Angola, IMF reach understanding for loans

The International Monetary Fund has reached a preliminary deal with Angola that could lead to significant loans to help the African nation cope with a global economic downturn and lower oil prices, the IMF said on Tuesday. In a statement, IMF mission chief Lamin Leigh said the programme was designed to alleviate immediate liquidity pressures and Angola's Economy Minister Manuel Nunes Junior added that the deal would bolster the country's credibility. Angola, which rivals Nigeria as sub-Saharn Africa's biggest oil producer, has been hit by the global slowdown and lower oil prices - from last year's highs - have knocked government revenue and foreign reserves. "The programme aims to alleviate immediate liquidity pressures, boost market confidence, and restore a sustainable macroeconomic position," Leigh told reporters, adding that one of the goals of the programme was to increase transparency in Angola. "The contribution from the IMF will be significant. But we have to work out all of these details, subsequent from our mission we have to finalise these details given the large financing needs from Angola." The country could borrow up to 200% of its IMF quota, he said, or more if needs were deemed "exceptional". The quota currently stands at 286,3-million Special Drawing Rights (about $445-million). Angola and the IMF declined to give a final figure for the loans, with the preliminary agreement still to be confirmed by the fund's board. Leigh said the 27-month stand-by arrangement programme should be approved by the IMF board in November and that an IMF mission should return to Luanda in January or February to review the process. "It is centred on the authorities' objective of strengthening the public finances through an appropriately tight 2010 budget, backed by firm policies on monetary management," he said. Nunes Junior hailed the preliminary agreement as a victory for Angola and said his country could soon "benefit from the biggest loan ever granted by the IMF to a sub-Saharan nation in recent years". The deal is seen as a milestone in relations between Angola and the IMF, which has been critical in the past about the way the African nation manages and accounts for its oil revenues. The Angolan government broke off talks with the IMF in 2007 and turned to China instead for billions in oil-backed loans. But a sharp drop in oil prices has weighed on Angola's coffers, dependent on oil for nearly 90 percent of their income. Angola, which has huge development needs after a civil war that lasted for decades, has revised downwards its GDP growth forecast for 2009 to 6,2% from 11,8%. A Reuters poll last week predicted growth of just 0,4%. Angola has been trying hard to increase transparency by publishing its oil revenues online but still ranks among the world's 22 most corrupt nations in a Transparency International Index. Angola's oil revenues have been hit by low crude prices and foreign exchange reserves have plunged around 30% in the January to August period . Oil is trading at around $68 per barrel, less than half of last year's record high of over $147 per barrel.