GUINEA MAKES ANOTHER GOOD IMPRESSION ON IMF

UNCLAS CONAKRY 001106

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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