VZCZCXRO6150
RR RUEHMA RUEHPA
DE RUEHNM #1181/01 3641355
ZNR UUUUU ZZH
R 291355Z DEC 08
FM AMEMBASSY NIAMEY
TO RUEHC/SECSTATE WASHDC 4786
RUEATRS/DEPT OF TREASURY WASHDC
INFO RUEHZK/ECOWAS COLLECTIVE
RUEHFR/AMEMBASSY PARIS 0768
RUCPDOC/USDOC WASHDC
RUEHLMC/MCC WASHDC
RHMFISS/HQ USAFRICOM STUTTGART GE

UNCLAS SECTION 01 OF 02 NIAMEY 001181 
 
DEPT FOR AF/W, AF/EPS, AND EEB/IFD 
 
PARIS FOR AF WATCHER 
 
SIPDIS 
 
E.O. 12958:  N/A 
TAGS: ECON PGOV EFIN EINV ETRD EAID NG
SUBJECT:  GOVT OF NIGER FY09 BUDGET INCREASES 28 PERCENT 
 
NIAMEY 00001181  001.2 OF 002 
 
 
¶1.  Summary:  On Friday, November 14, 2008, the National Assembly 
approved the Government of Niger's proposed budget of USD 1.532 
billion for 2009, representing an increase of 28.41 percent over the 
2008 budget and including significant additional spending for 
capital projects.  The 2009 budget increase is funded in part with a 
special one-time payment of $257 million received in June 2008 as a 
"signing bonus" upon conclusion of a petroleum exploration and 
development agreement between the Government of Niger and China's 
state oil firm.  Investment expenditure will account for 52 percent 
of 2009 spending.  Top budget priorities are education, health, and 
agriculture.  End summary. 
 
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Budget Parameters 
----------------- 
 
¶2.  Assumptions:  Agriculture remains the main engine of growth, and 
increased domestic food production is a GON priority.  Investment in 
roads and electric generation and transmission are designed to 
support the performances of manufacturing and service industry. 
Other macroeconomic considerations are as follows: 
 
-- GDP growth of 4.9 percent, down from 5.5 percent in 2008; 
-- Inflation rate at 5 percent, down from 9.1 percent; and 
-- Value Added Tax (VAT) rate of 19 percent unchanged from 2008. 
 
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Revenue 
------- 
 
¶3.  The 2009 budget projects government revenue of USD 1.53 billion, 
representing a 28 percent increase over the previous year.  Internal 
domestic revenue is budgeted to increase by 26 percent to USD 903.3 
million while external revenue, including development assistance and 
debt, will increase 31 percent to USD 629.3 million. 
 
¶4.  The increase in domestic revenue is largely the result of 
payments received from China as a "signing bonus" for the 2008 
agreement on petroleum exploration and development, and increased 
revenue from uranium mining.  The budget also anticipates new fiscal 
measures, including additional taxes on gambling, lotteries, and 
duty stamps, which were developed by the Ministry of Economy and 
Finance in concert with donors as part of the strategy of 
mobilization of internal resources.  In mid-2008, in response to 
dramatic increases in food prices but without prior discussion with 
donors or the Ministry of Economy and Finance, the GON suspended VAT 
and import duty on basic foods, including rice and powdered milk; 
these charges are to be reinstated.  In the final budget, USD 10 
million of non-fiscal receipts from mining were re-allocated to a 
Special Treasury Account for Funds for Priority Investments to bring 
the balance of that Fund to USD 31 million.  The budget does not 
clarify how the Fund is to be spent, but it is separate from the 
capital budget. 
 
Revenue              USD (millions at 480 CFA = 1 USD) 
 
EXTERNAL  (32 percent increase from 2008) 
Donations    377.5 
Loans on Projects   185.8 
Program Loans    65.8 
 
INTERNAL   (26 percent increase from 2008) 
Real Estate Sales     0.8 
Fiscal Revenue   600.8 
Non-Fiscal Revenue   254.0 
Exceptional Revenue    37.9 
 
Total         1,532.6 
 
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EXPENDITURES 
------------ 
 
¶5.  A large increase in the capital budget (49 percent higher than 
2008) reflects the government's decision to finally begin 
construction of the large hydroelectric and irrigation dam at 
Kandadji, which has been in the planning stages for years.  Most 
funding for the multi-year project will be in the form of 
multilateral loans.  Additional new programs funded in the 2009 
budget include:  reform of the National Postal Service and 
establishment of a separate postal banking system to be called 
FINAPOSTE; creation of an agricultural bank; and reform of the 
microfinance sector.  Consistent with the budget priority of 
 
NIAMEY 00001181  002.2 OF 002 
 
 
improved education, the budget for the Ministry of Secondary and 
Higher Education, Research, and Technology increases by almost 22 
percent over the previous year budget.  Payments for goods and 
services increase by 23 percent, while expenditures for subsidies 
increase by only 8 percent. 
 
Expenditure    USD (millions) 
 
National Debt Service  109.4 
Employee Salaries and Benefits 194.4 
Goods and Services Purchases  180.4                    Subsidies and 
Transfers    234.6                   Capital Projects   803.3 
 
 
Total         1,522.1 
 
Allen