CAR: IMPROVEMENTS IN BUDGET TRANSPARENCY EVIDENT

UNCLAS SECTION 01 OF 02 BANGUI 000007

SENSITIVE
SIPDIS

DEPT FOR AF/C
FOR EB/IFD/OMA BRIANA SAUNDERS

E.O. 12958: N/A
TAGS: AID EAID ECON EFIN PREL CT
SUBJECT: CAR: IMPROVEMENTS IN BUDGET TRANSPARENCY EVIDENT

REF: A. A - 10 STATE 1923 AND PREVIOUS

B. REF: B - 09 BANGUI 204


1. (SBU) SUMMARY: This is a response to Ref A. The Central
African Republic (CAR) made commendable strides to address
budget transparency in 2009. Though there is still much ground
to cover, the government, with the help of the international
community, is making concerted efforts to increase its control
of spending and precision of data. These improvements lead Post
to support a waiver for the CAR in 2010. END SUMMARY.



2. (U) The following current programs fall under SFOAA
regulations:

-- The U.S. Defense Attache's Office occasionally sends Central
African military officers to training through the International
Military Education and Training Program. This training does not
normally include a budgeting or fiscal component.

-- USAID funding of a USD 2.75 million Road Rehabilitation
Project between the Central African towns of Bozoum and
Bossangoa.

--USAID funding of a USD 2.5 million Property Rights and
Artisanal Diamond Development (PRADD) project in support of
Kimberley Process goals.



3. (U) The CARG publishes its annual budget each year. Copies
are made available to interested citizens and observers, though
a lack of resources prevents the Government from distributing
the document widely.



4. (U) There have been no events in the last year that effected
fiscal transparency.



5. (U) In 2009, the CARG adopted a number of measures to
increase its budget's transparency as well as bringing revenues
and expenditures under tighter control:

-- In 2009, the government closed 51 bank accounts managed by
individual ministries in commercial banks and consolidated the
accounts into a single treasury account in the Central African
Regional Bank (BEAC). Customs receipts are directly transferred
to BEAC as well.

-- Only the Director of the Treasury may now issue checks from
the treasury.

-- All budget and treasury operations from 2007 and 2008 are
being transferred to a computerized system that will be reviewed
by both a Court of Account and the National Assembly. While
there are some technical difficulties and institutional foot
dragging, experts think this process will be completed by the
end of 2010.

-- In January 2009, the government declaring assets of ministers
and senior civil servants upon entry into office. Full
compliance with the rule has been achieved. Unfortunately, it is
not required that those same individuals make a declaration upon
leaving office.

-- According to the World Bank, the government is adhering to
EITI's criteria, having just published data from 2006.



6. (U) In September 2009, Post engaged the CARG on fiscal
transparency (Ref B). DCM discussed the need for greater
responsibility and accountability in the budget with senior
officials at the Ministry of Foreign Affairs and Finance who
agreed that while positive steps had been taken, there is still
much work to do. On a separate occasion, the DCM renewed the
USG's message to the CAR Minister of Commerce in a discussion
about MCC eligibility.



7. (SBU) The CARG has made solid steps in 2009 and should be
commended for doing so. The new engagements taken by the
government have not closed all the loopholes, but they are

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building a foundation from virtually nothing when the government
reengaged with the WB, IMF and other international organizations
in 2005. There are still serious shortfalls in budget execution,
controls on exactly how spending it carried out, and corruption
outside of the budgetary process. This necessitates close
monitoring by the international community and continued will by
the CARG to curb excesses. Yet it remains Post's conviction that
the Ministry of Finance is making positive steps toward
increasing fiscal transparency and should be supported in its
efforts by granting a waiver to the CAR for 2010.
COOK