Canada blocks debt relief as Congo marks jubilee

KINSHASA,  (Reuters) – Canada delayed an $8 billion  debt relief deal for Democratic Republic of Congo in a dispute  over mining rights, depriving the African nation of a chance to  mark the 50th anniversary of its independence yesterday with  the accord.

Congolese President Joseph Kabila had pushed for the relief  to be finalised in time for the celebration to show the world  his country was putting its painful past behind it, following   the war of 1998-2003 in which some five million people died.

But a World Bank decision on the debt was postponed slightly  at Canada’s request due to a legal dispute that exploded last  year between Vancouver-based First Quantum Minerals <FM.TO> and  the Kinshasa government over mining rights, officials said.

“Canada did it due to ongoing concerns related to  governance, rule of law, and preoccupations about what these  realities mean for sustainability of the debt relief programme,”  said a Canadian official who requested anonymity.

The accord, which could have slashed Congo’s annual debt  service burden to $194 million from $920 million, was meant to  be a high point of events to be attended by U.N.  Secretary-General Ban Ki-moon and Albert II, king of ex-colonial  power Belgium.

A spokesman for Canadian Finance Minister Jim Flaherty cited  concern about the cancellation of mining contracts after a  review of the sector by Kinshasa and noted that Canada had  slowed the debt relief process last year to raise such concerns.

“We will continue to work with our international partners to  ensure Canadian investment in the DRC is protected, while  empowering those within the country as they work towards peace  and sustainable economic development,” the spokesman said.

The World Bank’s sister organisation, the International  Monetary Fund, approved the debt relief for Congo yesterday,  an IMF board official said.

Both bodies must approve the deal and a World Bank official  said the board would discuss it today. A U.S. official  said Washington was supporting debt relief for Congo.