GUINEA MAKES ANOTHER GOOD IMPRESSION ON IMF

UNCLAS CONAKRY 001106 SIPDIS DEPT PLEASE PASS TO USTR FOR LAURIE ANN AGAMA AMEMBASSY DAKAR PLEASE PASS TO WATH AMEBASSY ACCRA PLEASE PASS TO WATH COMMERCE FOR SALIHA LOUCIF TREASURY FOR OFFICE OF AFRICAN NATIONS TREASURY FOR USED IMF AND USED WORLD BANK SIPDIS SENSITIVE E.O. 12598: N/A TAGS: EFIN ECON IMF PGOV GV SUBJECT: GUINEA MAKES ANOTHER GOOD IMPRESSION ON IMF ¶1. (SBU) SUMMARY. IMF team leader, Jean Le Dem, was optimistic with respect to Guinea's progress towards a return to an IMF funded program. After a ten-day visit, which ended October 3, Le Dem said that Guinea is essentially on track, but expressed concern over Central Bank operations and external debt arrears. Le Dem stated that if Guinea continues with necessary macro-economic reforms, he plans to propose that Guinea return to a funded program during the November IMF Board meeting. END SUMMARY. ¶2. (SBU) DCM and econoff attended an out-briefing hosted by Le Dem and resident IMF representative, Alvin Hillaire, during which Le Dem expressed cautious optimism for Guinea's continued progress on macro-economic reforms. Le Dem said that the Government of Guinea is more transparent with respect to spending processes. He also identified the just completed IMF audit of the ministries as a good baseline study for measuring future improvements in government operations. ¶3. (SBU) Although he acknowledged improvements in Central Bank operations, Le Dem said that the Bank is still not up to par and needs to conduct a thorough "cleaning" of accounts. Le Dem added that President Conte told him privately that he would not interfere in government operations. Conte reportedly said that he was not interested in taking any funds from the government since he already has enough money. ¶4. (SBU) Le Dem added that payment of Guinea's substantial external debt arrears could pose difficulties in attaining IMF targets. Le Dem is in favor of addressing Guinea's debt through either rescheduling or forgiveness. ¶5. (SBU) Turning to Guinea's 2008 budget proposal, Le Dem said that the budget is overly ambitious with respect to revenue projections and that proposed spending is too high. He also expressed concern about how the military's potential demands for pay increases could impact the precarious financial health of the reform government. ¶6. (SBU) In closing, Le Dem stated that he had a meeting with the Prime Minister that afternoon, during which he planned to push for an end to rice and gasoline subsidies as well as to the ban on the export of agricultural products. (NOTE: The export interdiction is currently set to end in December. END NOTE). Le Dem said that the price subsidies are a concern given continued price increases on the world market, which means that the subsidies could 'break' the proposed 2008 budget. CARTER