CONTROLLING THE MONEY FLOW - THE BUCK STOPS WITH

C O N F I D E N T I A L SECTION 01 OF 02 CONAKRY 000163

SIPDIS

E.O. 12958: DECL: 03/13/2019
TAGS: ECON EFIN PGOV PREL ASEC GV
SUBJECT: CONTROLLING THE MONEY FLOW - THE BUCK STOPS WITH
DADIS

REF: CONAKRY 0156

Classified By: POL/ECON CHIEF SHANNON CAZEAU FOR REASON 1.4 B AND D


1. (C) SUMMARY. A discussion with a senior official at
Guinea's Central Bank revealed that CNDD President Moussa
Dadis Camara is controlling the country's finances with an
iron fist. All non-salary expenditures must be authorized
directly by Dadis, which given what we know about how the
government functions at Camp Alpha Yaya, suggests that most
ministerial operations have likely come to a halt. The Bank
official admitted that Guinea is in a deep economic
recession, but had no clear policy strategies for addressing
the problem, other than waiting for international aid to
materialize. He was convinced that the IMF, France, and the
EU would eventually come around although he ruefully
acknowledged that the USG continues to be a huge "blockage."
END SUMMARY.


2. (SBU) On March 12, Pol/Econ Chief met with Cheick Sylla,
the 1st Vice-Governor of Guinea's Central Bank, to discuss
recent developments in Bank operations. A long-time Embassy
contact, Cheick has been with the Central Bank for years. He
was only just recently appointed to the number two position
at the Bank and had yet to move to his new office, although
he was quick to hand out his newly printed business cards.
Most recently, he worked as the Director of Training, a
position that was perceived by many as a demotion
orchestrated by former Prime Minister Kouyate. Before being
moved to Training, Cheick was Director of the Office of
Credit and Exchange.

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GUINEA IN A RECESSION...BUT STILL ECONOMICALLY STABLE
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3. (SBU) Cheick initially stated that Guinea's economy
remains fairly healthy. "Inflation continues to go down and
our currency has been relatively stable," he said. He
claimed that the Guinean Government's strong fiscal policy
has enabled the Bank to maintain a high degree of economic
stability despite world economic pressures and internal
political developments.


4. (C) However, later in the discussion, Cheick admitted
that Guinea is in a deep recession. "There is a general
economic slowdown, particularly in the informal sector," he
said. Claiming that the informal sector generates as much as
60% of the country's gross domestic product, Cheick said that
the government is very concerned about how to reinvigorate
the economy. When asked about a possible policy strategy to
address the problem, Cheick said that the Bank wants to
inject cash into the market by exploring options for offering
microfinance opportunities, which he felt would provide a
much needed jumpstart. Pol/Econ Chief asked how the Bank
planned to finance this initiative. Cheick sheepishly
responded "well...we are going to need assistance from donor
partners...we don't have the money to do it ourselves." In
response to further questions about economic policy, Cheick
said that he could only speak for the Bank, but that other
elements of the government, such as the Ministry of Finance,
were likely developing other strategies.


5. (C) Pol/Econ questioned whether the CNDD and other
members of the government had the technical capacity to
understand the economic challenges ahead in order to develop
effective strategies to address those challenges. "They
understand because we are explaining it to them," Cheick
replied.

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THE BUCK STOPS WITH DADIS
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6. (SBU) With respect to cQnt fiscal management policies,
Cheick explained that the Bank is functioning exactly as it
has in the past, with only one major difference, namely that
the Bank now answers directly to the President of the CNDD,
Moussa Dadis Camara, rather than to the Minister of Finance.
He claimed that this change represented a significant
improvement over past practices. "Before the coup, money was
going everywhere...ministers would come with authorizations
from the Minister of Finance and we would have to release
funds...all of that is stopped now," he said.


7. (C) Clarifying the disbursement process, Cheick explained

CONAKRY 00000163 002 OF 002


that ministries must still go through the Ministry of Finance
for approval of expenditures, but that instead of only
requiring the Minister's signature, such authorizations now
also require Dadis' signature before funds can be released.
The only exception is funds to pay salaries, which the Bank
can release upon the authorization of the Minister of
Finance. Pol/Econ Chief commented that such a system might
be quite cumbersome given that it is often difficult to get a
timely signature from Dadis. Cheick disagreed, arguing that
the tight control over the government's coffers has
effectively curbed corruption. Cheick said that all
ministries must adhere to this new procedure, including the
Ministry of Defense. When asked about the Office of the
President, Cheick said "oh of course the President has a
sovereign, independent account for affairs of state." He
said that Dadis is the only person authorized to withdraw
funds from the presidential account.

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FOREIGN CURRENCY RESERVES
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8. (C) When asked about foreign currency reserves, Cheick
said that the latest data he had was from December, at which
time, the Bank reportedly held $86 million in reserves. He
explained that the Bank usually tries to maintain
approximately $147 million in reserves, reflecting the
average value of one month's worth of imports. Cheick said
that the Bank was currently working on putting together the
numbers for the first quarter of the year.

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YOU AMERICANS ARE THE BIG BLOCKAGE
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9. (C) Cheick was keen to persuade the USG to soften its
policy stance towards Guinea. He repeatedly asked for help
in obtaining HIPC debt relief and for financial assistance to
help reinvigorate the Guinean economy. Pol/Econ Chief
emphasized that the USG's policy position will not change
without elections, and that the USG has absolutely zero
tolerance for the military regime in place. Good naturedly,
Cheick commented "you Americans are the main blockage...the
IMF wants to help us and we can get France and the EU to
soften their position...but you are making things difficult
for us." Pol/Econ Chief assured Cheick that without
elections, the USG would not budge.

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COMMENT
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10. (C) Although Cheick was convinced that Dadis' control
over the Central Bank is a good thing, the additional
bureaucratic requirement has likely brought an already highly
dysfunctional government to a screeching halt. Given what we
know about how the government functions at Camp Alpha Yaya
(reftel),simple financial decisions likely take weeks, if
they get addressed at all. Cheick was clearly trying to
paint a positive economic picture, but it was equally clear
that he was aware that the Guinean economy is in serious
trouble -- and that the Guinean Government has no real
strategy in place to address the problem, other than to wait
for international donor partners to come to the rescue. END
COMMENT.
RASPOLIC