US embassy cable - 00KINSHASA8647

C O N F I D E N T I A L SECTION 01 OF 02 KINSHASA 008647 
 
SIPDIS 
 
 
E.O. 12958: DECL: 12/28/2010 
TAGS: EFIN, ECON, PGOV, CG 
SUBJECT: FINANCE MINISTER PLANS REFORMS, BUT CAN HE DELIVER? 
 
 
REF: STATE 24316 
 
 
Classified by Economic Officer Katherine Simonds.  Reason: 
1.5(d). 
 
 
1. (C) Summary: On December 28 Finance Minister Amisi told 
the Ambassador that he hopes to have Presidential approval 
for both an interim economic reform program and a new budget 
by mid-January.  He said his program would include market 
liberalization, deficit reduction and policies to encourage 
local food production.  He said the IFIs have agreed to 
review GDRC performance after three months.  The Ambassador 
gave Amisi information on requirements for USG debt 
forgiveness, including military transparency.  Amisi appears 
more committed than his predecessor to doing the right thing, 
but his ability to put his plans into practice is 
questionable.  End summary. 
 
 
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Critical Time Ahead 
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2. (C) During a visit from the Ambassador on December 28, 
Minister of Finance Jean Amisi Kalondaya said he had two key 
programs he would present to the President for approval by 
mid-January.  One is a draft budget, which he expects to 
complete within two weeks.  The other is an interim economic 
reform program.  Amisi said that he expects a World Bank/IMF 
team to visit Kinshasa around January 15, and implied that he 
hopes to have government approval for the reform program 
before they arrive.  (At their meeting on December 29 
(septel), recalling his talk with Amisi the previous day, 
Ambassador Swing encouraged President Kabila to give full 
support to the World Bank/IMF mission when it comes here in 
January.) 
 
 
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Pleased with International Support 
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3. (C) Amisi told the Ambassador he recently spoke by phone 
with World Bank President Wolfensohn and IMF Managing 
Director Kohler, and he said that both expressed support. 
Amisi said the IFIs had agreed to review the DRC's 
performance three months after his reform program is 
implemented and to consider a negotiated program at that 
time.  He acknowledged that past recommendations from Bank 
and Fund experts had not been followed, but noted that 
despite this the World Bank is moving ahead to activate the 
Emergency Stabilization Fund.  Amisi told the Ambassador that 
he hoped to use most of the $5 million in the Stabilization 
Fund for road-building projects.  He also expressed 
satisfaction with the African Development Bank's plan to 
begin a major capacity building project for the GDRC. 
Finally, he said the European Community will release 200 
million euro in credits for the DRC as soon as the GDRC pays 
a $500 thousand membership fee, something he hopes to achieve 
in the next week. 
 
 
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The Reform Program 
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4. (C) Amisi gave only a broad overview of his reform 
program.  He said he plans to liberalize diamond, petroleum 
and foreign exchange markets, but noted that foreign exchange 
liberalization will need to be staged.  He admitted that 
current policy includes a large subsidy for fuels that the 
government can ill afford.  He told the Ambassador he is 
confident that he can increase government revenues 
dramatically and thereby reduce the budget deficit, which 
will allow the GDRC to reduce money supply growth and control 
inflation. 
 
 
5. (C) Amisi was enthusiastic about plans to reduce the 
demand for hard currency by increasing local production and 
limiting imports.  He told the Ambassador that restrictions 
on the DRC's imports of salted fish will quickly lead to a 
resurgent fishing industry.  Similarly, he said, local 
production of pork, chicken, corn and manioc must be 
encouraged. 
 
 
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The Importance of Getting It Right 
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6. (C) The Ambassador told Amisi that he was wise to make 
relations with the IFIs one of his top priorities, since 
their participation will help the DRC design the right 
program, will open the way to multilateral financing, and is 
a prerequisite for bilateral debt relief.  He gave the 
Minister information on the HIPC program and noted that the 
USG is committed to providing debt relief to countries 
meeting requirements.  He also described for Amisi U.S. 
legislation relating to military budget transparency and left 
him a copy of the demarche delivered to former-Minister 
Mawampanga in March (Reftel).  The Ambassador recommended 
that the GDRC focus efforts on reform of the parastatal 
sector as well.  He explained USG restrictions on assistance 
to the GDRC to Amisi, but noted that we still had the 
opportunity to be helpful in promoting reform, such as when 
we sponsored the Public-Private Partnership Forum in October. 
 
 
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Comment 
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7. (C) It was a refreshing change to discuss economic issues 
with the Finance Minister, instead of listening to an 
emotional diatribe about the war.  Amisi said all the right 
things about market liberalization, and about fiscal and 
monetary restraint.  However, his belief that food imports 
can quickly be replaced appears naive, and his estimate of 
the amount and speed of international support the GDRC can 
expect appears overly optimistic.  More importantly, his 
success will hinge on his ability to secure the support of 
President Kabila in the face of opposition from some of those 
closest to the President.  Nothing we know about him or saw 
during our call inspires confidence that he will be able to 
deliver where others have failed. 
SWING