VZCZCXRO3341
PP RUEHROV
DE RUEHKH #0737 1320823
ZNR UUUUU ZZH
P 120823Z MAY 07
FM AMEMBASSY KHARTOUM
TO RUEHC/SECSTATE WASHDC PRIORITY 7154
INFO RUCNIAD/IGAD COLLECTIVE

UNCLAS KHARTOUM 000737 
 
SIPDIS 
 
SIPDIS 
SENSITIVE 
 
DEPT FOR AF/SPG, AF/EPS, EB/IFD, AND EB/ESC 
DEPT PLS PASS USAID FOR AFR 
 
E.O. 12958:  N/A 
TAGS: PREL PGOV EFIN ECON EAID PHUM SU
SUBJECT: ACTING GOSS MINISTER OF FINANCE OULINES PRIORITIES 
 
REF: A) KHARTOUM 0211 B) KHARTOUM 0720 
 
¶1. (SBU) Summary:  The Acting Minister of Finance (MOF) for the 
Government of Southern Sudan (GOSS) Gabrielle Changson Chang 
outlined his immediate objectives for establishing a 
fully-functioning GOSS financial structure.  The gap between GOSS 
capacity in this area and the imperative nature of establishing a 
functioning Ministry of Finance is a significant one.  The impending 
GOSS budget crisis is only going to exacerbate existing problems 
within the ministry and at every level of government.  End Summary. 
 
¶2. (SBU) Fresh on the heels of his predecessor's corruption scandal, 
Changson is appropriately focused on accountability within the GOSS 
funding and expenditures structure and is attempting to embed his 
ministry with the appropriate oversight mechanisms.  Changson's 
goals include establishing a public financial management system, 
non-oil revenue generation operations, and planning and budgeting 
systems.  With these systems in place, Changson advocates, the MOF 
can more effectively manage its resources; diversify its revenue 
stream away from oil profit and into, for example, customs, duties, 
and value-added taxes (VATs); and focus on priority development 
projects within the GOSS.  Though Changson has the technical savvy 
to lay out these objectives, he confronts the same lack of capacity 
problem within his ministry as is faced by all GOSS ministries. 
 
¶3. (SBU) Changson's macroeconomic goals reflect that he is thinking 
long-term about the financial health of the GOSS, which is in an 
exceptionally fragile state, but the challenge to reaching these 
goals before a financial crisis strikes is obvious.  He wants to 
establish a foreign currency reserve in the Bank of Southern Sudan 
(BOSS) and claims he has gained "approval" from the Bank of Sudan 
(BOS) (Sudan's central bank) to do so.  Changson sees foreign 
reserves as providing a cushion around which the GOSS can operate 
its financial transactions during budget shortfalls. 
 
¶4. (SBU) Despite Changson's plans for this ministry, the GOSS 
financial state is precarious at best.  The BOS denied Changson's 
recent request for a GOSS loan and GOSS oil revenues have been in 
decline for the past few months.  GOSS oil revenues in March totaled 
only $44.53 million according to public reporting and GOSS public 
statements.  At that rate, GOSS revenue for 2007 will be roughly 
half of its 2006 levels.  Though some newspapers have reported GOSS 
transfers and expenditures for the same period to be $34.60 million, 
indicating a surplus, stories about salary shortages also 
proliferate in daily news reports.  In addition, the public 
Governors' Forum speeches highlighted growing financial concerns 
among GOSS leadership (Reftel A). 
 
¶5. (SBU) Changson intends to rein in the 2008 GOSS budget in order 
to make all ministries operate within their resources and to allow 
for building GOSS reserves. Changson is interested in ways to tie 
budget performance and output together in order to minimize 
operating costs for all GOSS ministries, and this month has directed 
that they all refrain from entering into any contracts without 
approval from the Ministry of Finance.  The resonance of his 
instruction is undetermined as of yet. Changson estimates that 
salary payments comprise approximately 70 percent of the GOSS 
budget, but other sources suspect it could be more.  Changson 
acknowledges that this is an inordinate percentage, but he 
recognizes the political sensitivities to making drastic, but 
necessary, changes to the existing structure. 
 
¶6. (SBU) GOSS leadership, including Changson, continues to distrust 
oil revenue figures coming from the GNU and to cite familiar 
impediments to GOSS verification of production figures.  In 
addition, low oil prices for the Dar blend coming out of Blocks 3 & 
7, at roughly $23 a barrel according to GNU sources, contribute to 
low revenues.  Changson briefly explained that he would like the 
GOSS to receive a portion of its oil revenue share in actual oil so 
that it could sell the oil on its own, rather than take the price 
the GNU takes.  However, there is no indication that such an 
arrangement is forthcoming.  The National Petroleum Commission (NPC) 
technical secretariat meets at the end of every month for an 
exchange of information, including GNU-provided production figures 
and revenue outlays, but the GOSS NPC representatives continue to 
voice dissatisfaction with the level of access to the oil fields and 
the perennial border dispute, which minimizes the GOSS claim to oil 
revenue. 
 
MONROE