VZCZCXRO3005
PP RUEHLMC
DE RUEHDK #2059/01 2911239
ZNR UUUUU ZZH
P 181239Z OCT 07
FM AMEMBASSY DAKAR
TO RUEHC/SECSTATE WASHDC 9390
INFO RUEHZK/ECOWAS COLLECTIVE PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/USDOC WASHDC
RUEHLMC/MCC WASHDC

UNCLAS SECTION 01 OF 03 DAKAR 002059 
 
SIPDIS 
 
 
SIPDIS 
 
STATE FOR 
AF/W, AF/EPS, EB/IFD/ODF, AFR/DP 
 
TREASURY FOR OASIA/EBARBER 
 
 
E.O.12958: N/A 
TAGS: EAID EFIN PREL PGOV OTRA SG
SUBJECT: SENEGAL: SIXTH CONSULTATIVE GROUP 
MEETING - Paris, October 3-4, 2007 
 
 
¶1. SUMMARY: The sixth meeting of the Consultative Group (CG) for 
Senegal was convened at the World Bank's Paris Office on October 
3-4, 2007. The meeting was chaired by Madani Tall, World Bank 
Director of Operations for Senegal. The 48-person Senegalese 
Delegation [press reports noted more than 100 in total, including 
support staff] included 18 ministers and was led by Prime Minister 
Hadjibou Soumar.  The meeting was attended by representatives of 
Senegalese business associations and delegations from key 
multilateral institutions and bilateral donors.  The PM announced 
that donors pledged approximately $4 billion in development 
assistance supporting economic reforms and priority program for the 
three-year period 2006-2010.  The actual amount pledged, and the 
ability of donors to fulfill those pledges, is not yet confirmed. 
The amount pledged also included a substantial amount of money 
already committed but not yet disbursed - a reflection of the 
country's ability to absorb the aid.  END SUMMARY. 
 
 
¶2. MEETING AGENDA: The meeting agenda included the following items: 
 
 
Opening Ceremony 
 
Session 1: Assessment of the Poverty Reduction Strategy Plan (PRSP) 
I ( 2003-2005) 
 
Session 2: PRSP II and the Accelerated Growth Strategy(AGS) 
 
Session 3: Recent developments and Strategic aspects 
 
Session 4: Instruments for implementing the PRSP II 
 
Session 5: Financing the PRSP II and the AGS 
 
Session 6: Announcement of contributions 
 
 
¶3. OPENING STATEMENTS 
 
In his opening statement, Jean M. Chataignier, Chief of the French 
Delegation focused on the following issues: the need for greater 
transparency in the management of public finances, the need for 
increased coordination of development assistance in line with the 
Paris Declaration, the preservation of a low level of national debt, 
and the establishment of an appropriate institutional framework to 
monitor PRSPII and AGS implementation.  He concluded his statement 
by reaffirming that France's aid will target a limited number of 
priority programs in line with the country's Millennium Development 
Goals (MDGs). 
 
Johannes Mueller from the IMF African Department elaborated on the 
four key elements of the new program with the GOS: (a) maintaining a 
prudent fiscal policy to achieve fiscal sustainability, 
(b)strengthening fiscal governance and transparency, (c) 
strengthening the framework for private sector development, 
and (d) enhancing the role of the financial sector in providing 
access to credit and capital.  In his concluding remarks he stated 
that the IMF Board is expected to discuss Senegal's program under 
the Policy Support Instrument in early November. 
 
Lopez Blanco, head of the European Union (EU) Delegation stressed 
the need for higher and sustained economic growth to alleviate 
poverty.  While recognizing that Senegal is a privileged partner of 
the donors, he noted that the GOS still needs to take the necessary 
steps to attract private investors. 
 
Bouri Sanhouidi, head of the UNDP delegation, called for 
strengthening the dialogue between high level government officials 
and development partners and reinforcing the participatory process 
that was used in the context of the preparation of the PRSPII and 
the AGS.  He reiterated previous calls for improving governance and 
establishing an appropriate institutional arrangement to monitor the 
PRSPII and the AGS. 
 
Madani Tall, the World Bank's Director of Operations for Senegal, 
summarized progress made since the Fifth Consultative Group Meeting 
in 2003.  He stated that poverty declined by six percentage points 
over the period 2001-2005.  However, he noted that unemployment is 
among the key challenges facing with the country.  He also stressed 
the need to fight against corruption and promote good governance. 
 
GOS Prime Minister Hadjibou Soumare commended the donor community 
 
DAKAR 00002059  002 OF 003 
 
 
for proving financial support of $1.3 billion over the period 
2003-2005. He noted that since 2000, Senegal has received a debt 
relief package under HIPC and MDRI totaling more that $600 million. 
He recognized that Senegal would not be able to achieve the 7% 
growth rate needed to halve poverty by 2015.  He reaffirmed the 
government's commitment to establish the necessary institutional 
arrangements for implementation of the AGS by the end of the year. 
He stated that in order to address the country's energy 
requirements, the electricity company (SENELEC) had prepared a 
comprehensive investment program totaling $1.1 billion for the 
period 2007-2012.  Soumare committed to ensuring that that the new 
procurement would be fully effective in January 2008. 
 
¶4. DISCUSSIONS 
 
The first session was devoted to a review of the PRSP I. The GOS 
described the major achievements during the period which included: 
(a) a 6% reduction in poverty during the period 2001 - 2005, (b) an 
increase in the primary school enrolment rate from 71.6 % in 2002 to 
82.5% in 2005, (c) a sharp increase in the percent of the government 
budget allocated to health from 7.7% in 2003 to 9.7% in 2005, and 
(d) an HIV prevalence rate of 0.7%, reputedly the lowest in 
Sub-Saharan Africa.  Donors raised concerns that very little poverty 
reduction had occurred in rural areas and that regular annual 
reviews of the PRSP had not taken place.  It was agreed that much 
more needed to be done in the area of agriculture and food security 
to alleviate poverty in rural areas. 
 
The second session focused on the presentation of the PRSP II and 
the AGS, as the two vehicles expected to guide Senegal towards 
becoming an emerging country by 2015. Issues raised by participants 
included:(a)the need to put in place a complete the set of PRSPII 
indicators, (b) insufficient integration of gender issues in poverty 
reduction programs and activities, (c) the low level of financial 
and human resource transfers to local authorities, (d) the need to 
establish an enabling business environment, and (e) the need to 
establish an institutional framework to coordinate and monitor 
implementation of the AGS. 
 
 
 
The third session was devoted to a review of recent developments and 
strategic issues.  Presentations were made on the macroeconomic 
situation, the energy sector, labor market issues, and governance 
issues related to large infrastructure programs. There was strong 
consensus among participants that a stable macroeconomic framework 
is essential for attracting foreign investment.  The donors 
encouraged the GOS to move quickly to implement new labor 
legislation reforms needed to spur higher growth and job creation. 
Development partners also expressed a desire for the government to 
ensure greater transparency in the procurement, budgeting and the 
execution of large infrastructure projects. 
 
The fourth session focused on the implementation of the PRSP.  The 
development partners requested the GOS to provide stronger 
leadership for improving aid coordination and performance with 
respect to Paris Declaration objectives.  Donors providing budgetary 
support and the GOS agreed to sign a common framework in November 
¶2007. 
 
The fifth session focused on PRSP II and the AGS financial 
requirements. Development partners stressed the need for a sound and 
stable macroeconomic framework crucial to mobilizing both public 
funds and private investment flows.  They also noted that a clear 
linkage between PRSPII indicators, the Priority Action Plan and the 
Budget is critical for fund mobilization. 
 
The last session was devoted to the announcement of pledges. The 
donors pledged a reported CFAF 1837 billion (approximately $4 
billion) in development aid to Senegal in the form of grants 
supporting its Priority Action Program for the period 2006-2010. 
Some 47% of this amount, approximately $1.9 billion is comprised of 
commitments made under previous agreements but not yet disbursed. 
This reflects limits to the country's absorptive capacity. 
 
 
¶5. COMMENT.  During the CG meeting, the GOS committed to 
implementing a broad set of measures including: (1) ensuring the 
effective implementation of the new procurement code by January 
2008; (2) improving the dialogue between the GOS and development 
partners; (3) undertaking annual reviews of the PRSP and (4) over 
the coming months, the development partners will closely monitor the 
 
DAKAR 00002059  003 OF 003 
 
 
extent to which the GOS fulfills these commitments. 
 
Senegal continues to heavily rely on public donor assistance. 
According to OECD data, Senegal is among the largest recipients of 
foreign aid in Africa.  If Senegal is serious about wanting to 
become an emergent country, it will have to develop an aggressive 
reform program aimed at attracting increased private investment 
flows.  Many donors' actual contributions will be determined only 
after Senegal concludes its new Policy Support Instrument with the 
IMF.  Donors will follow closely the GOS's willingness to fully 
conform to that program's reform measures and reporting 
requirements.  The GOS delegation consisted of 48-plus persons, 
requiring an estimated $400,000 GOS expenditure.  This represents a 
heavy burden for a government with insufficient resources to 
implement a poverty reduction program and raised reasonable 
questions among donors as to why the meeting had not been held in 
Dakar. 
 
Smith