SIERRA LEONE GARNERS PRAISE, REAPS $800 MILLION,

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SIPDIS

SIPDIS

SENSITIVE

E.O. 12958: N/A
TAGS: EAID EFIN PREL SL
SUBJECT: SIERRA LEONE GARNERS PRAISE, REAPS $800 MILLION,
AND APPROACHES DEBT RELIEF AT LONDON CONSULTATIVE GROUP
MEETING


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1. (U) Summary: The Consultative Group (CG) meeting on
Sierra Leone on November 29-30 in London generated
unexpected praise from the international community for the
country's recovery after the end of the brutal decade-long
civil war in early 2002. UK Secretary of State for
International Development Hilary Benn set the tone by
applauding Sierra Leone's "significant progress" in
restoring and reforming government and stimulating economic
growth, but also by highlighting the need to sustain anti-
corruption initiatives. The IMF commented favorably on
Sierra Leone's GDP growth rate at over 7% since 2002, and
projected similar growth for the next 3 years. President
Kabbah affirmed, "we take the fight against corruption very
seriously." The donors responded with pledges of $800
million for the 2005-07 period of the Poverty Reduction
Strategy Paper (PRSP),according to the World Bank, which UN
Deputy SRSG Victor Angelo characterized as a "significant
vote of confidence" despite potential pitfalls. The
leadership and Government of Sierra Leone (GoSL) are
delighted with the outcome, which should lead to the
completion point for Highly Indebted Poor Country (HIPC)
debt relief by mid-2006, despite falling $150 million short
of the PRSP pledging goal. End Summary.


2. (U) The CG meeting to consider Sierra Leone's PRSP took
place in London on November 29-30, 2005, after having been
postponed from the originally scheduled June dates in Paris.
The CG, co-hosted by the UNDP, World Bank, and the UK's
Department for International Development (DfID),was co-
chaired by Mats Karlsson of the World Bank and Sierra
Leone's Vice President Solomon Berewa, while President Ahmad
Tejan Kabbah spoke at the opening session. The CG attracted
30 donors, including the U.S., Algeria, China, Denmark,
Egypt, Germany, Ireland, Italy, Japan, Norway, Sweden,
Switzerland, United Kingdom, African Development Bank,
European Commission, Food and Agriculture Organization,
International Committee of the Red Cross, International
Finance Corporation, International Fund for Agricultural
Development, International Monetary Fund, Kuwait Fund for
Arab Economic Development, Saudi Fund for Development,
UNAIDS, UNDP, UNEP, UNHCR, UNICEF, World Food Program, World
Health Organization, and World Bank. The United States was
represented by the Ambassador to Sierra Leone and the USAID
Sierra Leone Country Program Coordinator. Sierra Leonean
observers at the CG included members of parliament and civil
society organizations advocating gender issues, Truth and
Reconciliation Commission recommendations, and expatriate
Sierra Leone-American concerns.


3. (U) The tone for the CG was set in welcoming remarks by
the host, Britain's Secretary of State for International
Development Hilary Benn, who noted that "The Government of
Sierra Leone has traveled an impressive distance since 2002
but there is still a considerable way to go." Paricularly
significant, Benn said, has been "Sierra Leone's performance
under the IMF supported economic reform program (which) has
been impressive with targets being met over the course of
six successful reviews." Sierra Leone, he said, is now "at
a critical turning point and we cannot risk going backwards
and letting the progress made to date unravel." While
praising the GoSL for "good progress . in addressing
corruption issues," Benn exhorted Sierra Leone to intensify
its anti-corruption efforts. Benn also cited extreme
poverty and youth unemployment as key determinants for
Sierra Leone's future. "The poor need to see and feel the
dividends from jobs and growth," he said, "otherwise we risk
undermining peace and stability as people lose hope again
and start to doubt the integrity of the poverty strategy."


4. (U) The UN delegation leader, Deputy SRSG Victor Angelo,
likewise described Sierra Leone as "a beacon of hope in West
Africa." IMF representative Delphin Rwegasira praised the
GoSL for "significant progress" in its post-conflict
transition, predicting a 6-7% annual GDP growth rate over
the next three years. He observed that after Sierra Leone
completes one year of PRSP implementation in the first half
of 2006, the most important HIPC trigger point for debt
relief will have been reached. He cautioned, however, that
debt relief will be inadequate for the large resource gap

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(approximately $950 million before pledges) needed for PRSP
implementation, and called for intensified GoSL revenue
collection. He noted that revenues are up, pointing out
that the 2005 deficit will be less than in 2004.


5. (U) To underscore the importance of the CG to Sierra
Leone, President Ahmad Tejan Kabbah delivered an opening
address that surveyed the accomplishments since 2002, the
considerable challenges ahead, and the plans for PRSP
implementation. He stated that he personally regards
corruption "as a serious national security threat" because
"we can never realize our vision of developing a stable and
prosperous country without curbing corruption." Among the
accomplishments cited by Kabbah are the use of foreign
judges and prosecutors to pursue corruption, a new
investment code and other initiatives to attract foreign
investment, decentralization through local councils to bring
government closer to the grassroots, and progress towards
food security. Kabbah, while expressing gratitude for past
assistance, appealed to "international partners to support
this nascent success story" and in particular "to encourage
the emergence of a private sector" and "in creating an
enabling environment for foreign investment."


6. (U) At the urging of the World Bank and the UN two new
funding mechanisms were offered for PRSP support: a World
Bank-managed PRSP Trust Fund, and Multi-Donor Budget
Support. Neither attracted the anticipated support.
Although Benn announced an immediate British contribution of
3 million UK pounds to initiate the Trust Fund, only one
other donor made a contribution to this mechanism. Four
donors (UK, European Commission, World Bank, African
Development Bank) committed to Multi-Donor Budget Support,
but this was simply an alternate mechanism for the direct
budget support that they already provide.


7. (U) Amidst considerable praise for Sierra Leone's
progress, donors largely committed to continuing their
existing assistance through their preferred modalities.
Most democratic donors stated that they could not commit to
new funding prior to appropriations from their legislatures.
Speaking for the United States, the Ambassador said, "Due to
the funding process, timing, and the budgetary cycle, the
U.S. Government has no new money to pledge to the
implementation of the PRSP, but our current ongoing program
remains robust and responsive to the key needs identified by
the people and the Government of Sierra Leone as described
in the PRSP."


8. (U) Among the notable commitments, the African
Development Bank announced the opening of its Freetown
office in 2006. The UK stated that it is giving 100 million
pounds annually to Sierra Leone, its highest per capita aid
recipient in Africa. Britain reiterated an earlier pledge
to give at least 40 million pounds annually through 2012
exclusive of security assistance. Japan announced
resumption of its bilateral program, which began with the
opening of a JICA office in Freetown in 2005, at $16
million. Ireland, which also opened in Freetown in 2005,
confirmed its annual program of 5 million euros. Neither
Japan nor Ireland could confirm future commitments in
advance of appropriations. Germany announced 22 million
euros for PRSP support. The Kuwaiti Fund invited proposals
for PRSP support. Sweden stated that its aid to Sierra
Leone would continue through multi-lateral institutions such
as UNDP. Denmark also would not have bilateral aid, but
noted its contributions to regional medical assistance that
benefit Sierra Leone and to the war crimes Special Court for
Sierra Leone. Italy emphasized its debt cancellation to
Sierra Leone and announced approximately 19 million euros
for electric power production and medical assistance. The
European Commission said that it was providing 345 million
euros in its 2002-2007 budget cycle, which was approved well
ahead of the PRSP but is supportive in many aspects. The UN
said that its development budgets for Sierra Leone would be
$68 million in 2006 and an estimated $40 million in 2007.
Switzerland emphasized its contributions to the Special
Court and existing assistance through multilateral channels
such as UNDP, IDA, and WFP.

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9. (U) At the meeting's conclusion, CG Co-Chair Mats
Karlsson, the World Bank Director for Sierra Leone resident
in Accra, announced that at least $800 million had been
pledged by donors for the 2005-2007 period to support the
PRSP without providing any details on how the figure had
been calculated. Karlsson also announced that future
Consultative Group Meetings on Sierra Leone would be held
annually in Sierra Leone. In his final remarks, Karlsson
stated, " we have made substantial progress here and
demonstrated a real commitment to turning a fragile success
into a robust one." In a similar vein, fellow CG Co-Chair
Victor Angelo of the UN declared, "The many countries and
multilateral organizations represented at this meeting have
recognized the tremendous progress achieved by the
Government and people of Sierra Leone in the short period
since the end of the civil war and given a significant vote
of confidence to the Government's Poverty Reduction
Strategy."


10. (U) Sierra Leone's leaders were pleased by both the
positive tone of the CG and the total reportedly pledged.
In a communiqu, the GoSL noted that the $800 million pledge
could increase when donors finalize their aid budgets and
that HIPC debt relief will produce another dividend toward
closing the PRSP resource gap.


11. (SBU) Comment: The Consultative Group Meeting for
Sierra Leone mainly served as a morale boost for the
Government of Sierra Leone which is often criticized for
mismanagement and political mendacity while trying to
overcome the daunting challenges of extreme poverty, food
insecurity, high unemployment, corruption, inadequate human
services, and idle youth. For a leadership that feels
unfairly maligned, the praise and funding from the
international community at the CG was a welcome atmospheric
change for President Kabbah and Vice President Berewa.
Significant new commitments did not materialize and the new
funding mechanisms were initially a bust. Nevertheless, it
was in the interest of the UK and World Bank for the CG to
succeed after having conspired to postpone the meeting from
June to November on the grounds that a delay would lead to
more donors and donations, which does not appear to have
been the case.


12. (SBU) Comment Continued: More assistance will be needed
if the PRSP goals are to be accomplished. Meanwhile, the
PRSP resource gap will require the GoSL to make some hard
prioritization decisions. Nevertheless, having received
universal praise and a World Bank endorsement for the PRSP,
Sierra Leone's political leaders are basking in the glow of
the Consultative Group Meeting. Eventually, as Sierra
Leone's political season heats up ahead of 2007 elections,
opposition parties are likely to question the math of the
PRSP budget and donor commitments towards closing the gap.
End Comment.

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