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