Cameroon and Fiscal Transparency

UNCLAS YAOUNDE 000055

SIPDIS

DEPT for EEB/IFD/OMA, Briana Saunders

E.O. 12958: N/A
TAGS: EFIN EAID EINV ECON CM
SUBJECT: Cameroon and Fiscal Transparency

REF A: State 01923
REF B: 09 Yaounde 1095
REF C: 09 Yaounde 729


1. (SBU) Summary: The Government of Cameroon (GRC) annually
publishes its budget as passed by the National Assembly and approved
by the President. The published budget allows the public to review
some information regarding projected revenues and expenditures, but
the GRC's actual income and expenditures are believed to vary widely
from the publicly announced appropriations, and it is not possible
for Cameroonian citizens to obtain detailed information regarding
actual GRC revenues and expenditures. The Government of Cameroon
has taken some recent positive action to improve budget
transparency, but its finances are still relatively opaque. Post
supports another waiver based on these initial steps and offers its
updated 2010 action plan. End Summary.


2. (SBU) The GRC is already receiving U.S. foreign assistance funds
from the FY10 State Foreign Operations Appropriations Act.

Budget Publicly Available With Incomes and Expenditures


3. (SBU) The GRC makes public its annual finance law, which
includes projected revenues and expenditures for the coming year.
This information is published widely in the official and private
media but is not available online. Cameroonian citizens are able to
obtain more details regarding the projected budget by purchasing the
Official Gazette, which costs about 500 CFA (about $1). The
Official Gazette includes more detailed information on the execution
of the previous year's public investment budget; however, as
reported in Ref B, budget watchdog Dynamique Citoyenne estimates
only 17% of the public investment budget is accounted for in the
Official Gazette.

The Publicly Available Budget Is Not Completely Accurate


3. (SBU) The Embassy believes there is significant variance between
the projected budget and the budget as it is actually executed.
Embassy contacts continue to report that the GRC does not have the
capacity to track its own budget execution because there is no
interface among various computer programs used by the Office of the
Budget (which plans the budget) and the Office of the Treasury
(which spends the money),meaning even the Minister of Finance is
incapable of giving a detailed account of how funds are spent. A
prominent economist pointed out in local newspapers during the most
recent budget exercise that the lag in budget execution has led to
what should be an accumulated budget surplus of almost $4 billion
and the public does not know where the money has gone. The World
Bank Country Representative told EconOff that while the government
has recently taken some steps, transparency concerns still prevented
his organization from lending the government substantial amounts of
money. The Embassy has not heard of any substantial "off-budget"
spending by the GRC since our last report in 2009 (Ref C),although
contacts believe that it still occurs.

The GRC Has Recently Taken Limited Steps To Improve Transparency


4. (SBU) Although the GRC's budget is still far from transparent,
since our reporting in 2009 (Refs B and C) it has taken limited
steps to improve transparency. The GRC had stopped publishing
quarterly budget execution updates for most of 2008, but has now
published three quarterly reports in 2009. The latest report,
published December 30, 2009, updates information as of the end of
September 2009. Finance Minister Essimi Menye published a full page
ad in newspapers on December 14, 2009, directing all managers of
public money, including ambassadors and local officials, to perform
an end of year cash count and submit the results by January 14,

2010.


5. (SBU) Finance Minister Menye did not seem very receptive to
Ambassador's demarche (Ref C) in August, 2009. However, five months
later, on January 11, 2010, Prime Minister Philemon Yang
independently designated his Secretary General to respond and follow
up with the Ambassador's concerns. At an initial meeting with
EconOff on January 20, 2010, the Secretary General promised to work
on budget transparency issues and promised to meet regularly with
EconOff, along with his two staffers who work the portfolio,
although no specific actions were previewed. The Secretary General
also presented Econoff with the first report of the Steering
Committee for Public Finance Reform, published in November 2009,
entitled "Public Finance Modernization Plan." Formed in February
2009, the Committee aims to improve governance in public finances
through several methods outlined in the 46-page report.


6. (SBU) Cameroon is a candidate country in the Extractive
Industries Transparency Initiative (EITI) process and EITI
"validators" are in country the week of January 18, 2010 to assess
the progress toward becoming compliant. At a presentation to donors
in November, representatives from Cameroon's EITI committee reported
optimism in achieving validation by the March, 2010 deadline.

Cameroon has published EITI reports and worked with corporations,
government and civil society to effect compliance with EITI
standards. Privately, however, NGO and other non-governmental
contacts have told EconOff they are not optimistic Cameroon will be
EITI compliant by March 2010, but that the deadline may be
extended.

Updated 2010 Action Plan for Encouraging Transparency


7. (SBU) The Embassy will push for regular meetings and concrete
action with the nascent informal working group in the General
Secretariat of the Prime Ministry, perhaps including it in regular
meetings of the multi-donor community. Along with the donor
community, we will seek regular progress reports on the newly
published Plan. The Embassy has in the past hosted successful
roundtables with NGOs, donors, IFI representatives, and government
officials to push for progress on budget transparency and will do so
again in February. The EITI process will guide public and private
diplomacy. Finally, the Ambassador will continue to raise the issue
with senior government interlocutors.


8. (SBU) Comment: Government lethargy, corruption and capacity
limitations hinder overall government effectiveness, including
greater progress in improving budget transparency. Nevertheless,
Cameroon has taken some concrete steps since the Ambassador's
demarche in August, 2009 and the donor community continues to
pressure its interlocutors in government to improve transparency.
The more regular budget execution reports, public moves by the
Finance Minister, and the independent, albeit late, response by the
Prime Minister perhaps signal more action on the issue. A readout
of the EITI validator visit will also be crucial to gauge Cameroon's
seriousness. In the end, post supports yet another waiver for
Cameroon based on these limited but encouraging efforts.
Additionally, ending aid, FMF and IMET especially, would undermine
other USG priorities in Cameroon, including public health
initiatives, maritime security initiatives, food security, and even
receptiveness to substantial American commercial interests. End
comment.

GARVEY