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Cablegate: Gon Will Consider Debt Relief for Liberia

VZCZCXRO5507
RR RUEHMA RUEHPA
DE RUEHUJA #1973/01 2551451
ZNR UUUUU ZZH
R 121451Z SEP 07
FM AMEMBASSY ABUJA
TO RUEHC/SECSTATE WASHDC 0911
INFO RUEHZK/ECOWAS COLLECTIVE
RUEHOS/AMCONSUL LAGOS 7874
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS SECTION 01 OF 02 ABUJA 001973

SIPDIS

SENSITIVE
SIPDIS

DEPARTMENT PASS TO USTR LAGAMA
TREASURY FOR RICHARD HALL/DAN PETERS
USDOC FOR 3317/ITA/OA/KBURRESS AND
3130/USFC/OIO/ANESA/DHARRIS

E.O. 12958: N/A
TAGS: ECON EFIN EPET LI NI PREL
SUBJECT: GON WILL CONSIDER DEBT RELIEF FOR LIBERIA

REF: STATE 117303

SENSITIVE BUT UNCLASSIFIED - PROTECT ACCORDINGLY.

1. (SBU) Summary. On September 12, 2007 Ambassador Gribbin,
accompanied by EconCouns and EconOff, delivered reftel
demarche to the Minister of State for Finance, Aderemi
Babalola. Babalola said the GON would consider the USG
request that Nigeria forgive $44 million in arrears that
Liberia owes the Nigerian Trust Fund (NTF) through the
African Development Bank (AfDB). Ambassador Gribbin also
took the opportunity to discuss Nigeria,s debt structure,
follow-on to the IMF Policy Support Instrument (PSI),
Temporary Import Licenses (TIs), Customs Reforms and the
recently held Nigeria Economic Summit. End Summary.

-------------------------------------------
Forgiveness of Liberia,a Arrears to the NTF
-------------------------------------------

2. (SBU) Ambassador Gribbin noted that Nigeria had been the
recipient of concessions that led to forgiveness of their
Paris and London Club debts and suggested that Nigeria should
consider such treatment for Liberia. Babalola indicated that
the GON is looking at the issue but has not made a decision.
The GON would like to determine if Liberia is capable of
paying their arears and said the GON would not grant relief
if Liberia had the ability to pay. The Ambassador stated
that the USG saw this as an instance of genuine need and a
key step towards Liberia's economic revival. Babalola said
the GON was looking at other ways it could assist in helping
revive the Liberian economy.

--------------------------
Nigeria,s Debt and the PSI
--------------------------

3. (SBU) Ambassador Gribbin touched on the Chinese loan the
IMF had highlighted in the Third PSI Review. Babalola said
the GON respected its commitment on nonconcessional loans.
The previous Memorandum of Understanding (MOU) signed with
the Chinese covered 5-6 areas, among them telecoms, railways
and power, but usage of those funds was on hold. Babalola
said the GON needs to review potential projects related to
the MOU, to ensure that actual financing would be appropriate
and to avoid having to abandon any projects in mid-stream.
Credit arrangements with the Chinese are presently being
discussed by President Yar,Adua,s Economic Management Team,
chaired by Dr. Shamsudeen Usman, Minister of Finance.
Ambassador Gribbin stressed that the GON should keep to the
debt relief and PSI framework.

------------------------------
Temporary Import Permits (TIs)
------------------------------

4. (SBU) Ambasador Gribbin brought up U.S. concerns about
purported Customs charges to American oil service companies
for temporary import permits. He stressed the need for
Customs charges to be fully transparent. U.S. company
concerns centered around payments to customs agents
processing TIs, despite the fact that there are no costs or
charges set out by law or publicly available regulations.

5. (SBU) Babalola said that the U.S. Foreign Corrupt
Practices Act is helpful to the GON in its efforts to reel in
corruption. He has met with the U.S. company, Tidewater, and
the Nigerian Customs Service (NCS) to discuss the matter. He
stated that there are no Customs fees for TIs. He
volunteered that delays in processing could lead companies or
agents to believe that bureaucrats were seeking a fee. He
noted also that companies can apply to be their own agent for
TIs. Any agent must state and document all charges and
provide valid receipts, Babalola said. At the same time, it
was a legimate Customs concern to ensure that equipment
brought in under TIs was in fact eventually re-exported.

6. (SBU) Babalola agreed that goods need to be cleared much
sooner than they are now. The NCS needs to determine where
the bottlenecks are and develop a system based upon an agreed
timeframe. The NCS requires a technology platform that
combines software, systems and processes and coordination
with all inspection agencies to reduce the time for
clearance. He noted existing concessions given to Customs,

ABUJA 00001973 002 OF 002


where they are able to keep 7% of collected revenues (Federal
Inland Revenue has been given the same concession) to use as
they see fit. Babalola was concerned that that funding
method led to an emphasis on collections over service.

-----------------------------------
13th Nigerian Economic Summit (NES)
-----------------------------------

7. (SBU) Babalola described the previous week's NES as a
private sector initiative to assist the GON in realizing its
reform agenda. For the past five years the private sector
was discouraged because the earlier focus on that period's
"Vision 2010" never reached fruition. The private sector was
more hopeful about the new administration. The GON has now
embarked on a goal to make Nigeria one of the twenty largest
economies in the world by 2020. At the same time, the GON had
not been keeping up with its own plans for capital spending,
the Minister of State said. Substantially more investment is
needed--requiring private sector involvement and the
"enabling conditions" to encourage private investment in
infrastructure. Babalola informed Ambassador Gribbin that
the Minister of Finance and the Minister of National Planning
are expected to attend the IMF/World Bank meetings this year.

GRIBBIN
GRIBBIN

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