ECONOMIC REPORT - AUG 05 THROUGH AUG 12

UNCLAS SECTION 01 OF 03 KINSHASA 001540 SIPDIS E.O. 12958: N/A TAGS: EAGR EAID EAIR ECON EFIN EIND ENRG EPET PGOV PREL CG SUBJECT: ECONOMIC REPORT - AUG 05 THROUGH AUG 12 SUMMARY ¶1. Prices remain stable despite the collapse of the Mai- Ndombe bridge. Exchange rates are very stable. COPIREP will pay out USD 11.5 million in severance packages to liquidate three Congolese banks. The government of the People's Republic of China is funding construction of a 150 bed hospital in the N'Djili district of Kinshasa. Unidentified thieves stole 3,000 meters of electrical transmission cable from SNEL lines, disrupting power supply to Kisangani. The African Development Fund will distribute USD 36.3 million in loans and grants to aid agriculture in Bas- Congo and Bandundu provinces. Norway agreed to forgive USD 700,000 of the DRC's debt. A cholera epidemic has infected around 600 and killed 56 in Nord-Kivu province. MONETARY AND PRICE UPDATE ¶2. Prices have only risen approximately 25 percent on certain food staples. Completion of repairs on the Mai- Ndombe bridge will alleviated upward pressures. ¶3. Exchange rates remain very stable. Effects of the recent BCD liquidation appear to have run their course on the Kinshasa market. Rates remain slightly higher in the east due to continuing tensions. BANKING COPIREP TO DISTRIBUTE USD 11.5 MILLION IN SEVERANCE PAY ¶4. Le Comite de la Reforme des Enterprises Publique (COPIREP, a World Bank-funded corporation designed to reform the DRC's public enterprises) will pay out USD 11.5 million in severance packages to workers of three banks ordered liquidated by the Banque Centrale du Congo (BCC). The Nouvelle Banque de Kinshasa (NBK), Banque Congolaise du Commerce Exterieur (BCCE),and Banque de Credit Agricole (BCA) are being liquidated as part of the BCC's restructuring of the DRC's banking sector. INFRASTRUCTURE CHINESE FUND HOSPITAL IN N'DJILI ¶5. The People's Republic of China has funded the construction of a 150 bed hospital in the N'Djili district of Kinshasa. A Chinese engineering firm will build the hospital at a cost of USD 6 million. 3,000 METERS OF ELECTRICAL CABLE STOLEN ¶6. Local press reports that approximately 3,000 meters of low-voltage electrical transmission cable was unearthed, cut, and stolen near Kisangani, Orientale province. La Societe National d'Electricite (SNEL) claims it is currently unable to replace the stolen cable, and says that Kisangani is at risk for power outages as a result of the theft. MBANDAKA AIRPORT REPAIRS COMPLETED ¶7. Mbandaka airport commander Gedeon Mangolopa reported that Mbandaka airport, which was damaged during the civil war, has been restored and is now in conformity with Congolese air navigation safety standards. Repairs were financed from the airport's operating revenues. Work consisted primarily of repairs to the communications system and control tower improvements. VHF and HF radios were installed for air traffic control and communication, and navigational beacons were replaced. AGRICULTURE SOUTH KIVU SUGAR MILL REOPENS ¶8. The Kiliba sugar mill in South Kivu province has reopened with USD 25,000 in GDRC financial support after several years of inactivity. The mill had closed due to regional insecurity and mismanagement of funds. Kiliba once employed some 3,500 workers, and will reopen with a staff of 147. PETROLEUM GASOLINE SHORTAGE IN KISANGANI ¶9. Local press reports that Kisangani is experiencing a severe gasoline shortage due to transportation problems on the Congo River. Low river water levels have prevented fuel barges from reaching the city. Prices per liter of gasoline have already moved from FC 400 to FC 700, and will likely continue to rise. AID AFRICAN DEVELOPMENT FUND AIDS DRC AGRICULTURE ¶10. The African Development Fund will provide USD 36.3 million to support agricultural reform and expansion in the DRC. USD 26.1 million in loans and 10.2 million in grants will be used to repair agricultural access routes, rehabilitate market infrastructure, and expand institutional capacities. The Fund will also distribute seeds and provide training and rural planning assistance. The aid is intended to ensure a stable food supply in the provinces of Bandundu and Bas- Congo. NORWAY FORGIVES USD 700,000 IN DEBT ¶11. The Norwegian Ambassador and DRC Minister of Finance Andre-Phillipe Futa signed an agreement to annul some USD 700,000 of the DRC's debt to Norway in conformity with the DRC's HIPC program. HEALTH WORLD BANK ENVOY INSPECTS DRC HEALTH SECTOR ¶12. Eva Jarawan, a World Bank public health specialist is in the DRC on a two-week mission to assess the state of the country's health care infrastructure. The inspection mission is part of the World Bank's USD 45 million Programme Multisectoriel de Rehabilitation et Reconstruction (PMURR). CHOLERA EPIDEMIC IN EASTERN DRC ¶13. Local press reports that since June 2004, approximately 600 cases of cholera have been reported, with 56 fatalities, in the Bisiye mining district near Walikale, Nord-Kivu province. Local health infrastructure is reportedly strained by the outbreak. Additional medical supplies and personnel have been requested from Goma. Local authorities have launched a campaign to sensitize the local population to preventive hygiene measures. ¶14. INFLATION BY CATEGORY (IN PERCENT) WEEK ENDING 7/16 7/23 7/30 8/6 FOOD 2 -2 2 -1 BEVERAGE 0 0 0 0 NON-FOOD 1 8 0 0 CLOTHING 0 0 0 0 RENT 0 0 0 0 TRANSPORT 0 0 0 0 SCHOOL COSTS 0 0 0 0 UTILITIES 0 0 0 0 COMBINED FIGURES WEEKLY INFLATION 0.9 -0.6 0.9 -0.2 MONTHLY INFLATION 0.8 0.4 1.2 -0.2 ¶15. EXCHANGE RATE DEVELOPMENTS 7/16 7/23 7/30 8/6 CENTRAL BANK RATE 389.5709 388.1864 389.1094 389.1157 PARALLEL MARKET -KINSHASA 390-395 388-398 385-390 385-390 -LUBUMBASHI 380-390 385-395 380-385 380-385 -MBUJI MAYI 380-385 380-385 380-385 380-385 -KISANGANI 400-410 400-410 400-410 375-385 -GOMA 400-410 400-410 400-410 400-410 -BUKAVU 400-410 400-410 400-410 400-410 MEECE