VZCZCXYZ0010
PP RUEHWEB

DE RUEHJB #0714/01 2781423
ZNY CCCCC ZZH
P 051423Z OCT 07
FM AMEMBASSY BUJUMBURA
TO RUEHC/SECSTATE WASHDC PRIORITY 0637
INFO RUEHXR/RWANDA COLLECTIVE PRIORITY

C O N F I D E N T I A L BUJUMBURA 000714 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR AF/C 
 
E.O. 12958: DECL: 10/05/2017 
TAGS: EFIN ECON PARM PREL PGOV BY
SUBJECT: IMF GUARDEDLY OPTIMISTIC ABOUT BURUNDI 2008 BUDGET 
REVIEW 
 
REF: A. A. BUJUMBURA 564 
     ¶B. B. BUJUMBURA 556 
 
¶1. (U) SUMMARY: The International Monetary Fund (IMF) 
representative to Burundi called a meeting of the principal 
donor representatives to review the progress the Government 
of Burundi (GOB) is making in terms of meeting conditional 
provisions of the Poverty Reduction and Growth Facility.  The 
agreement to extend the current Facility by three years must 
be signed by January 15.  While the GOB has made progress on 
resolving the long-standing political impasse which blocked 
legislative action over the past several months, the IMF 
requests donors to maintain a common front on pushing for the 
reforms needed to meet Facility guidelines in a timely 
manner, so that Burundi can continue to receive budgetary 
support from donor nations.  END SUMMARY 
 
¶2. (U) On October 3, 2007, IMF resident representative Israel 
de la Piedra invited Burundi's principal donor partners to 
review recent GOB progress on key economic and political 
issues.  Progress is a condition for the release of budget 
assistance from the World Bank, Holland, France, Norway and 
the EU to cover the budget deficit for 2007.  Principals at 
the meeting included the Ambassadors from France, Germany, 
Belgium; the Charges from the EU and the Netherlands; the 
DFID Country Representative; and the World Bank resident 
representative.  The US was represented by the USAID Country 
Representative. 
 
¶3. (U) De la Piedra was generally upbeat about the progress 
the Ministry of Finance was making in finalizing the 2008 
budget.  This will be a key document which the Minister of 
Finance will be bringing to the IMF budget review to be 
conducted next week in Washington.  Should the results of 
that review confirm recent progress has been sufficient to 
continue with a more in-depth analysis that will likely lead 
to timely finalization of the agreement in January, the IMF 
will dispatch a team to Burundi during the 26 October to 7 
November period. 
 
¶4. (U) The major budget issue facing the GOB, according to De 
la Piedra, is the need to begin in earnest the International 
Bank for Reconstruction and Development (IBRD) assisted 
defense demobilization.  He sees the planned reduction of 
approximately 8,000 soldiers and police officers by March as 
essential to freeing funds for the 34% civil service salary 
increase promised by Burundi President Nkurunziza last May. 
De la Piedra was informed by General Silas Ntigurirwas, 
National Director of the Disarmament, Demobilization, and 
Reintegration (DDR) program, that 300 soldiers and 600 police 
are to start the demobilization process next Monday, October 
¶8.  While previous delays in the demobilization program have 
caused Burundi's partners to be cautious about predictions of 
progress, De la Piedra expressed optimism. 
 
¶5. (U) In addition to progress on the budget, the IMF is 
insisting that the GOB address the structural problems in the 
GOB that gave rise to the Interpetrol scandal (ref A), as 
well as make every effort to recover the missing money and 
initiate the judicial process against the perpetrators of the 
fradulent payment.  De la Piedra insisted that it was not the 
intention of the IMF to become involved in the judicial 
process, but rather to seek legislative, regulatory, and 
procedural reforms to assure that such a scam could not be 
repeated easily.  The IMF also believes that the GOB should 
make every reasonable effort to apprehend, try, and punish 
the guilty parties.  While the IMF admits that it is unlikely 
that the judicial process will be complete prior to 
concluding the extension of the Facility, the IMF insists 
that the GOB initiate the legal process. 
 
¶6. (U) The IMF is also actively seeking movement of six 
billion Burundian Francs (5.45 million USD) that was in an 
Interpetrol-owned account in the Banque du Commerce du 
Burundi (BCB) to a holding account within the Central Bank 
until the judicial process is completed.  The IMF considers 
money in any commercial bank at risk and does not believe 
that a commercial bank should be using this money as a 
guarantee for their lending operations.  So far the IMF has 
succeeded in getting the money transferred out of the 
Interpetrol account into another account within the BCB, 
owned by the Ministry of Justice, but have not yet been able 
to convince the GOB to transfer the funds to the Central Bank. 
 
¶7. (U) Lastly, De la Piedra expressed satisfaction with 
recent efforts by President Nkurunziza to bring progress in 
resolving the political impasse that led to blockage of 
National Assembly (ref B).  It appears that the Parliament 
will once again be able to debate and pass legislation 
 
critical to structural reforms being promoted by the donor 
community, including measures on the Budget, Anti 
Money-Laundering, Public Offerings, Privatization, and Sale 
of Public Assets.  The opening of this session will be 
reported septel. 
 
¶8. (U) De la Piedra warned that a ministerial re-shuffle was 
imminent.  He was hopeful that the current Minister of 
Finance, Clotilde Nizigoma, would not be removed, in the 
interest of maintaining momentum in coming to closure on all 
the financial reform actions currently underway within the 
Ministry of Finance.  In his opinion, every day lost in 
transition to a new Minister will make it significantly more 
difficult to meet the tight deadlines surrounding the 
IMF/Washington review, the work of the IMF technical team due 
26 October, and the IMF board consideration on January 15. 
 
¶9. (U) While the USG does not provide budget support to the 
GOB, most of the donor partners participating in the meeting 
do. Most of that support is tied to the reforms being sought 
by the IMF and World Bank.  Therefore, the progress being 
reported by De la Piedra was well received by the French, 
Belgians, EU, Dutch, British, and Germans.  Comments from the 
group on De la Piedra's report focused mainly on the 
necessity to maintain a common front in discussing reform 
issues with the GOB.  Progress in reaching agreement with the 
IMF becomes increasingly important as the end of the calendar 
year approaches, because most of the donors are unable to 
carry over 2007 budget support commitments into 2008. 
 
¶10. (U) The message De la Piedra encouraged the group to pass 
along to their GOB counterparts was: 
-- Do whatever you need to do to help the Minister of Finance 
meet the review requirements. 
-- We are pleased at the progress made on the political 
reconciliation front. 
-- We support the legislation for structural adjustments 
noted above, required as part of the review process. 
-- Don't change the Minister of Finance during the cabinet 
re-shuffle. 
-- Approve the 2008 budget quickly. 
-- The six billion Burundian Francs from the Interpetrol 
account needs to be moved from the BCB to a holding account 
in the Central Bank now. 
 
CASEBEER