FINANCE MINISTER UNPERTURBED BY ECONOMIC PRESSURES

C O N F I D E N T I A L SECTION 01 OF 02 FREETOWN 000321

SIPDIS

DEPARTMENT FOR AF/W (JHUNTER)

E.O. 12958: DECL: 08/17/2019
TAGS: ECON EFIN EAID PREL PINR SL
SUBJECT: FINANCE MINISTER UNPERTURBED BY ECONOMIC PRESSURES

REF: FREETOWN 262

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


1. (C) Summary: Ambassador met with Finance Minister Samura
Kamara on August 11 to discuss the state of the Sierra
Leonean economy. Minister Kamara downplayed the ongoing
currency devaluation (reftel),focusing instead on long-term
financial and development strategies, such as the GoSL's
approach for the upcoming Consultative Group meeting and
introducing long-term securities into the market. He also
discussed the African Caucus of Finance Ministers and Bank
Governors, of which Sierra Leone is now chair, and his
expectations for the Caucus meetings that were held in
Freetown August 11-14. As per his norm, Minister Kamara
seemed unruffled by the economic downturn and provided few
specifics about how he will address its immediate, rather
than long-term, effects. End Summary.

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FEELING THE PRESSURE: SIERRA LEONE'S ECONOMY
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2. (C) Minister Kamara admitted that Sierra Leone is starting
to feel the impact of the second-round effects of the global
economic crisis. Despite this, though, he stated that the
growth rate is 4-4.5% (Note: The Economist Intelligence Unit
predicts the 2009 growth rate will be 2%. End Note). He also
stated that the Leone is particularly under pressure, but did
not seem overly concerned at the continued devaluation. The
weekly currency auction amount has been raised to a little
over USD 1 million, though banks desperately in need of
foreign exchange cannot participate. The Minister noted that
foreign exchange reserves need to grow, and said that he
wants diplomatic missions, international organizations, and
non-governmental organizations to hold more savings in Sierra
Leone rather than in foreign accounts.


3. (C) When asked if the World Bank and International
Monetary Fund (IMF) will be supplying an infusion of funds,
the Minister responded that the IMF fifth review is expected
soon. He intends to support fiscal expansion and issue more
Treasury bills in an effort to mop-up liquidity. He also
intends to introduce long-term securities, and reported that
commercial banks had agreed to invest in those during a
meeting on August 10. He also met with commodities importers,
and learned that they have enough stocks to meet several
weeks' worth of demand: being able to afford replacement
stocks is now their primary concern. The Minister did not say
if any measures would be taken to assist the importers at
that point.

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MOVING AHEAD: THE CONSULTATIVE GROUP
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4. (C) The FinMin discussed the Consultative Group (CG)
meeting, to be held in London November 18-19, after
Ambassador sought to clarify the specifics of the agenda.
Kamara replied that the CG will start with an investment and
trade forum on November 18, in which he hopes to demonstrate
that Sierra Leone's investment climate has improved. The CG
itself will be held on November 19, using President Koroma's
"Agenda for Change" document as a guide. The Minister said
that the GoSL is looking for sectoral basket funds in areas
such as infrastructure, agriculture, health, education, and
strengthening local governments. A session on aid
effectiveness and donor coordination will also take place on
that day. Ambassador reminded him of the USG's bilateral
assistance programs, particularly the current focus on
agriculture and agri-business. She told Minister Kamara that
the USG would welcome increased donor coordination, and also
expressed her hope that Sierra Leone will take greater
advantage of AGOA benefits in future.

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THE AFRICAN CAUCUS
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5. (C) The Minister also highlighted the African Caucus,
which Sierra Leone is currently chairing. Sierra Leone
assumed the chairmanship a year ahead of schedule following
the coup in Mauritania, which came in the middle of its
two-year term (Note: The Chairmanship alternates every two
years between Anglophone and Francophone countries in
alphabetical order. The Democratic Republic of Congo will
become chair in 2011. End Note). The Caucus was formed in
response to the difficulties African countries face in
engaging the Bretton Woods institutions. The primary output
from the meetings held August 11 through 13 was a memorandum
of mutual issues to be raised during the World Bank/IMF

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annual meetings in Istanbul. The themes considered this year
included infrastructure financing, growth drivers, and the
impact of the financial crisis. The meeting closed on August
14 with G-20 consultations (Note: Post will provide a
detailed read-out of the consultations and the Caucus
declaration septel. End Note).

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COMMENT
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6. (C) The Finance Minister provided no new information about
how Sierra Leone will handle the various economic shocks that
are driving down the value of the Leone and making it
increasingly hard to meet the needs of this heavily
import-reliant country. Though he has an unflappable demeanor
generally, the Minister's nonchalance is disconcerting in the
face of the genuine concern and anxiety expressed by
commercial banking contacts. That said, he does acknowledge
that the current economic state could erode stability and
security, and it is possible that he intends to maintain an
optimistic posture before donors to instill confidence while
internally admitting that his arsenal of policy tools to
improve the situation is extremely limited. Against the
backdrop of strategizing how to maximize donor funds, the
GoSL just spent a fortune supporting the in-country costs for
an extravagant Caucus meeting. For a government too
cash-strapped to provide adequate fuel for its police force,
support social services, or even pay salaries for civil
servants at times, funding the in-country costs for a
multi-day event for upwards of 600 dignitaries did not seem
judicious (Note: Dr. Kamara refused to disclose the Caucus'
costs to the GoSL in a press interview. End Note). With the
CG a few short months away, this kind of financial management
could dampen donors' enthusiasm to respond to the GoSL's
near-constant refrain that they are nearing insolvency.
Nevertheless, we note that President Koroma told Ambassador
in an August 8 conversation that he was counting on the CG to
pull Sierra Leone out of troubled financial waters. End
Comment.

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BIOGRAPHIC NOTE
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7. (C) Dr. Samura Kamara is an APC party member from the
Northern Province, but was appointed to the post of Financial
Secretary by former President Kabbah in 2005. He left that
position in 2007 to work for the IMF in Washington, and
returned to Sierra Leone at President Koroma's behest in
December, 2007, to become the Governor of the Central Bank.
He became the Finance Minister as a result of the Cabinet
reshuffle in March, 2009. Further background information will
be provided as it becomes available.
PERRY