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O 081838Z JAN 10
FM SECSTATE WASHDC
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UNCLAS SECTION 01 OF 06 STATE 001923 
 
SENSITIVE 
SIPDIS 
FOR AMBASSADORS FROM DEPUTY SECRETARY LEW 
 
E.O. 12958: N/A 
TAGS: AID EAID ECON EFIN PREL
SUBJECT: FY 2010 PROHIBITION ON ASSISTANCE TO CENTRAL 
GOVERNMENTS WHOSE BUDGETS ARE NOT TRANSPARENT 
 
REF: A. (A)STATE 81177 
     ¶B. (B)STATE 98111 
 
--------------------------------------------- 
RESTRICTIONS ON ASSISTANCE -- POST INPUT NEEDED 
--------------------------------------------- -- 
 
¶1. (U)  This is a request for action by January 20; see 
paragraphs 3, 4, and 10. 
 
¶2.  (U)  Under Section 7086(c)(1) of the Department of State, 
Foreign Operations, and Related Programs Appropriations Act, 
2010 (P.L. 111-117) (SFOAA), the Department and USAID are 
prohibited from providing any bilateral economic assistance 
or international security assistance (i.e., funds 
appropriated under titles III or IV of the SFOAA) to the 
central government of any country "that fails to publicly 
disclose on an annual basis its national budget, to include 
income and expenditures." Section 7086(c)(2) permits the 
Secretary or her designee to waive the restriction on a 
country-by-country basis if it is important to the U.S. 
national interest to do so.  Before any FY 2010 funds can be 
obligated to provide assistance to the central government of 
any country, the Department must determine which, if any, 
central governments are not in compliance with Section 7086 
and whether it may be important to the U.S. national interest 
to seek a waiver to allow funding to proceed.  EEB's Office 
of Monetary Affairs (EEB/IFD/OMA) is coordinating the 2010 
fiscal transparency review.  Fiscal transparency promotes 
sound management of scarce resources, citizens' engagement in 
budgetary decisions that affect them, and rule of law.  The 
Department is committed to use this process to effect 
positive change toward better fiscal transparency in 
countries, including compliance with the standard contained 
in Section 7086(c)(1). 
 
¶3. (SBU)  ACTION REQUEST:  Action addressee posts -- in 
countries that either received waivers last year or that have 
been identified by EEB as requiring further analysis in the 
FY 2010 cycle -- are asked to please respond to the following 
questions to assist EEB in its analysis: 
-- Is the central government expected to receive funding 
 
STATE 00001923  002 OF 006 
 
 
under the FY 2010 SFOAA? (See guidance in para 5 below) 
 
-- Is the host country's annual national budget publicly 
available?  (See guidance in para 6 below) 
 
-- Are incomes and expenditures included in the 
publicly-available budget? (See guidance in para 7 below) 
 
-- What is post's assessment of the extent to which the 
publicly-available budget accurately reflects actual 
government incomes and expenditures?  (See guidance in para 7 
below) 
 
-- Have there been any events since the 2009 review that may 
have affected fiscal transparency (e.g., a coup)? 
 
-- Since last year's review, what efforts has the host 
government undertaken to improve fiscal transparency?  What 
progress has been made, pursuant to the 2009 demarches on the 
subject (reftels)? 
 
¶4.  (SBU)  Posts are requested to submit responses by January 
20, 2010, by cable slugged for EEB/IFD/OMA Briana Saunders, 
and by e-mail to SaundersB@state.gov, with a copy to the 
country desk and regional bureau POC (see para 15).  For an 
example of what constitutes good post input to EEB analysis, 
please see 2009 YAOUNDE 369 (this can be emailed to posts 
upon request, if needed). 
 
--------------------- 
GUIDANCE FOR RESPONSES 
---------------------- 
 
¶5.  (SBU)  For the purpose of answering the first question, 
the following guidance is provided:  The legislative 
restriction only pertains to bilateral economic assistance 
and international security assistance under the SFOAA for 
central governments; assistance to regional, local or 
municipal governments is not considered assistance to the 
central government.  Assistance for the central government 
would include any assistance for central ministries and their 
operations, and for executive, legislative, and judicial 
branch entities of the national government.  For example, 
Foreign Military Financing (FMF) and International Military 
Education and Training (IMET) are assistance for the central 
government.  Assistance for the central government that is 
provided through an NGO-implementer, e.g. training for 
 
STATE 00001923  003 OF 006 
 
 
Minister of Interior officials, would also constitute 
assistance for the central government.  Financing under the 
Export Import Bank Act would not be considered assistance 
within the meaning of this restriction. 
 
¶6.  (U)  For the purpose of answering the second question, 
"publicly available" can be broadly interpreted to mean that 
the information is available on-line, on request from the 
ministry, for purchase at a government printing office, etc. 
While Executive Budget speeches are valuable, they typically 
do not contain sufficiently detailed information on revenues 
and expenditures on their own to satisfy the fiscal 
transparency requirement.  Additional detailed publicly 
available information on the enacted budget ) and, ideally, 
an end-of-year outcomes report, audited budget reports, and 
information on budget support from foreign assistance ) is 
usually necessary for a country to be considered fiscally 
transparent.  If the budget is posted on the internet, posts 
are asked to cite the relevant link in your response cable 
and email it to SaundersB@state.gov. 
 
¶7.  (U)  For the purpose of answering the third and fourth 
questions, the following guidance is provided:  EEB takes 
into account not only whether a country makes publicly 
available a budget that includes income and expenditures, but 
also whether that budget is credible and complete (not 
including military or intelligence spending, which many 
countries do not disclose for national security reasons). 
EEB also considers the transparency of government-affiliated 
enterprises that may be expected to transfer revenues to the 
central government ) for example, the transparency of the 
revenues of a national oil company. 
 
¶8.  (U)  Also of note: Although the IMF promotes fiscal 
transparency through its engagement, the IMF typically has 
access to non-public budget information and the existence of 
an IMF program in itself does not suggest that a country will 
pass the fiscal transparency requirement.  However, reporting 
on the IMF's analysis of a country's fiscal transparency is 
valuable to EEB's analysis. 
 
--------------- 
WAIVER REQUESTS 
--------------- 
 
¶9.  (SBU)  Based on posts' input and other sources, EEB will 
determine which central governments do not satisfy the fiscal 
 
STATE 00001923  004 OF 006 
 
 
transparency requirement for this year, as identified in the 
Foreign Ops legislation.  For countries which do not satisfy 
the transparency requirement, the regional bureau will 
determine whether or not to seek a waiver in order to permit 
the obligation of foreign assistance under the FY2010 Foreign 
Ops legislation. The Department does not operate on the 
assumption that each country that fails to satisfy the 
requirement deserves a waiver.  Should the regional bureau 
decide to pursue a waiver, the regional bureau will draft and 
submit a waiver request to D(L) no later than February 10, 
¶2010.  In cases where a regional bureau deems that a country 
should be eligible for a waiver, full justification must be 
submitted in the waiver request.  Posts need to be able to 
demonstrate clearly efforts undertaken and progress made. 
Any extraordinary circumstances that prevent the country from 
making progress towards satisfying the fiscal transparency 
criteria should be articulated in the waiver submission. 
 
¶10.  (SBU)  ACTION REQUEST:  Given the possibility that 
action addressees' host governments may require a waiver, 
Posts are also asked to provide in the cable response the 
following input; such input is of interest generally and will 
assist the regional bureaus in drafting the waiver request 
for your country: 
 
-- Efforts by the host government to improve fiscal 
transparency; 
 
-- USG/Post actions and strategy to promote such efforts, 
including pursuant to reftels; 
 
-- Any resulting progress; 
 
-- An updated 2010 action plan for Post efforts to work with 
the host government to improve fiscal transparency and 
promote graduation out of the need for a waiver. 
 
¶11.  (SBU)  The Department expects Posts to be working with 
countries to address fiscal transparency concerns and promote 
graduation out of the need for a waiver, pursuant to reftels. 
 Unless there are extraordinary circumstances, a pattern of 
continued failure by countries to make progress towards 
satisfying the fiscal transparency criteria is unacceptable. 
EEB will continue working with regional bureaus following the 
waiver process to ensure that efforts are underway with 
countries to promote compliance with Section 7086(c)(1) and 
graduation from the need for a waiver. 
 
STATE 00001923  005 OF 006 
 
 
 
------------------------- 
BACKGROUND ON METHODOLOGY 
------------------------- 
 
¶12.  (SBU)  EEB's analysis relies heavily on post reporting, 
including the response to this cable, as well as open source 
information from NGOs, international institutions, etc. 
Where there are serious concerns about significant, 
non-transparent central government revenues or expenditures 
based on the totality of the information obtained by EEB ) 
even in cases where there is some form of a publicly-released 
budget ) EEB will make the determination that a country does 
not meet the fiscal transparency requirement under the SFOAA. 
 In such a case, the respective regional bureau will decide 
whether to pursue a waiver to allow assistance to the central 
government to continue despite insufficient fiscal 
transparency; regional bureaus will also be responsible for 
the drafting the waiver request.  Final approval of a waiver 
rests with Deputy Secretary Lew. 
 
¶13.  (SBU)  For the 2010 review, EEB will analyze fiscal 
transparency in those countries that required waivers in 
2009: Cambodia; Egypt; Lebanon; Libya; Saudi Arabia; Yemen; 
Afghanistan; Kyrgyzstan; Maldives; Tajikistan; Turkmenistan; 
Uzbekistan; Bolivia; Dominican Republic; Dominica; Nicaragua; 
St. Vincent; Angola; Burkina Faso; Cameroon; CAR; Chad; 
Congo-B; Cote d,Ivoire; DRC; Ethiopia; Gabon; Gambia; Guinea 
Bissau; Niger; Somalia; Senegal; Swaziland; and Zambia. 
 
¶14.  (SBU)  EEB will also re-analyze the fiscal transparency 
of countries with borderline fiscal transparency in last 
year's review and countries in which fiscal transparency may 
have worsened.  Those countries will at a minimum include: 
Comoros; Djibouti; Malawi; Mauritania; Nigeria; Sao Tome & 
Principe; Sierra Leone; Zimbabwe; Vietnam; Algeria; Ecuador; 
Honduras; and Venezuela. 
 
¶15.  (SBU)  For more information on the fiscal transparency 
review process, please refer to "Fiscal Transparency8 on the 
Diplopedia website, to EEB Coordinator Saunders, or to the 
appropriate point of contact on fiscal transparency for your 
regional bureau: 
 
-- AF:   Mary Johnson 
-- SCA:  Aisha Sabar 
-- WHA:  Jennifer Ceriale 
 
STATE 00001923  006 OF 006 
 
 
-- NEA:  Brian Grimm 
-- EAP:  Adam West 
 
¶16.  (U) The Department greatly appreciates Missions' support 
for this exercise and your ongoing efforts to promote fiscal 
transparency. 
CLINTON