During July 17-31, an IMF mission reviewed with the Angolan authorities the implementation of the staff-monitored program covering the period January-June 2001. The government has published the details of this program, which can also be found at the IMF website (www.imf.org). The main objectives of the program were to reduce inflation, improve transparency in public sector operations, and begin implementation of critical structural reforms.
Based on preliminary data, it appears that many of the macroeconomic targets (including a minimum of accumulation of foreign exchange reserves and a maximum in foreign borrowing) were not met. Despite a costly attempt to contain the depreciation of the kwanza in the official market and delays in adjusting fuel and utility prices, the 12-month rate of inflation was 173 percent in June 2001, compared with a program objective of 150 percent. The authorities agreed on the need to contain government expenditures and achieve a sustainable deceleration of inflation in the months ahead.
There has been some progress in the implementation of the structural measures under the program, namely the preparation of the reports from the diagnostic study of the oil sector, the signing of performance contracts with the managements of BPC and BCI, the completion of the external audit of the 1999 accounts of the central bank, the liquidation of the CAP bank, and the approval of a privatization program. Many of these and other measures, however, remain to be completed, and urgent action is required to improve the production and publication of data on government revenues and expenditures from all sources, including that on external debt transactions
The authorities requested that discussions with the staff of the Fund on the implementation of these measures be continued in October. The authorities agreed on a set of indicative macroeconomic targets based on the pursuit of prudent fiscal and monetary policies as well as on a series of transparency and structural measures to be taken during the remainder of 2001. These measures include identifying and eliminating or including in the treasury account all extrabudgetary expenditures; strengthening the control of the treasury over fiscal operations and foreign debt transactions; publishing data on oil and other government revenues and expenditures, as well as on external debt; conducting a financial audit of the 2000 accounts of the central bank; hiring an independent international company to implement international accounting standards in Sonangol; and seeking the assistance of the World Bank for a complete overhaul of the procurement system.
The authorities and the staff of the IMF agreed that discussions on a possible Fund-supported program could begin when these measures have been undertaken and the objectives of the staff-monitored program achieved. In the meantime, the staffs of the Fund and the World Bank will continue to work with the government on the accounting of oil and other revenues and plan for their allocation in line with a comprehensive strategy to reduce poverty.