US embassy cable - 00KINSHASA8385

UNCLAS SECTION 01 OF 02 KINSHASA 008385 
 
SIPDIS 
 
 
E.O. 12958: N/A 
TAGS: ECON, EFIN, EPET, EMIN, KSAC, AMGT, PREL, CG 
SUBJECT: WEEKLY ECONOMIC REPORT - WEEK OF DECEMBER 11 - 
DECEMBER 17 
 
 
1. (U) SUMMARY: Gasoline and diesel prices rose on 
December 11, and public transportation fares went up 50 
percent on the 13th.  Kinshasa's motor fuel supplies 
were adequate but the GDRC twice closed service 
stations without providing advance notice, causing 
confusion. The Congolese franc weakened on the parallel 
market to about 130 Congolese francs per US dollar. 
Hewa Bora Airways acquired a Lockheed 1011 aircraft. 
Another new GSM cellular phone service was launched on 
December 15.  Two men were convicted of the December 
7th attack on Central Bank Governor Masangu in which 
his bodyguard was killed.  They were sentenced to death 
by a military court, and were executed in public, along 
with eight others, on December 14.  Inflation rose 
sharply following the increase in fuel prices and 
public transit fares.  END SUMMARY. 
 
 
 
 
MOTOR FUEL 
 
 
2. (U) The price of gasoline rose from 45 congolese 
francs (fc) to 70 fc and the price of diesel fuel rose 
from 40 fc to 66 fc on Monday, December 11.  (On 
January 1, 2000, gasoline cost only 3.1 fc per liter; 
over the course of the year fuel prices have increased 
over 2000 percent.) Fuel stocks at SEP, the national 
distribution company, were adequate and no lines formed 
except on Wednesday and Sunday, when stations were 
closed. 
 
 
3. (U) Fuel supplies currently in Kinshasa came from a 
new supplier.  Rumors that this was a substandard 
product circulated throughout the city and were 
repeated in the press.  The GDRC closed stations on 
Wednesday in order to perform tests on the quality of 
gasoline.  The GDRC announced that the tests confirmed 
the quality of the product, although some contacts 
claim they also showed a lower lead content than past 
deliveries to Kinshasa. 
 
 
4. Sunday's closure is part of a new policy to reduce 
consumption.  Industry contacts believe this is 
appropriate, and say it was part of the package of 
measures attached to the price hike.  The GDRC, 
however, made no public announcement about the Sunday 
closure, leaving motorists angry and confused.  The 
price of black market fuel hit a new high on Sunday of 
about 200 fc per liter. 
 
 
MONETARY UPDATE/EXCHANGE RATE 
 
 
5. (U) The Congolese franc weakened on the parallel 
market to about 130 Congolese francs per US dollar. 
The official exchange rate remains 50 francs per 
dollar. 
 
 
TRANSPORTATION 
 
 
6. (U) Following the fuel price hike Monday morning, 
minibus and taxi owners kept their vehicles off the 
street pending a fare hike, leaving Kinshasa's 
commuters to make the long walk into the center city. 
On Tuesday evening, December 12, the GDRC raised public 
transportation fares 50 percent. 
 
 
7. (U) The delivery of new and renewed drivers licenses 
was halted when the company contracted to produce them 
ran out of necessary imported materials.  This follows 
recent similar interruptions in the supply of license 
plates and tax stamps. 
 
 
LOCAL ECONOMIC NEWS 
 
 
8. (U) Hewa Bora Airways (formerly Congo Airlines or 
CAL) acquired from Delta Airlines a Lockheed 1011 
aircraft for use on passenger flights to Europe.  A 
second L1011 will be delivered in the first quarter of 
2001. 
 
 
TELECOMMUNICATIONS 
 
 
9. (U) Cellular phone service provider SAIT launched 
its "Oasis" GSM service on December 15.  The GDRC's 
Office of Post and Telecommunications announced that it 
would provide cellular phone service in partnership 
with ZIDCO Holdings, a Zimbabwean company. 
 
 
SECURITY 
 
 
10. (U) On December 11 the Military Court sentenced two 
men to death for the December 7 attack on Central Bank 
Governor Jean-Claude Masangu.  (Masangu's bodyguard and 
another man were killed in the attack.)  On December 14 
eight convicted men, including the two convicted of the 
Masangu attack, were publicly executed as a warning to 
other undisciplined members of security forces. 
 
 
11. A local newspaper reported that Masangu was rumored 
to have offered his resignation following the attack. 
Masangu wrote a letter to the paper's editor denying 
the report and declaring his firm intention to continue 
to defend the Congolese franc and to fight against 
inflation. 
12. (U) INFLATION FOR THE WEEK OF DECEMBER 4 
INFLATION BY CATEGORY  (IN PERCENT) 
WEEK ENDING          11/30      12/08      12/15 
FOOD                   3          9          13 
BEVERAGES              0          0           4 
NON-FOOD               2          9           2 
CLOTHING               0          0           0 
RENTS                 23          0           0 
TRANSPORTATION         0          0          50 
SCHOOL COSTS           0          0           0 
UTILITIES              0          0           0 
COMBINED FIGURES 
WEEKLY                 3.5        3.6        18.1 
MONTH TO DATE          8.6        3.5        22.0 
 
 
Transportation cost increases and rain increased the 
price of locally produced food.  Beer prices went up 
over 10 percent. 
 
 
November inflation: 8.6 percent 
Year to date (end November) 487 percent 
Last 12 months inflation (end November ): 605 percent 
1999 Inflation: 333 percent 
 
 
 
 
13.  (U) EXCHANGE RATE DEVELOPMENTS 
 
 
Exchange rates in Congo francs per US dollar 
                       1/30     12/08     12/15 
CENTRAL BANK RATE       50        50        50 
PARALLEL MARKET 
-KINSHASA              117-122   120-125  127-132 
-LUBUMBASHI            112-115   118-121  128-131 
-MBUJI MAYI            114-117   119-122  127-130 
 
 
SWING