JUNE 19 MEETING WITH MINISTER OF FINANCE CLARIFIES STATE

UNCLAS NDJAMENA 000245 SIPDIS SENSITIVE DEPT FOR AF/C AND S/USSES NSC FOR GAVIN LONDON FOR POL - LORD PARIS FOR POL - KANEDA ADDIS ABABA ALSO FOR AU E.O. 12958: N/A TAGS: PREL ECON EFIN CD SUBJECT: JUNE 19 MEETING WITH MINISTER OF FINANCE CLARIFIES STATE OF GOC'S REDUCED BUDGET REF: NDJAMENA 000241 ¶1. (U) Charge d'Affaires met June 19 with Minister of Finance Gata Ngoulou to discuss Chad's revised 2009 budget, which has been reduced to USD 804 million in revenue and USD 1.7 billion in expenditures. (The initial 2009 budget adopted by Chad's National Assembly in November 2008 forecast revenues of USD 1.7 billion and expenditures of USD 1.9 billion.) The GoC expects the Banque des Etats de l'Afrique Centrale (BEAC) to cover a portion of the gap of USD 840 million in the new budget. The GoC adopted the revised text, under pressure from the international community, IMF and World Bank, on June 4. It is to be voted on in an extraordinary session of the National Assembly set to begin June 25, along with four other pieces of legislation that have been deemed to have a "reform" agenda: two items on elections (reftel); one on press freedom; and one on trafficking in persons. According to Minister Ngoulou, all these pieces of reform legislation have been notionally agreed between the GoC and opposition members of the Assembly as consensus documents, and all are expected to pass within a month of the start of the extraordinary session. The reduction in the budget will affect investments in goods and services but not government salaries. END SUMMARY GOC REVISES ITS 2009 BUDGET -------------- ¶2. (U) Minister Ngoulou told Charge that the GoC intended to cover its budget shortfall by three means: taking from existing GoC savings (of USD 57 million) in its BEAC account; further increasing revenues from taxes; and if necessary, borrowing from the BEAC against its national ceiling. ¶3. (U) The GoC also expects to reduce spending on goods and services, but only to a lesser extent to reduce capital investments. The Minister reiterated earlier comments to us to the effect that Chad would continue to fund investment projects that were already under way, but would postpone those that had not yet started. All government budgets will be reduced by approximately 25 per cent except those of "priority" Ministries (Health and Education). The Minister pointed out that Chad's original 2009 budget had projected investments of USD 422 million, whereas the IMF had pressed for a downward revision of this figure to USD 212 million. The sides had eventually settled on USD 330 million. ¶4. (U) The Minister of Finance made clear that he had already been thinking hard about the 2010 budget. He expressed concern that Chad would have used up all of its savings by 2010, leaving even less room to maneuver than this year. According to the Minister, the government would attempt to avoid spending every penny budgeted this year in the hope that some money would be left over for 2010. Ngoulou also said that he was counting on the Chadian MoD to "clean up its books" so that every soldier would be paid only once, and no payments would be made to unidentifiable individuals. According to Ngoulou, the GoC had made progress with its decision to shift from paying cash to electronic transfers for its employees, although the new arrangement was somewhat unpopular. OIL REVENUES -------------- ¶5. (U) Ngoulou indicated that Chad was counting on a petroleum price of USD 50 per barrel. If the price went up, Chad would have a windfall; the GoC was pleased that oil prices had stabilized somewhat since their plummet in late 2008-early 2009. THANKS TO U.S. -------------- ¶6. (U) Appreciative of U.S. support during Bank/Fund meetings in Washington earlier this spring, Ngoulou asked Charge to continue to work with the IMF in the aim of bringing about a long-term return of all staff to Chad. BREMNER