ENGAGEMENT OF INTERNATIONAL, LOCAL FINANCIAL

C O N F I D E N T I A L SECTION 01 OF 02 ABIDJAN 000318

SIPDIS

SIPDIS

ACCRA FOR USAID/WARP
TUNIS FOR AFDB USED

E.O. 12958: DECL: 03/23/2017
TAGS: EFIN ECON PREL PGOV IV
SUBJECT: ENGAGEMENT OF INTERNATIONAL, LOCAL FINANCIAL
INSTITUTIONS IN COTE D'IVOIRE IN CONTEXT OF OUAGA ACCORD

REF: ABIDJAN 242

Classified By: EconChief EMassinga, Reasons 1.4 (b,d)


1. (C) Summary. The Ouaga Accords have forced
international and private financial institutions to react.
World Bank staff is anxious to find a mechanism to disburse
USD 104 million in DDR funds. The IMF is equally anxious to
pry open government oil, gas and cocoa accounts as a
precursor to a large post-conflict package, but is
encountering resistance from State-owned firms and ministries
(although this should not have come as a surprise). The
African Development Bank staff is renewing its examination of
the decision on the location of its permanent HQ now that the
Bank's management apparently believes Ouaga may open a
pathway towards final resolution of the Ivorian crisis.
Private Ivorian banks are watching developments closely, and
have a (cautious) eye on reopening their operations in the
northern, Forces Nouvelles-held zone. End Summary.

World Bank and Pre-Arrears Disbursement
=================================

2. (C) During a March 5 luncheon hosted by World Bank
Country Director James Bond (reftel),his deputy, World Bank
Resident Representative Peter Ngomba told EmbOff in a
pull-aside that Bank Staff was seriously considering putting
to the Board a plan to disburse Disarmament, Demobilization
and Reintegration funds (USD 104 million in WB funds is
budgeted) prior to an agreement on Cote d'Ivoire's arrears to
the Bank, which currently stand at well over USD 400 million.
The idea is predicated on the notion that the Bank and its
sister institutions (IMF, African Development Bank) and
bilateral debt holders, most notably the French development
assistance agency, would maintain leverage over Cote d'Ivoire
in upcoming negotiations over Emergency Post Conflict budget
support packages and later, debt forgiveness through the
Paris Club and other mechanisms. Ngomba was anxious to say
that this idea would only be viable should the U.S. be
amenable, hinting other major Bank board members would go
along with the proposal.

IMF Expresses Frustration with Cocoa, Oil/Gas Audits
============================================= =======

3. (C) Philippe Egoume, The IMF's Cote d'Ivoire Resident
Representative, buttonholed Ambassador Hooks at a recent
function to express frustration with the lack of cooperation
Ivorian authorities are providing to auditors assigned to
look at the government's finances related to the cocoa and
oil/gas sectors. An IMF mission to Cote d'Ivoire planned for
March 19 was scrapped due to continued stonewalling by key
government institutions of a World Bank audit team assigned
to look at those critical income-generating economic sectors.
As of March 19, a new workplan calls for a stripped down IMF
team of three to begin work with WB staff and contractors to
examine oil/gas and cocoa March 29 through April 4. This
will be followed by an Ivorian technical team visit to DC
April 14-April 21 to meet with both the Fund and the Bank to
start discussions on Article IV and an Emergency Post
Conflict Assistance (EPCA) support program. The workplan
further specifies April 29-May 13 for a full-fledged mission
in Abidjan to conclude Article IV consultations and the EPCA
program. While the modified workplan remains ambitious,
Egoume along with WB officials are angered at the lack of
progress to date. The lack of progress is unsurprising,
however, given the sensitivity of these sources of income to
the President and his circle. (Hence the difficulty Soro is
having negotiating a handover of control over some or all of
them in his possible Premiership).

AfDB and Its HQ Location Question
=================================

4. (C) African Development Bank Group Official
Representative in Cote d'Ivoire, Ngardinga Sangbe, met with
the Ambassador on March 19, largely to gather U.S. views on
the Ouaga Accord and its viability. In the context of the
discussion, Ambassador Hooks asked Sangbe about the decision
concerning the permanent home for the AfDB, which is
currently in its 5th year of "temporary" relocation to Tunis.
Sangbe acknowledged some jockeying among states to host the
Bank permanently (Tunisia, Ghana, Algeria, Botswana and
Nigeria have all made overtures to host the Bank
permanently),as well as a strong push by Cote d'Ivoire to
have the Bank return to its Abidjan HQ. Bank staff appear to
have a preference for returning to Abidjan, given its ties to
the city, and hope the Ouaga Accord will be the basis of a
decision to return in the coming year.


ABIDJAN 00000318 002 OF 002


Ivorian Association of Banks President on Return of Financial
Institutions to the North
=================================

5. (C) EmbOff met with the President of the Ivorian Bank
Association (who is also the President of one of the largest
consumer banks, BICIC, owned by the French group BNP
Paribas),Ange Koffy, on March 20 to discuss the financial
industry's consideration of a return of activities to the
northern, Forces Nouvelles-held part of the country. Koffy
hailed the Finance Ministry's return of some cadres to the
FN's de facto capital, Bouake, and noted state-owned
investment bank BNI had returned there. When discussing
privately owned banks, Koffy said negotiations with the FN
and the "impartial forces" (ONUCI and French Licorne) were
continuing. Koffy said banks were leery of the "robber
becoming the gendarme" (in reference to the spate of bank
robberies in the FN zone after the '02 takeover, widely
attributed to FN elements),and wanted to work out a durable
plan for protecting banks and bank personnel as French
Licorne forces gradually are drawn down. Koffy said he
expects banks to return to at least minimal operations in the
North within three months. Asked if the banks would
appreciate USG technical assistance, Koffy indicated that
none at this time is needed, but that perhaps in future it
could be appropriate.


6. (C) Comment. As it has within most politically-attuned
circles, the Ouaga Accord has altered the terrain for both
public and private financial institutions operating in Cote
d'Ivoire. It has forced everyone to react, perhaps more
quickly than many had imagined. Concerning the GOCI's World
Bank arrears, we believe that the Bank should insist on an
agreement with the GOCI to clear these arrears before it
disburses DDR funds. Moreover, the Bank and the other IFIs
should continue to press the GOCI for transparency in the
cocoa and oil/gas sectors. Bank staff are anxious to avoid
being cast as an impediment to the peace process. However,
the government here should not be allowed to use the crisis
to hide its fiscal mismanagement. End Comment.
Hooks