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Cablegate: Drc Fiscal Transparency

VZCZCXYZ0000
PP RUEHWEB

DE RUEHKI #0256 0741307
ZNR UUUUU ZZH
P 141307Z MAR 08
FM AMEMBASSY KINSHASA
TO SECSTATE WASHDC PRIORITY 7678

UNCLAS KINSHASA 000256

SIPDIS

SIPDIS

FOR EEB/IFD/OMA ASNOW and RFIGUEROA
STATE PASS TREASURY for OWHYCHE-SHAW

E.O. 12958: N/A
TAGS: EAID ECON PREL
SUBJECT: DRC Fiscal Transparency

REF: STATE 016737

1. (U) The Democratic Republic of Congo (DRC), after successful
national and provincial elections in 2006, has had a government in
place now for one year. The current USG foreign assistance package
for FY 08 is over USD 150 million, consists of both direct project
funding and food aid, and includes IMET funds, meaning that the
submission to the Foreign Operations, Export Financing and Related
Programs Appropriations Act of 2003 (FOAA-03) must be updated
(reftel).

2. (U) Since the official return in mid-2003 of the IMF and World
Bank (WB), DRC state financial institutions, particularly the
Congolese Central Bank (BCC) and the Ministries of Finance and
Budget, have created official websites and are posting documents
such as the national budget, which has been made public annually
since 2003 both in hardcopy and electronic form. Revenues and
expenditures are detailed in the budget, but it is not always easy
to determine the source of the revenue. The 2008 DRC budget is the
first ever to surpass USD 3 billion, but it is generally conceded
that this may be an optimistic target for state revenue collection.
However, the GDRC continues to report its finances on a monthly
basis and has made efforts to maintain its spending within income
limits.

3. (U) The USAID Mission in Kinshasa is supporting accurate
disclosure of revenues paid to the central government at the
provincial level by working with companies in the copper mining
sector to encourage adherence to international standards, including
the Extractive Industries Transparency Initiative. USG programs to
encourage democratic reform and participatory decision-making
indirectly promote transparency by making government officials more
accountable to the public.
4. (U) The World Bank was the first institution to analyze DRC
public finance, beginning in 2005. An EU-funded January 2008 report
on DRC public finance management, using the Public Expenditure and
Financial Accountability (PEFA) methodology found that there are
still weaknesses in the national budget, the system of GDRC
expenditures and receipts, and overall transparency of public
finances. (Note: PEFA is a partnership between the World Bank, the
International Monetary Fund (IMF), several national aid agencies and
the Strategic Partnership with Africa. End note)
5. (U) The formal IMF program begun in 2003 lapsed at the end of
March, 2006, during the transitional government period, due to
increased macroeconomic instability and failure to achieve targeted
structural reforms. Since then, the IMF has had an informal
Staff-Monitored Program in place and continues to work with the GDRC
to reinstall a Poverty Reduction and Growth Facility program that
will eventually lead to increased outside budgetary assistance and
nearly complete external debt forgiveness. The IMF has generally
been satisfied with GDRC fiscal transparency, but recently learned
of GDRC deficit spending in December 2007 and January 2008 that has
delayed discussions of a new PRGF. The DRC has not/not requested
that the IMF prepare reports on compliance with standards and codes
covering fiscal transparency.

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