VZCZCXRO2981
PP RUEHMA RUEHPA
DE RUEHFN #0675 3131414
ZNR UUUUU ZZH
P 091414Z NOV 07
FM AMEMBASSY FREETOWN
TO RUEHC/SECSTATE WASHDC PRIORITY 1511
INFO RUEHZK/ECOWAS COLLECTIVE

UNCLAS FREETOWN 000675 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPARTMENT FOR AF/W 
 
E.O. 12958: N/A 
TAGS: PREL EFIN PGOV EAID SL
SUBJECT: AMBASSADOR MEETS WITH NEW MINISTER OF FINANCE 
 
REF: A) FREETOWN 0665 
 
¶1. (U) Summary: During an introductory call the newly 
appointed Minister of Finance and Ambassador Perry discussed 
a wide range of topics including: the strike by workers at 
the Central Bank, the urgent need to provide electricity to 
Freetown, the high rate of interest, weakness in revenue 
collection, the MCC and, in response to the Minister's 
suggestion, the possibility of a trade mission to promote 
trade between the U.S. and Sierra Leone. End Summary. 
 
New Minister Faces Urgent Demands 
--------------------------------- 
 
¶2. (SBU) Ambassador Perry paid an introductory call on the 
newly appointed Minister of Finance, David Carew, on November 
¶6. After introductions, the conversation quickly turned to 
substantive topics. The Minister noted that the workers at 
the Central Bank of Sierra Leone had gone out on a one-day 
strike on November 5 (reftel). Carew said that he had become 
involved in the negotiations and that the government had 
agreed to an arrangement on rent allowances, allowing the 
workers to return while talks continue.  The strike came just 
as an IMF team was scheduled to visit Freetown. 
 
¶3. (SBU) The Minister then elaborated his government's 
efforts to deal with another urgent issue - providing 
electricity to Freetown.  The electric generating system 
effectively collapsed in 2006 and restoration of power was a 
key election issue.  The high cost of running generators is 
an impediment to economic recovery. The Minister said the 
government intends to restore basic power by December 20 of 
this year, by establishing an Independent Power Provider 
(IPP). This would provide electricity until the Bumbuna 
hydroelectric plant could be brought on line in the third 
quarter of 2008, claimed the Minister.  The cost of the IPP 
is projected at about $37 million for a year, of this amount 
$7 million would be rental of the generators and $30 million 
for fuel costs. The Minister said he is exploring the 
possibility of using funding from debt relief to help defray 
the costs of the project.  This would entail justifying to 
the IMF that the generation of electricity could be counted 
as a poverty reduction measure. As part of the reform of the 
electricity sector, the Minister said that system of 
prepayment using new meters is being considered. 
 
Interest Rate Reflects Risk 
---------------------------- 
 
¶4. (SBU) The Minister said that the prime rate of interest in 
Sierra Leone is now 25 percent.  Banks charge up to 5 percent 
over prime on loans, leaving customers facing an interest 
rate of 30 percent.  With a relatively low inflation rate and 
the stability of the Leone/dollar exchange rate, one would 
have expected the interest rate to come down over the past 
three years, said the Minister.  However, the high risk of 
doing business in Sierra Leone and the shortage of capital 
has kept the interest rate high. The Minister said that in an 
effort to address this situation, the government plans to 
require the ten banks in operation in the country to increase 
their capital by the end of the year. 
 
¶5. (SBU) The Minister briefly noted that the National Revenue 
Administration (NRA) suffers from structural weaknesses which 
inhibit the collection of taxes.  He said that the operations 
of mining companies may be reviewed. The Minister noted that 
the energy shortage has reduced profits of many companies. He 
reaffirmed that Sierra Leone needs to be seen as an 
attractive place to do business. 
 
Trade Mission and MCC of Interest 
--------------------------------------------- -- 
 
¶6. (SBU) The Ambassador presented a copy of the MCC scorecard 
to the Minister. He responded that the information was 
'timely' coming as it did at the beginning of his tenure as 
Minister.  The Minister said he is interested in expanding 
trade between Sierra Leone and the U.S. and suggested that a 
trade mission might be organized in the near future.  He 
noted also that there are possible privatization projects 
that may attract foreign investment.  The Ambassador 
suggested that it might be useful to work with the Corporate 
Council on Africa to set up a trade mission in 2008, after 
the new government has settled into place. 
 
 
 
PERRY