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R 120902Z NOV 09
FM AMEMBASSY BRAZZAVILLE
TO SECSTATE WASHDC 1607
AMEMBASSY PARIS 
INFO AMEMBASSY BRAZZAVILLE

UNCLAS BRAZZAVILLE 000325 
 
 
E.O. 12958: N/A 
TAGS: EAID ECON EFIN PREL ZF
SUBJECT: BUDGET TRANSPARENCY DEMARCHE DELIVERED TO MINISTER OF 
FINANCE 
 
REF: STATE 81177 
 
 
1.(U) SUMMARY: Ambassador Eastham met November 10 with Minister 
of Finance Gilbert Ondongo to deliver the demarche on budget 
transparency (Reftel) to encourage transparency in the Congolese 
budget process and to describe the waiver process for U.S. 
assistance. Minister Ondongo was somewhat puzzled that the U.S. 
regarded the Congo(B) budget as lacking transparency but agreed 
that transparency is essential. He described the transparency 
built into the budget process. Congo's Cabinet discussion of the 
2010 draft budget commenced on November 6th. END SUMMARY. 
 
2.(U) Minister Ondongo, who took office in September with the 
new government, explained that the budget preparation for 
Congo(B)'s calendar year 2010 budget began in early 2009 with 
internal consideration within the Finance Ministry of the 
prevailing revenue environment, with special attention to the 
country's oil production, projection of the international price 
of oil into 2010, and consideration of the projected exchange 
rate environment.  Line ministries made their expenditure 
proposals to Finance Ministry staff at the technical level 
commencing in June, 2009.  Following the July 12 PresiQtial 
election, President Sassou-Nguesso issued new budget guidance in 
the form of a framework letter to the cabinet, at which point 
adjustments were made.  The final step was a series of 
individual, Minister-level meetings between each line Minister 
and the Minister of Finance in September 2009 (during which, he 
observed, each Minister requested "most" of the government 
budget).  This process resulted in the draft budget which was 
presented to the Cabinet on November 6.  Once the cabinet has 
agreed, the draft budget law will be send to the Parliament for 
consideration.  The Minister noted that targets will be set in 
January 2010 for the 2011 budget. 
 
¶3. (U) With respect to transparency in budget formulation and 
execution, the Minister pointed out that the budget is 
formulated in accordance with the "mid-term expenditure 
framework" developed by the Congo(B) government in partnership 
with the World Bank under the HIPC program, and that it is in 
full accord with the poverty reduction strategy paper, also a 
HIPC "trigger."  Moreover, he said, on the execution side, 
monthly spending tables are reviewed by the IMF and adjusted by 
the Ministry in accordance with IMF advice to ensure that actual 
execution is in agreement with the framework.  Moreover, he 
said, in the HIPC "triggers" there is a requirement that 
Congo(B) post all budget documents on an internet site, which is 
being done.  With all this review, he said, he found it 
difficult to understand why the United States had concerns about 
transparency in the budget process. 
 
¶4. (U)  In response to a question from the Ambassador regarding 
the role of donor assistance in the Congolese budget, the 
Minister said that Congo in fact has plenty of money and could 
meet its budget needs from revenue.  He expressed some concern 
that in fact, the government was too conservative in its 
expenditures, i.e. maintaining too much in its "future fund" and 
clearly indicated that his preference would be to invest more in 
infrastructure and social programs in the short term from its 
budget resources, rather than depending to a large extent on 
foreign (i.e. Chinese) financing for infrastructure projects. 
There was a sum of 112 billion CFA (around 255 million USD) in 
the budget that reflected the Chinese funding, as well as 
smaller amounts relating to other foreign contributions as well 
as the funding from anticipated HIPC debt service relief. He 
noted that he strongly supported an audit of infrastructure 
spending to ensure that Congo(B) was getting value for money. 
 
¶5. (U) Minister OndQo noted that the draft budget proposed on 
November 6 reflects a surplus of around 50% of anticipated 
revenus, (i.e. expected receipts are twice the proposed 
expenditures) which he partially attributed to rising oil 
production and a favorable oil price environment. According to 
the Minister, the budget conservatively assumes oil prices in 
the range of $63 per barrel for 2010 and anticipates, based on 
new production coming on line, that there will be an 
approximately 25% increase in oil production.  With increased 
production and stable oil prices, Congo will experience strong 
revenue, and the Minister emphasized that he expects it is 
possible that oil prices will in fact exceed the assumed amount 
in 2010.  The Minister cited the budget as projecting revenue of 
approximately 2,814 billion Francs CFA (6.4 billion USD), of 
which only 1,450 billion Francs CFA (3.3 billion USD) is 
currently proposed on the expenditure side. 
 
¶6. (U) Minister Ondongo agreed to send a transparency summary in 
writing to the Embassy. 
 
¶7. (U) Bio note:  Ondongo was previously the Labor Minister.  He 
served as chief economic advisor to the President's 2009 
campaign for re-election.  He holds a PhD in Economics from 
France, and has served as Professor of Economics at the 
university here.  He takes credit for the successful 
privatization of the MINOCO flour mill (currently the only 
non-petroleum U.S. investment in Congo). 
 
 
EASTHAM