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PP RUEHWEB

DE RUEHEG #0028 0041457
ZNY CCCCC ZZH
P 041457Z JAN 10
FM AMEMBASSY CAIRO
TO RUEHC/SECSTATE WASHDC PRIORITY 4662
INFO RUEATRS/DEPT OF TREASURY WASHDC PRIORITY

C O N F I D E N T I A L CAIRO 000028 
 
SIPDIS 
 
DEPT FOR NEA/ELA 
TREASURY FOR BRYAN BALIN AND FRANCISCO PARODI 
 
E.O. 12958: DECL: 01/03/2015 
TAGS: ECON EFIN EINV EG
SUBJECT: WORLD BANK OFFICIAL FRUSTRATED BY LACK OF EGYPTIAN TRANSPARENCY Classified By: ECPO Minister-Counselor Donald Blome for Reasons 1.4 (b) and (d).
1.(C) Key Points -- The World Bank's lead economist in Egypt says that lack of GOE transparency is impeding the work of the Bank. -- He told us that despite claims to the contrary, the GOE intervenes often in foreign exchange markets, and that the methods by which they account for such interventions do not meet international standards. -- Though working directly with the GOE on projects, data provided by the GOE to the WB is often insufficient to do proper financial and budgetary analysis.

2.(C) In a recent conversation Santiago Herrera, Lead Economist in the World Bank's Egypt country office, lamented that his work here is made extremely difficult by the lack of openness and data sharing by Egyptian government ministries, including the government's own statistical agency, CAPMAS. The World Bank office in Egypt has a robust program of lending to support projects in the financial, energy and transport sectors. They also provide technical assistance to the GOE in microenterprise lending and subsidy analysis.

3.(C) Herrera said that, despite both public and private statements to the contrary, the GOE has intervened and continues to intervene significantly and often in the foreign exchange markets in order to "manage" currency rates. The intervention, particularly at the height of the global credit crisis, as he put it "was very dirty," meaning that international standards for accounting and transparency were not observed. Herrera, who has decades of experience working with central bank accounts, asserted that the Central Bank had built up a special foreign currency reserve account, from which he estimates $15-16 billion was spent supporting the pound while publicly maintaining a steady level of foreign reserves. Herrera said that the ministries of finance and investment are "unaware" of how this "constant intervention" was done.

4.(C) Herrera told us that the WB was working with the GOE in validating the work of a contractor on the GOE new health care reform plan. He said that the project was frustrating since they were only allowed access to the work the contractor had done. Without access to the government ministries, Herrera said, the WB could not do a proper analysis, particularly since, as he put it, the cost and funding information provided was "completely useless."

5.(C) COMMENT: Lack of transparency in GOE statistics and figures continues to be an issue and negatively impacts economic reform. Despite some improvements in publishing the budget, there is still a long way to go. Herrera's comments echo those heard from other organizations and even from within the GOE, where hierarchy and lack of inter-agency cooperation stymie even the most reform-minded efforts. End Comment. Tueller