Viewing cable 09CONAKRY337
Title: BUSINESSES AND BANKS FEAR CURRENCY REVALUATION

IdentifierCreatedReleasedClassificationOrigin
09CONAKRY3372009-06-15 14:11:00 2011-08-30 01:44:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Conakry
VZCZCXRO8933
PP RUEHMA RUEHPA
DE RUEHRY #0337/01 1661411
ZNR UUUUU ZZH
P 151411Z JUN 09
FM AMEMBASSY CONAKRY
TO RUEHC/SECSTATE WASHDC PRIORITY 3746
INFO RUEHZK/ECOWAS COLLECTIVE
RHEFDIA/DIA WASHINGTON DC
RUEAIIA/CIA WASHDC
RHMFISS/HQ USAFRICOM STUTTGART GE
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
UNCLAS SECTION 01 OF 02 CONAKRY 000337 
 
SIPDIS 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: ECON EFIN PGOV PREL ASEC GV
SUBJECT: BUSINESSES AND BANKS FEAR CURRENCY REVALUATION 
 
REF: CONAKRY 0318 
 
¶1.  (SBU) Summary: Many economic actors are nervous over a 
possible revaluation of the Guinean Franc (GNF) (reftel) and 
large business transactions have come to a virtual halt in 
anticipation of the rate change. Meetings with banking 
officials, members of the Foreign Exchange Commission, and 
Guinean business people revealed fierce opposition to the 
proposed revaluation, as well as the CNDD,s management of 
economic affairs. According to contacts, the CNDD has failed 
to address business concerns and has threatened the 
operational stability of businesses who oppose the measure, 
as well as the physical security of individual dissenters. 
End Summary. 
 
 
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The Question of Revaluation 
------------------------------ 
 
¶2.  (U) The CNDD reportedly began discussions over 
revaluating the exchange rate on June 1. Though no policy has 
yet been instituted, the CNDD is pressing business people to 
support their intended peg of 3500 GNF to the dollar (a 
devaluation of around 25%). The junta held several meetings 
among themselves and with businesspeople, even forming a 
 commission, to discuss the proposed peg. 
 
¶3.  (SBU) According to Embassy contacts, the commission was 
formed of leaders in the business community, banking sector, 
and foreign exchange committee. The Commission concluded that 
a peg of any valuation less than 4500 GNF to the dollar would 
have devastating consequences. Tiegboro Camara, the Secretary 
of State for Special Services, Anti-Narcotics, and Organized 
Banditry, reportedly reacted angrily to the Commission,s 
findings. He warned that all members should support the 3500 
Guinean Franc peg or expect to find themselves in a 
precarious relationship with the government. 
 
¶4.  (SBU) The business community seemed most concerned about 
the ability of the Central Bank to support such a dramatic 
rate valuation. With an admitted 22 million USD in reserves, 
the Bank is incapable of backing the valuation of the GNF at 
this level. Any move toward an overvaluation would be 
artificial at best. Contacts also worried that the subsequent 
shortage of foreign currency would create a large informal 
market for foreign exchange, where, they believe, the dollar 
would be sold for as much as 8000 GNF. 
 
¶5. (SBU) An Embassy contact at Western Union noted that the 
GOG has revaluated the GNF twice in the past 6 years. In 
2007, the rate was changed from 6000 GNF to the dollar to 
¶3000. Though the peg lasted only three weeks, Western Union 
in Guinea lost over 700,000 USD, roughly 90% of the 
location,s revenue for that period. 
 
¶6. (U) In anticipation of the revaluation policy, many 
importers are suspending imports until their profit margin 
increases with the valuation. Exporters, on the other hand, 
are selling off their foreign currency and suspending 
operations to prepare for their impending downsizing. The 
banking sector also seems to be selling foreign currency to 
prevent massive revenue loss. 
 
¶7. (SBU) The Foreign Exchange Commission told Econoff that 
they see this policy as a result of corruption and military 
rule. Without economists in charge of the economy, they say, 
uneducated decisions will be made for the sake of political 
expediency. 
 
 
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COMMENTS 
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¶7.  (SBU) Though it is as yet unclear whether the CNDD will 
in fact revaluate the GNF, the speculation of such a policy 
is already being felt in the business community. In a country 
where rumors run rampant and a recession has already taken 
hold, such a decision could cause severe unrest among the 
country,s small business community. CNDD officials have 
argued that this valuation would help Guinea's poor afford 
imports that have, until now, been too expensive. In the long 
run, however, the policy would most certainly make the 
economic situation worse for the least advantaged Guineans. 
While it seems that many poor Guineans buy into this 
 
CONAKRY 00000337  002 OF 002 
 
 
rhetoric, much of the business community is worried. END 
COMMENT. 
RASPOLIC