MADAGASCAR/COMOROS RESPONSE RE FISCAL

UNCLAS ANTANANARIVO 000181

SIPDIS

STATE FOR AF/EPS ABREITER, EREPKO
STATE FOR EEB/IFD/OMA ASNOW, RFIGUEROA

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: EAID ECON PREL MA CN
SUBJECT: MADAGASCAR/COMOROS RESPONSE RE FISCAL
TRANSPARENCY IN COUNTRIES RECEIVING USG ASSISTANCE

REF: STATE 16737


1. (SBU) Post replies to Reftel questions below for Madagascar:

Madagascar
- - - - - - - - - -


A. Host country's budget is made public.


B. Budget is made public via publication.


C. Revenues and expenditures: The GOM has worked at length with
the World Bank and other donors to improve its budget tracking and
expenditure system. The GOM has also worked with the IMF to reform
its tax code and improve revenue collection. With these efforts in
mind, the Budget includes a majority of public revenues and
expenditures.


D. Meaning and accuracy of revenues and expenditure info: The
World Bank and other donors provide direct budget support, thus they
have access to the entire budget. Our World Bank colleagues confirm
the budget is accurate. The problem comes in budget execution
throughout the fiscal year, which is subject to various
implementation problems and inefficiencies.


E. Weak fiscal transparency, capacity or will: To the extent fiscal
transparency needs to be improved, it is due to lack of capacity.
Political will, at a minimum, is evidenced by the GOM hosting a U.S.
Treasury Budget Advisor at the Ministry of Finance.


F. USG programs to strengthen the host country's capacity to
develop sound fiscal policies that support transparency and good
governance: U.S. Treasury Budget Advisor. USAID and MCC, via their
programs, also address transparency and good governance.


G. Other donor countries or multilateral institutions
providing assistance in these areas: World Bank, IMF, EU, French,
GTZ.


2. (SBU) Post replies to Reftel questions below for Union of the
Comoros:

Union of the Comoros
- - - - - - - - - - - - - - - - -


A. Host country's budget is made public.


B. Budget is made public via publication.


C. Revenues and expenditures: Most revenues are accounted; they
are almost entirely trade tariffs. Expenditures are limited to debt
finance and civil servant salaries. The complicated federal
structure, with a national "Union" government and three
semi-autonomous island governments, includes specific budget
arrangements that are subject to close public scrutiny.


D. Meaning and accuracy of revenues and expenditure info:
In Union President Sambi's own words, "after I make debt payments
and pay salaries, there is nothing left." The Union Government is
in near-constant cash crisis. Public salaries are in arrears;
public works are only done if funded by donors.


E. Weak fiscal transparency; capacity or will: Capacity is very weak
throughout Government.


F. USG programs to strengthen the host country's capacity to
develop sound fiscal policies that support transparency and good
governance: The USG funded the National Democratic Institute to
conduct an assessment of the Comoros' federalist structures,
including the budget arrangement. The team created a road-map for
implementing better governance and public finance management.


G. Other donor countries or multilateral institutions
providing assistance in these areas: Very few other donors exist.
The French have advisors. The IMF was ready to sign a new Program
in mid-2007, but had to delay given the ongoing Anjouan problem.

MARQUARDT