March 28, 2012 / 10:36 PM / in 6 years

UPDATE 1-IMF approves final Angola loan tranche

* IMF approves final loan tranche to Angola

* Rights groups urged IMF to block due to “missing funds”

* Oct IMF report asked gov’t to explain $32 bln discrepancy (Recasts with IMF decision)

By Shrikesh Laxmidas

LUANDA, March 28 (Reuters) - The International Monetary Fund on Wednesday approved the release of a final loan disbursement to Angola under the country’s $1.4 billion loan agreement made in 2009.

The IMF said it would immediately disburse $132.9 million to Angolan authorities and waived performance targets linked to international reserves and central bank credit.

Earlier, rights groups wrote to IMF Managing Director Christine Lagarde urging the IMF’s executive board to withhold the final tranche until the Angolan government improved transparency on how it uses public funds. They also urged the government explain a $32 billion discrepancy in public funds thought to be linked to the state oil company, Sonangol.

Min Zhu, IMF deputy managing director, said Angola had taken measures to improve its accountability in public spending and oil profit transfers. With technical assistance from the IMF, he said Angola was working on a fiscal framework to improve the management of oil revenues.

“Looking ahead, the authorities recognise the need to sustain the reform momentum, continue to improve governance and transparency, and enhance the business environment to lay the foundations for economic diversification and inclusive growth,” Zhu added.

Africa’s second-largest oil producer after Nigeria, Angola was forced to turn to the IMF for a loan in 2009 during a balance of payments crisis caused by a slump in crude prices in the second half of the previous year.

The IMF has mostly praised Angola’s efforts during the program, especially on monetary policy that has curbed inflation, boosted foreign exchange reserves and kept the kwanza currency stable.

A report published by the fund in October raised alarm, saying it had identified a discrepancy of $32 billion in government funds thought to be linked to Sonangol and spent or transferred from 2007-10.

Angolan Finance Minister Carlos Alberto Lopes did not comment on the issue when he spoke to reporters on Wednesday. The Angolan government has denied the funds are missing and said the discrepancy resulted from insufficient record keeping.

After the fund’s review mission in January, the IMF said it expects the government to be able to explain a large part of the discrepancy as it relates to operations undertaken by Sonangol for the government, financed out of oil revenues but not recorded in budgetary accounts.

President Jose Eduardo dos Santos’ government has long been accused of mismanaging the country’s oil revenues and doing too little to fight widespread graft and poverty.

New-York based Human Rights Watch urged the government to explain the missing funds, which it said should have been used to benefit millions or Angolans.

“We firmly believe that disbursing the remaining funds ... would send the message that the IMF is willing to provide substantial financing to the government of Angola even though it has not adequately accounted for tens of billions of dollars in public funds,” it said in the letter to Lagarde. (Additional reporting by Lesley Wroughton in Washington. Editing by Gary Crosse and Dan Grebler)

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