November 25, 2009 / 6:41 PM / 8 years ago

IMF says transparency key to $1.4 bln Angola loan

3 Min Read

<p>The International Monetary Fund (IMF) logo is seen during a news conference in Bucharest March 25, 2009.Bogdan Cristel</p>

LUANDA (Reuters) - The International Monetary Fund (IMF) said on Wednesday Angola's commitment to increasing transparency, especially in the oil sector, was key to this week's approval of a $1.4 billion loan to the African nation.

Angola, which rivals Nigeria as Africa's biggest oil producer, has for years failed to agree a loan programme with the IMF because of a refusal to open the books of state-owned oil firm Sonangol.

Sonangol acts as both a player and a regulator of Angola's booming oil sector, and also invests some of Angola's oil money abroad by buying stakes in listed companies in Portugal.

IMF mission chief Lamin Leigh said the government was committed to increasing transparency and would soon publish Sonangol's recently-audited financial accounts. Angola has said there were no pre-conditions for the loan.

"Meeting those targets is what justifies the 27-month programme," Leigh said, adding that a balanced budget, increased social spending and a stable exchange rate were also needed.

His remarks signalled the IMF could stop or delay disbursements if the targets were not met.

In its 2009 index, global corruption watchdog Transparency International ranked Angola among the 18 most graft-ridden countries, placed in Africa below Zimbabwe and Democratic Republic of Congo.

Billions in oil revenues and Chinese loans have helped rebuild infrastructure devastated by a 27-year civil war that ended in 2002. But the spending has done little to improve life for ordinary people, two-thirds of whom live on $2 a day or less, according to the World Bank.

This month, a private newspaper published a list of what it said were the country's 12 richest people, including President Eduardo Dos Santos, his eldest daughter, several ministers and senior members of the ruling of the ruling MPLA. None of those named have commented on the article.

Reserves

Angola's Economy Minister said on Wednesday the government planned to use the loan to bolster its foreign exchange reserves and stabilise the local currency, the kwanza. The country is also planning to set up a sovereign wealth fund this year.

"We will use the loan to shore up our foreign exchange reserves and stabilise the exchange market," Nunes Junior said in comments broadcast over state-owned Radio Nacional de Angola.

The 27-month loan is the largest IMF financing package to date for a sub-Saharan African country during the current global crisis, the IMF said after approving the loan on November 23.

It granted Angola an additional $440 million as part of a general issuance of Special Drawing Rights (SDRs) approved earlier this year.

Angola's foreign exchange reserves fell by almost a third to $12.1 billion from January to October, partly due to the central bank's efforts to stabilise the exchange rate following a slump in oil prices last year.

The kwanza is down 16.9 percent against the dollar this year.

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