NEW FINANCE MINISTER ON FUTURE OIL REVENUE

UNCLAS NDJAMENA 000454 SIPDIS SENSITIVE DEPARTMENT FOR AF, AF/C, EB, LONDON AND PARIS FOR AFRICAWATCHER, TREASURY FOR OTA, ENERGY FOR GEORGE PERSON AND CAROYLN GAY E.O. 12958: N/A TAGS: ECON EFIN ENRG EPET PGOV PREL CD SUBJECT: NEW FINANCE MINISTER ON FUTURE OIL REVENUE MANAGEMENT ¶1. (SBU) SUMMARY: Chad would like to use new oil revenues to enhance public security and protect vulnerable groups as well as reduce poverty, according to Chad's newly-appointed Minister of Finance. In a meeting with the Ambassador March 25, the new Minister also supported an independent panel to supervise revenues from new fields, but did not take a position whether the existing mechanism should be charged with that task. The Minister welcomed future visits by Treasury advisors for the Oil Revenue Management College. END SUMMARY. ¶2. (SBU) On March 25, Ambassador and Econ/Comm Officer met with Minister of Finance Ngueyam Djiabe, recently appointed by President Deby's government to replace Awad Sakine. Ambassador asked for the Minister's views on regulations regarding the management of future oil revenues. The Minister noted that the law regarding oil management specifically referred to the oil-producing sites at Kome, Miandoum, and Bolobo. He claimed the IMF and World Bank had insisted on clearly designating only those sites in the law. He cited the recent decree by the Council of Ministers, which announced that revenues from future oil fields would be managed "in the spirit of" the law applicable to current oil production. ¶3. (SBU) The Minister noted that, while the existing law focused on poverty reduction, two other areas also need to be addressed: 1) investment in good governance and 2) protection of vulnerable groups. He believed that the concept of good governance is a positive first-step in curbing corruption and freeing up resources for fiscal and infrastructure development, but also needed to include resources for domestic security. The Minister pointed out that without resources for the ministries responsible for maintaining security (i.e., Ministry of Justice, Ministry of Public Security and Immigration, etc.),it will be difficult to reduce poverty or establish good governance practices. What good are new schools, he pointed out as an example, if it is too unsafe for students to attend them. ¶4. (SBU) A second missing component of the decree, according to the Minister, is a clear reference to protecting "vulnerable groups." At one point, he indicated that 
"vulnerable groups" would include retirees. (Comment: Throughout 2004, the Government has not been able to pay salaries or retirement benefits. It is not surprising that the GOC wants to designate "retirees" as a priority. End Comment.) The Minister noted that the vagueness of the new decree could pose a problem, as the Chadian public views the government's management of oil revenues with suspicion. He said more information for the public about the use of oil revenues would be necessary to put to rest these suspicions. ¶5. (SBU) The Ambassador asked Djiabe about the role that the Revenue Management College would have in the management of future oil revenues. The Minister said that an independent panel will manage future revenues in order to prevent the misappropriation of resources outside the law. He spoke favorably about the performance of the Revenue Management College, but did not comment on whether it or some other mechanism would manage the revenues. Nor did the Minister respond explicitly to the Ambassador's comment that there did not appear to be a need to duplicate the efforts of the College with another independent panel. ¶6. (SBU) Ambassador raised the possibility of a Treasury advisor returning to Chad to aid in the oil revenue management efforts. The Minister expressed appreciation for past USG assistance. He looked forward to future visits by Treasury advisors. ¶7. (SBU) COMMENT: Minister Djiabe gets high marks in financial circles here for his competence and his commitment to fiscal disipline and transparency. His support for an indpendent body for revenue management is positive, tough the GOC's position on what mechanism will beused remains to be seen. His comments on the ned for flexibility in spending oil revenues outsie the priority sectors defined in the existing ptroleum law reflect a concern heard increasingly here. The potential for misuse is obvious. But for a government which has trouble paying teachers' salaries and is under constant pressures from insecurity on its eastern border with Sudan and elsewhere in the country, its frustrations over how it can spend oil revenues are also obvious. END COMMENT. ¶8. (SBU) BIONOTE: Previously, Djiabe served as the former Minister's deputy, in charge of the national budget. He studied in Paris, and worked as an attach for economic development for many years in the Bank for Central African States in Brazzaville. His experience could be an asset for the GOC, and his background as a civil servant may leave him free of political entanglements. The Minister is from the town of Koumra in southern Chad, and has numerous contacts in the United States. WALL NNNN