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Cablegate: Transparency of Budget/Military Spending

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

UNCLAS KINSHASA 002138

SIPDIS

STATE FOR EB/IFD/OMA:L.GALLAGHER
TREASURY FOR OASIA/MDM:J. FRANCO

E.O. 12958: N/A
TAGS: EFIN EAID CG
SUBJECT: TRANSPARENCY OF BUDGET/MILITARY SPENDING

REF: STATE 239929

1. Summary. This message is in response to reftel and
answers are keyed to those questions. The GDRC is a post-
conflict transitional government composed of all parties to
the Global and Inclusive Accord signed in Sun City in 2002.
The focus of the government is to finish the transition with
elections slated to take place in June 2005. The IMF is
working with the GDRC to improve the accounting and budget
process. Over the past three years they have made
considerable progress in budget and expenditure procedures
through the "expense chain" that accounts for disbursements
and codes them to budget items. End summary.

2. (Part A) General Overview of Auditing Procedures
(1) Military expenditures are audited internally.
(2) Military finance officers conduct the audits.
(3) Audits are presented to the Minister of Defense and the
President.
(4) Both the Minister of Defense and the President hold the
rank of Major General.
(5) Audits are not required on an annual basis.
(6) There has been no specific legislation passed by the
transitional government but, as noted above, internal audits
are conducted as a matter of policy.

The GDRC is transitional in nature, and is working to resolve
years of internal and external conflicts. The government's
lack of technical capacity is being addressed in cooperation
with the IMF. Parliament is increasing its oversight of the
budgetary process, and has authority to review audits.

There is a lack of breakdown in salary payments to the
military due to the absence of a centralized disbursement
structure. The international community is working with the
GDRC to integrate former rebel groups into the armed forces,
demobilize large numbers of them, and conduct a census to
precisely budget for salary and related expenses. Parallel
to this, the Central Bank is working to set up offices
throughout the country and to set up an electronic payroll
system for the civil service as well as military. Most
deficiencies in the present system are a result of capacity
constraints. The IMF reported on November 23 at the
conclusion of its November 9-23 mission that the GDRC has
made very good progress on tracking expenditures, including
with the military.

3. (Part B) The Military Budget and On-budget and Off-budget
Revenues and Expenses
(1) The national police are under the Minister of the
Interior, not the Minister of Defense. Other security
services are under the Office of the President.
(2) Both the GDRC and the IMF noted military
over-expenditure in 2004; this was a direct result of
unanticipated expenses incurred in June 2004 when the
military had to respond to the seizure of Bukavu (the capital
of South Kivu) by a renegade militia group. Post is not
aware of significant off-budget military receipts.

4. (Part C) The Military Component of the National Budget

(1) With pressure from donors under the HIPC program and
IMF's Poverty Reduction Strategy, the GDRC has made progress
in increasing health and education spending. Military
expenditures are still larger. Military spending is
estimated to be 15 percent of the budget. The GDRC is
unlikely to spend significantly more on health and education
until conflicts are resolved and the transition is completed.
(2) The budget debate begins in the Council of Ministers
where 36 different Ministries vie for funding with four
vice-presidents and the President's office. As half the
budget is financed by external sources, donors also weigh in
on the debate. The draft budget is then debated by the two
chambers of the Parliament. These actors were all appointed
under the Global Accord; none has a majority in any body, so
debate is lively.


MEECE

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