US embassy cable - 04KINSHASA2138

UNCLAS KINSHASA 002138 
 
SIPDIS 
 
STATE FOR EB/IFD/OMA:L.GALLAGHER 
TREASURY FOR OASIA/MDM:J. FRANCO 
 
E.O. 12958: N/A 
TAGS: EFIN, EAID, CG 
SUBJECT: TRANSPARENCY OF BUDGET/MILITARY SPENDING 
 
REF: STATE 239929 
 
 1.  Summary.  This message is in response to reftel and 
answers are keyed to those questions.  The GDRC is a post- 
conflict transitional government composed of all parties to 
the Global and Inclusive Accord signed in Sun City in 2002. 
The focus of the government is to finish the transition with 
elections slated to take place in June 2005.  The IMF is 
working with the GDRC to improve the accounting and budget 
process. Over the past three years they have made 
considerable progress in budget and expenditure procedures 
through the "expense chain" that accounts for disbursements 
and codes them to budget items.  End summary. 
 
2.  (Part A) General Overview of Auditing Procedures 
(1)  Military expenditures are audited internally. 
(2)  Military finance officers conduct the audits. 
(3)  Audits are presented to the Minister of Defense and the 
President. 
(4)  Both the Minister of Defense and the President hold the 
rank of Major General. 
(5)  Audits are not required on an annual basis. 
(6)  There has been no specific legislation passed by the 
transitional government but, as noted above, internal audits 
are conducted as a matter of policy. 
 
The GDRC is transitional in nature, and is working to resolve 
years of internal and external conflicts.  The government's 
lack of technical capacity is being addressed in cooperation 
with the IMF. Parliament is increasing its oversight of the 
budgetary process, and has authority to review audits. 
 
There is a lack of breakdown in salary payments to the 
military due to the absence of a centralized disbursement 
structure.  The international community is working with the 
GDRC to integrate former rebel groups into the armed forces, 
demobilize large numbers of them, and conduct a census to 
precisely budget for salary and related expenses.  Parallel 
to this, the Central Bank is working to set up offices 
throughout the country and to set up an electronic payroll 
system for the civil service as well as military. Most 
deficiencies in the present system are a result of capacity 
constraints. The IMF reported on November 23 at the 
conclusion of its November 9-23 mission that the GDRC has 
made very good progress on tracking expenditures, including 
with the military. 
 
3.  (Part B) The Military Budget and On-budget and Off-budget 
Revenues and Expenses 
(1)  The national police are under the Minister of the 
Interior, not the Minister of Defense.  Other security 
services are under the Office of the President. 
(2)  Both the GDRC and the IMF noted military 
over-expenditure in 2004; this was a direct result of 
unanticipated expenses incurred in June 2004 when the 
military had to respond to the seizure of Bukavu (the capital 
of South Kivu) by a renegade militia group.  Post is not 
aware of significant off-budget military receipts. 
 
4.  (Part C)  The Military Component of the National Budget 
 
(1)  With pressure from donors under the HIPC program and 
IMF's Poverty Reduction Strategy, the GDRC has made progress 
in increasing health and education spending.  Military 
expenditures are still larger.  Military spending is 
estimated to be 15 percent of the budget.  The GDRC is 
unlikely to spend significantly more on health and education 
until conflicts are resolved and the transition is completed. 
(2)  The budget debate begins in the Council of Ministers 
where 36 different Ministries vie for funding with four 
vice-presidents and the President's office.  As half the 
budget is financed by external sources, donors also weigh in 
on the debate.  The draft budget is then debated by the two 
chambers of the Parliament.  These actors were all appointed 
under the Global Accord; none has a majority in any body, so 
debate is lively. 
 
 
MEECE