PM'S DEPUTY CHIEF OF STAFF HIGHLIGHTS GDRC

C O N F I D E N T I A L SECTION 01 OF 02 KINSHASA 000269 SIPDIS E.O. 12958: DECL: 03/23/2019 TAGS: ECON EFIN EINV PREL PGOV CH CG SUBJECT: PM'S DEPUTY CHIEF OF STAFF HIGHLIGHTS GDRC COMMITTMENT TO FREEPORT AND HIPC; SUPPORTS RAPID CLOSURE OF PRGF NEGOTIATIONS WITH IMF Classified By: Ambassador William J. Garvelink for reasons 1.4 (b) and (d). ¶1. (C) Summary. Prime Minister Alexis Muzito's Deputy Chief of Staff, Jean-Claude Nachega, assured DCM and Economic Counselor during a March 20 meeting that Freeport McMoRan's contract review would be completed shortly and that the government of the DRC remained committed to renegotiating the Sino-Congolese agreement to ensure debt sustainability. DCM and EconCouns stressed the importance of moving quickly on finalizing both the Freeport contract negotiations and renegotiating key provisions of the China agreement to allow a formal IMF agreement to be considered by the IMF Board as soon as possible. End Summary. ¶2. (C) DCM convened a meeting with the Prime Minister's Deputy Chief of Staff Jean-Claude Nachega on March 20 to express our concerns over delays in reaching agreement on Freeport McMoRan's contract and to discuss progress on renegotiating the Sino-Congolese agreement in light of the visiting IMF Staff Mission (Septel). Nachega noted that Freeport McMoRan executives had met earlier in the day on March 20 with the Prime Minister, and that the PM was supportive of the investment and the quick conclusion of the negotiations. DCM and EconCouns expressed frustration that at the same time that the GDRC had announced the completion of the mining contract review process in mid-December, Freeport's contract remained under negotiation -- this sent a negative message to current and potential investors and was detracting from the development of the DRC's mining sector. Nachega assured, again, of support for the investment at the highest levels in the government and that the contract would soon be finalized. (Note: The Prime Minister and Vice Prime Minister for Reconstruction appear genuinely supportive of the prompt conclusion of the negotiations; the hold-out appears to be Gecamines CEO Paul Fortin. End Note) ¶3. (C) Turning to the IMF Staff Mission and prospects for a formal IMF program (Poverty Reduction and Growth Facility, PRGF),Nachega noted the importance the GDRC placed on re-establishing a PRGF and reaching HIPC completion point as soon as possible. Nachega stated that the recently approved emergency financial assistance from the World Bank and IMF had helped strengthen the relationship between the GDRC and traditional Western donors, which in turn, would help support GDRC efforts to renegotiate the China agreement. While Nachega did not have details on the latest state-of-play on negotiations between the GDRC and PRC on renegotiation of the China agreement as this was being handled out of the Presidency, he did note that Muzito had been prepared to travel to Beijing several weeks ago. ¶4. (C) Nachega lamented that key Ministries, such as Finance and Budget, were not involved in the initial negotiations on the Sino-Congolese agreement, which could have assured that debt sustainability concerns had been addressed earlier. Nachega inquired as to whether the USG (or other Paris Club members) could potentially support a PRGF before the formal renegotiation of the China agreement, with the formal agreement as a trigger for HIPC completion point. He asked if it would be possible for the U.S. to engage with other Paris Club members in an effort to obtain the Club's support for the PRGF while efforts to elucidate the China agreements continue. EconCouns noted that the GDRC's recent Letter of Intent to the IMF on its ESF included commitments on ensuring debt sustainability; the GDRC needed to follow-through on its formal renegotiation to ensure Paris Club member support for the IMF program. Nachega requested USG support in engaging with the PRC on the importance of renegotiating the agreement to ensure eventual HIPC debt relief. DCM promised to convey this request to Washington. ¶5. (C) Nachega made a plea for quick U.S. assistance in lobbying for the PRGF, noting that the time could not be better as there was considerable good will within the GDRC vis-a-vis Western donors and the Bretton-Woods institutions because of rapid intervention by the World Bank, the IMF and EU to come to the aid of the Congo in its moment of crisis with more than $300 million in the past month. Speaking with great candor, he stated that the Prime Minister told him two months ago he had packed his bags for a trip to China to seek that country's assistance because he doubted the West would come through. ¶6. (C) Comment and Bio Note: Jean-Claude Nachega, a Bushi from Bukavu in the eastern DRC, was recently promoted from the Prime Minister's Economic Advisor to become his Deputy KINSHASA 00000269 002 OF 002 Chief of Staff. A Congolese national, Nachega is currently on leave from the IMF. His salary is funded by the EU. Nachega lived in Washington, DC from 1993 to 2008, when he returned to the DRC to work for the GDRC. While in the United States, he worked primarily for the IMF, with a brief stint at the International Finance Corporation. He was educated in Belgium and is married with one daughter. He speaks English. His promotion within the Prime Minister's Office likely reflects the importance that Muzito attaches to moving forward on a formal IMF agreement and reaching HIPC completion point as soon as possible. Nachega appears to have the respect of the Prime Minister and will serve as a key interlocutor for post on macroeconomic issues within the office of the Prime Minister. End Comment and Bio Note. GARVELINK