This record is a partial extract of the original cable. The full text of the original cable is not available.



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FM AMEMBASSY NDJAMENA
TO SECSTATE WASHDC 2819
INFO AMEMBASSY ABUJA 
AMEMBASSY DAKAR 
AMEMBASSY LIBREVILLE 
AMEMBASSY LONDON 
AMEMBASSY NIAMEY 
AMEMBASSY PARIS 
AMEMBASSY YAOUNDE 
USDOC WASHDC
DOE WASHDC
DEPT OF TREASURY WASHDC

UNCLAS  NDJAMENA 001851 
 
SIPDIS 
 
LONDON AND PARIS FOR AFRICA WATCHERS, TREASURY FOR OTA, 
ENERGY FOR GPERSON AND CGAY 
 
E.O. 12958: N/A 
TAGS: CD ECON EFIN ENRG EPET PGOV
SUBJECT: CHAD: OIL REVENUE LAW UPDATE 
 
REF: NDJAMENA 1760 AND PREVIOUS 
 
¶1.  (SBU)  SUMMARY: The Government of Chad (GOC) has formally 
invited a World Bank team to come to Chad to discuss the 
Government's proposed amendments to the Oil Revenue Law and 
strengthening of the Public Finance System.  Some donors have 
expressed concern that continued disagreement between the 
World Bank and the GOC over the proposed elimination of the 
Fund for Future Generations and the inclusion of security as 
a priority sector might jeopardize the success of the 
mission, currently projected for January 2006.  The Minister 
of Finance has stated that while he and the GOC appreciate 
the team's visit, the Government will maintain its sovereign 
right to amend its laws. National Assembly debate over the 
revisions to the Oil Revenue Law is still scheduled for 
December 29, but we do not anticipate a vote the same day. 
The GOC has clarified which changes it seeks to the draft 
terms of reference of the U.S. Department of Treasury 
Resident Advisor.  We are hopeful that this will resolve the 
impasse over placement of the Advisor at the Oil College. 
END SUMMARY. 
 
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GOC AGREES TO ACCEPT WORLD BANK TEAM, DONORS HAVE CONCERNS 
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¶2.  (U) On December 21, the World Bank convened a donors' 
meeting/audioconference in N'Djamena to update donors on the 
status of negotiations with the Government pertaining to 
revisions to the Oil Revenue Management Law.  Representatives 
from the IMF, African Development Bank, French Development 
Agency, French Embassy, the European Commission, and the U.S. 
Embassy were present.  The audioconference included 
representatives from Paris, Brussels, and Washington.  Ali 
Khadr, World Bank Country Director for Central Africa, and 
Marie-Francoise Mary-Nelly, World Bank Coordinator for the 
Chad-Cameroon Pipeline, began the meeting by expressing the 
World Bank's satisfaction with the receipt of a letter from 
Prime Minister Pascal Yoadminadji's office, which accepted to 
host a World Bank/IMF mission.  Khadr stated that upon 
receiving the blessing of Senior Management, the Bank would 
send a letter outlining the details of the missions that 
would be arriving in Chad. 
 
¶3.  (U) While the details of the mission were still being 
finalized, Khadr stated that the Bank's tentative plan was to 
send two missions: a technical assessment mission on January 
15, and a high-level political delegation on January 29. 
According to Khadr, the technical assessment mission would 
discuss the GOC's proposed revisions to the Revenue 
Management Laws, examine the current budgetary process and 
explore needs for technical assistance to strengthen the 
current system, and identify financing requirements to 
relieve any financing gaps in the 2005 budget.  The political 
delegation (which would be led by the WB's Senior Vice 
President for Africa and the Director of the African 
Department) would relay the findings of the assessment 
mission to the GOC, and resolve any specific differences with 
the Government. 
 
¶4.  (SBU) Donors also discussed the GOC's preparation of the 
2006 Budget.  IMF Representative Wayne Camard stated that, 
based on discussions with the Ministry of Finance, the 
Government had not made a decision on whether to pass a 
temporary budget for 2005 and amend it if the amendments to 
the Revenue Management Laws are approved, or if they would 
extend the 2005 budget into 2006 and maintain spending 
through continuing resolutions.  Khadr stated that it was 
important for the GOC to make its intentions clear on the 
2006 Budget before the assessment team arrived in January, as 
a lack of concrete position would make the team's mission 
extremely difficult. 
 
¶5.  (SBU) Following the premature cut-off of the 
audioconference (due to technical difficulties), donor 
representatives in N'Djamena exchanged views on the current 
negotiations.  While IMF representative Camard was optimistic 
that the January visits could resolve differences over the 
revisions to the oil laws, representatives from the European 
Commission and the French Embassy pointed out that the basic 
disagreements between the World Bank and the GOC over the 
 
elimination of the Fund for Future Generations and the 
inclusion of security as a priority sector still had not been 
resolved.  They expressed concern that the failure to resolve 
these points before the arrival of the team may pose a 
problem for the team's ability to carry out its assessment. 
Camard asked the donors whether their respective 
organizations would be open to contributing resources to GOC 
financing needs to close any spending gaps.  The donors 
stated they would have to know exactly what the financing 
would be used for, and what the spending limits would 
actually be.  French Economic Attach Marco Bellito stated 
that while the French were open to providing resources for 
demobilization efforts, they would not approve of spending 
for military equipment.  The European Commission 
representative concurred with this assessment, and said that 
clear boundaries needed to be delineated before the EC could 
even consider providing additional financing. 
 
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MINISTER WELCOMES DIALOGUE, ASSERTS SOVEREIGNTY, DEBATE STILL 
SCHEDULED 
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¶6.  (SBU) On December 23, Minister of Finance Abbas Tolli 
told Charge that the invitation of the World Bank team by the 
Government was a positive step in enhancing dialogue between 
the Bank and the GOC, and he looked forward to their 
recommendations for the Public Finance System.  The Minister 
pointed out that he and his colleagues understand the 
importance of current IFI programs, and want to ensure that 
they continue.  However, he noted that points of blockage 
still remained between the two parties, and the Government 
would stand firm on maintaining its sovereign right to amend 
the oil revenue laws to benefit the country.  The Minister 
reiterated the GOC's argument that the PRSP, in which the 
international partners identified specific economic and 
social needs in-country, required financial resources that 
the Government did not have.  Freeing up the resources from 
the Fund for Future Generations (FFG) would allow the 
Government to make progress on the PRSP, and alleviate 
current social tensions associated with salary arrears and 
failing public services.  He also pointed out that the 
Government would not accept a solution that was imposed by 
the World Bank. 
 
¶7.  (SBU) With respect to the 2006 Budget, Tolli stated that 
the Government was still trying to decide whether to pass a 
budget law in the near future and rectify it based on the 
outcome of vote in the National Assembly, or to pass a 
continuing resolution to extend the 2005 budget, and allow 
the debate to be completed.  For the time being, the Minister 
stated the debate was scheduled for December 29, and he added 
that the President of National Assembly told him that unless 
the Government said otherwise, the debate would move forward. 
(NOTE: E/C Officer confirmed with the Secretary General of 
the National Assembly that the debate was scheduled for 
December 29, but that was susceptible to change if the 
committees designated to resolve internal disagreements among 
ruling-party deputies over the proposed amendments could not 
complete their work in time.  END NOTE). 
 
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PROGRESS ON STATUS OF TREASURY ADVISOR 
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¶8.  (SBU) During meetings with Finance Minister Tolli and 
Minister of Plan, Economy, and Cooperation Mahamat Hassan, 
Charge was informed that the status of the Department of 
Treasury's Resident Advisor, Linda Gregory, was close to 
being resolved.  Minister Hassan provided Charge with a copy 
of a letter addressed from the Government to the Revenue 
Management College outlining proposed amendments to the 
Resident Advisor's Terms of Reference.  Both Tolli and Hassan 
stated that once the amendments were made, they foresaw no 
other obstacles that would prevent Ms. Gregory from taking up 
her duties. 
 
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COMMENT 
 
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¶9.  (SBU) The Government willingness to host a Bank-Fund team 
is definitely a positive step towards resolving differences 
between the World Bank and the GOC over proposed revisions to 
the oil revenue law.  However, the fact that the basic points 
of disagreements still remain over the elimination of the FFG 
and the inclusion of security as a priority sector means that 
significant obstacles remain before any type of compromise 
can be reached.  The Government seems adamant in maintaining 
these two items in any resolution, and other donors seem 
hesitant to accept changes on these fronts.  We are pleased 
that the GOC has moved forward on our Resident Advisors' 
Terms of Reference.  We will follow up with the College to 
make sure that the process continues, and hope to have her 
fully installed at the beginning of the new year. 
 
TAMLYN 
 
 
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