DRC APRIL MONTHLY ECONOMIC REVIEW

UNCLAS SECTION 01 OF 02 KINSHASA 000516 SIPDIS SIPDIS E.O. 12958: N/A TAGS: EFIN EMIN ELAB EAIR ECON PGOV CG SUBJECT: DRC APRIL MONTHLY ECONOMIC REVIEW REF: A) KINSHASA 408 B) KINSHASA 181 ¶1. (U) Summary. - The GDRC has not yet promulgated a 2007 budget. - The GDRC fired the heads of the electricity and water parastatals, citing the growing supply shortages. - Employees of the DRC's diamond mining parastatal went on strike. - A review of 60 pre-Transition mining contracts is scheduled to begin May 15. - According to Post's market basket survey, April consumer prices increased nominally, by about 0.3 percent compared to May, and the Congolese Franc (CF) remained stable. End summary. Aviation -------------- ¶2. (U) The CEO of Congolese airline Hewa Bora says the company will resume flights from Kinshasa to Belgium in June and begin service to Dubai, using a newly-obtained Boeing 767 that replaced a Lockheed aircraft. Budget/Finance -------------- ¶3. (U) The GDRC is still in the process of drafting its 2007 budget, and estimates promulgation by the end of July. Budget Minister Adolphe Muzitu announced May 5 that the budget will total about USD 2.15 billion, 60 percent funded with domestic revenue, although this total may include unfunded investment line items. ¶4. (U) The DRC's Central Bank reserves remain at two and a half weeks (USD 162.2 million),against an IMF target of about four weeks. ¶5. (U) The Ministry of Finance granted businesses only an additional week to file income tax returns in response to the Congolese Chamber of Commerce's (FEC) request for a one-month extension after the March violence in Kinshasa (reftel A). Energy -------------- ¶6. (U) The Ministers of Energy and Portfolio suspended the CEOs of SNEL (DRC's electric power parastatal) and REGIDESO (DRC's water authority) on April 28 and nominated interim management teams, citing their failures to address the worsening power and water shortages. In April, certain portions of Kinshasa had several days of power and water shortages. Labor -------------- ¶7. (U) 5,000 employees of MIBA (the DRC's diamond mining parastatal) went on strike April 23 in Mbuji-Mayi, Western Kasai, to press for payment of eight months of salary arrears and three years of food provisions. The strike has hampered mining operations and reportedly forced the closure of MIBA-funded institutions, including schools and hospitals. ¶8. (U) Teachers in Kisangani, Orientale province have threatened not to return to school for the 2007-08 academic year if the GDRC does not implement salary increases. ¶9. (U) Employees of two of the GDRC's main revenue collection agencies have threatened to strike to over salary arrears and pay bonuses. DGRAD (DRC's administrative, real property and judicial tax authority) staff in Katanga province are protesting the remission of a portion of their pay bonuses to Kinshasa. Employees of OFIDA (DRC's customs agency) are protesting the agency's failure to pay their April salaries, which management says they are unable to do following the seizure of its bank accounts in the course of litigation with a private business. ¶10. (U) Airport authority (RVA) employees throughout the DRC are again threatening to strike over salary arrears. ¶11. (U) According to an Econ LES labor union contact, the Ministry of Labor overturned Hewa Bora's retaliatory firing of two union members who opposed the company's planned layoff of 150 airline staff. KINSHASA 00000516 002 OF 002 Natural Resources -------------- ¶12. (U) The GDRC's review of 60 joint-venture mining agreements is scheduled to begin May 15 and end July 15. The contracts to be examined include 31 with Gecamines (the DRC's copper/cobalt mining parastatal),11 with OKIMO (DRC's gold mining parastatal),and 6 with MIBA (septel). ¶13. (U) The GDRC is delaying determining whether to cancel the contract between OKIMO and South African company Moto Goldmines, as Moto's agreement will be among the 60 joint-ventures reviewed (reftel B). ¶14. (U) Anvil Mining announced its Board approved the building of a copper processing plant near Lubumbashi, Katanga province at an estimated cost of USD 238 million. ¶15. (U) Official mineral exports from North and South Kivu restarted following the GDRC's April 19 ban on the export of unprocessed ore from the province. Trade media reported that the Ministry of Mines authorized 11 companies to restart export after those entities proved they have processing equipment (septel). Trade and Investment -------------- ¶16. (U) A two-week Belgian economic and commercial mission to the DRC began April 29 in Kinshasa. The mission's purpose is to explore trade and investment opportunities in the agriculture, tourism, energy, water and transport sectors. Participants are also traveling to Kananga, Eastern Kasai and Bukavu, South Kivu. ¶17. (U) In cooperation with the FEC, business and political leaders from SADC countries met in Kinshasa April 23 -25 to discuss trade and investment opportunities in the DRC's reconstruction and development sectors. Minister of Agriculture Nzanga Mobutu made opening remarks, and the Ministers of Plan and Portfolio also spoke. ¶18. (U) The DRC's investment promotion agency, ANAPI, says it approved 96 investment projects in 2006 valued at USD 1.8 billion. 30 of the proposed projects are in the service sector, 28 are in manufacturing, 13 in agri-business, and the rest in forestry and the pharmaceutical industry. (Note: Not all approved projects are ultimately implemented. End note.) Consumer Inflation Rate -------------- ¶19. (U) Post's market-basket survey indicates a cumulative April consumer inflation rate of just 0.3 percent against May, combining first-half April inflation of 0.4 and second half deflation of 0.1 percent. IMF's survey indicated monthly inflation of 0.4 percent. Exchange Rate -------------- ¶20. (U) The currency markets were relatively stable in April. Week ending 04/06 04/13 04/20 04/31 Central Bank Rates: 552 554 551 546 Parallel Rates Kinshasa 556 555 552 545 Lubumbashi 560 555 550 550 Mbuji-Mayi 560 550 550 540 Bukavu/Goma 560 560 560 555 Kisangani 560 560 555 550 Matadi/Boma 560 555 555 550 MEECE