6 PUBLIC SPENDING ON THE FORESTRY SECTOR

6.1 Spending from main public forestry institutions

The only “institution” or forestry harvesting company in the Democratic Republic of Congo - FORESCOM - was “privatised” by a process which up until now has not been cleared up. The other institutions are normative specialised services of the Ministry not having autonomy regarding their budget except the FCFC which operates on a budget on order, supplied by two taxes, that is, on the felling permit and the tax on wood exports (logs, sawnwood and veneer). The revenue from these two taxes is paid into a Resident Foreign Currency account (RFC). We will present the 1998 budget of the FRFC having briefly described the procedure in drafting it.

6.1.1 Drafting of FRFC budget

The 1999 budget forecast was drafted on the basis of the following points:

1. Ministerial decree number 13/CAB/MIN/ECNT/97 of 28 February 1997, setting taxes and the methods of collection of FRFC dues. For the 1999 year, the rates set were the following:

- Dues on felling permits: USD 2.00/ha
- Dues on wood exports: logs - 4.00% of FOB amount
sawnwood - 2.00% of FOB amount
veneer - 1.50% of FOB amount

2. The average value of currencies in relation to the Congolese franc are rated at: USD 1.00 = Fc 3.50; and BEF 1.00 = Fc 0.10.

3. For the production statistics for 1994, 1995, 1996 and 1997, the working hypothesis used is acknowledging that forestry companies will be able to maintain for 1999 their average level of production for the years 1997, 1995, 1996 and 1997. The forestry surface area for harvesting in 1999 is thus estimated at 70,000 ha. The dues on wood harvesting are calculated on the basis of the annual average of revenue generated by forestry companies in 1994, 1995, 1996 and 1997.

The situation of this revenue can be summarised as follows:

Product	Amount
Logs	BEF 17,889,349
Sawnwood	BEF 4,969,264
Veneer	BEF 1,987,705
Total	BEF 24,846,318

The forecast for 1999 for the FRFC are presented as: dues on felling permits = Fc 490,000; and dues on wood exports = Fc 2,484,632.

6.1.2 1999 budget

Revenue aspect. There is a fund that was specially created for forestry, it is the Fund for the Reconstitution of Forestry Capital (FRFC) which was to support twelve projects of reforestation and nine forestry services of the supervisory ministry for forestry. Its activities are today paralysed by the war that caused a ceasing of forestry activities for the most part of big wood production companies.

Table 8 FRFC revenue

Budget headings	1998 forecast (NZ)	1999 forecast (Fc)
Dues on felling permit	15,620,000,000	490,000
Dues ad valorem (export)
- Logs (4.00%)	61,564,783,678	1,788,935
- Sawnwood (2.00%)	17,179,894,022	498,926
- Veneer (1.50%)	7,305,281,896	198,771
Subtotal	86,049,959,594	2,484,632
TOTAL	101,669,959,594	2,974,632

Note; Fc 1.00 = NZ 3,000,000; USD 1.00 = Fc 1.50.

Spending aspect. In conformity with texts governing the use of FRFC loans, the revenue is used to finance projects on the one hand, and on the other, the operating of the FRFC secretariat in the following percentages:

- Financing of projects:               70% of the budget   Fc 2,082,242
- Operating of FRFC secretariat: 30% of budget         Fc   892,330
- Total budget in 1999                                                 Fc 2,974,632

Spending affected by the financing of these projects is broken down as follows:

Payments	42.2%
Operating costs	30.0%
Investment (equipment)	19.8%
Total	100.0%

Public spending on investment for the 2000 tax year was Fc 5,196,640,822 or USD 208,000,000 and Fc 272,568,000 or USD 10,902,720 of expenditure allocated to forestry, that is 5% of capital investment (see Table 9).

Regarding the operating budget estimated at Fc 956,073,378 or USD 38,242,951, an amount of Fc 3,902,200 or USD 156,088 or 0.4% was allocated to forestry (see Table 10).

Table 9 Public capital expenditure 1999 and 2000

Ministries	1999 budget	2000 budget
Presidency Constituent Assembly Magistrates Security Services Foreign Affairs and International Cooperation Home Affairs Defence Justice Civil Service, Labour and Social Security Information and Tourism Human Rights Finances and Budget Programmes and Trade Economy and Industry Land Affairs, Environment, Conservation of Nature, Fishing and Forestry Reconstruction Transport and Communications Post, Telephone and Telegraphs Agriculture and Breeding Energy National Education Arts and Culture Oil Mining Youth, Sports and Leisure Social and Family Affairs Health Public Works Portfolio	27,713,686 - 1,107,847 1,754,478 - 2,356,896 30,018,998 14,367,000 2,001,406 5,675,177 - 2,260,000 3,573,700 143,664 2,780,212 50,540,990 23,779,779 3,216,329 67,436,286 17,868,501 33,334,055 285,896 15,188,223 7,323,083 174,099 785,034 22,514,308 67,080,572 -	72,953,000 50,000,000 50,913,000 74,866,000 21,552,000 172,160,000 856,099,824 55,512,000 50,628,000 94,017,000 7,582,000 224,477,000 133,108,000 102,822,000 272,568,000 662,498,000 253,026,000 105,963,000 365,748,000 220,758,000 236,355,000 12,963,000 114,966,000 168,608,000 9,920,000 48,478,000 230,439,000 521,361,000 300,000
TOTAL	400,896,119	5,196,640,822

Source: Congolese State budget for the 2000 tax year, Table number 44. Note; the Budget is expressed in Congolese Francs (Fc); USD 1.00 = Fc 25 (Year of reference: 2000).

Table 10 Ministries operating expenditure (2000)

Ministries

Amount (Fc)

Ministry for Land Affairs, the Environment, Fishing and Forestry

Other ministries

3,902,200

952,171,178

0.04

99.96

TOTAL

956,073,378

100.00

Source: Congolese State budget for the 2000 tax year, Table number 38.

6.2 Other intervention

Since the first pillaging in 1991 which put an end to structural cooperation with sponsors, that is more than ten years ago, the Democratic Republic of Congo has no longer received foreign aid destined for forestry, with the exception of the UNDP and FAO. They financed the holding of two conferences in May 2000 on forestry policy in the Democratic Republic of Congo.

6.3 Subsidies to the private forestry sector

Congolese law does not cater for this type of subsidy and there are practically no companies or individuals operating in the sector of forestry management.

6.4 Revenue and expenditure of State forestry companies

The only forestry company of the Democratic Republic of Congo (FORESCOM) was privatised following the rupture with Canadian cooperation.