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Viewing cable 06KINSHASA566, DRC MARCH ECONOMIC REVIEW

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Reference ID Created Released Classification Origin
06KINSHASA566 2006-04-11 17:33 2011-08-25 00:00 UNCLASSIFIED Embassy Kinshasa
VZCZCXRO9733
RR RUEHDU RUEHGI RUEHJO RUEHMR
DE RUEHKI #0566/01 1011733
ZNR UUUUU ZZH
R 111733Z APR 06
FM AMEMBASSY KINSHASA
TO RUEHC/SECSTATE WASHDC 3638
INFO RUEHXR/RWANDA COLLECTIVE
RUCNSAD/SOUTHERN AFRICAN DEVELOPMENT COMMUNITY
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEHC/DEPT OF LABOR WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUEAIIA/CIA WASHDC
UNCLAS SECTION 01 OF 03 KINSHASA 000566 
 
SIPDIS 
 
SIPDIS 
 
DEPT FOR DRL/IL-LHOLT AND AF/RSA-MHARPOLE 
 
E.O. 12958:  N/A 
TAGS: ECON EFIN ENRG ELAB EAGR EAIR ETRD PGOV CG
SUBJECT:  DRC MARCH ECONOMIC REVIEW 
 
1. (U) Summary 
-------------- 
 
-The DRC?s IMF Poverty Reduction and Growth Facility 
program lapsed March 31, without going to a sixth review. 
-The GDRC widened its ban on the import of poultry 
products. 
-Employees of Lignes Aeriennes Congolaises (LAC) objected 
to the parastatal?s new partnership with a Spanish airline, 
Bravo Airlines. 
-President Kabila replaced the Central Bank?s Vice Governor 
and named new directors of two major national taxation 
entities. 
-President Kabila released USD 2 million to support 
hydroelectric power plant construction in two provinces. 
-Labor strife, including threatened strikes, continued in 
various public sectors. 
-The DRC?s Minister of Planning resigned March 16 from his 
post and political party, following the release of a draft 
Poverty Reduction Strategy Paper. 
-Three DRC provinces are facing a corn meal scarcity. 
-A World Bank?s audit team is investigating allegations of 
corruption within two DRC agencies responsible for 
administering donor-funded projects. 
-According to Post?s market basket survey, March consumer 
prices decreased by 0.6 percent, and the 12-month market 
basket inflation average is 9.6 percent.  End summary. 
 
AVIAN INFLUENZA 
--------------- 
 
2. (U) The GDRC has increased the number of countries from 
which it bans the import of poultry products.  The increase 
is in step with the World Health Organization?s expansion 
of the list of countries with confirmed outbreaks of the 
highly pathogenic avian influenza (HPAI). In mid-March, the 
GDRC sent samples from three suspected HPAI outbreaks in 
the DRC to a lab in Pretoria, South Africa; two samples 
were negative, but the GDRC has not received the results 
from the third sample. 
 
AVIATION 
-------- 
 
3. (U) The European Union has banned 50 Congolese 
commercial airlines from taking off or landing passenger or 
cargo airplanes in the EU or operating within EU airspace, 
pursuant to a European Commission civil aviation panel?s 
findings on air safety. The EU banned or restricted a total 
of 92 airlines.  Hewa Bora is the only Congolese airline 
that is not subject to a complete ban; it is permitted to 
operate one specific aircraft in Europe. 
 
4. (U) Employees of the parastatal Lignes Aeriennes 
Congolaises (formerly Air Zaire) are demanding that LAC 
withdraw from its partnership with the Spanish company 
Bravo.  LAC, which has been essentially defunct since the 
early 1990s, recently launched a partnership with Bravo, 
which brought a Boeing 767 to the DRC.  The employees, 
through their union, object to the partnership?s agreement 
to reduce LAC?s payroll, and they are claiming 13 years of 
salary arrears, despite the fact that they have not worked 
during this period. 
 
FORESTRY 
-------- 
 
5. (U) The Central African Forests Commission (COMIFAC) 
held a German-funded regional workshop in Kinshasa March 
15-17 to discuss financing and implementation of its forest 
conservation plans. 
 
INFRASTRUCTURE 
-------------- 
 
6. (U) DRC President Kabila released USD 2 million out of a 
promised USD 15 million to fund the construction of hydro- 
electric power plants in Katende, Western Kasai province 
and Kakobola, Bandundu province.  The total project cost 
for the plants is estimated at USD 30 million.  The GDRC 
has pledged USD 15 million, while the South African firm 
Clackson Power is to pay the other half. 
 
LABOR 
----- 
 
KINSHASA 00000566  002 OF 003 
 
 
 
7. (U) The employees of ONATRA (the Congolese port and 
western rail authority) are again threatening to strike 
over nonpayment of wages.  Employees have not received 
their February and March wages. 
 
8. (U) The employees of SNCC (the DRC?s eastern and 
southern rail transporter) are on strike to protest at 
least 14 months of salary arrears.  Employees of CMDC (the 
DRC?s nearly defunct sea transport parastatal) were on 
strike for two days to claim their wage arrears of 15 to 30 
months. 
 
PUBLIC FINANCE AND TAXATION 
--------------------------- 
 
9. The IMF allowed the DRC?s Poverty Reduction and Growth 
Facility program to lapse on March 31, rather than 
extending it through its latest possible date, June 11, 
2006.  The program?s end means that the DRC will not 
receive a final USD 39 million disbursement to the 
Congolese Central Bank (BCC).  The program began June 2002 
and successfully passed through five reviews, but the IMF 
determined that the GDRC would not be able to meet all 
program conditions in time to pass a sixth review.  The DRC 
and IMF are now in discussions for the setup of a staff- 
monitored program (septel to follow). 
 
10. (U) Alexis Thambwe Mwamba, the Minister of Planning, 
resigned from his post and political party (MLC) March 16. 
Before leaving office, the mixed commission that he chaired 
released the first draft of its Poverty Reduction Strategy 
Paper (PSRP), a necessary part of the GDRC?s efforts to 
arrive at the Heavily Indebted Poor Country?s ?completion 
point,? when a large lump-sum debt cancellation will occur. 
This draft must still be vetted and revised, based upon 
donors? group comments, and presented to the Council of 
Ministers for final GDRC approval, before it can be given 
to the IMF and the World Bank for approval.  Initial 
reactions by Congolese and international partners have 
identified several major flaws in the draft strategy, and 
at least for the time being, the draft has been ?withdrawn? 
for further review and revision. 
 
11. (U) President Kabila replaced the BCC Vice Governor and 
named new directors of DGI (the DRC?s income tax collection 
service), and DGRAD (the DRC?s administrative fees 
collection service).  The prior DGI and DGRAD directors 
were removed in late 2005 for alleged corruption and 
mismanagement, in the wake of a tax credit scandal.  All 
three appointees are members of the PPRD party; MLC members 
previously held the DGI and DGRAD positions. 
 
12. (U) A team from the World Bank?s Department of 
Institutional Integrity was in Kinshasa to examine alleged 
corruption and irregular practices at BCECO and UCOP, two 
GDRC agencies responsible for administering donor-funded 
anti-poverty projects. The Ministries of Finance and Budget 
oversee these agencies. 
 
TRADE 
----- 
 
13. (U) The United Nations Conference on Trade and 
Development (UNCTAD) held a workshop entitled ?The 
Elimination of Service Sector Export Barriers? March 12-15 
to promote multilateral trade and to discuss modernizing 
the DRC?s economic and commercial compliance with WTO 
accords. 
 
14. (U) Reports from the southern and central DRC provinces 
of Katanga, Western Kasai and Eastern Kasai indicate that 
the price of cornmeal, a dietary staple, has risen 
dramatically over the last month.  This increase is due to 
the Zambian government?s halt of maize exports ? Zambia is 
a major supplier of cornmeal to the DRC - and the National 
Railway Company?s (SNCC) inability to provide reliable 
transport from Katanga to the Kasai provinces (see labor). 
At the same time, thousands of tons of maize are rotting at 
the DRC river port of Lisala, Equateur province, because of 
insufficient Congo River transport. 
 
INFLATION 
--------- 
 
 
KINSHASA 00000566  003 OF 003 
 
 
15. (U) Post?s market basket survey recorded deflation of 
0.6 percent.  The inflation average for the last 12 months 
now stands at 9.6 percent. 
 
EXCHANGE RATE 
------------- 
 
16. (U) Week ending 
      02/28   03/1003/17   03/25 
CENTRAL BANK RATE432   439438   439 
PARALLEL MARKETS 
-KINSHASA440   445445   445 
-LUBUMBASHI450   450450   450 
-MBUJIMAYI450   450450   450 
-KISANGANI450   450450   450 
-GOMA450   450450   480 
-BUKAVU450   450450   450 
 
MEECE 
 
UKAVUQQQ450Q   450Q450Q   450 
 
MEECE