WORLD BANK REVEALS IMMEDIATE FUNDING PLANS

UNCLAS KINSHASA 000177 SIPDIS SIPDIS SENSITIVE E.O. 12958: N/A TAGS: EFIN ECON PGOV EAID CG SUBJECT: WORLD BANK REVEALS IMMEDIATE FUNDING PLANS REF: 05 KINSHASA 1193 ¶1. (U) Summary. The World Bank plans to spend USD 140-180 million on immediate reconstruction projects in the DRC. The DRC World Bank (WB) office aims to fund rapid, visible impact projects in order to help the GDRC begin meeting the population's expectations quickly. The WB Board will review the proposals this spring. Its programming may include balance of payments support; funds to complete internal debt repayments; trash removal, road rehabilitation and an anti-malaria effort in Kinshasa; and aid to street children. End summary. ¶2. (SBU) The World Bank (WB) shared its immediate funding priorities during a January 31 meeting between Xavier de Victor, the WB's DRC Deputy Country Director, and USAID's DRC Director and Program Officer. De Victor said the "Emergency Project" program is in the design phase and that the WB wants to present a proposal to the Board in March or April. Its intent is to have activities on the ground in Kinshasa as soon as possible to provide a tangible and visible "peace dividend" to the population. ¶3. (SBU) De Victor said a WB design team has spent several weeks in Kinshasa working with a multi-functional team of 20 staff from various DRC ministries to develop the proposals. He said the design is "well-advanced," but the Office of the WB President has not yet cleared on it. When asked if the President's clearance was normal procedure for a project such as this, Xavier responded such procedure may be due to high-level USG interest in this project in Washington, but he did not give details. Project Components -------------- ¶4. (SBU) The WB plans to provide USD 30-50 million in balance of payments support to the GDRC, but it has not yet decided whether to support parastatals, or the private sector. De Victor is leaning toward the latter. (Comment: Post agrees the private sector is currently in a better position to absorb such support. End comment.) Should the support go through the private sector, the Congolese Central Bank would receive the funds and sell the foreign exchange to Congolese private sector importers, generating USD 30-50 million in counterpart funds. The proceeds would then be used to pay the operating costs of schools around the country. ¶5. (SBU) Payment of the remaining internal debt is another priority in order to help stimulate the private sector (reftel). The GDRC and the Congolese Chamber of Commerce agreed in 2005 on a discount rate of 77 percent on existing debt, with 50 percent of the balance to be repaid in 2005 and 25 percent paid each in 2006 and 2007. The GDRC only made the 2005 payments. (Comment: This delay seemed to result at least in part from a disagreement between the Ministry of Finance and OGEDEP, the DRC's public debt management agency, over control of the program. End comment.) The estimated cost for the remaining 2006 and 2007 repayments is USD 50 million. ¶6. (SBU) The WB is considering offering three contracts for about USD 10 million each for urban road repair in Kinshasa province. They believe the contracts will be bundled so that they would attract Chinese bidders. Groundbreaking could not take place before December ¶2007. De Victor asked for USG assistance in advertising these tenders once the project is approved. ¶7. (U) The WB also has a rather preliminary plan to support garbage removal in Kinshasa province's urban areas, with a USD 10-20 million budget. The idea seems to be to support a labor-intensive project, but as yet there is no disposal solution. (Comment: Kinshasa has no available landfills, and creating one would involve extensive environmental due diligence and training. Consideration should be given to a recycling program as an alternative. End comment.) ¶8. (U) Two other proposed projects are indoor DDT spraying and support for street children. The DDT project's goal is to combat malaria, at a cost of USD 15 million. The proposal is to spray the inside of all Kinshasa homes with DDT three times before the end of 2007, although large logistical and management challenges to this effort exist. The WB is also interested in budgeting USD five to six million to provide care for some of the thousands of DRC's street children. (Note: Several viable models exist for the latter program, although opinions vary on the overall policy approach. End note.) COMMENT -------------- ¶9. (SBU) The WB will obviously have many issues to work through to get this multi-faceted program off the ground. Some have to do with public expenditure management, some are environmental and some are sectoral policy related (e.g., debates on whether street children should receive alternative care or be reunited with families). Many of the projects appear designed to support the newly-elected government, as they coincide with the five reconstruction/ development priorities President Kabila has announced. However, the program selection process may be more complicated than necessary; easing the design and approval process would still permit programming that provides a substantial peace dividend. End Comment.