Identifier
Created
Classification
Origin
09CONAKRY122
2009-02-25 13:34:00
CONFIDENTIAL
Embassy Conakry
Cable title:  

IMF CONTINUES TECHNICAL SUPPORT WITH LOWERED

Tags:  EAID AORC PGOV ECON GV 
pdf how-to read a cable
VZCZCXRO2096
RR RUEHPA
DE RUEHRY #0122/01 0561334
ZNY CCCCC ZZH
R 251334Z FEB 09
FM AMEMBASSY CONAKRY
TO RUEHC/SECSTATE WASHDC 3484
INFO RUEHZK/ECOWAS COLLECTIVE
RUEAIIA/CIA WASHDC
RHEFDIA/DIA WASHINGTON DC
RHMFISS/HQ USAFRICOM STUTTGART GE
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
C O N F I D E N T I A L SECTION 01 OF 02 CONAKRY 000122 

SIPDIS
SENSITIVE

E.O. 12958: DECL: 02/25/2019
TAGS: EAID AORC PGOV ECON GV
SUBJECT: IMF CONTINUES TECHNICAL SUPPORT WITH LOWERED
PROFILE

REF: A. HUNTER-BROKENSHIRE E-MAIL

B. CONAKRY 119

C. CONAKRY 121

Classified By: ECONOFF T. SCOTT BROWN FOR REASONS 1.4 (B) AND (D)

C O N F I D E N T I A L SECTION 01 OF 02 CONAKRY 000122

SIPDIS
SENSITIVE

E.O. 12958: DECL: 02/25/2019
TAGS: EAID AORC PGOV ECON GV
SUBJECT: IMF CONTINUES TECHNICAL SUPPORT WITH LOWERED
PROFILE

REF: A. HUNTER-BROKENSHIRE E-MAIL

B. CONAKRY 119

C. CONAKRY 121

Classified By: ECONOFF T. SCOTT BROWN FOR REASONS 1.4 (B) AND (D)


1. (C) SUMMARY. On Monday, 23 February, DCM and Econoff met
with Alvin Hilaire, the Resident Representative for the
International Monetary Fund in Guinea. Hilaire confirmed
that the IMF is not withdrawing from Guinea, and plans to
continue its low-profile macroeconomic engagement with the
CNDD in order to pave the way for quick HIPC completion
shortly after democratic elections. Hilaire confirmed that
the Fund does not have a clear understanding of the current
Guinean government's fiscal policy. Overall, the ResRep
seems optimistic about Guinea's capacity to make progress,
and appears to be going out of his way to avoid antagonizing
the CNDD. END SUMMARY.

--------------
"WE ARE NOT LEAVING GUINEA"
--------------


2. (C) Hilaire began the meeting by denying a report from
Department (Ref A) that the IMF intended to close its country
office in Guinea and relocate to Sierra Leone. "We are not
leaving Guinea," he said. Instead, Hilaire indicated that
several months ago, the GoG requested that the IMF field
office currently covering Guinea and Sierra Leone be split,
so that Guinea might have its own full-time IMF ResRep. He
said that his headquarters is currently considering this
request, and might eventually pair Sierra Leone with Ghana to
accommodate Guinea.

-------------- --------------
QUIET ENGAGEMENT, WITH HIPC COMPLETION ONLY AFTER ELECTIONS
-------------- --------------


3. (C) Hilaire said that the Fund's current objective is to
continue to engage the regime led by the National Council for
Democracy and Development (CNDD) on macroeconomic issues,
such as Central Bank reform and audits of certain government
accounts. In his view, the transition to a civilian
government will be short, and the Fund should therefore
continue to lay the groundwork for Guinea to reach the HIPC
completion point (CP) shortly after elections. Hilaire
stated categorically that the Fund would not support HIPC

completion until after elections are held. He said that IMF
Headquarters believed that giving substantial debt relief to
the CNDD would legitimize the regime and perhaps send a
signal that the Fund tacitly supports coups.

--------------
NO PUBLIC DECLARATION
--------------


5. (C) When DCM asked if Hilaire or IMF Headquarters planned
to issue a press statement saying that elections must take
place before the World Bank and the IMF reconsider HIPC
completion, Hilaire stated that he did not plan to issue any
declaration. Nor would the Fund state directly to GoG
officials that elections are a prerequisite for HIPC
completion. According to Hilaire, the Fund must keep a low
profile during the transition and avoid antagonizing "this
armed guy," meaning CNDD-President, Captain Moussa Dadis
Camara. Hilaire also said that such an announcement "might
halt all efforts at cooperation," which would be
counterproductive to the IMF's purposes. He said that not
engaging Guinea was also risky, as the work the GoG completed
prior to the coup could easily "slip away." Hilaire said
that he had faith in the current Governor of Guinea's Central
Bank (BCRG),who was previously the head of the Bank's audit
department. He said that "it's tricky to strike a balance
between supporting the transition and being seen as
supporting the coup."

--------------
PUBLIC FINANCES ARE "NOT CLEAR"
--------------


6. (C) Hilaire said that the IMF mission did not have a good
grasp of the CNDD's fiscal policy or strategy for economic
governance since the coup, but noted that the status of
Guinea's public finances is currently "clear to no one." He
said that the Fund has been unable to obtain many economic

CONAKRY 00000122 002 OF 002


indicators and other key data from the military regime.
Though Hilaire reported a close relationship to the Governor
of the BCRG, he said that his relationship to the Ministry of
Finance is "deliberately tangential," and that he has meet
only once with the current Minister of Finance, Captain
Mamadou Sande, to avoid the appearance that he is too close
to the junta.

-------------- --
RESREP SEES BOTH SIDES OF REVENUE CONSOLIDATION
-------------- --


7. (C) Addressing the recent CNDD consolidation of Guinea's
major revenue streams--Customs, Bureau of Taxation, the
Mining Fund--under the presidency (Refs B & C),Hilaire said
that under ideal circumstances, control over Guinea's
finances would be divided. However, he said he understood
the argument that the CNDD might need to take extraordinary
measures in order to make progress in fighting corruption and
rent-seeking. He said he is willing to accept such an
arrangement provided that revenue streams revert to
ministerial control following elections.

-------------- --------------
RESREP CONTINUES PUSH FOR INDEPENDENT CENTRAL BANK LAW
-------------- --------------


8. (C) As part of his continued engagement with Guinea, the
Resrep said that he would continue to push for a law granting
more monetary-policy independence to the Central Bank.
Hilaire noted that Lansana Conte's last government before the
coup had sent such a law to the National Assembly, but that
the putsch took place before the parliament could pass it.
Hilaire expressed hope that a newly elected National Assembly
would again take up the bill, but in the meantime said that
he would quietly advocate that the CNDD ratify an almost
identical, interim law to get the ball rolling.

--------------
COMMENT
--------------


9. (C) In the past, Embassy has noted the IMF ResRep's
optimistic interpretation of Guinean progress towards
achieving the HIPC completion point and other Fund goals.
Hilaire seemed sanguine during our first meeting with him
post-coup, which had been delayed due to his constant travel
since December. Essentially, Hilaire stated he believes that
the transition will be short and the completion point will be
achieved shortly after end-of-year elections. Like almost
all other multilateral partners, Hilaire also gave the
impression of going out of his way not to ruffle the feathers
of the CNDD, avoiding any hard-line stance on economic issues
and appearing reluctant to announce a "No Elections, No Debt
Relief" policy. His views stand in stark contrast to Siaka
Bakayoko, the ResRep of the World Bank, who seems to have
with time become more skeptical of the regime's capacity and
motivations.


10. (C) The IMF's coy approach is at odds with the USG's
clear position calling for timely elections and a return to
civilian rule. The Fund's silence on electoral
pre-conditions for HIPC completion may well nourish a false
hope in the CNDD of an eventual financial windfall, which may
stiffen its resistance to calls for a timely transfer of
power. END COMMENT.
RASPOLIC