VZCZCXRO4124
RR RUEHBZ RUEHDU RUEHGI RUEHJO RUEHMR RUEHRN
DE RUEHKI #1168/01 2750941
ZNR UUUUU ZZH
R 020941Z OCT 07
FM AMEMBASSY KINSHASA
TO RUEHC/SECSTATE WASHDC 6969
INFO RUEHXR/RWANDA COLLECTIVE
RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RHMFISS/HQ USEUCOM VAIHINGEN GE
RUFOADA/JAC MOLESWORTH RAF MOLESWORTH UK
RUEAIIA/CIA WASHDC

UNCLAS SECTION 01 OF 03 KINSHASA 001168 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: N/A 
 
TAGS: ECON EFIN EMIN ELAB EAIR PGOV CG
 
SUBJECT: DRC SEPTEMBER ECONOMIC REVIEW 
 
 
¶1. (U) Summary 
- New GDRC Aviation Commission Created 
- IMF and World Bank Teams in Kinshasa 
- IMF and World Bank Check on PRSP, HIPC Progress 
- Extractives Industries Transparency Initiative (EITI) 
- Lower Electricity Rates for Large Consumers 
- Ebola Epidemic Continues in Kasai Occidental 
- More Shooting, Deaths on Lake Albert 
- Ranks of Child Soldiers Swell 
- China and DRC Sign USD 5 Billion Agreement 
- Teacher's Strike Continues into Fourth Week 
- GDRC Employment and Vocational Training Strategy 
- GDRC Mining Commission Review of Contracts 
- Parliament Okays DRC-Angola Petroleum Agreement 
- Inflation and Exchange Rates 
 
Aviation 
-------- 
¶2. (U) New GDRC Aviation Commission Created 
Transport Minister Remy Katanga created a new Aviation Commission 
and directed it to put a system in place to control airlines, 
including licensing for employees of the aviation industry, within 
60 days.  On September 4 airlines using Soviet-era Antonov aircraft 
met with Katanga to request that they be allowed to continue using 
Antonov planes during the 60-day period.  (Note: In the past 30 days 
there have been two crashes in DRC, both Antonov aircraft. End 
note.) 
IMF and World Bank 
------------------ 
¶3. (U) IMF and World Bank Teams in Kinshasa 
International Monetary Fund (IMF) and the World Bank (WB) teams are 
in Kinshasa from September 18 to October 3 looking at the DRC 
macroeconomic and financial situation.  The IMF team is preparing 
the way for possible negotiations in November to renew a formal 
economic program with the DRC, which would allow for much-needed 
debt forgiveness through the Heavily Indebted Poor Countries (HIPC) 
program.  The GDRC has external debts totaling USD 11.5 billion as 
of end 2006, USD 4.6 billion to the multilateral lenders and over 
USD 6 billion to the Paris Club countries.  The IMF team will 
deliver an end of mission report of their preliminary findings early 
the week of October 1. 
¶4. (U) IMF and World Bank Check on PRSP, HIPC Progress 
One year ago, the IMF and WB approved the DRC Poverty Reduction 
Strategy Paper (PRSP).  They are now assessing the implementation of 
the strategy, key to the eventual achievement of Heavily Indebted 
Poor Country (HIPC) completion point and debt relief.  The IMF met 
with Planning Minister Kamitatu, Finance Minister Matenda, and 
Budget Minister Muzito to gain their perspectives on DRC 
macroeconomic status, growth, reforms, and investments during the 
period July 2006 through July 2007.  The World Bank, which has some 
USD 1.7 billion in development funds in the pipeline for the DRC, 
has slowed the disbursement of these funds since the end of 2006 
because of poor DRC structural reform performance and lack of 
adherence to pro-poor spending levels. 
Cooperation 
----------- 
¶5. (U) Extractive Industries Transparency Initiative 
On September 3, President Joseph Kabila signed a decree to modify 
and complete the DRC National Extractive Industries Transparency 
Initiative (EITI) Committee.  Kinshasa's Civil Society Commission 
denounced the fact that the Presidency and the Ministry of Plan did 
not consult with them and suggested a meeting between the three 
entities. 
Electricity 
----------- 
¶6. (U) Preferential Electrical Rates for Large Consumers 
DRC Economy Minister Sylvain Tshamwala decreed preferential 
electricity rates for six large consumers, including two cement 
factories and two breweries, after canceling preferential rates for 
40 other companies.  The latter had apparently received preferential 
rates from the national electricity company, SNEL, without GDRC 
authorization.  SNEL employees have long argued that preferential 
rates are detrimental to the parastatal and its workers and bad for 
the GDRC overall.  SNEL workers held a work stoppage on September 14 
to protest the practice.  Energy Minister Salomon Banamuhere was not 
consulted in this decision by the Economy Minister and the matter 
has been turned over to a GDRC committee in charge of water and 
electricity pricing, which also includes a representative from the 
Ministry of Trade. 
ESTH Issues 
----------- 
¶7. (U) Ebola Epidemic Continues in Kasai Occidental 
The Ebola hemorrhagic fever epidemic, which began in April and was 
not acted upon until mid-August, continues to claim victims in the 
 
KINSHASA 00001168  002 OF 003 
 
 
Kasai Occidental province of south-central DRC.  CDC, WHO, Ministry 
of Health, and Medecins Sans Frontieres (MSF) personnel are on the 
scene between the towns of Mweka and Luebo and have set up a 
laboratory, isolation wards, and care/treatment centers near the 
village epicenter of the epidemic.  Tons of materials, including 
personal protective gear and equipment to allow quick identification 
of the Ebola virus, have been flown to the area.  Samples from 
suspected cases in southern Kasai Occidental, near the border with 
Angola, and in neighboring Kasai Oriental province are being 
analyzed and results should be available shortly.  Epidemiologists 
hope to contain the spread of the highly lethal disease through a 
combination of testing, tracking, isolation, and public service 
announcements.  Embassy Kinshasa has issued a disaster declaration 
and requested emergency funding for the USG response, which could 
last for months until there are no more new cases or fatalities. 
Humanitarian 
------------ 
¶8. (U) More Shooting, Deaths on Lake Albert 
Reports indicate that six civilians were killed when Ugandan 
soldiers opened fire on a Congolese passenger boat in the middle of 
Lake Albert, northeast DRC.  Reports from Uganda say that two 
soldiers, one from each country, were killed in a dispute involving 
an oil exploration vessel on the lake.  Lake Albert, along the 
DRC-Uganda border, has recently become the scene of petroleum 
exploration.  UN peacekeepers verified that on September 24 they 
intercepted a Heritage Oil vessel that had strayed into Congolese 
waters, possibly leading to the later incident.  (Note:  See 
Kinshasa 1150 and Kampala 1490 for more information.) 
¶9. (U) Ranks of Child Soldiers Swell 
The Christian Science Monitor reported on September 19 that recent 
fighting between ethnic militias, Rwandan rebels, and the DRC army 
has involved hundreds, perhaps thousands, of young boys and girls. 
Ethnic divisions and control of natural resources (cassiterite, 
gold, coltan, etc.) seem to be the driving factors behind this 
recent surge.  Many of the children are being used to carry weapons 
and food for the soldiers. 
Investment 
---------- 
¶10. (U) China and DRC sign a USD 5 Billion Agreement 
DRC Public Works Minister Pierre Lumbi signed an agreement September 
17 with Chinese Embassy officials that will reportedly provide USD 5 
billion to the DRC for infrastructure (USD three billion for road, 
railway, health and housing) and mining sector joint ventures (USD 
two billion).  No details of the agreement, including loan term and 
repayment requirements, have been released, but the loan would 
continue a pattern established during the Mobutu years, when large, 
high visibility projects such as Kinshasa's main stadium and the 
Parliament building were financed and constructed by the Chinese. 
Lumbi stressed that in addition to improved infrastructure the 
projects would create employment and business opportunities for the 
Congolese people.  (Kinshasa 1133) 
Labor 
----- 
¶11. (U) Teacher's Strike Continues into Fourth Week 
Public school teachers' unions SYSCO and SYNECAT met on September 22 
and voted to continue their strike, begun September 3, until 
September 28, to give President Kabila the opportunity to accede to 
their wage demands.  The teachers are demanding a minimum salary of 
USD 69/month, up to USD 690/month for the highest Ministry of 
Education civil servant position.  Other DRC civil servants are now 
also threatening to strike for salary increases. (Kinshasa 1123) 
¶12. (U) GDRC Employment and Vocational Training Strategy 
Prime Minister Gizenga opened an employment forum on September 18 as 
part of the DRC government's strategy to battle poverty and achieve 
sustainable development.  He vowed to set up a new employment policy 
and new strategies for vocational training.  Labor Minister 
Marie-Ange Lukiana said that only 4 percent (880,000) of the 22 
million working-age people in the DRC are employed in the formal 
economy.  The GDRC is taking this initiative in league with the 
International Labor Organization and the UN. 
Mining 
------ 
¶13. (U) GDRC Mining Commission Review of Contracts 
The GDRC Mining Commission for the Review of Mining Contracts, 
established in June 2007, will not complete its investigation by the 
end of September as planned and may continue deliberations until 
year's end.  DRC Mines Minister Martin Kabuelulu claims that the 
commission is functioning properly.  The Catholic Church has 
announced that it may also sponsor a mining contracts review, 
reflecting the Congolese public's high expectations and desire for 
concrete benefits from the 60-70 contracts. 
Petroleum 
--------- 
¶14. (U) Parliament Okays DRC-Angola Petroleum Agreement 
 
KINSHASA 00001168  003 OF 003 
 
 
The National Assembly passed a law ratifying the July 30, 2007 
agreement between the DRC and Angola to jointly develop off-shore 
petroleum projects in the 10-kilometer-wide DRC zone between Angola 
proper and its enclave of Cabinda. 
Inflation and Exchange Rates 
---------------------------- 
¶15. (U) The DRC economy continues with a slight inflationary trend. 
Post market survey shows an inflation rate of 1.4 percent for the 
month of September.  The year-to-date inflation now stands at 19 
percent.  The inflation is likely due to scarcity of imported food 
in different cities.  This is a consequence of the engorgement of 
Matadi port and low goods clearance procedures.  Also, the beverage 
sector costs increased in anticipation of the exchange rate 
increase. 
Week ending:   8/3   8/31   9/25 
Central Bank Rates: 495   495   498 
Parallel Markets: 
Kinshasa    490   490   495 
Lubumbashi   490   490   495 
Mbuji-Mayi   495   500   505 
Kisangani   495   500   505 
Goma    495   500   500 
Bukavu    495   500   500