DRC APRIL ECONOMIC REVIEW

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