Common use of Recent Developments Clause in Contracts

Recent Developments. 4. Overall economic activity declined in 2007 because of a temporary fall in oil production caused by an accident on the Nkossa oil platform. However, the non oil economy continued to expand at a healthy pace (about 6½ percent), and above the growth rate experienced during the past several years. Food prices fell as a result of improvements in the transportation network, leading to a decline in annual inflation in 2007. The current account moved into deficit last year, reflecting the decline in oil production and imported equipment to repair the oil platform. The external position, however, was helped by an agreement with London Club creditors, which led to debt relief amounting to US$ 1.6 billion. This agreement is consistent with the enhanced HIPC Initiative and accounts for more than half of the total relief envisaged at the completion point. 5. Monetary conditions were appropriate for Congo during 2007. Broad money slowed from its strong increases in previous years, which reflected the build up of government deposits with commercial banks. The financial sector remained sound according to the regional banking supervisor (COBAC). A new bank specializing in home mortgages was recently created and a new commercial bank has just been licensed. 6. The fiscal stance weakened in 2007 because of an overshoot in expenditure. The overshoot was associated mainly with unanticipated costs of the legislative elections last year (some re-voting took place because of irregularities in some constituencies), higher subsidies to the petroleum product sector due to high world oil prices, and higher than budgeted domestically- financed investment. In the latter case, we had intended to limit this investment to CFAF 344 billion, but it proved difficult to reverse the over execution of this spending which took place in the third quarter of the year. Overall, these developments, together with a decline in oil revenue (related to the temporary decline in oil production), resulted in a sharp fall in the basic primary surplus to about 13.9 percent of GDP in 2007, from 21.5 percent a year earlier. 7. While there were delays in implementing structural reform under the previous SMP, important progress has been made more recently. We completed several audits that were undertaken to help increase the transparency of oil costs and revenue. We took actions to enhance governance through the creation of an anti-corruption observatory, sending them the audit report on the award of Marine XI concession. We presented a draft law to parliament on conflict of interest and asset disclosure of public officials, and adopted a decree to ensure that all new oil concessions will be awarded through a competitive bidding process. We re-entered the ▇▇▇▇▇▇▇▇ process for diamond certification and reapplied to the Extractive Industries Transparency Initiative (EITI). We completed diagnostic studies on how to improve the financial and operating performance of the national oil refinery and the oil-marketing company ( SNPC). As agreed with Fund staff, the government raised petroleum product prices earlier this year, to help reduce subsidies to the petroleum product sector, which had been a major source of fiscal slippage last year. Finally, we have adopted a public finance reform program with the support of the Fund, World Bank, European Union, and other donors.