WEEKLY ECONOMIC REPORT - WEEK OF DECEMBER 11 -

UNCLAS SECTION 01 OF 02 KINSHASA 008385

SIPDIS


E.O. 12958: N/A
TAGS: ECON EFIN EPET EMIN KSAC AMGT PREL CG
SUBJECT: WEEKLY ECONOMIC REPORT - WEEK OF DECEMBER 11 -
DECEMBER 17



1. (U) SUMMARY: Gasoline and diesel prices rose on
December 11, and public transportation fares went up 50
percent on the 13th. Kinshasa's motor fuel supplies
were adequate but the GDRC twice closed service
stations without providing advance notice, causing
confusion. The Congolese franc weakened on the parallel
market to about 130 Congolese francs per US dollar.
Hewa Bora Airways acquired a Lockheed 1011 aircraft.
Another new GSM cellular phone service was launched on
December 15. Two men were convicted of the December
7th attack on Central Bank Governor Masangu in which
his bodyguard was killed. They were sentenced to death
by a military court, and were executed in public, along
with eight others, on December 14. Inflation rose
sharply following the increase in fuel prices and
public transit fares. END SUMMARY.




MOTOR FUEL



2. (U) The price of gasoline rose from 45 congolese
francs (fc) to 70 fc and the price of diesel fuel rose
from 40 fc to 66 fc on Monday, December 11. (On
January 1, 2000, gasoline cost only 3.1 fc per liter;
over the course of the year fuel prices have increased
over 2000 percent.) Fuel stocks at SEP, the national
distribution company, were adequate and no lines formed
except on Wednesday and Sunday, when stations were
closed.



3. (U) Fuel supplies currently in Kinshasa came from a
new supplier. Rumors that this was a substandard
product circulated throughout the city and were
repeated in the press. The GDRC closed stations on
Wednesday in order to perform tests on the quality of
gasoline. The GDRC announced that the tests confirmed
the quality of the product, although some contacts
claim they also showed a lower lead content than past
deliveries to Kinshasa.



4. Sunday's closure is part of a new policy to reduce
consumption. Industry contacts believe this is
appropriate, and say it was part of the package of
measures attached to the price hike. The GDRC,
however, made no public announcement about the Sunday
closure, leaving motorists angry and confused. The
price of black market fuel hit a new high on Sunday of
about 200 fc per liter.


MONETARY UPDATE/EXCHANGE RATE



5. (U) The Congolese franc weakened on the parallel
market to about 130 Congolese francs per US dollar.
The official exchange rate remains 50 francs per
dollar.


TRANSPORTATION



6. (U) Following the fuel price hike Monday morning,
minibus and taxi owners kept their vehicles off the
street pending a fare hike, leaving Kinshasa's
commuters to make the long walk into the center city.
On Tuesday evening, December 12, the GDRC raised public
transportation fares 50 percent.



7. (U) The delivery of new and renewed drivers licenses
was halted when the company contracted to produce them
ran out of necessary imported materials. This follows
recent similar interruptions in the supply of license
plates and tax stamps.


LOCAL ECONOMIC NEWS



8. (U) Hewa Bora Airways (formerly Congo Airlines or
CAL) acquired from Delta Airlines a Lockheed 1011
aircraft for use on passenger flights to Europe. A
second L1011 will be delivered in the first quarter of

2001.


TELECOMMUNICATIONS



9. (U) Cellular phone service provider SAIT launched
its "Oasis" GSM service on December 15. The GDRC's
Office of Post and Telecommunications announced that it
would provide cellular phone service in partnership
with ZIDCO Holdings, a Zimbabwean company.


SECURITY



10. (U) On December 11 the Military Court sentenced two
men to death for the December 7 attack on Central Bank
Governor Jean-Claude Masangu. (Masangu's bodyguard and
another man were killed in the attack.) On December 14
eight convicted men, including the two convicted of the
Masangu attack, were publicly executed as a warning to
other undisciplined members of security forces.



11. A local newspaper reported that Masangu was rumored
to have offered his resignation following the attack.
Masangu wrote a letter to the paper's editor denying
the report and declaring his firm intention to continue
to defend the Congolese franc and to fight against
inflation.

12. (U) INFLATION FOR THE WEEK OF DECEMBER 4
INFLATION BY CATEGORY (IN PERCENT)
WEEK ENDING 11/30 12/08 12/15
FOOD 3 9 13
BEVERAGES 0 0 4
NON-FOOD 2 9 2
CLOTHING 0 0 0
RENTS 23 0 0
TRANSPORTATION 0 0 50
SCHOOL COSTS 0 0 0
UTILITIES 0 0 0
COMBINED FIGURES
WEEKLY 3.5 3.6 18.1
MONTH TO DATE 8.6 3.5 22.0


Transportation cost increases and rain increased the
price of locally produced food. Beer prices went up
over 10 percent.


November inflation: 8.6 percent
Year to date (end November) 487 percent
Last 12 months inflation (end November ): 605 percent
1999 Inflation: 333 percent





13. (U) EXCHANGE RATE DEVELOPMENTS


Exchange rates in Congo francs per US dollar
1/30 12/08 12/15
CENTRAL BANK RATE 50 50 50
PARALLEL MARKET
-KINSHASA 117-122 120-125 127-132
-LUBUMBASHI 112-115 118-121 128-131
-MBUJI MAYI 114-117 119-122 127-130


SWING