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Cablegate: Drc April Monthly Economic Review

VZCZCXRO1334
RR RUEHBZ RUEHDU RUEHGI RUEHJO RUEHMR RUEHRN
DE RUEHKI #0516/01 1301401
ZNR UUUUU ZZH
R 101401Z MAY 07
FM AMEMBASSY KINSHASA
TO RUEHC/SECSTATE WASHDC 6098
INFO RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY
RUEHXR/RWANDA COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RHMFISS/HQ USEUCOM VAIHINGEN GE
RUFOADA/JAC MOLESWORTH RAF MOLESWORTH UK
RUEAIIA/CIA WASHDC

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

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