US embassy cable - 05NDJAMENA1015

UNCLAS NDJAMENA 001015 
 
SIPDIS 
 
 
DEPT FOR AF, EB, ENERGY FOR CAROLYN GAY AND GEORGE PEARSON, 
TREASURY FOR OTA, LONDON AND PARIS FOR AFRICA WATCHERS 
 
E.O. 12958: N/A 
TAGS: ECON, EFIN, ENRG, PGOV, CD, Economic Trends 
SUBJECT: CHAD INQUIRES ABOUT G8 DEBT RELIEF 
 
 
1.  (U) The following message is Sensitive But Unclassified. 
Please protect accordingly. 
 
2.  (SBU) SUMMARY: The Minister of Finance is very concerned 
that, despite oil revenues, Chad is facing intense financial 
pressures and needs to be considered for G8 debt relief 
proposals.  In a recent meeting, he also stated that the 
government is committed to transparent fiscal practices, and 
would welcome international involvement in budgetary 
revisions in 2006.  The IMF has made it clear that Chad 
could be considered for debt relief under the G8 proposals 
once it reaches its HIPC completion point, but does not see 
that happening soon. 
 
3.  (U) In a meeting on June 13 with the Ambassador and 
Economic/Consular Officer, Finance Minister Ngeuyam Djaibe 
appealed for international assistance.  The Minister pointed 
to the recent announcement of G-8 debt relief proposals for 
18 HIPC countries.  He expressed hope that Chad would be 
eligible for these benefits, prticularly since its 
resources are being spent o security and humanitarian 
assistance for Sudanee refugees in Eastern Chad.  He also 
noted that Cad's external debt is a significant drain on 
theeconomy (2 billion CFA annually), and prevents the 
country from financing its infrastructure needs. 
 
4.  (U) The Minister said previous economic bright spots are 
now somewhat dim.  He noted that the government's 
expectations of the oil revenues have been dampened 
following the realization that Doba crude is being sold at a 
barrel price far lower than expected.  He also explained the 
government's concern about the World Bank's demand for the 
privatization of CotonTchad by 2007, noting that while the 
government is aware of the importance of cotton for local 
community, it is not sure if rapid privatization is 
necessarily the solution to alleviating the plight of 
failing parastatal.  Finally, Djaibe noted that while the 
GOC has done a great deal to revamp the electrical grid 
infrastructure, it lacks enough diesel fuel to power the 
system.  The Minister pleaded for greater U.S. and 
international awareness of the country's plight. 
 
5.  (U) The Ambassador noted that eligibility for a program 
of debt reduction would depend on its reform program.  He 
told Djaibe that implementation of the GOC's plan for 
petroleum revenue management and budgetary transparency 
would put the country in a better position for possible 
future benefits.  In response, the Minister stressed his 
committment to fiscal reform.  The minister asserted that he 
would defend current petroleum laws, and ensure that 
revenues are managed transparently.  He also told the 
Ambassador that the government would welcome the input of 
the international community when Chad's national budget 
would be up for review in 2006. 
 
6.  (SBU) IMF Representative Wayne Camard told 
Economic/Consular Officer on June 24 that he had also 
addressed the issue of Chad's chances to receive debt relief 
in a meeting with Djaibe and the President's Economic 
Advisor on June 13.  Camard said that he explained to the 
Minister that Chad could receive the same benefits obtained 
by the 18 HIPC countries once it reaches its HIPC completion 
point.  According to Camard, the Minister responded 
positively to this comment.  Camard also told 
Economic/Consular officer that while he does not see Chad 
meeting the requirements for the completion point anytime 
soon, he is pleased with reforms within the Ministry to 
improve its capacity to manage the national budget. 
 
7.  (SBU) COMMENT: The government is clearly feeling a great 
deal of domestic economic pressure, and hopes for relief. 
The burden of responding to the security threats and refugee 
inflows on its eastern border with Sudan requires 
expenditures it cannot afford.  We will continue to remind 
the GOC of the need to implement its PRSP program, including 
improving fiscal transparency and adhering to the Revenue 
Management College, if it ever wishes to benefit from 
possible future debt relief opportunities. 
 
 
WALL 
 
 
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