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 001490 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EAID EAGR ECON EFIN EIND ELTN EMIN ETRD PGOV PREL CG
SUBJECT: ECONOMIC REPORT - JULY 25 THROUGH AUGUST 04 
 
 
¶1. Summary.  Exchange rates are quite stable, but prices 
show signs of impending increase due to transportation 
problems between Kinshasa and the provinces, including the 
collapse of the Mai-Ndombe bridge.  The GDRC reported 
significant macroeconomic progress for 2003, including 5 
percent GDP growth and single digit inflation.  Diamond 
exports rose sharply in July due to the expulsion of Congo- 
Brazzaville from the Kimberley Process certification scheme. 
New pumps provided by the ICRC increased Regideso's water 
supply to eastern Kinshasa.  Tax and fee receipts at the 
Port of Matadi have increased since the installation of the 
World Bank funded guichet unique in mid-2003.  Japan and 
Belgium will disburse USD 1 million in food aid to at-risk 
families in Katanga, Equateur, and Kasai provinces.  The 
World Bank released USD 42.5 million to the GDRC to pay back 
a portion of its domestic debt.  End Summary. 
 
MONETARY AND PRICE UPDATE 
 
¶2. Prices have been relatively stable, but show signs of a 
light increase on certain foodstuffs.  The combined problems 
of low water levels on the Congo River during the dry season 
and the recent collapse of the Mai-Ndombe bridge on the main 
land route from Bandundu province to Kinshasa (see para 10) 
could result in a scarcity of certain staple foods on the 
Kinshasa market. Corn prices have already risen from FC 
80/unit to FC 180/unit. (Note. Unit used in the Embassy 
price survey is a non-standard local unit of measurement. 
End Note.) 
 
¶3. No significant changes have been seen in the rate of 
exchange over the past two weeks. Rates in eastern cities 
remain slightly higher (FC 400-410 to the USD) due to 
continuing tensions. However, the official, and most 
parallel market rates remain at approximately FC 390 to the 
USD. 
 
MACROECONOMIC CLIMATE 
 
DRC ECONOMY SHOWS IMPROVEMENT FOR 2003 
 
¶4. Ministries in the financial and economic sectors 
displayed the successes of the GDRC's economic program in a 
27 July 2004 cabinet meeting.  Highlights of the annual 
reports for 2003 include: a 5.6 percent GDP increase; annual 
inflation of 4.4 percent (Note. Embassy price survey showed 
an inflation rate of 7 percent. End Note.) and a   year to 
date inflation rate of 2.7 percent for 2004; exchange rate 
stability at FC 388 to the USD; a positive real interest 
rate for the first time in several years; doubled foreign 
exchange holdings; and a 40 percent increase in GDRC 
revenues. 
 
MINING 
 
BRAZZAVILLE SHUTDOWN DRIVES UP DRC DIAMOND EXPORTS 
 
¶5. The CEEC reported DRC diamond exports of 2.7 million 
carats valued at USD 81.4 million for July 2004.  DRC 
diamond exports usually total between USD 27 and 35 million 
per month.  CEEC attributes the substantial increase in 
exports to the 9 July 2004 exclusion of the Republic of 
Congo (Brazzaville) from the Kimberley Process certification 
scheme. 
 
BANKING 
 
BANKS' CURRENCY HOLDINGS INCREASE 
 
¶6. The GDRC Central Bank (BCC) reported a reduction in 
currency circulation outside the banking sector from 50 
percent to 30 percent.  (Comment.  This reflects primarily 
increased commercial deposits by businesses in the DRC. 
Commercial banks still largely do not issue personal 
checking accounts. This is positive sign for the DRC economy 
but falls short of signaling renewed confidence in the 
banking sector among the general population.  End Comment.) 
 
MANUFACTURING 
 
DRC, NAMIBIA, ZAMBIA ESTABLISH COPPER CABLE VENTURE 
 
¶7. DRC Minister of Mines Eugene Diomi Ndongala announced 
that he signed a joint-venture agreement with his 
counterparts in the Zambian and Namibian Ministries of Mines 
on 23 July 2004. This multilateral agreement will establish 
a copper cable plant in Walvis Bay, Namibia.  The plant will 
operate as an export-processing zone, and will receive raw 
materials from each of the three countries. 
 
INFRASTRUCTURE 
 
TENDER FOR DRC-ZAMBIA POWER INFRASTRUCTURE WORK 
 
¶8. The Bureau Central de Coordination (BCECO) has issued an 
open tender for construction and rehabilitation work on the 
DRC electrical power infrastructure. Work in the DRC will 
include rehabilitation of the 500kV transmission lines 
between Inga and Kolwezi, the construction of new 220kV 
transmission lines, and the installation of a 
telecommunications network between Inga and Kolwezi. 
Additional work will repair transmission lines in the 
electricity export corridor between the DRC and Zambia.  The 
World Bank has provided USD 178 million to finance this 
project. 
EIGHT REHABILITATED WATER PUMPS IN EAST KINSHASA 
 
¶9. The ICRC funded the rehabilitation and reinstallation of 
eight commercial water pumps used by Regideso (national 
water company) to supply running water to eastern Kinshasa. 
Four pumps have been installed at the N'Djili intake and 
four at the Kingabwa water treatment station.  The two 
locations had been operating at half capacity since the late 
1990s, leaving many Kinshasans without regular access to 
running water.  The new pumps will increase N'Djili's output 
to 220,000 cubic meters/day and will supply some 4 million 
people. 
 
TRANSPORTATION 
 
MAI-NDOMBE BRIDGE COLLAPSES 
 
¶10. The bridge over the Mai-Ndombe River on National Road 
No. 2 collapsed on 28 July 2004.  The collapse severed the 
primary land transportation route from Bandundu province to 
Kinshasa, and has resulted in a scarcity of staple 
commodities in the city.  Office des Routes (OR - national 
road maintenance and planning authority) has sent a repair 
team to the site. Office des Routes expects to complete 
repairs by the end of the week of August 1-7, 2004.  The 
primary bridge over the Mai-Ndombe River was destroyed in 
1997 by retreating FAZ.  The Italian government financed 
construction of a temporary bridge, to be used until the 
primary bridge could be repaired.  However, repairs were 
never completed, and the primary bridge remains impassable. 
OR is working to repair the temporary bridge and has offered 
no plan to rebuild the primary bridge. 
 
PORT OF MATADI AGENCIES INCREASE RECEIPTS 
 
¶11. In the year since the installation of the World Bank- 
funded guichet unique, Port of Matadi customs and tax 
agencies have reported significant receipt increases. 
According to Ofida's provincial director Mr. Mwepu, receipts 
increased 67 percent at Ofida (Customs), 180 percent at 
Direction Gnrale des Recettes Administratives et 
Domaniales (DGRAD - Government Fees and Receipts Authority), 
70 percent at Office de Gestion de Fret Maritime (OGEFREM - 
- 
Maritime Freight Authority), 50 percent at Le Fond de 
Promotion de l'Industrie (FPI), and 20 percent at Direction 
Generale des Impots (DGI - Tax Authority).  Mr. Mwepu 
attributed the increases to the reorganization and 
computerization of the port's customs and tax processes. 
Additionally, Ofida hopes to install similar guichets 
uniques for their operations at Kasumbalesa and Mwene-Ditu. 
 
AGRICULTURE 
 
JAPAN AND BELGIUM TO ASSIST CONGOLESE AGRICULTURE 
 
¶12. Local press reports that Japan and Belgium have agreed 
to provide USD 1 million in agricultural aid to Congolese 
families in Equateur, Kasai, and Katanga provinces as the 
second stage of a larger food security program in which the 
donor countries will eventually distribute USD 3.5 million 
in aid.  The second stage of the program involves 
distribution of some 120 tons of seeds, 24,000 hoes and 
machetes, and several thousand ducks to families deemed at 
risk of malnutrition.  Each family will receive enough 
supplies to cultivate 250 square meters of land and 
supplement their diet with protein from meat and eggs.  The 
donor countries will also provide technical assistance and 
monitoring via regular consultation with beneficiary 
families. 
 
ZAMBIA TO EXPORT CORN TO THE DRC 
 
¶13. Zambian Deputy Agricultural Minister Chance Kabaghe 
reported that Zambia has agreed to export some 120,000 
metric tons of surplus corn to four countries, including the 
DRC. 
 
HEALTH 
 
SUSPECTED PLAGUE KILLS 58 IN ITURI 
 
¶14. Local health officials have reported 58 deaths and 1,042 
infections of suspected plague in Ituri since the beginning 
of this year.  WHO officials cite poor food storage 
facilities and displacement due to continuing violence in 
the region as primary contributors to the outbreak.  Most of 
the infections are believed to be bubonic plague, with a 
small minority being pneumonic plague.  Local committees 
have been established to sensitize the public to the problem 
and sanitize the homes of infected persons.  Plague 
infections have been reported in Ituri since the 1920s. 
According to the WHO, recent cases represent a significant, 
but not alarming, increase in the infection rate. 
 
AID 
 
WORLD BANK ASSISTS GDRC WITH INTERNAL DEBT 
 
¶15. Bavon Nkubiri of la Commission de la Dette Interieuer de 
l'Etat (Internal Debt Commission) reported that the World 
Bank released USD 42.5 million to the GDRC to repay debts to 
individuals or businesses accrued by the state before, 
during, and after the 1997-2001 war.  A delegation from the 
Ministry of Finance was dispatched to Bukavu in late July to 
begin collecting claims from citizens and business-owners. 
 
¶16. INFLATION BY CATEGORY  (IN PERCENT) 
 
WEEK ENDING            7/9     7/16    7/23    7/30 
FOOD                   0       2      -2       2 
BEVERAGE               0       0       0       0 
NON-FOOD               1       1       8       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       0.9    -0.6     0.9 
MONTHLY INFLATION      0       0.8     0.4     1.2 
 
MAY 2004 INFLATION:  0.2 
JUNE 2004 INFLATION:  0.4 
JULY 2004 INFLATION (TO DATE):  1.2 
YEAR TO DATE INFLATION:  1.0 
2003 INFLATION:  7.0 
2002 INFLATION:  22.0 
 
¶17. EXCHANGE RATE DEVELOPMENTS 
 
                   7/9      7/16     7/23     7/30 
 
CENTRAL BANK RATE  392.7530 389.5709 388.1864 389.1094 
PARALLEL MARKET 
-KINSHASA          385-392  390-395  388-398  385-390 
-LUBUMBASHI        380-390  380-390  385-395  380-385 
-MBUJI MAYI        385-390  380-385  380-385  380-385 
-KISANGANI         375-385  400-410  400-410  400-410 
-GOMA              400-410  400-410  400-410  400-410 
-BUKAVU            390-400  400-410  400-410  400-410 
 
MEECE