VZCZCXRO8660
PP RUEHPA
DE RUEHAB #1345/01 3410728
ZNY CCCCC ZZH
P 070728Z DEC 06
FM AMEMBASSY ABIDJAN
TO RUEHC/SECSTATE WASHDC PRIORITY 2239
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
INFO RUEHZK/ECOWAS COLLECTIVE

C O N F I D E N T I A L SECTION 01 OF 02 ABIDJAN 001345 
 
SIPDIS 
 
SIPDIS 
 
STATE PASS TO USTR 
 
E.O. 12958: DECL: 12/04/2016 
TAGS: ECON EFIN IMF IV PGOV PREF
SUBJECT: COTE D'IVOIRE: FINANCE MINISTRY OFFICIALS SIGNAL 
THAT THE GOVERNMENT WILL NOT PAY WORLD BANK ARREARS 
 
REF: A. A) ABIDJAN 1099 
     ¶B. B) MASSINGA-DESK UNCLASS EMAILS 
 
Classified By: EconChief EMassinga, Reasons 1.4 (b, d) 
 
¶1.  (C)  Summary.  Finance Ministry officials are telling us 
that Cote d'Ivoire does not intend to pay the balance of the 
arrears Cote d'Ivoire owes the World Bank.  Bank staff tell 
us the Bank would be willing to accept partial repayment, but 
will not resume normal assistance until it receives the full 
amount.  However, Ministry officials pretend not to be aware 
of this, and tell us that instead, the government expects the 
Bank to either forgive or reschedule the rest of the arrears. 
 Bank staff believe the problem lies with senior Ministry 
officials still loyal to the former Minister, a Gbagbo crony 
who insisted that the World Bank and the IMF must give Cote 
d'Ivoire the money up front to pay off the arrears.  Prime 
Minister Banny himself recently told the International 
Working Group (IWG) that he is confident he can cut the 
"Gordian knot" of the arrears problem.  This may be one more 
issue on which the Gbagbo camp is working to thwart the Prime 
Minister.  End Summary. 
 
¶1.  (C)  Econ Chief met with Ministry of Finance Cabinet 
Director Koffi Ahoutou on November 30 to discuss ongoing 
negotiations with shareholders of Cora de Comstar (ref B) at 
the request of Ahoutou.  At the meeting, Econ Chief raised 
the issue of Cote d'Ivoire's arrears to the World Bank. 
 
¶2.  (C)  Ahoutou said that Cote d'Ivoire is unable to pay the 
arrears beyond the approximately $160m it raised in its 
May-June 2006 borrowing (vice the $225m mentioned in reftel 
A).  The total arrears owned on Cote d'Ivoire's debt to the 
World Bank is rapidly approaching $400m, a total that 
Ahoutoun said the Ministry of Finance has no plans at this 
point to pay.  In response to a query concerning how the 
government will address this question, Ahoutou said that it 
will ask the World Bank to either accept the money raised and 
waive the rest, or find some mechanism to reschedule the 
debt.  Ahoutou asked if the United States would be willing to 
support Cote d'Ivoire's request to the WB in this regard, 
noting that Cote d'Ivoire is now in a negative cash position 
vis a vis the IFIs.  Econ Chief said he doubted that 
Washington would look favorably upon such a request. 
 
¶3.  (C)  When Econ Chief asked Ahoutou directly why the 
Ministry hasn't paid the WB what it had raised in the 
mid-2006 borrowing, the Ministry official said the Bank 
refused to accept partial payment.  When Econ Chief asked if 
perhaps the Bank had communicated to the Ivorian government a 
change in its position on that score (ref A), Ahoutou said it 
had not, according to his information (Note:  this 
contradicts what Bank staff told Econ Chief in September. 
End Note). 
 
¶4.  (C)  Ahoutou explained the government refusal to pay the 
arrears by saying its fiscal position is so dire that it has 
no capability to use cash on hand, future receipts or 
additional borrowing to close the gap.  Pointing to a French 
corporate creditor waiting in his lobby, Ahoutou said the 
government cannot pay the $60m owed to the company hurriedly 
contracted by the Prime Minister's Office in September to 
clean up the toxic wastes dumped at sites throughout Abidjan 
(the creditor told Econ Chief after the latter's meeting with 
Ahoutou that he has been in Abidjan fruitlessly pursuing 
payment for two months). 
 
¶5.  (C)  In a December 1 meeting with World Bank officials on 
the margins of the IWG meeting (septel), local WB officials 
told Pol/Econ Chief that they believed that the unwillingness 
to pay the arrears lies with some senior officials in the 
Ministry who remain loyal to the former minister, Bouabre 
Bouhoun, a Gbagbo crony who steadfastly insisted that the 
World Bank and the IMF must give Cote d'Ivoire the money up 
front to pay off the arrears, and who refused even to discuss 
Cote d'Ivoire paying them off itself.  At the same IWG, Prime 
Minister Banny, who is also the Finance Minister, himself 
acknowledged that the arrears are a serious obstacle 
preventing Cote d'Ivoire from receiving the donor support it 
desperately needs to go forward with disarmament, 
reunification and elections.  Banny said he was confident he 
could cut this "Gordian knot" because of his years of 
experience as a central banker. 
 
¶6.  (C)  Comment.  The arrears question exasperates World 
Bank staff, who are anxious to move forward with support for 
disarmament, although that process itself remains stalled 
along with the overall peace process.  And as with the peace 
 
ABIDJAN 00001345  002 OF 002 
 
 
process, the arrears impasse poses a tough and growing 
challenge to the international community.  This appears to be 
yet another issue on which the Gbagbo camp is seeking to 
thwart the Prime Minister.  End Comment. 
Hooks