WESTERN DONORS EXPRESS CONCERNS ABOUT BUDGET AND

UNCLAS DAKAR 001190 SIPDIS DEPARTMENT FOR AF/W E.O. 12958: N/A TAGS: PGOV PREL ECON EFIN SG SUBJECT: WESTERN DONORS EXPRESS CONCERNS ABOUT BUDGET AND ARREARS TO PRIME MINISTER ¶1. (SBU) Summary: Charge accompanied a delegation of Ambassadors and international organization representatives to the Prime Minister,s office on October 10 to seek an update and clarification of the GOS,s payment arrears, off-budget expenditures and plans for the Government to bring accounts into balance. The meeting yielded only a fragmentary explanation and a promise to provide more details at a later date. End Summary. ¶2. (SBU) In response to increasing alarm and consternation over the disheveled state of Senegalese national accounts, the Charge joined a delegation led by the EC Ambassador and including the Ambassadors of France, Canada, Germany, and the Netherlands, as well as representatives from the World Bank and Islamic Development Bank to seek more information from the Prime Minister Cheikh Hadjibou Soumare. The non-U.S. participants all had greater and more urgent stakes in the discussions as many of their assistance programs contribute directly to budgetary support or will hinge on Senegal,s positive performance in an imminent IMF program review. ¶3. (SBU) The Prime Minister, who was flanked by new Budget Minister Abdoulaye Sow, was asked specifically to account for the Government,s failure to make good on massive accumulated arrears to Government vendors, off-budget expenses for items such as official travel and the transfer of a very large real estate tract to guarantee financing for payment to the North Korean firm constructing the President,s gigantic, USD 20 million African Renaissance monument, and government plans to restore and maintain fiscal responsibility. ¶4. (SBU) The Prime Minister was unable to provide detailed responses to any of the queries, instead referring to a study now being conducted by the Budget Minister and promising to share detailed findings at a later date. He said Senegal had been placed in a vise by rising world prices for food and petroleum products and had been forced to engage to subsidies to try to avoid a degradation of living standards. He acknowledged that this strategy was not a viable in the long-term and that unspecified new approaches would need to be found. He asked for donors, patience in responding to the request for an accounting of Government arrearages, stating that, due to the legerdemain of the recently dismissed Budget Minister Ibrahima Sarr, the GOS did not have reliable figures on the amount of money owed. The Prime Minister promised to share detailed findings when available. ¶5. (SBU) Comment. While the meeting fell far short of its objectives, it did serve to give notice to the Government of the depth of donor concern over the disarray in Senegalese national accounts. The delegation came away from the meeting with a sense that it may not be unreasonable to expect a more exact picture of Senegal,s overall finances than has been available in the recent past. However, it is worth noting that the impact of the message was perhaps undermined by the October 14 announcement by the French Ambassador that his country was giving Senegal more than USD 40 million to recapitalize Senelec, the national power company. End Comment. SMITH