VZCZCXRO3104
RR RUEHPA
DE RUEHAB #0021/01 0201617
ZNY CCCCC ZZH
R 201617Z JAN 10
FM AMEMBASSY ABIDJAN
TO RUEHC/SECSTATE WASHDC 0036
INFO ECOWAS COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC

C O N F I D E N T I A L SECTION 01 OF 02 ABIDJAN 000021 
 
SIPDIS 
AMEMBASSY YAOUNDE PASS TO AMEMBASSY MALABO 
 
E.O. 12958: DECL: 2020/01/20 
TAGS: EFIN ECON EAID PREL IV
SUBJECT: Little GOCI Progress on IMF Program Goals 
 
CLASSIFIED BY: MTownswick, Pol/Econ Chief; REASON: 1.4(B), (D) 
 
¶1.  (C) Summary:  IMF Resident Representative Philippe Egoume gave 
a mixed review of Cote d'Ivoire's economic performance in a meeting 
with Ambassador and Pol/Econ chief on January 15.  While he was 
optimistic about the country's future economic prospects and 
believed President Gbagbo would hold the line on civil service 
salaries, he expressed concerns about a 130 billion FCFA (USD 289 
million) shortfall in Cote d'Ivoire's projected customs revenue, as 
well as the lack of progress in reducing electricity subsidies.  He 
stated  that corruption and impunity must be addressed before they 
become more deeply entrenched in society. If elections are not held 
before the June meeting of the IMF board, Egoume anticipates 
difficulties in completing the Poverty Reduction and Growth 
Facility (PRGF) program.  End Summary 
 
 
 
¶2.  (C) IMF Resident Representative Philippe Egoume was positive 
about the strength of Cote d'Ivoire's economy ("I'm bullish on Cote 
d'Ivoire") in the long run but his assessment of progress on 
program goals was more negative.  Ambassador noted that President 
Gbagbo had devoted a lot of time in his New Year's address to CdI's 
need for HIPC debt relief, and warned public servants not to 
strike, as there would be no salary increases.  Egoume affirmed 
that the President has taken a courageous stand on limiting civil 
service salary increases.  Commenting that GOCI's wage bill already 
equaled 43 percent of government revenues (compared with an ECOWAS 
average of 34 percent), he said that if all cost of living 
adjustments which had been promised since 2007 were paid, the wage 
bill would jump to over 900 billion FCFA (USD 2 billion), from the 
745 billion FCFA (USD 1.6 billion) target.  Egoume predicted that 
Gbagbo would compromise and pay some of the promised cost of living 
increases, which would result in a total bill of about 844 billion 
FCFA (USD 1.9 billion). 
 
 
 
GOCI NOT MEETING TARGETS 
 
------------------------- 
 
 
 
¶3.  (C) Egoume said customs revenue was among the easiest targets 
to predict, and expressed surprise that CDI's customs receipts were 
almost 130 billion FCFA (USD 289 million), or approximately one 
percent of GDP, less than anticipated.  He attributed some of the 
shortfall to glitches in switching to a new computerized collection 
system, as well as to the inexperience of the current head of 
Customs, Col. Alphonse Mangly, who, in contrast to his predecessor 
Konan Gnamien, had no relevant experience and spent several days a 
week campaigning for Gbagbo..  When pressed, Egoume admitted that 
Mangly could well be siphoning off customs monies for the 
Presidency.  On the positive side, he noted that income tax 
revenues were up slightly, and that Cote d'Ivoire has reduced taxes 
on cocoa to 22%, although higher than average prices helped them 
meet this target. 
 
 
 
¶4. (C) No progress has been made on the other major source of IMF 
concern, namely electricity subsidies.  The GOCI had agreed to meet 
with all stakeholders - gas suppliers, consumers, electricity 
producers - in order to work out a compromise whereby each party 
would make some concessions, but no meetings have occurred.  He 
agreed that Cote d'Ivoire's supplying below-cost electricity to 
Ghana and Burkina Faso at prices lower than what it charges 
domestic consumers was also a problem, but said that the GOCI, 
while well aware of this practice, felt obliged to continue it  to 
preserve its image and as a matter of regional prestige. 
 
 
 
¶5.  (SBU) Cote d'Ivoire's lackluster performance thus far could 
impact the next tranche of IMF funding, particularly if elections 
are delayed again. The IMF's Executive Board must meet by June at 
the latest in order to finalize the next tranche of the PRGF.  If 
there is no government in place with a longer mandate to approve 
the program's tenets, it will be difficult for the Board to move 
forward. 
 
 
 
 
 
¶6. (SBU) Egoume mentioned that he was preparing a comparative study 
 
ABIDJAN 00000021  002 OF 002 
 
 
of the Ivorian and Ghanian economies, and said that, while per 
capita income in each country was converging - with CdI's falling 
and Ghana's rising - they were still several hundred dollars apart 
(roughly USD 800 versus USD 500), Cote d'Ivoire remained an 
economic powerhouse with the ability to rapidly increase GDP growth 
once the political stalemate was resolved. 
 
 
 
¶7.  (C)  Regarding the return of the AfDB headquarters to Abidjan, 
Egoume mentioned that the renovation of the Hotel Ivoire (in 
preparation for the May meeting of the African Development Bank) 
was reportedly behind schedule and substantially over budget. How 
this will affect the Bank's decision is unclear. The IMF has 
limited the GoCI's overall spending on public works to 40 billion 
FCFA (USD 89 million), and Egoume said that, although it was up to 
the government to decide how to allocate this sum, Gbagbo's 
penchant for large-scale public works created problems for the 
budget. 
 
 
 
¶8.  (C)  Comment:  Egoume made no secret of his preference for RDR 
presidential candidate Alassane Ouattara,  noting that Ouattara's 
tenure as Deputy Managing Director of the IMF and his party's 
well-conceived economic program have made him the most credible of 
the three candidates - and the most desirable future president. 
Although he dismissed PDCI candidate Bedie as a has-been,  he 
agreed with the Ambassador that PDCI technocrats ran the country's 
economy well under Houphouet Boigny and that the party retains 
professional capacity.   While Gbagbo might wish to better manage 
the economy, past experience has shown that a high level of 
corruption among his appointees, and his emphasis on prestige 
infrastructure projects rather than more modest but effective 
stimulus programs, do not bode well for his future performance. 
Egoume lamented the culture of corruption which has permeated CdI 
society, and said that it must be changed before the younger 
generation internalizes it. 
NESBITT