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Cablegate: Epstein Meeting with Finance Minister Okonjo-Iweala

This record is a partial extract of the original cable. The full text of the original cable is not available.

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 NOT FOR PUBLICATION ON THE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.

-------
SUMMARY
-------

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.

------
BUDGET
------

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.

----------------
SHOWING PROGRESS
----------------

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.

-----------
IMPORT BANS
-----------

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

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