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Cablegate: Economic Report - Aug 05 Through Aug 12

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 03 KINSHASA 001540

SIPDIS

E.O. 12958: N/A
TAGS: EAGR EAID EAIR ECON EFIN EIND ENRG EPET PGOV PREL CG
SUBJECT: ECONOMIC REPORT - AUG 05 THROUGH AUG 12

SUMMARY

1. Prices remain stable despite the collapse of the Mai-
Ndombe bridge. Exchange rates are very stable.
COPIREP will pay out USD 11.5 million in severance
packages to liquidate three Congolese banks. The
government of the People's Republic of China is funding
construction of a 150 bed hospital in the N'Djili
district of Kinshasa. Unidentified thieves stole 3,000
meters of electrical transmission cable from SNEL
lines, disrupting power supply to Kisangani. The
African Development Fund will distribute USD 36.3
million in loans and grants to aid agriculture in Bas-
Congo and Bandundu provinces. Norway agreed to forgive
USD 700,000 of the DRC's debt. A cholera epidemic has
infected around 600 and killed 56 in Nord-Kivu
province.

MONETARY AND PRICE UPDATE

2. Prices have only risen approximately 25 percent on
certain food staples. Completion of repairs on the Mai-
Ndombe bridge will alleviated upward pressures.

3. Exchange rates remain very stable. Effects of the
recent BCD liquidation appear to have run their course
on the Kinshasa market. Rates remain slightly higher
in the east due to continuing tensions.

BANKING

COPIREP TO DISTRIBUTE USD 11.5 MILLION IN SEVERANCE PAY

4. Le Comite de la Reforme des Enterprises Publique
(COPIREP, a World Bank-funded corporation designed to
reform the DRC's public enterprises) will pay out USD
11.5 million in severance packages to workers of three
banks ordered liquidated by the Banque Centrale du
Congo (BCC). The Nouvelle Banque de Kinshasa (NBK),
Banque Congolaise du Commerce Exterieur (BCCE), and
Banque de Credit Agricole (BCA) are being liquidated as
part of the BCC's restructuring of the DRC's banking
sector.

INFRASTRUCTURE

CHINESE FUND HOSPITAL IN N'DJILI

5. The People's Republic of China has funded the
construction of a 150 bed hospital in the N'Djili
district of Kinshasa. A Chinese engineering firm will
build the hospital at a cost of USD 6 million.

3,000 METERS OF ELECTRICAL CABLE STOLEN

6. Local press reports that approximately 3,000 meters
of low-voltage electrical transmission cable was
unearthed, cut, and stolen near Kisangani, Orientale
province. La Societe National d'Electricite (SNEL)
claims it is currently unable to replace the stolen
cable, and says that Kisangani is at risk for power
outages as a result of the theft.

MBANDAKA AIRPORT REPAIRS COMPLETED

7. Mbandaka airport commander Gedeon Mangolopa reported
that Mbandaka airport, which was damaged during the
civil war, has been restored and is now in conformity
with Congolese air navigation safety standards.
Repairs were financed from the airport's operating
revenues. Work consisted primarily of repairs to the
communications system and control tower improvements.
VHF and HF radios were installed for air traffic
control and communication, and navigational beacons
were replaced.

AGRICULTURE

SOUTH KIVU SUGAR MILL REOPENS

8. The Kiliba sugar mill in South Kivu province has
reopened with USD 25,000 in GDRC financial support
after several years of inactivity. The mill had closed
due to regional insecurity and mismanagement of funds.
Kiliba once employed some 3,500 workers, and will
reopen with a staff of 147.

PETROLEUM

GASOLINE SHORTAGE IN KISANGANI

9. Local press reports that Kisangani is experiencing a
severe gasoline shortage due to transportation problems
on the Congo River. Low river water levels have
prevented fuel barges from reaching the city. Prices
per liter of gasoline have already moved from FC 400 to
FC 700, and will likely continue to rise.

AID

AFRICAN DEVELOPMENT FUND AIDS DRC AGRICULTURE

10. The African Development Fund will provide USD 36.3
million to support agricultural reform and expansion in
the DRC. USD 26.1 million in loans and 10.2 million in
grants will be used to repair agricultural access
routes, rehabilitate market infrastructure, and expand
institutional capacities. The Fund will also
distribute seeds and provide training and rural
planning assistance. The aid is intended to ensure a
stable food supply in the provinces of Bandundu and Bas-
Congo.

NORWAY FORGIVES USD 700,000 IN DEBT

11. The Norwegian Ambassador and DRC Minister of
Finance Andre-Phillipe Futa signed an agreement to
annul some USD 700,000 of the DRC's debt to Norway in
conformity with the DRC's HIPC program.

HEALTH

WORLD BANK ENVOY INSPECTS DRC HEALTH SECTOR

12. Eva Jarawan, a World Bank public health specialist
is in the DRC on a two-week mission to assess the state
of the country's health care infrastructure. The
inspection mission is part of the World Bank's USD 45
million Programme Multisectoriel de Rehabilitation et
Reconstruction (PMURR).

CHOLERA EPIDEMIC IN EASTERN DRC

13. Local press reports that since June 2004,
approximately 600 cases of cholera have been reported,
with 56 fatalities, in the Bisiye mining district near
Walikale, Nord-Kivu province. Local health
infrastructure is reportedly strained by the outbreak.
Additional medical supplies and personnel have been
requested from Goma. Local authorities have launched a
campaign to sensitize the local population to
preventive hygiene measures.

14. INFLATION BY CATEGORY (IN PERCENT)

WEEK ENDING 7/16 7/23 7/30 8/6
FOOD 2 -2 2 -1
BEVERAGE 0 0 0 0
NON-FOOD 1 8 0 0
CLOTHING 0 0 0 0
RENT 0 0 0 0
TRANSPORT 0 0 0 0
SCHOOL COSTS 0 0 0 0
UTILITIES 0 0 0 0
COMBINED FIGURES
WEEKLY INFLATION 0.9 -0.6 0.9 -0.2
MONTHLY INFLATION 0.8 0.4 1.2 -0.2

15. EXCHANGE RATE DEVELOPMENTS

7/16 7/23 7/30 8/6

CENTRAL BANK RATE 389.5709 388.1864 389.1094 389.1157
PARALLEL MARKET
-KINSHASA 390-395 388-398 385-390 385-390
-LUBUMBASHI 380-390 385-395 380-385 380-385
-MBUJI MAYI 380-385 380-385 380-385 380-385
-KISANGANI 400-410 400-410 400-410 375-385
-GOMA 400-410 400-410 400-410 400-410
-BUKAVU 400-410 400-410 400-410 400-410

MEECE

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