US embassy cable - 05NDJAMENA1592

UNCLAS  NDJAMENA 001592 
 
SIPDIS 
 
 
SENSITIVE 
 
DEPARTMENT FOR AF, AF/C, INR, DRL, EB; TREASURY FOR 
OTA, SARA PAULSON; ENERGY FOR GPERSON AND CGAY; PARIS 
AND LONDON FOR AFRICAWATCHERS 
 
E.O. 12958:  N/A 
TAGS: PREL, PREF, EFIN, ECON, EPET, CD, Oil Revenue Management 
SUBJECT: CHAD: PRIME MINISTER ANNOUNCES PROPOSED OIL 
REVENUE MANAGEMENT LAW CHANGES TO DONORS 
 
REF: A) NDJAMENA 1560 
 
1. (U) Summary:  Prime Minister Pascal Yoadimnadji 
convoked the diplomatic corps and representatives of 
international organizations October 21 to announce that 
the Government of Chad (GOC) intended to submit a 2006 
budget to the National Assembly which would reflect 
changes to the oil revenue management law.  He asked 
international partners to work with the GOC on the 
proposed changes.  End summary. 
 
Exchange of views with donors prior to PM announcement 
--------------------------------------------- ------- 
2.  (U) At the invitation of the World Bank, Emboffs 
met on October 21 with World Bank Petroleum Sector 
adviser, Marie-Francoise Marie-Nelly, the German 
Charge, two members of the EC Mission and the local IMF 
Representative to exchange views before a meeting of 
the diplomatic corps with the Prime Minister on the oil 
revenue management law.  A representative of the French 
Embassy was invited but reportedly declined to attend 
on the grounds that France was not able to provide a 
position a half an hour before the Prime Minister's 
meeting. 
 
3.  (SBU) Marie-Francoise Marie-Nelly briefly reviewed 
the situation, recalling that in response to the GOC 
request to make certain changes to the oil revenue 
management law, the Bank and the Fund had sent a joint 
response earlier in the month saying that it was 
premature to change the law (which had only been in 
effect since 2004) and stressing the need for the GOC 
to improve management of resources and budget 
discipline.  She reported that the Prime Minister had 
called in the WB and the IMF again on 10/20 and had 
been very firm on the need to change the law.  Marie- 
Francoise Marie-Nelly reiterated the Bank position, 
noting that Bank did not consider the law "immutable," 
but that any changes needed to follow an agreed-upon 
process. 
 
3. (SBU) The EC rep suggested that the government 
needed money urgently to negotiate with army deserters 
in the east of the country.  Although the EC did not 
support changes to the law right now, they recognized 
that the donor community had little room to maneuver. 
The German Charge stated that the situation facing the 
GOC was not one of unexpected, exogenous shocks and 
therefore drastic measures were not called for.  Emboff 
supported the World Bank position and stated that 
changes to the oil revenue law would not solve the GOC 
budget problems.  She stressed the importance of better 
management of government resources, including a full 
response to the recent college report.  Emboff noted 
the importance of transparent management of resources, 
the role of the college and the Fund for Future 
Generations. 
 
Prime Minister Convenes Diplomatic Corps 
---------------------------------------- 
 
4.  (U) Shortly afterwards, Emboffs and other 
diplomatic representatives and representatives of 
international organizations gathered at the Foreign 
Ministry for a presentation by Prime Minister Pascal 
Yoadimnadji.  PM Yoadimnadji stated that after long 
consultations with different sectors on the 2006 
budget, the GOC thought it opportune to communicate its 
views to the international community.  PM Yoadimnadji 
referred to the daily struggle of life in Chad, 
mentioning insecurity, inter-community strife, unpaid 
salaries, pensions and scholarships and mounting 
internal debt.  The Prime Minister acknowledged that 
the government's management of resources could have 
been better, and mentioned as well the importance of 
fighting corruption (noting in passing the recent 
report of Transparency International).  On this point, 
PM Yoadimnadji detailed actions that the GOC was taking 
 
 
to combat corruption, including assembling a corps of 
financial inspectors. 
 
5.  (U) Turning to the oil revenue management law, PM 
Yoadimnadji stated that the law had turned out to be 
inadequate:  the Fund for Future Generations (FFG) put 
money away which was needed for the current generation; 
the priority sectors should include public 
administration and security, the allocation to the 
Treasury needed to be increased from 15 to 30 percent. 
He noted that the public was increasingly frustrated by 
the lateness of salaries and pensions, as well as 
problems of security.  Accordingly, the GOC proposed to 
revise the law to reflect the following: 
 
-- Change to the FFG so that it can be used for 
infrastructure and needs of "the current youth." 
 
-- Changes to the priority sectors to include security, 
territorial administration, and pay for the 
implementation of the recommendations of the Justice 
Ministry and Army reviews; 
 
-- Increasing the amount destined to the treasury from 
15-30 percent. 
 
6.  (U) PM Yoadimnadji stated that these changes would 
help to resolve problems of pensions and late salaries 
as well as contribute to planned reform of the military 
and of the justice system. 
 
7.  (U) The Prime Minister concluded by saying that for 
eight months the GOC had been discussing this issue 
with partners, and no solution had emerged.  He 
stressed that the relationship with partners was one of 
cooperation.  That being said, he had to stress that 
the people of Chad did not understand why more tangible 
benefits could not be seen from oil revenues. 
Therefore the GOC would propose a 2006 budget based on 
proposed changes to the oil revenue management law.  In 
this process, PM Yoadimnadji stated "we hope that our 
partners will accompany us." 
 
8. (SBU) Comment: The announcement of the proposed 
revisions was not unexpected, but the Government's 
intention to incorporate them into the 2006 budget is 
problematic.  World Bank and IMF representatives here 
are working on potential resolutions to the GOC's cash- 
crunch to stave off attempts to revise the law 
precipitously. 
 
WALL 
 
 
NNNN