US embassy cable - 05NDJAMENA1228

UNCLAS  NDJAMENA 001228 
 
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,S MINISTRY OF FINANCE DEVELOPS PLAN TO 
MODERNIZE BUDGETARY PROCESS (3RD TRANSMISSION) 
 
 
 1.  This message contained information that is Sensitive but 
Unclassified.  Please protect accordingly. 
 
SIPDIS 
 
2.  This message is being retransmitted due to technical 
errors on two previous occasions. 
 
3.  (SBU) SUMMARY: The Ministry of Finance has developed, in 
consultation with the World Bank, a five-year action plan to 
modernize Chad,s budgetary process, and is currently rolling 
it out to international donors.  The plan, which will cost 
approximately forty million USD, focuses on decentralizing 
the budgetary formulation process, increasing communication 
between the planning, executing, and monitoring agencies, 
increasing support for the management of oil revenues, and 
developing training opportunities for government employees. 
The World Bank expects the GOC to utilize its oil revenues 
for a large portion of the plan, but hopes that donors will 
contribute as well.  Both the MOF and World Bank plan to 
convene a meeting soon to formally solicit donor pledges for 
the action plan,s implementation.  END SUMMARY. 
 
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THE &PLAN D,ACTION8 
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4.  (SBU) On July 5, Embassy received a copy of the Ministry 
of Finance,s Action Plan for the Modernization of the 
National Budget.  The MOF plan, which was developed in 
consultation with IMF and World Bank technical advisors, 
focuses on reform of the preparation and execution of the 
national budget.  Citing the lack of coordination that has 
historically existed with government agencies involved in the 
budgetary process, the Ministry,s plan calls for the reform 
of all government bodies responsible for the development of 
the national budget.  This includes not only the Ministry of 
Finance and the Public Treasury, but also the oversight 
bodies responsible for overseeing the management of revenues 
and expenditures, such as the National Assembly, the Ministry 
of Moralization, and the Oil Revenue Management College. 
 
 
5.  (SBU) The Ministry,s plan points to a serious deficiency 
in professional training for government employees and the 
lack of a viable information system.  It particularly notes 
the lack of a professional, well-trained technical staff in 
the Office for the Management and Direction of Imports and 
Tariffs within the MOF, which has created inefficiency and 
corruption in the budgetary execution process.  In order to 
improve the technical capacity of the relevant government 
agencies, the plan devotes significant resources to training 
programs for the staff within the Ministries, and information 
systems to accelerate communication between government 
agencies. 
 
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ASSISTANCE FOR OIL REVENUE MANAGEMENT 
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6.  (SBU) Without going into significant detail, the Ministry 
also notes the need to strengthen the capacity of existing 
mechanisms that govern the management of oil revenues, which 
includes the Fund for Future Generations and the revenues for 
the oil producing regions.  The proposal also calls for the 
reinforcement of the capacity of the Revenue Management 
College by offering assistance to improve its communications 
network and improve its technical expertise.  In addition, 
the MOF accords resources to educate other ministries on the 
role and importance of the College. 
 
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INCLUDING ALL INSTITUTIONS 
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7.  (SBU) Expressing the need to improve transparent behavior 
and remove malfeasance from the budgetary process, the plan 
lays out broad actions to provide assistance for training 
initiatives and modernized equipment to the National Courts 
that oversee the budgetary execution, the Finance Commission 
of the National Assembly responsible for overseeing the 
national budget, and the Ministry of Moralization and General 
Control of the State.  The plan also proposes the creation of 
&ethics committees8 within the Ministry of Moralization to 
monitor transparency of the budgetary process, and 
organization of a &public hearing8 among GOC officials on 
 
 
the vices of corruption. 
 
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WORLD BANK OFFERS THOUGHTS ON ACTION PLAN 
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8.  (SBU) On July 27, Econ/Consular officer met with Gradimir 
Radisic, Senior Economist for the World Bank mission 
assisting the MOF with the Action Plan.  Radisic also stated 
that the World Bank believes the Plan, which was officially 
approved by the GOC on July 26, provides the most 
comprehensive reform proposal to ensure the transparent 
management of the national budget, which will also result in 
the proper administration of the oil revenues.  He noted that 
the World Bank feels that in order for the Revenue Management 
Process to be successful, reform must be focused on all 
entities dealing with the management of the oil revenues. 
Radisic pointed out that in addition to the Bank,s approval 
of the action plan in May, the IMF technical team that 
visited N,Djamena in July reacted positively toward the plan 
and its possible implementation.  He noted that the Bank is 
also in the process of developing performance indicators that 
will allow them to periodically evaluate the GOC,s progress 
in the implementation of the Action Plan. 
 
9.  (SBU) To fund the Action Plan, Radisic said that the Bank 
would press the GOC to use its oil revenues as part of its 
support for infrastructure development, one of five 
designated priority sectors.  At the same time, the Bank will 
seek financial assistance from international donors.  Radisic 
said his team was willing to meet with relevant USG officials 
to discuss the Action Plan    in detail and possibility of 
USG assistance toward the project.  He also noted that the 
GOC would convene a meeting of Chiefs of Missions of donor 
countries in November to formally unveil the plan, and 
solicit contributions for the funding of the Plan. 
 
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COLLEGE WELCOMES REFORM, BUT EXPRESSES DOUBTS 
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10.  (SBU) Economic/Consular Officer also met with General 
Secretary for the College, Michel Barka, on July 27 to 
 
SIPDIS 
discuss the implications of the action plan to the College. 
Barka said that the College welcomes any plan to reform the 
Ministry of Finance, and believes that any support afforded 
to the Budgetary Process will complement the activities of a 
Resident Treasury Advisor to the College. 
 
11.  (SBU) He did express some reservations about the role of 
the World Bank in this project, noting that previous World 
Bank initiatives to reform the budgetary process have either 
been implemented at a very slow pace or have eventually been 
discarded.  Barka also argued that while the GOC has 
officially recognized the need to support transparency of the 
budgetary process and management of the oil revenues, 
specific ministries are not extremely supportive of budgetary 
reform, and may resist the action plan.  He stated that if 
the plan were implemented, the international community would 
have to closely monitor GOC activities. 
 
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COMMENT 
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12.  (SBU) COMMENT: The MOF,s bold proposal presents all the 
right messages, and highlights the need for significant 
reform of the national budgetary process.  The World Bank 
argues correctly that the reform of the overall budgetary 
system will be necessary for the success of the Revenue 
Management Process.  Nevertheless, we still need to consider 
whether this Action Plan is technically sound and can be 
justified as part of the Revenue Management Plan,s priority 
sectors.  After all, it is not completely clear how funding 
the MOF,s plan falls under the priority sector of 
infrastructure.  The World Bank,s suggestion of using oil 
revenues for this endeavor may be an attempt to garner 
resources for its own initiative due to the lack of other 
means of assistance.  Additionally, while the Ministry,s 
support for the Revenue Management College is laudable, it 
raises the concern that the Ministry may try to exert 
influence over the independent body through the disbursement 
of resources.    A meeting between members of the World Bank 
team and USG officials with the technical expertise on 
 
 
budgetary formulation would be an excellent opportunity to 
determine whether the Action Plan merits USG support. 
WALL 
 
 
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