AMBASSADOR GAINS SUPPORT OF MINISTER OF FINANCE TO

C O N F I D E N T I A L FREETOWN 000521

SIPDIS

DEPARTMENT FOR AF/W (JHUNTER/ESPRUILL)

E.O. 12958: DECL: 10/30/2018
TAGS: PGOV PREL EAID SOCI MASS SL
SUBJECT: AMBASSADOR GAINS SUPPORT OF MINISTER OF FINANCE TO
FIGHT UNFAIR TAXATION

Classified By: Ambassador June Carter Perry for reasons 1.4(b/d)


1. (C) Summary: Ambassador Perry's meetings with Finance
Minister David Carew on September 15 and October 27 to
discuss tax relief for diplomatic missions met with success
when the Minister agreed to lift the "road usage" tax, with a
potential savings for the Embassy of more than 130,000
dollars per year. Minister Carew also discussed meetings in
Washington, potential development projects funded by the
Soros Foundation, the World Bank, and other agencies, and his
hope to eventually qualify for the MCC. End Summary.


2. (C) Ambassador Perry met with Minister of Finance David
Carew September 15 to discuss tax relief from various
revenue-generating schemes the National Revenue Authority
(NRA) has in place to collect revenue from the diplomatic
community. Of particular concern were "processing fees" of
500,000 Leones (about $166) required each time a purchase or
import qualified for "duty free" status, as well as the road
usage tax of 0.44 cents per gallon. Embassy Freetown is
entirely reliant on generators, and in FY 2008 spent $1.6
million on fuel alone. Only one major supplier (Total)
imposed the fee, but two others (a Nigerian company and the
Sierra Leone parastatal) were unreliable. Minister Carew
agreed that these fees violated the spirit of the Vienna
Convention, and following his meeting with Ambassador Perry
lifted the road usage charge for embassies, and provided duty
free blanket waivers for purchases. At the October 27
meeting, Ambassador thanked the Minister for his prompt
action on these issues.


3. (C) Minister Carew lamented the Government of Sierra
Leone's (GoSL) declining revenue during the October 27
meeting. Budget pressure due to rising energy costs,
overexpenditure in certain budget-lines, and the failure of
companies within the mining sector to pay agreed-to taxes is
building. The World Bank provided $3 million to cover lost
revenue, and prevent a decrease in needed food and fuel
subsidies. Carew described further Bank initiatives,
including the extension of emergency fuel funds for the
National Power Authority (NPA) through the completion of the
Bumbuna Dam project in March, 2009, a $4 million
food-for-work program, and potential support for three
executive-level positions in the NPA. The GoSL also requested
Bank support for technical assistance to the NRA. The Bank
provided $7 million in direct budget support, as did the EU.
DFID recently provided an undisclosed amount as well.


4. (U) The Minister also discussed other new funding
initiatives. While in Washington, he met with a number of
organizations on the cusp of providing assistance and
programming in Sierra Leone. The Soros Foundation plans to
provide support to key strategic program areas: law, justice,
and human rights; economic governance; political governance;
and HIV/AIDS. They are currently selecting a Program Manager
to establish and run their Freetown-based programs, and will
initially fund activities related to agriculture and
education. The Sithe Group is closer to starting their palm
oil enterprise initiative. A meeting with Ambassador Cohen
from OPIC indicated the possibility of funding for a 100
megawatt facility. Minister Carew continues to search for
ways to fund improvements to the Lungi airport, which he
believes will attract further investment.


5. (U) The impact of the global economic crisis on African
countries was a major topic of conversation for the Minister
and others in Washington. Finance Ministers from African
Union countries are planning a meeting in Tunis to discuss
this topic in the coming months. He noted that the recent
rise in food prices isn't helping African farmers, since
subsidies in western countries are eroding their potential
gains.


6. (U) The Ambassador described her own recent trip to
Washington, including her meeting with MCC representatives.
In that meeting, she mentioned Sierra Leone's progress in
certain areas. Minister Carew expressed his hope that Sierra
Leone would qualify for MCC support in the future. She also
highlighted support that will be provided by new embassy
personnel, such as USAID's new food-for-peace officer, as
well as agricultural technical staff expected this year. She
informed the Minister that she continues to lobby for further
funding for education (one of the "low" criterion areas for
the GoSL),as well as for Sierra Leone's membership into the
ACOTA program.
PERRY