wikileaks ico  Home papers ico  Cables mirror and Afghan War Diary privacy policy  Privacy
IdentifierCreatedClassificationOrigin
08ABIDJAN274 2008-05-02 08:10:00 CONFIDENTIAL Embassy Abidjan
Cable title:  

RESIDENT IMF, WORLD BANK HEADS DISCUSS EARLY HIPC

Tags:   ECON EAID IMF IBRD PGOV PREL IV 
pdf how-to read a cable
VZCZCXRO3898
PP RUEHPA
DE RUEHAB #0274/01 1230810
ZNY CCCCC ZZH
P 020810Z MAY 08 ZDK
FM AMEMBASSY ABIDJAN
TO RUEHC/SECSTATE WASHDC PRIORITY 4190
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
INFO RUEHZK/ECOWAS COLLECTIVE
RUEHTU/AMEMBASSY TUNIS 0046
RUEPGDA/USEUCOM JIC VAIHINGEN GE
					  C O N F I D E N T I A L SECTION 01 OF 02 ABIDJAN 000274 

SIPDIS

SIPDIS

DEPARTMENT PASS TO USAID/AF S.SWIFT, C.GARRETT
DEPARTMENT PASS TO USTR FOR C.HAMILTON
TREASURY FOR R.HALL, D.PETERS
EMBASSY DAKAR FOR FAS R.HANSEN, FCS S.MORRISON
EMBASSY ACCRA FOR USAID/WARP P.RICHARDSON
EMBASSY TUNIS FOR USED'AFDB ROY ADKINS

E.O. 12958: DECL: 04/21/2018
TAGS: ECON EAID IMF IBRD PGOV PREL IV
SUBJECT: RESIDENT IMF, WORLD BANK HEADS DISCUSS EARLY HIPC
DECISION POINT, NEW WB COUNTRY DIRECTOR, FINANCING OF
ELECTIONS

REF: A. 04/16 CLASSIFIED MASSINGA/NESBITT/PLUMB EMAIL ON
SAGEM FINANCING

B. ABIDJAN 166

Classified By: EconChief EMassinga, Reasons 1.4 (b,d)



1. (C) Summary. In an April 18 meeting, IMF ResRep
Phillipe Eugume defended the notion of an early HIPC Decision
Point, noting Cote d'Ivoire's heavy indebtedness and already
negative cash position with the IFIs, but acknowledged
substantial shareholder reluctance to proceed with such a
course of action at this point. Acting World Bank Country
Manager Daniel Sellen floated the notional idea of using some
portion of the World Bank's Post Conflict Assistance Fund to
mitigate the impact of food price hikes on poor Ivoirians,
but provided no details. End Summary.

IMF Favors Early HIPC Decision Point


--------------------------




2. (C) IMF Resident Representative Eugume and World Bank
Acting Country Manager Sellen met with Econoff on April 18,
and discussed, inter alia, the Fund and Bank staff's plans
for an early HIPC Decision Point, Cote d'Ivoire's fiscal
performance since IFI reengagement over the past year, the
nomination of a new World Bank Country Representative and the
suddenly politically important food security issue. With
regard to an "early" HIPC Decision Point, Eugume had in mind
the late 2008-early 2009 timeframe, and argued in favor of
the idea based on the ratio of indebtedness to exports.
Pressed, Eugume admitted that calculations of Cote
d'Ivoire,s indebtedness/export ratio are &all over the
map8 and could show the country breaching the threshold
either in early or late 2009. Moreover, Eugeme acknowledged
that the IFIs have heard misgivings from larger shareholders
about what would effectively be an early Decision Point, made
in the context of weak-to-mediocre performance under current
assistance and budget support programs. These include the
IMF's USD 120 million Emergency Post Conflict Assistance
package, the World Bank's USD 120 million Post Conflict
Assistance Program (PCAP) and the Bank's April 2008 USD 308
million arrears clearance/budget support program.



3. (C) Eugume offered an impassioned defense of progress
made in improving GoCI transparency (published budget
figures, recently published oil/gas audits), and noted the
high debt/GDP ratio of 80 percent and overall indebtedness of
USD 6 billion as justification for the need for eventual HIPC
treatment. Eugume added that Cote d'Ivoire is already in a
negative cash position with the IFIs; its fiscal situation is
very tight and getting tighter daily. Econoff said that IFI
staffs would have to make a compelling case with the
shareholders to achieve the objective of an early Decision
Point, noting that the USG had concerns about the idea.
(Note: German DCM later told Econoff that Berlin, too, has
strong reservations about an early Decision Point, as do most
members of the European Union. End Note).



4. (SBU) Sellen and Eugume said the Poverty Reduction
Strategy Paper (PRSP) drafting process is underway, and the
document, the result of extensive collaboration with civil
society and government institutions to define how debt relief
would be used, is expected to be complete by September, 2008
(Note: Minister of Planning Bouabre, lead on the PSRP
process, later told Ambassador that the draft would be
complete by the end of June. End Note). Econoff just
received a draft copy April 22, while the World Bank staff,
the EU and others have already provided comments.

Government Making Progress on Transparency Issues, But not on
Post Conflict Assistance Program


--------------------------




5. (SBU) On oil/gas, Eugume said the Cote d'Ivoire
Extractive Industries Transparency Initiative (EITI) reports
on 2006 and 2007 production and revenue should be done in
September and December 2008 respectively, and that their
completion should reassure shareholders of Cote d'Ivoire,s
progress in transparency. The IMF rep acknowledged, however,
that the local EITI committee has yet to choose a contractor
to prepare the report(s), which could put the September
publication date in question.


6. (C) Sellen acknowledged the $120 million PCAP program

ABIDJAN 00000274 002 OF 002


has been a &disaster.8 He openly questioned whether 1) any
money (aside from USD 5 million in quick-impact road
reconstruction financing) could be disbursed in 2008, and 2)
the program could be salvaged at all. IMF representative
Eugume pressed for the Bank to consider reformulating the
conditions of the PCAP, since the macroeconomic support
implied by the PCAP is already part of IMF,s fiscal year
2008 calculations, and failure to access $45 million this
year would put a hole in an already shaky budget situation.

New World Bank Country Representative for Cote d'Ivoire


--------------------------




7. (C) Both Sellen and Eugume agreed that the Bank needs a
leader at the helm of its Ivoirian operation sooner rather
than later, given the size of its current portfolio of
programs and budget support (more than USD 500 million).
Sellen said the Bank has informally decided (subject to
confirmation) to assign Mr. Madani Tall, a Malian and
currently the Country Representative for the Senegal group of
countries based in Dakar.

SAGEM Contract and the 2008 Budget


--------------------------




8. (C) Sellen and Eugume confirmed that the Ministry of
Finance effectively used IMF budget support to finance a
portion of the recent contract with French company SAGEM,
which will produce voter and national identification cards
for the November 30 presidential elections. The 2008 budget
included 25 billion CFA (USD 60 million) for the national
identification process, and the Cote d'Ivoire government
pulled together another 15 billion CFA (USD 36 million) from
other accounts to top off its 2008 payments to SAGEM. Both
Sellen and Eugume averred that IMF assent was needed and
provided. Eugume and Sellen, along with other European
diplomats, confirm that France was requested to provide the
outstanding USD 40 million needed to cover the last portion
of the USD 160 million SAGEM budget not being financed by the
Ivoirian Treasury; European diplomats indicate that among EU
countries, there have been no takers of France's offer to
share this cost.

Preoccupation with the Impact of Higher Food Prices Worldwide


--------------------------




9. (C) Conversation turned to the sharp rise in worldwide
food prices worldwide and resultant preoccupation about the
impact of this development in IMF and WB headquarters.
Econoff was asked about the USG response, and he pointed to
the announced decision to allocate $200 million to alleviate
global food shortages, but noted detailed decisions were to
be forthcoming. WB,s Sellen openly mused about recasting
the PCAP so that perhaps one third would be spent to mitigate
the &social impact8 of food price rises. Econoff asked if
this would mean food subsidies, but Sellen demurred in giving
details.



10. (C) Comment. The government's unwillingness/inability
to meet the conditions to access the USD 120 million in PCAP
money is extremely frustrating to the World Bank and other
donors. But those funds may become more attractive to IFI
staff seeking ways to address the country's fiscal and
macroeconomic problems as well as the politically delicate
food security issue. Clearly local IFI staff, if not in
Washington as well, are thinking about how to use PCAP funds
to address this new and urgent issue. On the larger HIPC
question, local IFI staff were not happy to hear renewed
mention of shareholder reluctance to consider an early
Decision Point, but it seems clear that they will have to
address the issue directly with the Boards in the near
future. End Comment.
NESBITT