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