US embassy cable - 04ABUJA235

UNCLAS SECTION 01 OF 02 ABUJA 000235 
 
SIPDIS 
 
STATE PLEASE PASS TO USTR PATRICK COLEMAN 
PARIS FOR OECD 
 
E.O. 12958: N/A 
TAGS: PGOV, ECON, KCOR, NI 
SUBJECT: EPSTEIN MEETING WITH FINANCE MINISTER OKONJO-IWEALA 
 
REF: ABUJA 110 
 
SENSITIVE BUT UNCLASSIFIED.  NOT FOR PUBLICATION ON THE 
INTRANET OR INTERNET. 
 
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SUMMARY 
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1. (SBU) Finance Minister Ngozi Okonjo-Iweala told us 
February 10 that she expects the budget to be passed by the 
National Assembly (NA) in the next ten days, and with what 
she considered to be the key budget figure, the deficit, kept 
to 2.5 percent or less.  Paper budget figures have not 
tallied with real expenditures in the past (the "budget 
implementation" problem), but Ngozi noted that the GON is 
beginning to provide detailed expenditure figures.  Ngozi 
also discussed the GON's import bans, claiming they are 
temporary.  END SUMMARY. 
 
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BUDGET 
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2. (SBU) Visiting AF/W Nigeria Desk Officer, CDA Anyaso, 
Counselor Maxstadt and USAID Director Liberi met with Finance 
Minister Ngozi Okonjo-Iweala on February 10.  The Minister 
had just returned from hearings at the National Assembly 
(NA), and she believed it would pass the budget in the next 
ten days.  Unlike previous years when the budget formulation 
process was opaque to NA members, who vented their 
frustrations by delaying or avoiding budget approval, Ngozi 
told us this year the administration had consulted widely in 
the NA before and after submitting the budget.  NA members 
were asked to agree to "envelopes" delineating the size of 
specific parts of the budget, much as government ministers 
had been asked, and the example caught on.  When the 
administration offered NA members special "constituency 
projects," (reftel), small development allocations for 
specific items an NA member would want for his/her district, 
NA members agreed that they too would remain within the 
"envelopes." 
 
3. (SBU) Ngozi believes the approved budget will have a small 
deficit of between 2.1 and 2.5 percent, compared to four or 
five percent in recent years' budgets.  Parastatals were all 
told to produce 25 percent "efficiencies" (reductions) in 
their operating costs, and the overall theme of the 
administration is to compress recurrent expenditures in order 
to preserve money for capital expenditures and the 
maintenance of debt service.  NA members, and the public at 
large, have complained that past expenditures were not 
detailed, and present revenues were underestimated as well as 
not detailed.  Ngozi said the government has begun to publish 
detailed expenditure figures (septel), and the government is 
working on how to provide revenue transparency. 
 
4. (SBU) GON ministers have not liked the "envelope" 
restrictions and other budgeting goals either.  The Defense 
Ministry, Ngozi related as an example, refused to meet with 
the Finance Minister unless President Obasanjo attended the 
meeting.  Obasanjo agreed, and the Defense Minister brought 
with him the uniformed chiefs of all of Nigeria's armed 
services.  Ngozi said Obasanjo was not overawed, and the 
shift in budget emphasis from the military to the police and 
other security services was preserved.  The other priorities 
in the budget, she said, are health, roads, education and 
pensions. 
 
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SHOWING PROGRESS 
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5. (SBU) Epstein asked how foreign governments should judge 
the results of Nigeria's economic reform efforts, given the 
GON's insistance on having its own reform program instead of 
an IMF program.  Ngozi replied that it was true Nigeria would 
not do a full IMF reform program, but would seek an IMF 
imprimatur for the Nigerian effort.  An IMF official would be 
in Nigeria soon for Article Four consultations, Ngozi said, 
but Nigeria must find other independent means for 
verification as well as Nigeria's own presentations.  On the 
latter, the World Bank was helping the GON build a website 
where the GON would post economic policy and performance 
information, and also a videoconference facility where others 
could contact the GON with specific questions. 
 
6. (SBU) "The onus is on us to explain," Ngozi said, and she 
expected she would be answering questions in the 
videoconference facility.  She hoped at least one donor would 
support that facility, but in any case the GON would fund 
most or all of it.  The GON would also be adding performance 
indicators to the Policy Matrix she has shown various USG and 
other governments' officials, in order to add benchmarks for 
independent verification. 
 
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IMPORT BANS 
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7. (SBU) Epstein noted that the previous and new additional 
bans on specific imported goods seemed to be at cross 
purposes with the GON's thrust toward economic reform. 
Ngozi's first reply was that "the bans are political."  She 
noted that she disagreed with import bans in general as a 
means to economic development, but went on to make a case 
that "the Chinese and Koreans are dumping textiles in 
Nigeria."  Seeing that she was losing her audience, Ngozi 
shifted gears and emphasized "the bans are not forever, don't 
fuss too much about them."  She argued that U.S. restrictions 
on steel and EU restrictions on agricultural and other goods 
undercut arguments she or others might make against such a 
ban, but her bottom line was that Nigeria's import bans are 
not permanent. 
ANYASO