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Viewing cable 06KINSHASA806, DRC APRIL ECONOMIC REVIEW

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Reference ID Created Released Classification Origin
06KINSHASA806 2006-05-22 16:10 2011-08-25 00:00 UNCLASSIFIED Embassy Kinshasa
VZCZCXRO3096
RR RUEHDU RUEHGI RUEHJO RUEHMR
DE RUEHKI #0806/01 1421610
ZNR UUUUU ZZH
R 221610Z MAY 06
FM AMEMBASSY KINSHASA
TO RUEHC/SECSTATE WASHDC 3921
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 02 KINSHASA 000806 
 
SIPDIS 
 
SIPDIS 
 
DEPT FOR DRL/IL-LHOLT AND AF/RSA-MHARPOLE 
 
E.O.  12958: N/A 
TAGS: ECON EFIN ENRG ELAB EAIR EMIN ETRD PGOV CG
SUBJECT: DRC APRIL ECONOMIC REVIEW 
 
 
1. (U) Summary 
-------------- 
 
- Plane crashes continue to plague the DRC's aviation 
industry. 
- Belgium will lead a donor effort to help the DRC 
restructure its civil service. 
- A Canadian company launched rehabilitation of one Inga Dam 
turbine as part of a multi-year project. 
-  Employees of the DRC's customs service and Ministry of 
Tourism threatened to strike over non-payment of benefits. 
- Gecamines' CEO announced plans to reduce the number of 
employees. 
- Several high-level GDRC officials participated in the 
World Bank/IMF's Spring meetings in Washington, D.C. 
-  The GDRC is on the verge of granting a preferential 
import tariff to a Kinshasa-based, Greek-owned industrial 
bakery. 
- The DRC's income tax collection agency exceeded its first 
quarter revenue projection by more than twenty percent. 
 
AVIATION 
-------- 
 
2. (U) Three commercial aircraft, two of them U.S.-built, 
crashed during the week of April 24.  April 26 an Antonov 26 
crashed near Lubutu, Maniema province, killing five of 6 
people aboard; on the same day a Convair 58 cargo plane 
crashed near Amisi, Maniema province, killing all eight 
people onboard; and on April 28 a Cessna 208 on a World Food 
Program mission crashed in the Ruwenzori Mountains, killing 
all three persons onboard.  This brings to eleven the number 
of commercial aircraft that have crashed in the DRC in 2006. 
Fifteen commercial air crashes were reported during 2005. 
 
CIVIL SERVICE 
------------- 
 
3. (U) The Belgian Technical Cooperation Agency (CTB) has 
agreed to lead a project to restructure the DRC's civil 
service, with an estimated cost of 10 million euros. 
 
ENERGY 
------ 
 
4. (U) MagEnergy, Inc, a Canadian-based company launched 
rehabilitation of turbines at the Inga II Dam, in 
partnership with the DRC's electricity parastatal, SNEL. In 
the first phase, MagEnergy will provide USD 12 million to 
refurbish one turbine, and in the second phase, it will 
finance the rehabilitation of four turbines, at an estimated 
cost of USD 110 million. SNEL and MagEnergy estimate that 
the projects will increase Inga II's production from about 
360 MW to 900 MW. 
 
5. (U) The Minister of Economy signed a decree that will 
allow SNEL to give preferential electricity rates to 16 
public and private companies, thereby substantially reducing 
their bills and SNEL's official income.  Many SNEL employees 
have publicly expressed their opposition to this decision. 
 
LABOR 
----- 
 
6. (U) Employees of the DRC's customs office (OFIDA) 
threatened to strike over non-payment of their performance 
bonus for the last quarter of 2005, which they were supposed 
to receive January 6.  Employees at the Regie des Voies 
Aeriennes (RVA), the DRC's airport authority, threatened to 
strike for the non-payment of promised school allowance. 
 
7. (U) Ministry of Tourism employees have been striking 
since April 12 to press the Tourism Minister to oppose the 
Economic and Finance Commission's plan to take control of 
the Ministry's revenues and retrocede only an operational 
budget.  The Ministry currently keeps 80 percent of its 
proceeds. 
 
MINING 
------ 
 
8. (U) The CEO of Gecamines, the state mining company, 
announced plans to reduce the number of employees from 
12,000 to 4,000, although Gecamines does not have any 
budgeted funds to pay the mandatory severance packages. 
 
KINSHASA 00000806  002 OF 002 
 
 
 
9. (U) A Chinese company, Covec, entered into a joint 
venture agreement with Gecamines to restart exploitation of 
a copper mine in Katanga province. Covec has a 72 percent 
interest in the joint venture and has already reportedly 
contributed USD 4 million to the project. 
 
PUBLIC FINANCE 
-------------- 
 
10. (U) The GDRC is expected to grant a preferential wheat 
flour import tariff to the Union de Panification de Kinshasa 
(UPAK), a Greek-owned industrial bakery. UPAK has asked the 
GDRC to decrease its tariff on imported flour from 35.6 
percent to 3 percent.  UPAK would be the only flour importer 
to receive this tariff reduction. (Note: As a result, the 
flour UPAK imports would cost less than what it buys from 
the U.S. company Midema/Seaboard, which has milling 
operations in the DRC. End note.) 
 
11. (U) The Ministers of Finance and Budget, and the 
Governor of Central Bank attended the Spring IMF/World Bank 
meetings in Washington, D.C. 
 
12. (U) The DRC's Council of Ministers approved the merger 
of two commercial banks - the private Congolese Bank (CB) 
and the publicly-owned Congolese Bank Union (UBC). 
 
13. (U) Japan has donated USD 3.2 million of rice to the 
GDRC for monetization, to support reconstruction and 
rehabilitation projects. 
 
14. (U) April 7, Hubert Efole replaced Pierre Maloka as the 
Minister of Economy.  Maloka had only held the position, a 
RCD/G post, since November 2005. 
 
INFLATION 
--------- 
 
15. (U) Post's market basket survey recorded an inflation of 
0.9 percent this month.  The twelve-month inflation average 
now stands at 0.0 percent. 
 
EXCHANGE RATE 
------------- 
 
16.  (U) Week ending     04/08     04/15     4/22      4/29 
 
CENTRAL BANK RATE        441       440       440       439 
PARALLEL MARKETS: 
KINSHASA                 440       440       440       435 
LUBUMBASHI               440       440       440       440 
MBUJIMAYI                440       440       440       440 
KISANGANI                440       440       440       440 
GOMA                     440       440       440       440 
BUKAVU                   440       440       440       440 
 
MEECE