VZCZCXRO9906
RR RUEHPA
DE RUEHJL #0147/01 0790848
ZNY CCCCC ZZH
R 200848Z MAR 07
FM AMEMBASSY BANJUL
TO RUEHC/SECSTATE WASHDC 7408
INFO RUEHZK/ECOWAS COLLECTIVE
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEHLMC/MILLENNIUM CHALLENGE CORP

C O N F I D E N T I A L SECTION 01 OF 02 BANJUL 000147 
 
SIPDIS 
 
SIPDIS 
 
SECSTATE PASS EXIMBANK, OPIC, AND USTDA; TREASURY FOR 
OFFICE OF AFRICAN NATIONS 
 
E.O. 12958: DECL: 03/19/2017 
TAGS: ECON EAID ETRD EFIN PREL KMCA PTER IMF GA
SUBJECT: THE GAMBIA: TOUR D'HORIZON WITH FINANCE 
MINISTER,CENTRAL BANK GOVERNOR 
 
REF: BANJUL 101 
 
BANJUL 00000147  001.2 OF 002 
 
 
Classified By: AMBASSADOR JOSEPH STAFFORD, REASON 1.4 (B AND D) 
 
SUMMARY 
-------- 
 
¶1. (C) Finance and Economy Minister Bala Gaye and Central 
Bank Governor Jatta were predictably upbeat on the GOTG's 
success in getting back on track with the IMF and were 
optimistic that The Gambia would perform satisfactorily under 
the new PRGF so as to qualify for debt relief as early as 
mid-2007.  However, both officials acknowledged the need for 
reform of the country's troubled groundnut sector.   Central 
Bank Governor Jatta asserted that the GOTG needed to overcome 
suspicions about Senegal and do more to promote economic 
cooperation, citing the long-delayed Gambia River bridge 
project.  Jatta also revealed plans to establish a Financial 
Intelligence Unit at the Central Bank so as to strengthen the 
GOTG's capacity to monitor and interdict money-laundering and 
other illicit financial activities; he said he would approach 
us in due course about possible technical assistance for the 
Unit's capacity-building efforts.     END SUMMARY. 
 
BACK ON TRACK WITH IMF 
----------------------- 
 
¶2. (SBU) Ambassador and Pol/econoff recently met with Finance 
and Economy Minister Musa Bala Gaye and Central Bank Governor 
Famara Jatta for a review of economic issues.  In separate 
meetings, the two officials were predictably upbeat on the 
IMF's recognition of the GOTG's progress on economic reform 
in deciding to implement a new Poverty Reduction and Growth 
Facility (PRGF) here (reftel).  They made clear their 
satisfaction at the GOTG's success in normalizing ties with 
the IMF following a rupture in 2002 due in part to 
irregularities at the Central Bank.  Bala Gaye acknowledged 
the need for the GOTG to maintain economic reforms and meet 
benchmarks under the PRGF, saying he had established a "PRGF 
monitoring committee," composed of officials from his and 
other ministries, to monitor compliance with the PRGF's 
terms. 
 
PROSPECTS FOR DEBT RELIEF 
------------------------- 
 
¶3. (SBU) The two officials also indicated optimism about The 
Gambia's prospects of achieving HIPC Completion Point as 
early as mid-2007 so as to qualify for debt relief under 
MDRI.  They asserted that the GOTG was on course to comply 
with all HIPC "triggers" for achievement of Completion Point, 
with the exception of that related to privatization of the 
Gambian Groundnut Corporation (GGC), the parastatal operating 
in the country's strategic groundnut sector.  Bala Gaye 
expressed doubt that the GOTG could move quickly enough on 
privatization to comply with this HIPC "trigger" this year, 
but stated that he expected the IMF to grant a waiver whereby 
the GOTG would be deemed to have registered sufficent 
progress to achieve Completion Point.  He added that the 
European Union had agreed to fund a study designed to devise 
a viable strategy for GGC's privatization. 
 
GROUNDNUT SECTOR'S WOES 
----------------------- 
 
¶4. (SBU) There was a general discussion of the troubled 
groundnut sector, with Bala Gaye noting that the stagnation 
in recent years in exports of the country's leading cash crop 
was continuing.  He said that while the sector was no longer 
among leading sources of foreign exchange for the country, 
many Gambians -- sixty percent of rural households, he 
claimed -- continued to rely heavily on groundnuts for their 
livelihood.  Central Bank Governor Jatta noted that in recent 
years both the private sector and GGC had had difficulty in 
coming up with funds to purchase an adequate supply of 
groundnuts for processing and export; the result was that 
some farmers were unable to sell their crop or were paid only 
after lengthy delays.  Jatta remarked that farmers' plight 
had eased somewhat during the current harvest season, due to 
increased sales to Senegalese buyers.  He went on to observe 
that the genuine solution to the sector's woes lay in getting 
farmers to ease their dependence on groundnuts by cultivating 
other varieties of cash crops, but noted that convincing them 
to do so would take time. 
 
ECONOMIC RELATIONSHIP WITH SENEGAL 
 
BANJUL 00000147  002.2 OF 002 
 
 
---------------------------------- 
 
¶5. (C) Central Bank Governor Jatta said he fully shared IMF's 
stated concern about The Gambian economy's "vulnerability to 
exogenous shocks" (reftel), and recalled that one such 
"shock" was Senegal's August/October 2005 closure of its 
border with The Gambia due to a bilateral dispute over 
transportation issues.  Recalling the considerable damage 
caused the Gambia's economy by the action of its far more 
powerful neighbor, Jatta called for greater efforts by the 
GOTG to promote economic cooperation with Senegal.  He 
lamented what he saw as some Gambian officials' tendency to 
adopt a negative posture toward such cooperation out of 
concern for "preserving Gambian sovereignty" toward "big 
brother Senegal."  Jatta cited the endlessly-delayed project 
with the Senegalese to construct a bridge across the Gambia 
River as illustrative, citing Gambian footdragging on the 
project -- which would facilitate overland travel between 
northern Senegal and the southern Casamance region -- as due 
in no small part to a concern in some GOTG circles of 
"Senegalese domination" manifested in a steady stream of 
Senegalese transporters using the bridge.   Instead of 
worrying about "Senegalese domination," he concluded, the 
GOTG should view the bridge as clearly serving Gambian 
economic interests and offering numerous opportunities for 
establishment of Senegalese/Gambian joint ventures associated 
with the bridge operation. 
 
FINANCIAL INTELLIGENCE UNIT 
--------------------------- 
 
¶6. (SBU) Jatta said that, as part of the GOTG's effort to 
combat money-laundering and other financial crimes, the 
Central Bank was working with the UN and others to establish 
a Financial Intelligence Unit to monitor banking 
transactions.  Jatta said that once the Unit was operational 
-- by June, he hoped -- he would contact us to request 
technical assistance for the Unit's capacity-building 
efforts. 
 
COMMENT 
------- 
 
¶7. (C) Finance Minister Bala Gaye and Central Bank Governor 
Jatta spearheaded the GOTG's successful effort to get back on 
track with the IMF, and their clear sense of satisfaction 
over the new PRGF -- and prospect of debt relief in 2007 -- 
is understandable.  The two officials also made clear their 
recognition that reform of the country's groundnut sector is 
essential.  Noteworthy was Jatta's implicit rebuke of his 
government for failing to overcome wariness toward Senegal so 
as to move forward on the Gambia River bridge project and 
economic cooperation generally.  Jatta's plan to establish a 
Financial Intelligence Unit at the Central Bank to strengthen 
the GOTG's ability to monitor and crack down on illicit 
financial activity through banking channels is good news. 
We will report further as the Unit is established and will 
also advise of any technical assistance requests.  END 
COMMENT 
STAFFORD