VZCZCXYZ0000
RR RUEHWEB

DE RUEHLU #1261/01 3451116
ZNR UUUUU ZZH
R 111116Z DEC 06
FM AMEMBASSY LUANDA
TO RUEHC/SECSTATE WASHDC 3522
RUEAWJA/DEPT OF JUSTICE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RHEHNSC/NSC WASHDC
RUEHSE/US SECRET SERVICE WASHINGTON DC

UNCLAS LUANDA 001261 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
NSC FOR AF/BOBBY PITTMAN 
STATE FOR EB/IFD AND AF/S 
 
E.O. 12958: N/A 
TAGS: EFIN ECON EAID AO
SUBJECT: ANGOLAN GOVERNMENT DEMONSTRATES INCREASED WILLINGNESS TO 
WORK WITH IFIS 
 
REF: LUANDA 975 
 
¶1.  This is an action request.  See paragraph 9. 
 
¶2.  (SBU) Summary.  The GRA has indicated to the IMF more interest 
about entering into a Standby Agreement (SBA) than at any other time 
in the recent past.  IMF reps described meetings with high level 
government and party officials were very positive and are awaiting 
the GRA's response on a proposed 1 year stand-by agreement.  This 
new level of interest also reflects radical changes in Angola's 
financial situation over the past three years and the GRA's desire 
to better manage the massive in-flow of foreign  exchange it faces 
as a result of increased oil revenues.  The World Bank also issued 
Angola's first Country Economic Memorandum since 21990 and the GRA 
has been open to full disclosure and publication of the text, which 
it reviewed and approved.  The Angolan National Bank (BNA) has 
requested technical help from the U.S. Treasury to deal with 
problems of supervision, lending rates, foreign exchange and money 
laundering (ref a).  Post believes this is an opportune time to 
extend that assistance. End Summary. 
 
¶3.  (SBU)  On December 6, the Ambassador met with members of a 
visiting  IMF delegation which has been holding discussions with the 
GRA about entering into a one-year Standby Arrangement (SBA). 
Delegation members found the GRA officials to be much more 
interested, and spoke with more authority about a stand-by agreement 
than during previous visits.  Besides meeting with Finance Minister 
Pedro de Morais and Prime Minister Aguinaldo Jaime, the IMF also 
briefed the MPLA's chief economic advisor, Manuel Junior, who is 
also close to President Jose Eduardo dos Santos, and worked 
extensively with Ministry of Finance technical experts 
 
What's in it for Angola? 
------------------------ 
 
¶4.  (SBU) The GRA representatives see an SBA as a tool to keep some 
government spending in check.  For example, they told the IMF they 
hoped that participation in an IMF program would keep the 
newly-founded Angolan Development Bank (BDA) from exceeding its 
statutory cap of 5 percent of petroleum receipts.  GRA interlocutors 
told the IMF they also hope technical assistance and working 
together with the IMF will lead Sonangol toward divesting itself of 
its conflicting roles as granter of oil concessions, concessionaire, 
and conduit for the GRA's oil royalties.  Expatriate oil 
professionals have told us that even though Sonangol captures the 
best of Angola's workforce it must still rely on the technical 
expertise of foreigners working short-term contracts and therefore 
has less institutional memory than it needs.  The Angolans are 
seeking to engage the IMF, and those with whom the team met seem to 
be putting together the best case for pitching both this one-year 
stand-by and  engagement writ large. 
 
The GRA Also Wants U.S. Technical Assistance 
-------------------------------------------- 
 
¶5.  (SBU) According to the IMF delegation, J. P. Morgan has been in 
touch with the IMF about a credit rating for Angola.  The IMF 
delegation noted that Angola has been using its windfall oil 
revenues to pay down its debts, including making a payment of USD 
100 million owed to bilateral creditors in the Paris Club.  In early 
December 2006, the Angolan Central Bank (BNA) applied to open an 
account with the Federal Reserve Bank of New York, a step which will 
also entitle it to a certain amount of technical assistance. 
 
World Bank Country Economic Memorandum Released 
--------------------------------------------- -- 
 
¶6.  (U) At the end of November, the World Bank released its first 
Country Economic Memorandum (CEM) on Angola since 1990, dated 
October 2, 2006.  The World Bank and the GRA consulted on the CEM 
and it was released with the GRA's concurrence.  The Bank identifies 
six key aspects of Angola's current stage of development:  complete 
the transition to a market economy; improve management of public 
expenditures; manage the oil and diamond wealth transparently; 
improve the business environment and investment climate in Angola; 
increase agricultural output, and improve the quality of public 
services, especially to the poor. 
 
Media Emphasis on Statistics 
---------------------------- 
 
¶7.  (SBU)  The official newspaper Jornal de Angola published a 
positive article about the CEM following its release.  In addition, 
its edition of December 8 featured two articles on the importance of 
statistics to government, echoing a theme the IMF and World Bank 
 
have emphasized for years in their dealings with Angola.  Roberto 
Alameida, President of the National Assembly, called for credible 
and reliable statistics meeting the UN standards in an address to an 
SADC seminar on management and statistics, according to one article. 
 These press reports may signal that Angola will make the effort to 
improve its statistics in order to make itself acceptable to the 
international community in an area critical to financial policy. 
 
 
¶8. (SBU) Comment.  The IMF has described encouraging signs of 
movement within the GRA.  The IMF wants to point the GRA toward 
increasing accountability, and the GRA appears to be moving toward 
closer engagement with the international community.  The USG can now 
take some timely action which may encourage Angola's steps toward an 
IMF agreement.  The BNA has asked for help from the United States on 
monetary policy and foreign exchange control, and to combat 
counterfeiting and money laundering. 
 
¶9. (SBU) Action Request and Comment, Continued.  The BNA's request 
provides the USG with an opportunity to move Angola's banks closer 
to international standards.  That, in turn, should encourage banks 
to provide more credit to the non-petroleum sector.  Embassy 
believes that the USG should take advantage of Angola's willingness 
to engage more broadly with the international community.  In reftel 
A, the BNA requested technical assistance from the USG for managing 
the money supply and for combating money laundering and 
counterfeiting.  Accepting the BNA's invitation would give the USG a 
role in modernizing Angola's financial sector.  Improved capacity 
for Angola's banks will also help U.S. corporations as Angola is 
expected soon to phase in a requirement for oil companies to deposit 
their operating budget in Angolan banks at the beginning of each 
calendar year.  Post requests that the U.S. Treasury respond 
positively to our request for technical assistance. 
EFIRD