Transparency on oil money delaying donor conference

Angola has yet to provide the International Monetary Fund (IMF) with details of its windfall from high oil prices, delaying the Fund's mission to the country and raising doubt among donors about concluding an agreement any time soon. An IMF mission scheduled to come to Angola in November last year was postponed to January 2005, but would not take place before the end of February, sources in the capital, Luanda, told IRIN. "I still believe both parties are keen to reach an agreement, so it's a bit of brinkmanship going on, with the government saying, 'let's see how far we can go' - the result is that everything gets delayed," said one foreign official. The government told Reuters news agency in November that it expected a total of US $600 million extra from the high oil prices during 2004. Donors in Luanda said the IMF had put off its mission because the Angolan finance ministry had so far failed to provide it with data about the whereabouts of the extra funds. "The government has accumulated this huge amount of money, which is the differential between the budgeted price of oil and the actual price of oil. The question is: where is that money? Is it in the national bank? Is it in an escrow account?" said the official. Global oil prices skyrocketed to a whopping $55 per barrel in 2004 - far higher than the $22.6 pencilled in by the government in its budget. "The IMF would like to know where the money is, and how the government wants to use it," the source added. One growing fear among donors is that the ruling MPLA, desperate to sustain its overall majority in parliament in general elections scheduled for 2006, wants to keep the cash for its campaign slush-fund. "They want to be able to use the funds as they see fit, without strings attached. This would give them a favourable position in the election campaign," one donor remarked. Opposition parties have complained that the MPLA has already stacked the campaign in its favour in this, the pre-election year, by monopolising funds, parliament and the media. The government was not immediately available for comment, but said late last year it could secure a staff-monitored programme (SMP) with the IMF in the first quarter of 2005. Although Angola is one of the continent's richest countries in terms of natural resources, its people are among the poorest, with allegations of corruption and mismanagement levelled at the leadership. The IMF, World Bank and donors praised Angola at the end of 2004 for its progress in improving transparency. But sources said the latest developments did not bode well. "The government wants an SMP but on its own terms. It wants to say it has one, but without making any key reforms on transparency," said Human Rights Watch director Arvind Ganesan. "The overall balance sheet is still positive - they are becoming more transparent - but they give in there, and then tighten up around the corner," said the foreign official. The knock-on effects of delaying an IMF programme could harm Angola, which is desperate for funds to help it rebuild after its 27-year civil war ended in April 2002. In the past Angola has relied on expensive oil-backed loans, but would like to gain access to cheaper, softer loans, which require an agreement with the IMF. However, there is talk that a recently secured $2 billion credit line with China has allowed it to take its foot off the gas in terms of transparency. Despite these negative developments, the World Bank management in Luanda is prepared to seek approval from its board of directors in Washington in mid-February for a new phase of support to Angola. But donor sources said the delays of the IMF's mission could make it harder to convince board members to approve the programme. "There's serious concern among World Bank executive members that Angola is dragging its feet over the SMP, and the wider question of political commitment to greater transparency is also being called into question," said one western donor. The Bank admitted the delays were unfortunate, but said it remained committed to supporting Angola. "We in the World Bank are naturally disappointed to learn that the IMF staff mission, originally programmed for this month, has been postponed," said Laurence Clarke, the Bank's resident representative in Angola. "The Bank will continue to sustain a strong partnership with the Angolan authorities and our Fund colleagues to ensure effective results on the ground," he said. The delays were also jeopardising Angola's plans to hold a successful donor conference, sources said. They said the longer it took Angola to become truly transparent, the harder it would be to convince donors to support it financially via a donor conference so long after the end of the conflict. "Can the government ask for a donor conference three or four years after the end of the war? Does it make sense? In most post-conflict situations a donor conference happens straight after the war," the foreign official said. Even though a traditional fund-raising donor conference was unlikely this long after the end of the war, a meeting of donor countries would be important to Angola, to boost its battered image. "This country needs real investments, not handouts. A donor conference is important as a signal to the investor, saying that Angola is back on the international scene and that it is a land of opportunities," the official said. "The money it will bring in is secondary - it shows Angola is back in the international community as a respectable country."