LETTER TO SECRETARY OF TREASURY PAULSON FROM SENEGALESE

UNCLAS DAKAR 002187 SIPDIS SIPDIS DEPT FOR AF/W AND AF/EPS TREASURY FOR OIASA/EBARBER, RHALL E.O. 12958: N/A TAGS: EFIN PGOV SG SUBJECT: LETTER TO SECRETARY OF TREASURY PAULSON FROM SENEGALESE MINISTER OF ECONOMY AND FINANCE DIOP ON TRAINING TO CAPITALIZE BOND ISSUANCES REF: DAKAR 1987 ¶1. (U) Embassy Dakar received a letter dated October 29 from Senegalese Minister of State and Minister of Finance Abdoulaye Diop for Secretary of Treasury Paulson asking that the Department of Treasury support provide training and capacity-building on techniques to capitalize on government bond issuances. The signed French original will be sent via pouch to AF/W. ¶2. (U) Following is Embassy's informal translation of the letter to Secretary Paulson from his Senegalese counterpart. SIPDIS Begin Text. Republic of Senegal Ministry of Finance and Economy Minister of State No. 01136/MEF/CAB Dakar, October 29, 2007 Mr. Secretary I would be grateful if your institution would examine the possibility of providing training and capacity- building on Treasury bond issuance techniques for the staff members of the Senegalese Treasury department. We expect local staff members from the Senegalese Department of Treasury to gain exposure to the American experiences and practices in the organization, operation, and intervention rules and modalities of financial markets. The American financial market, apart from its size and growth potential, offers the opportunity to better understand the new financial products, and to raise the bar on best practices for our bond issuance rules and strategies, and the management of public shares. As Senegal is among the main leading state actors within the West African Economic and Monetary Union's (WAEMU) sub-regional financial market, I wish to express my great interest for this training that could contribute without doubt to the development of a national expertise. (Complementary Close) Abdoulaye Diop End Text. POST CONTEXT AND COMMENT -------------- ¶3. (SBU) It is likely that Sengal is looking for assistance to further tap new avenues of financing to deal with a deteriorating economic situation. Recent Post reports have noted that the rapid increase of Senegal's budget deficit over the last two years (currently estimated at 8 percent of GDP or higher) is now becoming a serious concern to the Senegalese authorities and donors. As noted in Reftel, this year, Senegal successfully launched two bond offerings worth a total of USD 264 million to ease its current account deficit, and reportedly "replenish" its HIPC relief budget, which was a requirement for the recent signing of a new PSI with the IMF. The strong participation of commercial banks in Senegal's recent Treasury bill auctions, and the existence of approximately USD 2 billion in uninvested funds available within the West African Economic and Monetary Union's (WAEMU) financial market, has no doubt encouraged Senegalese authorities to plan for new issuances to finance the government's short-term and medium-term capital needs, including civil servants' salaries, payment of internal debt, and infrastructure projects. However, the IMF has privately noted that the two bond issuances this year are probably the most the GOS should pursue in the near term to avoid increasing the risk of return to a debt portfolio that is unsustainable. SMITH