Identifier
Created
Classification
Origin
06KINSHASA68
2006-01-13 11:25:00
UNCLASSIFIED
Embassy Kinshasa
Cable title:
DECEMBER ECONOMIC REVIEW
how-toThis record is a partial extract of the original cable. The full text of the original cable is not available.
UNCLAS KINSHASA 000068
SIPDIS
DEPT FOR DRL/IL-LHOLT AND AF/RSA-MHARPOLE
TRANSPORTATION FOR FAA-EJONES
E.O. 12958: N/A
TAGS: ECON EFIN ELAB EMIN EAIR PGOV CG AID
SUBJECT: DECEMBER ECONOMIC REVIEW
REF: A. 05 KINSHASA 2079; B. 05 KINSHASA 2113
UNCLAS KINSHASA 000068
SIPDIS
DEPT FOR DRL/IL-LHOLT AND AF/RSA-MHARPOLE
TRANSPORTATION FOR FAA-EJONES
E.O. 12958: N/A
TAGS: ECON EFIN ELAB EMIN EAIR PGOV CG AID
SUBJECT: DECEMBER ECONOMIC REVIEW
REF: A. 05 KINSHASA 2079; B. 05 KINSHASA 2113
1. (U) SUMMARY
--------------
- USG debt relief for the DRC has been extended through
March 2006.
- The World Bank approved two grants totaling USD 215
million to support the implementation of the GDRC's
economic program, reconstruction and rehabilitation.
- A UN-organized audit of six Congolese airlines
concluded in December, and the results are expected this
month.
- The GDRC is only partially honoring its 2005 strike-
ending agreements with teachers and civil servants. At
least one teachers' union is threatening to renew its
strike after January 20 if the GDRC does not meet the
union's demands. Police and military also continue to
lodge compensation complaints.
- The GDRC's official diamond exports and per carat value
through November 2005 increased over the same 2004 period.
- MIBA, the diamond mining parastatal, avoided a strike.
- Parliament has neither promulgated the 2006 budget nor
approved provisional spending.
- The GDRC has completed one stage of its internal public
debt settlement.
- The GDRC authorities confiscated several tons of
minerals that were allegedly being illegally exported at a
Ugandan border crossing.
- The DRC's main maritime port is facing simultaneous
problems of a strike and a grossly exceeded container
capacity.
- The GDRC reported 23.1 percent year-end inflation.
End summary.
AVIATION
--------------
2. (U) The UN's Joint Logistics Center (UNJLC) aviation
audit concluded in December. The audit team inspected six
Congolese airlines to determine if they comply with IATA
(International Air Transport Association) certification
standards. A report of the findings may become public
this month.
3. (U) A January 3 Congolese airline crash in Ituri
District killed 3 passengers.
LABOR
--------------
4. (U) The GDRC is only partially honoring its 2005 strike-
ending agreements with teachers and civil servants.
Teachers and their unions state that the government has
not paid all teachers through December 2005, and that none
have received promised raises. At least one union has
announced that teachers will strike if they do not receive
salary increases pursuant to the 2004 Mbudi accord, which
set a minimum USD 208 monthly salary for government
employees, but which the GDRC has never ratified.
5. (U) Kinshasa-based civil servants in all ministries
received their salary and bonus payments through December,
although some employees in the Finance, Budget, and
Commerce Ministries told Econ FSNs that they had received
larger bonuses than those in other ministries. Employees
in other provinces await their November and December
remuneration. Consequently, civil servants in at least one
eastern city are striking.
6. (U) Police and military, at least in Kinshasa, received
food allowances and salaries through December.
7. (U) Employees of ONATRA, the DRC's port authority, are
on strike to protest a January 3 presidential decree
declaring that OFIDA (DRC's customs body) is now the sole
operator and collector of customs and excise taxes at all
border posts. Thus, ONATRA loses direct control over its
income stream and must wait for the GDRC to retrocede its
share, thereby resulting in a reduced cash flow. Many
ONATRA employees believe that they will lose jobs as a
result. The strike has essentially shut down the port of
Matadi, and thus no ships are docking.
MINING
--------------
8. (U) According to GDRC statistics, diamond exports
through November 2005 increased by 11 percent over the
same 2004 period, despite a 13 percent one-month decrease
in diamond exports from October to November. Total export
volume through November was 29.6 million carats. Total
evaluated price per carat (both gem and industrial
quality) increased by 11.15 percent over the 2004 period
with a total evaluated value of nearly USD 815 million.
9. (U) The GDRC is hosting a Kimberley Process Alluvial
Mining Sub-group meeting January 30-31 in its capacity as
the Central and South African Coordinator.
10. (U) MIBA, the GDRC's diamond mining parastatal,
negotiated with labor representatives to avert a
threatened late December strike. Through November, its
official production, which consists primarily of
industrial diamonds, had decreased by more than one-third
over 2004 totals.
11. (U) DRC law enforcement authorities seized several
tons of coltan and cassiterite that were allegedly being
illegally exported December 5 at a major customs post on
the Ugandan border (reftel A).
PUBLIC FINANCE AND TAXATION
--------------
12. (U) November 30, the DRC agreed to amend the September
2005 debt relief agreement with the USG, extending through
March 2006 the earlier period of forgiveness (from July
2003 through June 2005).
13. (U) December 8, the World Bank (WB) approved a USD 90
million grant to support the implementation of the GDRC's
transitional economic programs and USD 125 million for the
ongoing Emergency Multi-sector Rehabilitation and
Reconstruction program. The USG abstained from the vote.
14. (U) The Council of Ministers approved the proposed USD
2.16 billion 2006 budget November 25, but the Parliament
has not yet done so (reftel B). The lower house has
approved the budget, but Senate approval is pending.
Despite the resulting funding gap that began January 1,
the GDRC has not yet approved interim funding. (Note: A
January 11 presidential decree convoked an extraordinary
session of Parliament, during which the budget issue is
expected to be resolved. End note.)
15. (U) The GDRC completed the first stage of its World
Bank-funded public commercial internal debt settlement,
having paid all creditors entitled to USD 50,000 or less.
The GDRC must next fund and schedule payments for
creditors owed more than USD 50,000.
16. (U) The GDRC paid USD 11.5 million in World Bank-
funded severance to employees of banks closed from 1999-
2001 and liquidated after 2003, under the WB's economic
restructuring program.
TRANSPORTATION
--------------
17. (U) The DRC's main maritime port, Matadi, has 2000
containers in excess of its 3500 container capacity, in
part due to minimal rail service and a lack of functioning
handling equipment. The railway system is now
transporting only ten percent of Matadi's cargo, as a
result of long-neglected maintenance of the rail and
railcars.
INFLATION
--------------
18. (U) 2005 Inflation, Post's Estimate: 23 percent
2005 inflation, Central Bank's Estimate: 22.1 percent
EXCHANGE RATE DEVELOPMENTS
--------------
19. (U) Week ending 12/9 12/16 12/23 12/31
Central Bank Rate 438.69 436.75 431.03 431.28
Kinshasa 440-445 435-440 430-435 420-425
Lubumbashi 450-460 445-455 440-450 440-450
Mbujimayi 440-450 430-435 430-435 430-435
Kisangani 450-460 460-470 460-470 460-470
Goma 470-480 460-470 460-470 460-470
Bukavu 470-480 460-470 460-470 460-470
According to preliminary Central Bank figures, the 2005
average official rate was 474, and the parallel market
average rate was 473.
MEECE
NNNN
SIPDIS
DEPT FOR DRL/IL-LHOLT AND AF/RSA-MHARPOLE
TRANSPORTATION FOR FAA-EJONES
E.O. 12958: N/A
TAGS: ECON EFIN ELAB EMIN EAIR PGOV CG AID
SUBJECT: DECEMBER ECONOMIC REVIEW
REF: A. 05 KINSHASA 2079; B. 05 KINSHASA 2113
1. (U) SUMMARY
--------------
- USG debt relief for the DRC has been extended through
March 2006.
- The World Bank approved two grants totaling USD 215
million to support the implementation of the GDRC's
economic program, reconstruction and rehabilitation.
- A UN-organized audit of six Congolese airlines
concluded in December, and the results are expected this
month.
- The GDRC is only partially honoring its 2005 strike-
ending agreements with teachers and civil servants. At
least one teachers' union is threatening to renew its
strike after January 20 if the GDRC does not meet the
union's demands. Police and military also continue to
lodge compensation complaints.
- The GDRC's official diamond exports and per carat value
through November 2005 increased over the same 2004 period.
- MIBA, the diamond mining parastatal, avoided a strike.
- Parliament has neither promulgated the 2006 budget nor
approved provisional spending.
- The GDRC has completed one stage of its internal public
debt settlement.
- The GDRC authorities confiscated several tons of
minerals that were allegedly being illegally exported at a
Ugandan border crossing.
- The DRC's main maritime port is facing simultaneous
problems of a strike and a grossly exceeded container
capacity.
- The GDRC reported 23.1 percent year-end inflation.
End summary.
AVIATION
--------------
2. (U) The UN's Joint Logistics Center (UNJLC) aviation
audit concluded in December. The audit team inspected six
Congolese airlines to determine if they comply with IATA
(International Air Transport Association) certification
standards. A report of the findings may become public
this month.
3. (U) A January 3 Congolese airline crash in Ituri
District killed 3 passengers.
LABOR
--------------
4. (U) The GDRC is only partially honoring its 2005 strike-
ending agreements with teachers and civil servants.
Teachers and their unions state that the government has
not paid all teachers through December 2005, and that none
have received promised raises. At least one union has
announced that teachers will strike if they do not receive
salary increases pursuant to the 2004 Mbudi accord, which
set a minimum USD 208 monthly salary for government
employees, but which the GDRC has never ratified.
5. (U) Kinshasa-based civil servants in all ministries
received their salary and bonus payments through December,
although some employees in the Finance, Budget, and
Commerce Ministries told Econ FSNs that they had received
larger bonuses than those in other ministries. Employees
in other provinces await their November and December
remuneration. Consequently, civil servants in at least one
eastern city are striking.
6. (U) Police and military, at least in Kinshasa, received
food allowances and salaries through December.
7. (U) Employees of ONATRA, the DRC's port authority, are
on strike to protest a January 3 presidential decree
declaring that OFIDA (DRC's customs body) is now the sole
operator and collector of customs and excise taxes at all
border posts. Thus, ONATRA loses direct control over its
income stream and must wait for the GDRC to retrocede its
share, thereby resulting in a reduced cash flow. Many
ONATRA employees believe that they will lose jobs as a
result. The strike has essentially shut down the port of
Matadi, and thus no ships are docking.
MINING
--------------
8. (U) According to GDRC statistics, diamond exports
through November 2005 increased by 11 percent over the
same 2004 period, despite a 13 percent one-month decrease
in diamond exports from October to November. Total export
volume through November was 29.6 million carats. Total
evaluated price per carat (both gem and industrial
quality) increased by 11.15 percent over the 2004 period
with a total evaluated value of nearly USD 815 million.
9. (U) The GDRC is hosting a Kimberley Process Alluvial
Mining Sub-group meeting January 30-31 in its capacity as
the Central and South African Coordinator.
10. (U) MIBA, the GDRC's diamond mining parastatal,
negotiated with labor representatives to avert a
threatened late December strike. Through November, its
official production, which consists primarily of
industrial diamonds, had decreased by more than one-third
over 2004 totals.
11. (U) DRC law enforcement authorities seized several
tons of coltan and cassiterite that were allegedly being
illegally exported December 5 at a major customs post on
the Ugandan border (reftel A).
PUBLIC FINANCE AND TAXATION
--------------
12. (U) November 30, the DRC agreed to amend the September
2005 debt relief agreement with the USG, extending through
March 2006 the earlier period of forgiveness (from July
2003 through June 2005).
13. (U) December 8, the World Bank (WB) approved a USD 90
million grant to support the implementation of the GDRC's
transitional economic programs and USD 125 million for the
ongoing Emergency Multi-sector Rehabilitation and
Reconstruction program. The USG abstained from the vote.
14. (U) The Council of Ministers approved the proposed USD
2.16 billion 2006 budget November 25, but the Parliament
has not yet done so (reftel B). The lower house has
approved the budget, but Senate approval is pending.
Despite the resulting funding gap that began January 1,
the GDRC has not yet approved interim funding. (Note: A
January 11 presidential decree convoked an extraordinary
session of Parliament, during which the budget issue is
expected to be resolved. End note.)
15. (U) The GDRC completed the first stage of its World
Bank-funded public commercial internal debt settlement,
having paid all creditors entitled to USD 50,000 or less.
The GDRC must next fund and schedule payments for
creditors owed more than USD 50,000.
16. (U) The GDRC paid USD 11.5 million in World Bank-
funded severance to employees of banks closed from 1999-
2001 and liquidated after 2003, under the WB's economic
restructuring program.
TRANSPORTATION
--------------
17. (U) The DRC's main maritime port, Matadi, has 2000
containers in excess of its 3500 container capacity, in
part due to minimal rail service and a lack of functioning
handling equipment. The railway system is now
transporting only ten percent of Matadi's cargo, as a
result of long-neglected maintenance of the rail and
railcars.
INFLATION
--------------
18. (U) 2005 Inflation, Post's Estimate: 23 percent
2005 inflation, Central Bank's Estimate: 22.1 percent
EXCHANGE RATE DEVELOPMENTS
--------------
19. (U) Week ending 12/9 12/16 12/23 12/31
Central Bank Rate 438.69 436.75 431.03 431.28
Kinshasa 440-445 435-440 430-435 420-425
Lubumbashi 450-460 445-455 440-450 440-450
Mbujimayi 440-450 430-435 430-435 430-435
Kisangani 450-460 460-470 460-470 460-470
Goma 470-480 460-470 460-470 460-470
Bukavu 470-480 460-470 460-470 460-470
According to preliminary Central Bank figures, the 2005
average official rate was 474, and the parallel market
average rate was 473.
MEECE
NNNN