VZCZCXRO5615
RR RUEHMA RUEHPA
DE RUEHRY #1267/01 3301528
ZNR UUUUU ZZH
R 261528Z NOV 07
FM AMEMBASSY CONAKRY
TO RUEHC/SECSTATE WASHDC 1905
INFO RUEHZK/ECOWAS COLLECTIVE
RUEATRS/DEPT OF TREASURY WASHINGTON DC

UNCLAS SECTION 01 OF 02 CONAKRY 001267 
 
SIPDIS 
 
SIPDIS 
SENSITIVE 
 
E.O. 12598:  N/A 
TAGS: ECIN EFIN ECON GV
SUBJECT: AMBASSADOR MEETS WITH MIN OF FINANCE ON GAS SUBSIDY AND 
PROGRAM BUDGETING 
 
 
¶1.  (SBU) SUMMARY.  On November 16, the Ambassador met with the 
Minister of Finance.  The Minister discussed the budget for the 
CENI, ongoing difficulties with implementation of program budgeting 
without a supportive budget director, the profoundly negative 
effects of the gasoline subsidy, and the obstacles to reform he is 
facing within his own ministry.  END SUMARY. 
 
¶2.  (SBU) On November 16, the Ambassador, Econoff, and Treasury 
Budget Advisor Cheryl Hayes, met with Minister of Finance, Dr. 
Ousmane Dore.  The Ambassador's purpose was to make a courtesy call 
on the Minister and to highlight issues of importance to the United 
States.  The discussions were frank, open, and friendly, with the 
Minister being very candid with his responses. 
 
------------------ 
BIOGRAPHICAL NOTES 
------------------ 
 
¶3.  (U) Dr. Dore was born in 1957 in Mamou, Republic of Guinea.  He 
holds a Bachelor's degree in Geology from the Institute of Mines and 
Geology in Boke, a Master's degree in Mining Economy from the 
University of Arizona, and a PhD in Economics from the University of 
Minnesota.  He was a visiting scholar at Duke University in North 
Carolina in 1991 and an assistant professor in the Economics 
Department at the University of Minnesota from 1988 to 1992. 
 
¶4.  (U) Minister Dore held several positions at the International 
Monetary Fund (IMF) between 1993 and 2007, including Desk Economist: 
Iceland and Norway; International Civil Servant; and Senior Desk 
Economist for Cote d'Ivoire.  He also served as Resident 
Representative to Senegal, Guinea Bissau and Chief of Mission to 
Guinea Bissau. Prior to his appointment as Minister in 2007, he was 
serving as Senior Desk Officer on Ethiopia in Washington, DC. 
 
------------------------------ 
CHALLENGES FACING THE MINISTER 
------------------------------ 
 
¶5.  (SBU) The Minister constantly referred to the underlying 
challenges he is facing as Minister of Finance.  He confided that 
not only is the country quickly running out of cash, but many of the 
cabinet members and division-level authorities in his own ministry 
are working against him.  This takes the form of doing nothing 
rather than challenging him directly; nevertheless, it slows down 
progress, and makes reform difficult. 
 
------------------------------- 
INDEPENDENT ELECTIONS COMMITTEE 
------------------------------- 
 
¶6.  (SBU) When asked about budgeting for the independent elections 
committee (CENI) for the next legislative elections, Dr. Dore stated 
that a budget was in place, and that it was approximately USD 3.5 
million.  He confided that more would be needed, and that he would 
be raising the issue through the informal G8 group meeting here in 
December, as well as with the IMF and World Bank. 
 
----------------- 
PROGRAM BUDGETING 
----------------- 
 
¶7.  (SBU) The Ambassador was very frank about the need for better 
resource allocation and budget reform, particularly ongoing efforts 
to implement program budgeting in Guinea. While substantial progress 
has been made in the five pilot ministries chosen to implement 
program budgeting in 2008, the Ambassador clearly expressed his 
desire to see follow-through, such as having those ministries who 
have already completed program budgets, inserted into the final 
budget document.  The Minister acknowledged the importance of the 
project, and that there were difficulties with implementation of 
program budgeting.  In addition, he admitted that they had not taken 
full advantage of the Treasury Budget Advisor.  However, the 
Minister was clear that his door was always open to the Budget 
Advisor, and that if further obstacles arose from other members of 
the Ministry, she should come to him directly for action. The 
Treasury Budget Advisor was critical of the apathy shown by Budget 
Director Mohamed Diare, who has slowed implementation of the program 
budgeting by not taking affirmative implementation actions. 
 
-------------- 
SHADOW CABINET 
-------------- 
 
¶8.  (SBU) The Finance Minister then went on to reveal his deep 
frustration with the current finance ministry bureaucracy.  He 
reported that the members of his ministry work against him to such a 
degree that he spoke openly of creating a 'shadow' cabinet of 
loyalists to get things done. 
 
 
CONAKRY 00001267  002 OF 002 
 
 
---------------- 
GASOLINE SUBSIDY 
---------------- 
 
¶9.  (SBU) Currently, the Government of Guinea subsidizes gasoline 
for domestic consumption.  This has meant a street price of about 
USD 1.34 per liter of gasoline.  Dr. Dore said that this has 
resulted in two large problems for Guinea.  First, the cost of the 
subsidy has increased dramatically in lock step with the increase in 
the price of oil on world markets.  The Minister confided that last 
month alone the cost of the subsidy was USD 3.6 million, while this 
month it will reach approximately USD 6.5 million. 
 
¶10.  (SBU) The second problem is that the subsidized street cost is 
lower than the price for gas in other countries of West Africa, 
resulting in large scale gasoline smuggling.  Dr. Dore claimed that 
Guinea is supplying all of West Africa with subsidized gas. 
 
¶11.  (SBU) The Minister acknowledged that the Government of Guinea 
must increase the subsidized price, and eventually eliminate the 
subsidy altogether.  He revealed that the first increase in the 
street price for gasoline was planned for January 2008, and that it 
would be a large jump-up in the price.  He further confided that the 
subsidy would be completely withdrawn by June 2008, and the market 
would set the price of gasoline afterwards; a critical factor for a 
prospective IMF adjustment program. 
 
¶12.  (SBU) Dr. Dore was frank that if the subsidy was not ended very 
soon, he did not see how he could continue as Minister of Finance. 
The Minister requested the aid of the Embassy in sensitizing the 
public to the coming price increases.  He said that by educating the 
public, they could minimize any discontent caused by the price 
increases. 
 
------------------------ 
PHANTOM SOLDIERS/WORKERS 
------------------------ 
 
¶13.  (SBU) The Minister said that the recent use of civilian 
paymasters for paying the military had resulted in the discovery of 
phantom soldiers.  NOTE: Unconfirmed rumors put the figure as high 
as 60% of enlisted payroll. END NOTE.  He stated that the same 
mechanism would be tried in other ministries in order to address the 
problem in those ministries as well.  He said they were sure to find 
other phantoms throughout the government.  Such monies could then be 
used to increase salaries of government workers. 
 
------- 
COMMENT 
------- 
 
¶14. (SBU) Dr. Dore is very impressive in person.  He speaks with 
authority and confidence rooted in his many years of experience in 
the fields of international and domestic finance, economics, and 
budgeting.  He clearly wants Guinea to move away from its statist 
past and current crony-driven economy.  He is desperate for allies 
in his effort to get the Guinea economy on a sustainable growth 
path.  His respect for the Ambassador, in particular, quickly became 
apparent from his warm welcome and open manner.  The contrast 
between his welcome and his mood when he discussed his current work 
was also obvious.  Visibly frustrated as he discussed the 
difficulties he faced from members of his own ministry, it appears 
that the daily challenges of his office are taking their toll. How 
long he can hold up against this pressure is uncertain.  END 
COMMENT. 
 
 
CARTER