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Cablegate: Prime Minister Assures Donors of Progress and Commitment

VZCZCXRO2179
RR RUEHBZ RUEHDU RUEHGI RUEHJO RUEHMR RUEHRN
DE RUEHKI #0254/01 0551524
ZNR UUUUU ZZH
R 241523Z FEB 10
FM AMEMBASSY KINSHASA
TO RUEHC/SECSTATE WASHDC 0277
INFO RWANDA COLLECTIVE
SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RHEFDHP/DIA DHP-1 WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEAIIA/CIA WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC

UNCLAS SECTION 01 OF 03 KINSHASA 000254

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: ECON EAID PGOV PREL
SUBJECT: Prime Minister Assures Donors of Progress and Commitment
Towards HIPC Completion Point

REF: 09KINSHASA1135; 09KINSHASA1112

1. (SBU) Summary: Prime Minister Adolphe Muzito, accompanied by a
team of key ministers, assured bilateral and multilateral donors on
February 23 of the government of the DRC (GDRC)'s political
commitment to and progress towards meeting the triggers required to
reach Heavily Indebted Poor Countries (HIPC) Initiative completion
point by June 2010. Muzito thanked donors for providing financing
assurances and support for the DRC's new IMF Poverty Reduction and
Growth Facility (PRGF), approved in December 2009 (refs A and B),
and acknowledged that the task ahead was both difficult and time
was short. Minister of Plan Kamitatu outlined government actions
and progress in each of the seven HIPC completion point triggers,
frequently noting work underway. Donor interventions highlighted
support for the GDRC's efforts to date, while acknowledging steps
that remain. A key outstanding concern for donors is the passage
of the new procurement law, anticipated for March when Parliament
resumes its next session. End Summary.

2. (U) Prime Minister Muzito was accompanied by the key ministers
engaged in the work on the seven HIPC completion point triggers,
including the Minister of Plan, the (newly named) Ministers of
Finance and Budget, and several line Ministers. Bilateral donor
representatives included the Ambassadors of Spain (representing the
EU Presidency), the EU, Switzerland, Japan, Canada and the United
States. Multilateral donor representatives included the IMF
Resident Representative and the World Bank Country Director.

Plan Minister Highlights Progress on Seven Triggers

--------------------------------------------- ------

3. (SBU) Following very brief introductory remarks to thank donors
for their support and acknowledge both the progress to date and
task ahead on the HIPC completion point triggers, Muzito turned to
his Minister of Plan for a detailed progress report on each of the
seven triggers. While presenting a highly positive report on
progress to date and current efforts, he did acknowledge that each
reform required both capacity and resources. In particular, he
noted the need for capacity building related to the sectoral
strategies (trigger 6). These include:

Trigger 1-PRSP (Poverty Reduction Strategy Paper). The GDRC is
completing its first draft of the progress revenue of PRSP
performance for 2008-2009; sectoral revenues and data collection
are currently underway. A stakeholders meeting will be held to
discuss PRSP implementation on March 8 and 9. The PRSP revenue
document is on track for finalization by the end of March.

Trigger 2- Macroeconomic stability. Macroeconomic policy is being
implemented in line with the DRC's PRGF. Relevant GDRC ministries
are currently compiling data to be reviewed during the upcoming IMF
Staff Mission in early March; the GDRC is committed to ensuring a
productive mission.

Trigger 3- Use of Budgetary Savings. Terms of Reference have been
defined for and work is underway by an independent, international
firm to conduct an audit of the national audit office and use of
budgetary resources.

Trigger 4- Public expenditure management. The expenditures
tracking system (chaine de depenses, in French) is fully
operational; the GDRC is currently revising its procedural manual
to address any weaknesses. The GDRC is currently producing and
reviewing the required budget execution reports.

KINSHASA 00000254 002 OF 003


Trigger 5- Governance and service delivery in key sectors. The GDRC
is working in two principal areas: quality of services and quality
of spending. An evaluation of services is currently being drafted
with international assistance in three provinces. The new public
procurement law (marche publique, in French) was passed by the
National Assembly before the close of the Parliament's
extraordinary session ending in mid-February, and has been referred
to the Senate. The Senate will review the procurement law as a
priority item when Parliament reconvenes on March 15. The GDRC is
working on drafting implementing regulations to ensure that the law
can be enacted as quickly as possible following Parliamentary
approval by the Parliament and the President's signature.

Trigger 6- Social and rural sectors. The GDRC has drafted
strategies for the three priority sectors-health, education, and
agricultural/rural development. The strategies will be finalized
and transmitted to the Council of Ministers by the end of
March/early April.

Trigger 7- Debt management. Debt service information for the
fourth quarter of 2009 is currently being drafted and will be
completed shortly.

IMF Reviews upcoming Staff Mission

----------------------------------

4. (SBU) The IMF Resident Representative noted that satisfactory
performance under the PRGF is one of the triggers for HIPC
completion point. The upcoming IMF Staff Mission, arriving the
first week of March, which will review progress under the PRGF,
both on macroeconomic stability and implementation of structural
reforms through December 2009. While reserving specific comments
given the upcoming mission, the IMF Res Rep gave a generally
positive assessment of developments including improved
macroeconomic stability, appropriate policies, and realistic
spending in line with revenues.

Donors highlight support and need to maintain momentum

--------------------------------------------- ----------

5. (SBU) All participating bilateral ambassadors made brief
statements. The overall message from the donors was one of strong
support for the efforts undertaken to date on the HIPC triggers and
the need to maintain the current policies and commitment. Donors
offered support to assist the GDRC continue its work. While the
message was generally positive, concerns were noted over the
limited time left to finalize and undertake remaining actions
before June 2010. Several donors also highlighted the adoption and
implementation of the new procurement law as a key action that must
still be completed. The World Bank Country Director seconded
bilateral donor comments on the importance of the procurement law
and also noted the importance of resolution of London Club arrears.
The World Bank has technical assistance to assist the GDRC in this
area.

6. (SBU) Comment: Coming just days following the naming of a new
cabinet, including new ministers of budget and finance, the GDRC's
review of the HIPC triggers was a timely opportunity for the Prime
Minister to reassure donors of continued political commitment,
policies and progress toward the GDRC's goal of HIPC completion
point by June 2010, the DRC's fiftieth anniversary of independence.

KINSHASA 00000254 003 OF 003


The donor community presented a common message that recognized the
important progress made to date, the key work that remained
(including the adoption of the procurement law), and the support
from the international community to help the GDRC in its efforts.
The IMF Staff Mission arriving in early March will help to provide
additional details on the GDRC's progress on the triggers,
particularly in the areas of macroeconomic stability and public
financial management. As noted by several donors and acknowledged
by the Prime Minister, there is still much work to be done in a
very short time. There are reasons to be encouraged by the progress
to date, but we must also ensure that the GDRC at the highest
levels does not lose the momentum. End comment.
GARVELINK

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