VZCZCXRO6427
RR RUEHMA RUEHPA
DE RUEHRY #1718 3261227
ZNR UUUUU ZZH
R 221227Z NOV 06
FM AMEMBASSY CONAKRY
TO RUEHC/SECSTATE WASHDC 0248
INFO RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHZK/ECOWAS COLLECTIVE

UNCLAS CONAKRY 001718 
 
SIPDIS 
 
SENSITIVE 
 
SIPDIS 
 
TREASURY FOR OFFICE OF AFRICAN NATIONS 
TREASURY FOR USED IMF AND USED WORLD BANK 
 
E.O. 12598:  N/A 
TAGS: EFIN ECON IMF PGOV GV
SUBJECT: IMF TEAM CONCLUDES GUINEA IS FARTHER THAN BEFORE FROM A 
FUNDED PROGRAM 
 
REF: CONAKRY 297 
 
¶1. (SBU) The November 18-21 visit by an IMF technical team ended 
with the team leader, Israel de la Piedra, expressing disappointment 
that Guinea's microeconomic performance had worsened since the IMF's 
last examination in March of this year (reftel).  The three-person 
team was dispatched to examine Guinea's 2007 budget and budget 
process, but lingering political issues loomed. At a November 21 
debriefing for the donor community, de la Piedra cited 
misappropriations and persistent lack of accountability at the 
Central Bank as major flaws.  He questioned whether the current 
Guinean government had a coherent plan to implement reforms.  While 
conceding that Guinea's Staff Monitored Program (SMP) had achieved 
some successes, de la Peidra was adamant that Guinea must show 
concrete examples of reform if it is to return to a funded program. 
The Guineans are saying the right things, he concluded, but their 
concrete actions are insufficient.  Guinea's next IMF team visit is 
scheduled for March or April of 2007. 
 
¶2. (SBU)  In a meeting with members of donor community and  the 
World Bank, IMF team leader Israel de la Piedra offered a frank 
assessment of Guinea's macroeconomic performance and proposed 2007 
budget. He acknowledged certain positive efforts, particularly in 
banking oversight.  However, Mr. de la Piedra expressed 
disappointment that Guinea's economic situation had deteriorated 
since the team's last visit in March of this year. 
 
¶3.  (SBU) De la Peidra praised the financial controls suggested by 
the World Bank and, to some extent, followed by the Guinean Budget 
Office.  He also applauded the new budget review and accountability 
process.  De la Piedra acknowledged the detrimental effects of the 
two general strikes on Guinea's economy but rejected Guinea's 
general monetary policy (i.e., the 'managed float') as 
"ineffective."  He outlined broad, interrelated areas for 
macroeconomic improvement. 
 
-- Guinea should request technical assistance and work with those 
partners to develop action plans to implement the IMF's 
preconditions for return to a funded program. 
 
-- Guinea should commission a full audit of the government's 2006 
expenditures and receipts.  This would be a regular annual audit. 
 
-- Guinea should establish a better mechanism to determine gasoline 
prices while aggressively paying down its arrears to petroleum 
companies. 
 
-- Guinea should review and reconcile its receipts, taxes and 
concessions in the mining sector. 
 
¶4. (SBU) Comment.  The IMF's assessment is both a denunciation of 
Guinea's fiscal and monetary policies and insufficient government 
reforms.  After the firing of former Prime Minister Diallo, the IMF 
waited to see the "identity" of the new administration.  During this 
visit, the team concluded the numbers, the economic situation, and 
overall governance have declined.  The IMF's technical team was in 
country to examine the 2007 budget, but also focused on governance 
issues -- the Central Bank's dueling audits of Futurlec remain 
unresolved, there is still no clear plan to resolve Guinea's 
petroleum issues, and ministers are too busy jockeying for power to 
form an effective team. 
 
MCDONALD