Identifier
Created
Classification
Origin
07CONAKRY1267
2007-11-26 15:28:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Conakry
Cable title:  

AMBASSADOR MEETS WITH MIN OF FINANCE ON GAS SUBSIDY AND

Tags:  ECIN EFIN ECON GV 
pdf how-to read a cable
VZCZCXRO5615
RR RUEHMA RUEHPA
DE RUEHRY #1267/01 3301528
ZNR UUUUU ZZH
R 261528Z NOV 07
FM AMEMBASSY CONAKRY
TO RUEHC/SECSTATE WASHDC 1905
INFO RUEHZK/ECOWAS COLLECTIVE
RUEATRS/DEPT OF TREASURY WASHINGTON DC
UNCLAS SECTION 01 OF 02 CONAKRY 001267 

SIPDIS

SIPDIS
SENSITIVE

E.O. 12598: N/A
TAGS: ECIN EFIN ECON GV
SUBJECT: AMBASSADOR MEETS WITH MIN OF FINANCE ON GAS SUBSIDY AND
PROGRAM BUDGETING


UNCLAS SECTION 01 OF 02 CONAKRY 001267

SIPDIS

SIPDIS
SENSITIVE

E.O. 12598: N/A
TAGS: ECIN EFIN ECON GV
SUBJECT: AMBASSADOR MEETS WITH MIN OF FINANCE ON GAS SUBSIDY AND
PROGRAM BUDGETING



1. (SBU) SUMMARY. On November 16, the Ambassador met with the
Minister of Finance. The Minister discussed the budget for the
CENI, ongoing difficulties with implementation of program budgeting
without a supportive budget director, the profoundly negative
effects of the gasoline subsidy, and the obstacles to reform he is
facing within his own ministry. END SUMARY.


2. (SBU) On November 16, the Ambassador, Econoff, and Treasury
Budget Advisor Cheryl Hayes, met with Minister of Finance, Dr.
Ousmane Dore. The Ambassador's purpose was to make a courtesy call
on the Minister and to highlight issues of importance to the United
States. The discussions were frank, open, and friendly, with the
Minister being very candid with his responses.

--------------
BIOGRAPHICAL NOTES
--------------


3. (U) Dr. Dore was born in 1957 in Mamou, Republic of Guinea. He
holds a Bachelor's degree in Geology from the Institute of Mines and
Geology in Boke, a Master's degree in Mining Economy from the
University of Arizona, and a PhD in Economics from the University of
Minnesota. He was a visiting scholar at Duke University in North
Carolina in 1991 and an assistant professor in the Economics
Department at the University of Minnesota from 1988 to 1992.


4. (U) Minister Dore held several positions at the International
Monetary Fund (IMF) between 1993 and 2007, including Desk Economist:
Iceland and Norway; International Civil Servant; and Senior Desk
Economist for Cote d'Ivoire. He also served as Resident
Representative to Senegal, Guinea Bissau and Chief of Mission to
Guinea Bissau. Prior to his appointment as Minister in 2007, he was
serving as Senior Desk Officer on Ethiopia in Washington, DC.

--------------
CHALLENGES FACING THE MINISTER
--------------


5. (SBU) The Minister constantly referred to the underlying
challenges he is facing as Minister of Finance. He confided that
not only is the country quickly running out of cash, but many of the
cabinet members and division-level authorities in his own ministry
are working against him. This takes the form of doing nothing
rather than challenging him directly; nevertheless, it slows down

progress, and makes reform difficult.

--------------
INDEPENDENT ELECTIONS COMMITTEE
--------------


6. (SBU) When asked about budgeting for the independent elections
committee (CENI) for the next legislative elections, Dr. Dore stated
that a budget was in place, and that it was approximately USD 3.5
million. He confided that more would be needed, and that he would
be raising the issue through the informal G8 group meeting here in
December, as well as with the IMF and World Bank.

--------------
PROGRAM BUDGETING
--------------


7. (SBU) The Ambassador was very frank about the need for better
resource allocation and budget reform, particularly ongoing efforts
to implement program budgeting in Guinea. While substantial progress
has been made in the five pilot ministries chosen to implement
program budgeting in 2008, the Ambassador clearly expressed his
desire to see follow-through, such as having those ministries who
have already completed program budgets, inserted into the final
budget document. The Minister acknowledged the importance of the
project, and that there were difficulties with implementation of
program budgeting. In addition, he admitted that they had not taken
full advantage of the Treasury Budget Advisor. However, the
Minister was clear that his door was always open to the Budget
Advisor, and that if further obstacles arose from other members of
the Ministry, she should come to him directly for action. The
Treasury Budget Advisor was critical of the apathy shown by Budget
Director Mohamed Diare, who has slowed implementation of the program
budgeting by not taking affirmative implementation actions.

--------------
SHADOW CABINET
--------------


8. (SBU) The Finance Minister then went on to reveal his deep
frustration with the current finance ministry bureaucracy. He
reported that the members of his ministry work against him to such a
degree that he spoke openly of creating a 'shadow' cabinet of
loyalists to get things done.


CONAKRY 00001267 002 OF 002


--------------
GASOLINE SUBSIDY
--------------


9. (SBU) Currently, the Government of Guinea subsidizes gasoline
for domestic consumption. This has meant a street price of about
USD 1.34 per liter of gasoline. Dr. Dore said that this has
resulted in two large problems for Guinea. First, the cost of the
subsidy has increased dramatically in lock step with the increase in
the price of oil on world markets. The Minister confided that last
month alone the cost of the subsidy was USD 3.6 million, while this
month it will reach approximately USD 6.5 million.


10. (SBU) The second problem is that the subsidized street cost is
lower than the price for gas in other countries of West Africa,
resulting in large scale gasoline smuggling. Dr. Dore claimed that
Guinea is supplying all of West Africa with subsidized gas.


11. (SBU) The Minister acknowledged that the Government of Guinea
must increase the subsidized price, and eventually eliminate the
subsidy altogether. He revealed that the first increase in the
street price for gasoline was planned for January 2008, and that it
would be a large jump-up in the price. He further confided that the
subsidy would be completely withdrawn by June 2008, and the market
would set the price of gasoline afterwards; a critical factor for a
prospective IMF adjustment program.


12. (SBU) Dr. Dore was frank that if the subsidy was not ended very
soon, he did not see how he could continue as Minister of Finance.
The Minister requested the aid of the Embassy in sensitizing the
public to the coming price increases. He said that by educating the
public, they could minimize any discontent caused by the price
increases.

--------------
PHANTOM SOLDIERS/WORKERS
--------------


13. (SBU) The Minister said that the recent use of civilian
paymasters for paying the military had resulted in the discovery of
phantom soldiers. NOTE: Unconfirmed rumors put the figure as high
as 60% of enlisted payroll. END NOTE. He stated that the same
mechanism would be tried in other ministries in order to address the
problem in those ministries as well. He said they were sure to find
other phantoms throughout the government. Such monies could then be
used to increase salaries of government workers.

--------------
COMMENT
--------------


14. (SBU) Dr. Dore is very impressive in person. He speaks with
authority and confidence rooted in his many years of experience in
the fields of international and domestic finance, economics, and
budgeting. He clearly wants Guinea to move away from its statist
past and current crony-driven economy. He is desperate for allies
in his effort to get the Guinea economy on a sustainable growth
path. His respect for the Ambassador, in particular, quickly became
apparent from his warm welcome and open manner. The contrast
between his welcome and his mood when he discussed his current work
was also obvious. Visibly frustrated as he discussed the
difficulties he faced from members of his own ministry, it appears
that the daily challenges of his office are taking their toll. How
long he can hold up against this pressure is uncertain. END
COMMENT.


CARTER