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PP RUEHPA
DE RUEHAB #0274/01 1230810
ZNY CCCCC ZZH
P 020810Z MAY 08 ZDK
FM AMEMBASSY ABIDJAN
TO RUEHC/SECSTATE WASHDC PRIORITY 4190
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
INFO RUEHZK/ECOWAS COLLECTIVE
RUEHTU/AMEMBASSY TUNIS 0046
RUEPGDA/USEUCOM JIC VAIHINGEN GE

C O N F I D E N T I A L SECTION 01 OF 02 ABIDJAN 000274 
 
SIPDIS 
 
SIPDIS 
 
DEPARTMENT PASS TO USAID/AF S.SWIFT, C.GARRETT 
DEPARTMENT PASS TO USTR FOR C.HAMILTON 
TREASURY FOR R.HALL, D.PETERS 
EMBASSY DAKAR FOR FAS R.HANSEN, FCS S.MORRISON 
EMBASSY ACCRA FOR USAID/WARP P.RICHARDSON 
EMBASSY TUNIS FOR USED'AFDB ROY ADKINS 
 
E.O. 12958: DECL: 04/21/2018 
TAGS: ECON EAID IMF IBRD PGOV PREL IV
SUBJECT: RESIDENT IMF, WORLD BANK HEADS DISCUSS EARLY HIPC 
DECISION POINT,  NEW WB COUNTRY DIRECTOR, FINANCING OF 
ELECTIONS 
 
REF: A. 04/16 CLASSIFIED MASSINGA/NESBITT/PLUMB EMAIL ON 
        SAGEM FINANCING 
     ¶B. ABIDJAN 166 
 
Classified By: EconChief EMassinga, Reasons 1.4 (b,d) 
 
¶1.  (C)  Summary.  In an April 18 meeting, IMF ResRep 
Phillipe Eugume defended the notion of an early HIPC Decision 
Point, noting Cote d'Ivoire's heavy indebtedness and already 
negative cash position with the IFIs, but acknowledged 
substantial shareholder reluctance to proceed with such a 
course of action at this point.  Acting World Bank Country 
Manager Daniel Sellen floated the notional idea of using some 
portion of the World Bank's Post Conflict Assistance Fund to 
mitigate the impact of food price hikes on poor Ivoirians, 
but provided no details.   End Summary. 
 
IMF Favors Early HIPC Decision Point 
---------- 
¶2.  (C)  IMF Resident Representative Eugume and World Bank 
Acting Country Manager Sellen met with Econoff on April 18, 
and discussed, inter alia, the Fund and Bank staff's plans 
for an early HIPC Decision Point, Cote d'Ivoire's fiscal 
performance since IFI reengagement over the past year, the 
nomination of a new World Bank Country Representative and the 
suddenly politically important food security issue.  With 
regard to an "early" HIPC Decision Point, Eugume had in mind 
the late 2008-early 2009 timeframe, and argued in favor of 
the idea based on the ratio of indebtedness to exports. 
Pressed, Eugume admitted that calculations of Cote 
d'Ivoire,s indebtedness/export ratio are &all over the 
map8 and could show the country breaching the threshold 
either in early or late 2009.  Moreover, Eugeme acknowledged 
that the IFIs have heard misgivings from larger shareholders 
about what would effectively be an early Decision Point, made 
in the context of weak-to-mediocre performance under current 
assistance and budget support programs.  These include the 
IMF's USD 120 million Emergency Post Conflict Assistance 
package, the World Bank's USD 120 million Post Conflict 
Assistance Program (PCAP) and the Bank's April 2008 USD 308 
million arrears clearance/budget support program. 
 
¶3.  (C)  Eugume offered an impassioned defense of progress 
made in improving GoCI transparency (published budget 
figures, recently published oil/gas audits), and noted the 
high debt/GDP ratio of 80 percent and overall indebtedness of 
USD 6 billion as justification for the need for eventual HIPC 
treatment.  Eugume added that Cote d'Ivoire is already in a 
negative cash position with the IFIs; its fiscal situation is 
very tight and getting tighter daily.  Econoff said that IFI 
staffs would have to make a compelling case with the 
shareholders to achieve the objective of an early Decision 
Point, noting that the USG had concerns about the idea. 
(Note:  German DCM later told Econoff that Berlin, too, has 
strong reservations about an early Decision Point, as do most 
members of the European Union.  End Note). 
 
¶4.  (SBU)  Sellen and Eugume said the Poverty Reduction 
Strategy Paper (PRSP) drafting process is underway, and the 
document, the result of extensive collaboration with civil 
society and government institutions to define how debt relief 
would be used, is expected to be complete by September, 2008 
(Note: Minister of Planning Bouabre, lead on the PSRP 
process, later told Ambassador that the draft would be 
complete by the end of June.  End Note).  Econoff just 
received a draft copy April 22, while the World Bank staff, 
the EU and others have already provided comments. 
 
Government Making Progress on Transparency Issues, But not on 
Post Conflict Assistance Program 
-------- 
¶5.  (SBU)  On oil/gas, Eugume said the Cote d'Ivoire 
Extractive Industries Transparency Initiative (EITI) reports 
on 2006 and 2007 production and revenue should be done in 
September and December 2008 respectively, and that their 
completion should reassure shareholders of Cote d'Ivoire,s 
progress in transparency.  The IMF rep acknowledged, however, 
that the local EITI committee has yet to choose a contractor 
to prepare the report(s), which could put the September 
publication date in question. 
¶6.  (C)  Sellen acknowledged the $120 million PCAP program 
 
ABIDJAN 00000274  002 OF 002 
 
 
has been a &disaster.8  He openly questioned whether 1) any 
money (aside from USD 5 million in quick-impact road 
reconstruction financing) could be disbursed in 2008, and 2) 
the program could be salvaged at all.  IMF representative 
Eugume pressed for the Bank to consider reformulating the 
conditions of the PCAP, since the macroeconomic support 
implied by the PCAP is already part of IMF,s fiscal year 
2008 calculations, and failure to access $45 million this 
year would put a hole in an already shaky budget situation. 
 
New World Bank Country Representative for Cote d'Ivoire 
---------- 
¶7.  (C)  Both Sellen and Eugume agreed that the Bank needs a 
leader at the helm of its Ivoirian operation sooner rather 
than later, given the size of its current portfolio of 
programs and budget support (more than USD 500 million). 
Sellen said the Bank has informally decided (subject to 
confirmation) to assign Mr. Madani Tall, a Malian and 
currently the Country Representative for the Senegal group of 
countries based in Dakar. 
 
SAGEM Contract and the 2008 Budget 
-------- 
¶8.  (C)  Sellen and Eugume confirmed that the Ministry of 
Finance effectively used IMF budget support to finance a 
portion of the recent contract with French company SAGEM, 
which will produce voter and national identification cards 
for the November 30 presidential elections.  The 2008 budget 
included 25 billion CFA (USD 60 million) for the national 
identification process, and the Cote d'Ivoire government 
pulled together another 15 billion CFA (USD 36 million) from 
other accounts to top off its 2008 payments to SAGEM.  Both 
Sellen and Eugume averred that IMF assent was needed and 
provided.  Eugume and Sellen, along with other European 
diplomats, confirm that France was requested to provide the 
outstanding USD 40 million needed to cover the last portion 
of the USD 160 million SAGEM budget not being financed by the 
Ivoirian Treasury; European diplomats indicate that among EU 
countries, there have been no takers of France's offer to 
share this cost. 
 
Preoccupation with the Impact of Higher Food Prices Worldwide 
------- 
¶9.   (C)  Conversation turned to the sharp rise in worldwide 
food prices worldwide and resultant preoccupation about the 
impact of this development in IMF and WB headquarters. 
Econoff was asked about the USG response, and he pointed to 
the announced decision to allocate $200 million to alleviate 
global food shortages, but noted detailed decisions were to 
be forthcoming.  WB,s Sellen openly mused about recasting 
the PCAP so that perhaps one third would be spent to mitigate 
the &social impact8 of food price rises.  Econoff asked if 
this would mean food subsidies, but Sellen demurred in giving 
details. 
 
¶10.  (C)  Comment.  The government's unwillingness/inability 
to meet the conditions to access the USD 120 million in PCAP 
money is extremely frustrating to the World Bank and other 
donors.  But those funds may become more attractive to IFI 
staff seeking ways to address the country's fiscal and 
macroeconomic problems as well as the politically delicate 
food security issue.  Clearly local IFI staff, if not in 
Washington as well, are thinking about how to use PCAP funds 
to address this new and urgent issue.  On the larger HIPC 
question, local IFI staff were not happy to hear renewed 
mention of shareholder reluctance to consider an early 
Decision Point, but it seems clear that they will have to 
address the issue directly with the Boards in the near 
future.  End Comment. 
NESBITT