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

UNCLAS  KINSHASA 000068 
 
SIPDIS 
 
 
DEPT FOR DRL/IL-LHOLT AND AF/RSA-MHARPOLE 
TRANSPORTATION FOR FAA-EJONES 
 
E.O. 12958: N/A 
TAGS: ECON EFIN ELAB EMIN EAIR PGOV CG AID
SUBJECT: DECEMBER ECONOMIC REVIEW 
 
REF: A. 05 KINSHASA 2079; B. 05 KINSHASA 2113 
 
¶1. (U) SUMMARY 
-------------- 
 
- USG debt relief for the DRC has been extended through 
March 2006. 
- The World Bank approved two grants totaling USD 215 
million to support the implementation of the GDRC's 
economic program, reconstruction and rehabilitation. 
-  A UN-organized audit of six Congolese airlines 
concluded in December, and the results are expected this 
month. 
-  The GDRC is only partially honoring its 2005 strike- 
ending agreements with teachers and civil servants. At 
least one teachers' union is threatening to renew its 
strike after January 20 if the GDRC does not meet the 
union's demands.  Police and military also continue to 
lodge compensation complaints. 
- The GDRC's official diamond exports and per carat value 
through November 2005 increased over the same 2004 period. 
-  MIBA, the diamond mining parastatal, avoided a strike. 
-  Parliament has neither promulgated the 2006 budget nor 
approved provisional spending. 
-  The GDRC has completed one stage of its internal public 
debt settlement. 
-  The GDRC authorities confiscated several tons of 
minerals that were allegedly being illegally exported at a 
Ugandan border crossing. 
-  The DRC's main maritime port is facing simultaneous 
problems of a strike and a grossly exceeded container 
capacity. 
-  The GDRC reported 23.1 percent year-end inflation. 
End summary. 
 
AVIATION 
-------- 
 
¶2. (U) The UN's Joint Logistics Center (UNJLC) aviation 
audit concluded in December.  The audit team inspected six 
Congolese airlines to determine if they comply with IATA 
(International Air Transport Association) certification 
standards.  A report of the findings may become public 
this month. 
 
¶3. (U) A January 3 Congolese airline crash in Ituri 
District killed 3 passengers. 
 
LABOR 
----- 
 
¶4. (U) The GDRC is only partially honoring its 2005 strike- 
ending agreements with teachers and civil servants. 
Teachers and their unions state that the government has 
not paid all teachers through December 2005, and that none 
have received promised raises.  At least one union has 
announced that teachers will strike if they do not receive 
salary increases pursuant to the 2004 Mbudi accord, which 
set a minimum USD 208 monthly salary for government 
employees, but which the GDRC has never ratified. 
 
¶5. (U) Kinshasa-based civil servants in all ministries 
received their salary and bonus payments through December, 
although some employees in the Finance, Budget, and 
Commerce Ministries told Econ FSNs that they had received 
larger bonuses than those in other ministries.  Employees 
in other provinces await their November and December 
remuneration. Consequently, civil servants in at least one 
eastern city are striking. 
 
¶6. (U) Police and military, at least in Kinshasa, received 
food allowances and salaries through December. 
 
¶7. (U) Employees of ONATRA, the DRC's port authority, are 
on strike to protest a January 3 presidential decree 
declaring that OFIDA (DRC's customs body) is now the sole 
operator and collector of customs and excise taxes at all 
border posts. Thus, ONATRA loses direct control over its 
income stream and must wait for the GDRC to retrocede its 
share, thereby resulting in a reduced cash flow.  Many 
ONATRA employees believe that they will lose jobs as a 
result.  The strike has essentially shut down the port of 
Matadi, and thus no ships are docking. 
 
MINING 
 
------ 
 
¶8. (U) According to GDRC statistics, diamond exports 
through November 2005 increased by 11 percent over the 
same 2004 period, despite a 13 percent one-month decrease 
in diamond exports from October to November.  Total export 
volume through November was 29.6 million carats.  Total 
evaluated price per carat (both gem and industrial 
quality) increased by 11.15 percent over the 2004 period 
with a total evaluated value of nearly USD 815 million. 
 
¶9. (U) The GDRC is hosting a Kimberley Process Alluvial 
Mining Sub-group meeting January 30-31 in its capacity as 
the Central and South African Coordinator. 
 
¶10. (U) MIBA, the GDRC's diamond mining parastatal, 
negotiated with labor representatives to avert a 
threatened late December strike.  Through November, its 
official production, which consists primarily of 
industrial diamonds, had decreased by more than one-third 
over 2004 totals. 
 
¶11. (U) DRC law enforcement authorities seized several 
tons of coltan and cassiterite that were allegedly being 
illegally exported December 5 at a major customs post on 
the Ugandan border (reftel A). 
 
PUBLIC FINANCE AND TAXATION 
--------------------------- 
 
¶12. (U) November 30, the DRC agreed to amend the September 
2005 debt relief agreement with the USG, extending through 
March 2006 the earlier period of forgiveness (from July 
2003 through June 2005). 
 
¶13. (U) December 8, the World Bank (WB) approved a USD 90 
million grant to support the implementation of the GDRC's 
transitional economic programs and USD 125 million for the 
ongoing Emergency Multi-sector Rehabilitation and 
Reconstruction program. The USG abstained from the vote. 
 
¶14. (U) The Council of Ministers approved the proposed USD 
2.16 billion 2006 budget November 25, but the Parliament 
has not yet done so (reftel B).  The lower house has 
approved the budget, but Senate approval is pending. 
Despite the resulting funding gap that began January 1, 
the GDRC has not yet approved interim funding. (Note: A 
January 11 presidential decree convoked an extraordinary 
session of Parliament, during which the budget issue is 
expected to be resolved. End note.) 
 
¶15. (U) The GDRC completed the first stage of its World 
Bank-funded public commercial internal debt settlement, 
having paid all creditors entitled to USD 50,000 or less. 
The GDRC must next fund and schedule payments for 
creditors owed more than USD 50,000. 
 
¶16. (U) The GDRC paid USD 11.5 million in World Bank- 
funded severance to employees of banks closed from 1999- 
2001 and liquidated after 2003, under the WB's economic 
restructuring program. 
 
TRANSPORTATION 
-------------- 
 
¶17. (U) The DRC's main maritime port, Matadi, has 2000 
containers in excess of its 3500 container capacity, in 
part due to minimal rail service and a lack of functioning 
handling equipment.  The railway system is now 
transporting only ten percent of Matadi's cargo, as a 
result of long-neglected maintenance of the rail and 
railcars. 
 
INFLATION 
--------- 
 
¶18. (U) 2005 Inflation, Post's Estimate: 23 percent 
2005 inflation, Central Bank's Estimate:  22.1 percent 
 
EXCHANGE RATE DEVELOPMENTS 
-------------------------- 
 
¶19. (U) Week ending  12/9     12/16    12/23    12/31 
 
Central Bank Rate   438.69   436.75   431.03   431.28 
 
Kinshasa            440-445  435-440  430-435  420-425 
Lubumbashi          450-460  445-455  440-450  440-450 
Mbujimayi           440-450  430-435  430-435  430-435 
Kisangani           450-460  460-470  460-470  460-470 
Goma                470-480  460-470  460-470  460-470 
Bukavu              470-480  460-470  460-470  460-470 
 
According to preliminary Central Bank figures, the 2005 
average official rate was 474, and the parallel market 
average rate was 473. 
MEECE 
 
 
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