COVID-19 and oil price shocks: the case of Republic of the Congo

The downturn in the global economy following the outbreak of COVID-19 pandemic has caused a fall in demand and a huge decline in oil prices. To examine the impact of negative exogenous shocks including oil price shocks, most studies focus on how it impacts on a country's economic growth. Focusing on the Republic of the Congo, our paper incorporates the modalities of sharing oil rents between the State and the oil exploration companies. In particular, our analysis is based on the rent sharing modalities of the fifteen oil contracts in this country. We demonstrate that the Republic of the Congo suffers three shocks: declining oil price shocks, diminishing share of oil rents with the exploration companies and a reduction in production volumes. Our work offers a better assessment of the needs of the country and the necessary aid that may promote stability and a reduction in the risk of a food crisis.