining sector. The one-notch gap between the FC ceiling and the LC ceiling reflects the limited effectiveness of policies and the relatively low capital account openness and convertibility risks given the history of exchange rate volatility during episodes. commodity price shocks.
Moody’s also notes that the solvency of the DRC remains limited by its very low GDP per capita, its low competitiveness, its still weak institutions and the deterioration of the political context environment, as well as the very limited domestic financing capacity. and dependence on external concessional financing.
However, the situation may improve further “if structural reforms continue and high commodity prices support further improvements in economic and fiscal soundness as well as further reductions in vulnerabilities to elevated domestic and geopolitical risks. (…).
For context, in October 2021, Moody’s had changed the rating outlook from ‘Caal, Outlook Stable’ to ‘Caal, Outlook Positive’ in view of a possible rating upgrade. In January 2022, Standard & Poor’s also raised the DRC’s rating from “CCC+, Outlook Positive” to “B-, Outlook Stable”. This rating was then reaffirmed on August 1st.
In June 2022, on the strength of these successes, the DRC requested a rating in local currency from the Bloomfield rating agency, like many countries on the continent, including Benin, Côte d’Ivoire and Senegal Bloomfield assigned the inaugural rating of “BBB” (investment grade) with a stable long-term outlook and rating of “A2” (investment grade) with a stable short-term outlook. These successes reflect the good momentum of the reforms and the strong prospects for growth in the DRC”, explained the Ministry of Finance in September.
