The country's abundant northern rain forests are the source of timber. Forestry, which led Congolese exports before the discovery of oil, now generates less than 7% of export earnings. Wood production came to a standstill during the war years but has recommenced, and new concessions were leased in 2001.

Earlier in the decade, Congo's major employer was the state bureaucracy, which had 80,000 employees on its payroll--enormous for a country of Congo's size. The World Bank and other international financial institutions pressured Congo to institute sweeping civil service reforms in order to reduce the size of the state bureaucracy and pare back a civil service payroll that amounted to more than 20% of GDP in 1993. The effort to cut back began in 1994 with a 50% devaluation that cut the payroll in half in dollar terms. By the middle of 1994, there was a reduction of nearly 8,000 in civil service employees.

Between 1994-96, the Congolese economy underwent a difficult transition. The prospects for building the foundation of a healthy economy, however, were better than at any time in the previous 15 years. Congo took a number of measures to liberalize its economy, including reforming the tax, investment, labor, timber, and hydrocarbon codes. In 2002-03 Congo privatized key parastatals, primarily banks, telecommunications, and transportation monopolies, to help improve a dilapidated and unreliable infrastructure.

By the end of 1996, Congo had made substantial progress in various areas targeted for reform. It made significant strides toward macroeconomic stabilization through improving public finances and restructuring external debt. This change was accompanied by improvements in the structure of expenditures, with a reduction in personnel expenditures. Further, Congo benefited from debt restructuring from a Paris Club agreement in July 1996.

This reform program came to a halt, however, in early June 1997 when war broke out, and the return of armed conflict in 1998-99 hindered economic reform and recovery. President Sassou-Nguesso has moved forward on improved governance, economic reforms, and privatization, as well as on cooperation with international financial institutions. President Sassou-Nguesso also has made speeches outlining the need for good governance and transparency in the Congo, particularly during his 2003 and 2004 National Day Addresses.

Before June 1997, Congo and the United States ratified a bilateral investment treaty designed to facilitate and protect foreign investment. The country also adopted a new investment code intended to attract foreign capital. The country has made some commendable efforts at political and economic reform, but despite these successes, Congo's investment climate has challenges, offering few meaningful incentives for new investors. High costs for labor, energy, raw materials, and transportation; a restrictive labor code; low productivity and high production costs; and a deteriorating transportation infrastructure have been among the factors discouraging investment. Five years of civil conflict (1997-2003) further damaged infrastructure, though the privatization of some statal and parastatal enterprises has generated some interest from U.S. companies.

In March 2006, the World Bank and International Monetary Fund (IMF) approved Heavily Indebted Poor Countries (HIPC) decision point treatment for Congo, noting that Congo has performed satisfactorily on an IMF-supported program and developed an interim Poverty Reduction Strategy. The IMF and World Bank also noted, however, that Congo needed to address serious concerns about governance and financial transparency in order to qualify for completion point and irrevocable debt relief. Specifically, Congo needs to bring the internal controls and accounting system of the state-owned oil company (SNPC) up to internationally recognized standards; prevent conflicts of interests in the marketing of oil; require SNPC officials to publicly declare and divest any interests in companies having a business relationship with SNPC; and implement an anti-corruption action plan with international support. Any resources that are freed by interim debt relief granted to Congo must be used for poverty reduction under a reform program closely monitored by the international financial institutions.