VZCZCXRO7563
OO RUEHGI RUEHTRO
DE RUEHNJ #0115/01 0921119
ZNR UUUUU ZZH
O 021119Z APR 09
FM AMEMBASSY NDJAMENA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 6836
INFO RUEHDS/AMEMBASSY ADDIS ABABA PRIORITY 1027
RUEHYD/AMEMBASSY YAOUNDE PRIORITY 1746
RUEHKH/AMEMBASSY KHARTOUM PRIORITY 0533
RUEHTRO/AMEMBASSY TRIPOLI PRIORITY 0587
RUEHLO/AMEMBASSY LONDON PRIORITY 1801
RUEHFR/AMEMBASSY PARIS PRIORITY 2360
RUEHGI/AMEMBASSY BANGUI PRIORITY 1564
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RHMFISS/HQ USAFRICOM STUTTGART GE PRIORITY

UNCLAS SECTION 01 OF 03 NDJAMENA 000115 
 
SIPDIS 
SENSITIVE 
 
STATE FOR AF/C AND AF/USSES 
NSC FOR GAVIN AND HUDSON 
LONDON FOR POL - LORD 
PARIS FOR POL -D'ELIA AND KANEDA 
ADDIS ABABA ALSO FOR AU 
 
E.O. 12958: N/A 
TAGS: PGOV ECON EPET EFIN IMF IBRD CDB EAID PREL
EU, FR, CD 
SUBJECT: CHAD'S PUBLIC FINANCES (II):  SEARCHING FOR 
SOLUTIONS 
 
REF: A. NDJAMENA 113 
     ¶B. NDJAMENA 0099 
     ¶C. NDJAMENA 0079 
 
This cable is Sensitive but Unclassified.  Not for Internet 
dissemination. 
 
 
¶1.  (U)  This is an action message.  See para 11 below. 
 
------- 
SUMMARY 
------- 
 
¶2.  (SBU)  Finance Minister Gata Ngoulou told Ambassador and 
DCM March 30 that Chad's public finances were in serious 
disarray, but that the budget picture was not yet 
"disastrous."  Ngoulou pointed out that Chad's efforts to 
manage its public revenues responsibly had been undermined by 
the global economic crisis, especially the sudden and deep 
drop in international oil prices.  Ngoulou stressed that Chad 
knew it needed help and was seeking assistance from partners 
-- the World Bank, IMF, ADB, and EU.  Ngoulou reported that 
in recent weeks he had met with delegations focused on public 
finance from the IMF,s PEFA and AFRITAC, the World Bank, and 
the EIB.  He expressed hope that members of the new U.S. 
administration would have time and advice for Chad in areas 
including customs, taxation, and budgeting, as well as public 
finance. 
 
¶3.  (SBU)  Ngoulou confirmed that he was redrafting the 
current national budget with a view to significantly scaling 
back expenditures.  He described a series of reorganizations 
in tax and customs collection procedures, as well as efforts 
to address corruption, which he though would net the 
government extra (and deserved) revenues.  He conceded that 
the path of restraint would be politically challenging, but 
expressed strong personal commitment to staying the course of 
combatting corruption and achieving budgetary stringency. 
END SUMMARY. 
 
----------------- 
GETTING THE HOUSE 
IN ORDER? 
--------- 
 
¶4.  (SBU)  Finance Minister Gata Ngoulou indicated that that 
security and reconstruction needs after the events of 
February 2008 were responsible for current high levels of 
public expenditures, along with education, public health, and 
the need to complete some key capital projects.  He confirmed 
that he was revising the most recent Chadian national budget, 
drafted in September 2008 when oil prices were high, in order 
to focus exclusively on necessities.  A prolongued spell of 
low oil prices would be "catastrophic" for Chad's public 
finances, he predicted, as Chad depended on oil income for 
70-80 percent of its total revenues.  In addition to finding 
ways to pay for education and health care, the GoC was also 
trying to manage debt servicing according to World Bank 
schedules.  Chad "needed extra means to pay necessary 
expenses," said the Minister. 
 
¶5.  (SBU)  Ngoulou reported that the GoC said had taken a 
number of steps to respond to the current situation.  First, 
the GoC had asked ESSO-Chad to agree to defer implemention of 
a 2008 repayment schedule for last fall,s "overpayment" to 
the GoC until July 2009, leaving ESSO-Chad's January and 
March payments larger than if deductions had been implemented 
immediately.  The GOC was also making strenuous efforts to 
collect non-oil revenues.  The Finance Ministry had 
reorganized tax and customs collection procedures, especially 
to capture more revenue from the "informal" sector, which 
Ngoulou defined as all but the largest enterprises (which 
were themselves already paying taxes).  Ngoulou said he had 
bought the Customs Service boats to patrol the Chari River 
 
NDJAMENA 00000115  002 OF 003 
 
 
against smugglers, and motor bikes for Customs agents to use 
in Ndjamena.  He had also set up five new tax collection 
locations to reach more actors in the "informal" economy. 
 
¶6. (SBU)  Ngoulou pointed out that ceasing cash payments of 
salaries to bureaucrats and substituting transfers to bank 
accounts ("banquarisation" of salaries for public officials) 
would help address corruption, as would better scrutiny of 
existing bank accounts.  According to Ngoulou, improved 
management of the military salary system had netted a savings 
of 1 billion CFA (USD 2 million) oveer the past three months. 
 The GOC wanted to impose biometric identification mechanisms 
to improve accountability in all areas of public revenue 
management.  Finally, Ngoulou said Chad had possibilities of 
financial help from the BEAC in the form of two lines of 
credit:  one of 200 million CEFA (USD 400,000) consisting of 
Chad's own reserves (it was already drawing on these funds), 
and one of 130 billion CEFA (USD 260 million) that it could 
repay at 4 percent interest.   Ngoulou said that he would try 
to resist drawing from this second line of credit if at all 
possible. 
 
------------- 
LOOKING AHEAD 
------------- 
 
¶7.  (SBU)  Ngoulou indicated that he was looking forward to 
traveling to Washington for late-April Bank/Fund meetings, 
adding that he hoped to talk to U.S. officials in more detail 
about Chad,s program of economic reforms.  Ambassador 
offered to request appropriate meetings. 
 
-------------------- 
TECHNICAL ASSISTANCE 
BEING PROVIDED 
-------------- 
 
¶8.  (SBU)  We have met with a number of the IFI teams in town 
recently to provide advice to the Chadians.  Harry Snoek, 
Head of the IMF's AFRITAC (Regional Technical Assistance 
Center for Central Africa, located in Libreville), told us 
that his organization had given training to Chadian officials 
in areas ranging from debt servicing to banking supervision, 
budget planning and decentralization, management of customs, 
taxation and government accounting, and statistical methods. 
Snoek described Chad as seriously in need of advice and 
capable of absorbing most of what his organization could 
teach.  AFRITAC is a Franco-German initiative within the IMF, 
under a general EU rubric.  In addition to AFRITAC, the EU is 
providing aid to Chad's public finance sector through 
technical assistance to the Chadian Department of Budget and 
Public Investment in the area of database development and 
management. 
 
¶9.  (SBU)  The IMF's PEFA (Public Expenditure and Financial 
Accountability) team also recently offered us an analysis of 
its own just-completed four-year program of assistance to 
Chad, which focused on strategic reform, integration of 
information-management systems, capacity development and 
external auditing.  The PEFA team gave the GoC grades of "B" 
or "C" in most of its 28 sub-areas of budget management.  The 
team noted that the GoC's greatest weakness lay in 
implementing external auditing, and made clear that 
additional assistance would be highly desirable in this area. 
 
 
------- 
COMMENT 
------- 
 
¶10.  (SBU)  Ngoulou, who spent 25 years with the BEAC in 
Yaounde, has good ideas on how Chad stands the best chance of 
surviving the current difficult period, although his hopes 
depend on a return to higher petroleum revenues in the near 
future.  We think it would be useful to talk to him in DC, 
 
NDJAMENA 00000115  003 OF 003 
 
 
especially to ascertain if the USG could offer technical 
assistance to the GOC this year and next. 
 
-------------- 
ACTION REQUEST 
-------------- 
 
¶11.  (U) Action Request:  That the Department arrange 
appropriate USG meetings for Ngoulou later this month, to get 
his take on Chad's public financial management sitiuation and 
to explore the possibility of U.S. technical assistance to 
the GOC's efforts to manage its public revenues more 
efficiently and responsibly. 
NIGRO