SENEGAL'S MINISTER OF BUDGET WALKS OUT

UNCLAS SECTION 01 OF 02 DAKAR 000748

SIPDIS

SENSITIVE

DEPT FOR AF/W, AF/EPS, EB/IFD
TREASURY FOR RHALL AND DPETRES
ABU DHABI FOR OTA

E.O. 12958: N/A
TAGS: ECON EFIN PGOV ETRD EAID SG
SUBJECT: SENEGAL'S MINISTER OF BUDGET WALKS OUT

DAKAR 00000748 001.2 OF 002



1. (SBU) Summary: On June 10, Junior Minister for Budget, Mamadou
Abdoulaye Sow resigned from the Government of Prime Minister
Souleymane Ndene NDiaye for "personal reasons". Sow was replaced
immediately by Abdoulaye Diop, Chief of Staff of former Prime
Minister Hadjibou Soumare. Several observers praised Minister Sow's
managerial competence and skills. In an interview with a private
local radio station, the IMF Resrep commented that former Minister
Sow is an honest expert who has positively contributed to improving
the budget management system of Senegal since September 2008. End
summary.

SOW'S RESIGNATION NOT A GOOD SIGN
--------------


2. (SBU) On June 10, President Wade accepted the resignation of
Mamadou Abdoulaye Sow as Junior Minister for Budget, a position
that reports to the Minister of Economy and Finance. For many
observers, Sow's resignation was orchestrated by senior government
officials who did not appreciate his strict handling of budget
disbursements and his willingness to say "no" to requests for money
or payments not fully justified by the formal budget and funds
available. It is clear that Sow was under great pressure for
funding requests.


3. (SBU) Sow's resignation came ten months after the dismissal of
his predecessor, Ibrahima Sarr, who was implicated in Senegal's
2007-2008 budget crisis that was caused by treasury advances and
extra budgetary commitments leading to CFA 150 billion (USD 300
million) or more in arrears to private sector suppliers and
contractors. Sow was widely viewed as a key official in stopping
these practices and helping the government meet reform criteria for
the December 2008 IMF Board Review of Senegal's Policy Support
Instrument (PSI) program.


4. (SBU) There is much speculation that Sow's resignation is also
the result of the current "portfolio conflict" between the Minister
of State/Minister of Economy and Finance, Abdoulaye Diop, and the
new "Super Minister," Karim Wade regarding control of Senegal's
budget and relations with donors. Sow was considered to be very
close to Minister Diop, but has likely been in conflict with the
staff of Minister Wade (whose portfolio includes International
Cooperation, Infrastructures, Civil Aviation and Land Management).
Sources noted that on several occasions, Sow refused to approve
non-competitive tenders and cash advances that had not gone through
appropriate channels.


5. (SBU) There are troublesome indications that some in the
government are trying to discredit Sow, and perhaps also Minister
Diop, through the efforts of the State's Inspector General, who
reportedly is assigning blame for the past treasury advances and
extra-budgetary spending on the two Ministers.

IMF RESREP HAS POSITIVE WORDS FOR SOW'S PERFORMANCE
-------------- --------------

6. (SBU) In reaction to Sow's resignation, the IMF Resrep, Alex
Segura, stated publically and unequivocally that Sow had perfectly
mastered Senegal's public finance issues. Segura stated, Sow is
honest and has contributed positively to Senegal's improved budget
management system by eliminating treasury advances since September
2008 -- the mechanism that led to budgetary difficulties in 2007 and
2008 -- and by reducing the number of 'Marche de gre a gre.'"
[Note: non-competitive, single source contracts. End Note.]
According to Segura, Sow was effective in "closing in a timely
manner the country's FY2008 fiscal and accounting budget." Segura
added that Sow was instrumental in Senegal's efforts to meet the PSI
criteria ahead of the IMF Review scheduled for June 19.

NEW BUDGET MINISTER IS A TECHNOCRAT - PERHAPS WITH POLITICAL TIES
-------------- --------------

7. (SBU) Surprisingly, President Wade appointed Abdoulaye Diop
(same name but no relation to the Finance Minister) to replace Sow.
Budget Diop ("Junior") is a technocrat and is reported to be very
close to Karim Wade. Prior to his nomination Diop was the interim
Chief of Staff of new Prime Minister NDiaye. At age 48, Diop is
relatively young for this position. He graduated from the National
School of Administration and Magistracy. He was most recently the
Chief of Staff of former Prime Minister Soumare and prior to that
was the Chief of Staff of MinFin Diop. Despite the fact that Budget
Diop worked previously in the Ministry of Finance, and closely with
Finance Diop, we do not believe that "Junior" was the Finance Diop's
choice, nor, apparently, was he even consulted on the appointment.
Some commentators have speculated that naming a second Abdoulaye
Diop into the financial governance mix represents a deliberate

DAKAR 00000748 002.2 OF 002


attempt to create new confusion about accountability for management
of funds -- but it should be noted that "Abdoulaye" and "Diop" are
both very common names in Senegal.

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

8. (SBU) The new Minister of Budget Diop has the knowledge and
expertise to do this job. We will have to wait, without too much
optimism, if young Diop is willing and able to resist the tremendous
political pressure that is bound to be applied for a "looser"
approach to funding requests by powerful government officials. His
close acquaintance with Minister Karim Wade could be a cause for
concern since former Budget Minister Sarr - another friend of
Karim's - acted without the Finance Minister's consent on the
treasury advances and extra-budgetary commitments. A return to
prior practices on treasury advances would be a critical breach of
Senegal's PSI program with the IMF. The new Minister will also come
under scrutiny for his possible role as an arbitrator in the duel
between Finance Diop and Wade for management of donor funds and
projects.

BERNICAT