Press Release No. 04/233

Press Release: Statement by IMF Deputy Managing Director, Mr. Takatoshi Kato, Upon the Conclusion of His Visit to Angola

November 2, 2004

IMF Deputy Managing Director Mr. Takatoshi Kato made the following statement upon the conclusion of his visit to Angola:

"This is my first visit to Angola and I would like to express my appreciation to President Jose Eduardo dos Santos and the Angolan authorities for their warm welcome. I have had a productive exchange of views with the President, Deputy Prime Minister Jaime, Minister of Finance de Morais, and Governor Mauricio of the National Bank of Angola. I have also had the pleasure of meeting with Mr. Samakuva, the President of UNITA, and Mr. Vicente, the President of Sonangol, as well as with representatives of the church, academic, business and diplomatic communities.

"This morning, I was heartened to experience at first hand the spirited work with sweet children and orphans of Father Caballelo and his helpers at the Arnaldo Jansen Center. With the devotion of such people, and skillful management of the economy, the recovery of Angola should be swift and secure.

"In my meeting with the President, I welcomed the gains that Angola has made in recent years. In particular, peace has now been secured and—due to the strong efforts on the economic management team—the public finances are improving and inflation is on the decline. That said, I also noted that the task ahead is to fully exploit the enormous opportunities for development, stemming from Angola's major resources, including notably—its people, its mineral wealth including oil and diamonds, and its agricultural potential. The President reaffirmed his desire to see macroeconomic stabilization take hold as well as a strengthening of dialogue with the IMF and with Angola's development partners.

"In my discussions with the economic management team I focused on how the IMF can deepen this dialogue, I reiterated that the IMF stands ready to work with Angola to secure an environment of high-quality growth and low inflation. Such an environment is necessary to reduce poverty and make progress towards the Millennium Development Goals. I also noted that there are two areas where—in the immediate period ahead—we would need to work jointly to achieve progress.

"First, on economic management, I urged the authorities to be ambitious in their efforts to stabilize the economy. I stressed that the substantial progress in reducing inflation over the last year, and the beneficial effects of the high oil prices on the fiscal accounts, provided an excellent opportunity to get inflation down to single-digit levels quickly. This would provide immediate help to the poor, and establish a sound basis for sustained economic stability and recovery. It would, however, demand fiscal discipline. With the advent of peace there would be room for significantly higher pro-poor spending, while making adequate provisions for spending on reconstruction within the overall budget envelope. In discussions about the forthcoming budget, I emphasized that fiscal deficits had to be brought down to low levels, even assuming that oil prices fall back to their long-term levels, to ease the burden on monetary policy and to provide room for private sector growth. In addition, I look foward to the leadership of the Central Bank in moving forcefully to eliminate its operating deficits and support the disinflation process.

"Second, the government needs to build upon recent advances to meet the President's objective that scarce resources are used in the best possible manner for the people of Angola who have borne immense sacrifices during the last two decades. This will involve further efforts to enhance transparency in the government's budget and central bank operations, including the management of oil resources.

"My interlocutors and I shared the same objectives. While the road ahead will invariably involve difficult choices, I look forward to rapid advances towards economic stability and effective use of resources. It is my firm hope that—with adequate will and effort—we will be in a position to conclude discussions on a staff monitored program within the next few months. The successful implementation of such a program is a prerequisite for Angola to access IMF resources."