CENTRAL BANK REVEALS RESERVES, REFORM PROGRESS, AND A NEW

UNCLAS CONAKRY 001238

SIPDIS

SIPDIS
SENSITIVE

E.O. 12598: N/A
TAGS: ECIN EFIN ECON EMIN GV
SUBJECT: CENTRAL BANK REVEALS RESERVES, REFORM PROGRESS, AND A NEW
MONEY LAUNDERING LAW

REFTEL: CONAKRY 827


1. (SBU) SUMMARY. The Director General at the Central Bank
revealed that currency reserves are down to about 12 days of
imports. However, he expressed optimism that return to a funded IMF
program would improve the exchange rate, which subsequently hit a
new low since the January/February strike. He also reported that
money laundering legislation was recently introduced in the National
Assembly. END SUMMARY.


2. (SBU) On November 7, Econoff met with the Director General of
Credit and Exchange for the Central Bank, Mr. Cheick Sylla. Mr.
Sylla characterized the overall reform activities of the Central
Bank of Guinea to be in a "wait and see" mode. He called it a "bit
by bit" process. He defended the pace by stating that since the
arrival of the new consensus government of Prime Minister Kouyate
and the appointment of a new governor of the bank, the bank has put
in place a reform working group committee. The committee submitted
its recommendations to the Prime Minister for necessary reforms, but
so far are still waiting to see if they will be implemented.


3. (SBU) The Director General revealed that the Central Bank
recently submitted a bill to the National Assembly to formally
criminalize money laundering. Mr. Sylla claims that Guinean rules
and regulations have always condemned money laundering, but no one
has been officially arrested for being involved in it. The Central
Bank is concerned about possible money laundering through the
construction of buildings in Conakry. Mr. Sylla said that people
are constructing buildings and making large investments here without
passing through any of the local financial institutions.
Nevertheless, the Guinean authorities lack evidence, and legal
basis, to charge them.


4. (SBU) Concerning the exchange rate policy, Mr. Sylla said the
Central Bank was still working to strengthen the Guinea Franc.
(NOTE: On November 13, the Guinea Franc/U.S. Dollar exchange rate
hit a new post strike low, 4179 Gnf/dollar. END NOTE.) The
Director General claimed that the Central Bank is no longer
financing off-budget expenses and the budget deficit. He also
claimed that a tax exemption abusively used by some businessmen is
no longer valid, which provides the GOG with a new revenue stream.
Mr. Sylla stated that if Guinea is able to get on a funded program
with the IMF, the exchange rate would stabilize at around 4000
GNF/Dollar.


5. (SBU) Mr. Sylla confided that the Central Bank currently has
reserves of approximately USD 59 million. That is about 12 days of
imports, according to his figures. This is down from the 27 days of
imports he claimed in a July meeting with Econoff(see reftel).

CARTER