CAMEROON'S REQUEST FOR IMF AID OFFERS WINDOW FOR USG GOALS

UNCLAS YAOUNDE 000587

SIPDIS

TREASURY FOR DAN PETERS AND FRANCOIS BOYE
USDOC for ITA Burress

E.O. 12958: N/A
TAGS: EFIN ECON PREL KCOR ECON CM
SUBJECT: CAMEROON'S REQUEST FOR IMF AID OFFERS WINDOW FOR USG GOALS

Ref A. Korte email to Post 06/29/2009
Ref B. Yaounde 518
Ref C. Yaounde 433
Ref D. Yaounde 291


1. (SBU) Summary. Cameroon's request for $143 million in ESF-RAC
provides an opportunity to gain traction in our continued efforts to
foster better governance and economic policy in Cameroon. The
Embassy recommends that the U.S. Executive Director register USG
concerns regarding persistent governance problems, but such a
gesture will be most effective if it is preceded and followed up by
communication from Washington, indicating the need for concrete
improvement on several fronts. It would not serve USG interests to
outright oppose Cameroon's ESF-RAC request because the Government of
Cameroon (GRC) officials continue to be receptive, if not
sufficiently responsive, to USG messages, and in light of the
position taken by the U.S. Executive Director on similar requests
from other countries, including some with governance challenges
rivaling or surpassing those in Cameroon. End summary.

Governance Problems Are Real
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2. (SBU) As the draft IMF Staff Report for 2009 Article IV
Consultations (ref A) acknowledges, the Government of Cameroon GRC
has made some improvements in transparency and governance of public
resources, but those reforms have been insufficient to resolve
Cameroon's deep governance challenges. Budget execution remains
woeful; the extent of the problem is difficult to determine because
accurate figures for actual expenditures are impossible to obtain.
According to Embassy contacts working in the sector, the
government's management is so poor that even the Minister of Finance
would be hard-pressed to determine how much the GRC has actually
spent on priority sectors like health and education. As the
Ambassador has noted in recent speeches covered extensively by the
Cameroonian media, the Open Budget Institute assessed Cameroon a
score of 5 (out of 100) in its 2008 evaluation of transparency in
public finances. What information we do have about public
expenditures indicates a high level of waste and corruption. One of
the GRC's most senior and experienced officials privately estimated
that less than 30% of the budget actually arrives at its intended
purpose.

Request for Assistance is Sincere
--------------


3. (SBU) Despite these persistent problems, the GRC's request for
urgent assistance is sincere. As noted in reftels, Cameroon's
economy has been hard hit by declining demand for its major imports,
including in high employment sectors like timber and rubber. The
Treasury's resources have dried up as a result, and the drop in oil
revenues, which account for roughly a third of government revenues,
has been particularly problematic. GRC officials have already told
us that they have noticed growing difficult obtaining resources for
their work, including in priority sectors.

And so Are Some Reformers
--------------


4. (SBU) Having been stunned by the ferocity of public protests in
February 2008, caused at least in part by the population's growing
socio-economic woes, many GRC officials were already focused on the
need to improve governance and economic management before the
economic crisis hit Cameroon. We believe that many Cameroonian
officials, from President Biya on down, recognize that governance
issues lie at the heart of Cameroon's challenges. These officials
are receptive in one degree or another to the USG's calls for
improved governance, and our goal should be to strengthen their
efforts and to avoid undercutting them in Cameroon's sometimes
cut-throat domestic political disputes. To Post's knowledge, the
U.S. has not opposed ESF requests from other countries, including
some where governance problems are as bad or worse than they are in
Cameroon. We fear that our message at the IMF could backfire if it
can be misconstrued as a "surprise" or unfair attack on Cameroon.

Comment: Delivering the Message
--------------


5. (SBU) We should not shy away from this opportunity to press our
point on governance issues, which are at the heart of a broad range
of U.S.G. interests in Cameroon, from democratization to regional
security. Instead, Post proposes that the U.S. Executive Director's
message be accompanied by parallel communications from U.S.
officials to counterparts in Cameroon, both before and after the
U.S. Executive Director's intervention. The Ambassador will request
a meeting with the new Prime Minister as quickly as possible to
convey USG support for reform efforts and concerns that those
reforms need to be strengthened and accelerated. Post would welcome
a subsequent communication-if possible, by letter-from a Treasury
official, reinforcing our desire to see Cameroon ramp up its reform
efforts. Finally, Post hopes Washington officials at the
appropriate level will be willing to deliver a similar message to
senior Cameroonian officials in early July. End comment.