FISCAL TRANSPARENCY - ANGOLA INPUT

UNCLAS LUANDA 000206

SIPDIS

SENSITIVE
SIPDIS

FOR AF/S, EEB/IFD/OMA (SNOW AND FIGUEROA),AF/EPS (BRIETER
AND REPKO)
NSC FOR LEO AND PITTMAN

E.O. 12958: N/A
TAGS: EAID EFIN ECON PREL AO
SUBJECT: FISCAL TRANSPARENCY - ANGOLA INPUT

REF: STATE 16737


1. The Government of Angola (GRA) makes its budget public on
the Ministry of Finance website about two months after its
approval by the National Assembly. Individual schedules
break down expenditures by ministry, program and province,
and public works projects. Budget documents have grown more
detailed from year to year, but the 2006, 2007 and 2008
budgets still place a substantial portion of expenditures
under vague headings like "administrative costs." The
government has been implementing a government-wide accounting
system (SIGFE, Sistema Integrado para a Gestao das Financas
do Estado),but has no system to verify proper execution of
planned expenditures. The Court of Accounts (Tribunal de
Contas) reviews cases of official financial misconduct, but
the published case load shows few convictions. Weak internal
controls reflect both a lack of capacity and a lack of will.
Individual officials profit from weak controls. Few
government officials have university degrees and the
government conducts little training. Private sector
companies also have difficulties in hiring competent managers.


2. Most GRA revenues come from petroleum royalties and taxes
on the petroleum sector. Sonangol, the national oil company,
is also the industry regulator. It collects revenues
directly from petroleum companies but does not publish the
amounts it receives. It is audited annually, but holds the
results closely. The 2006 bidding round for oil concessions
was the most transparent in Angola's history. A new round is
due to conclude in early April.


3. The USG supports a fiscal programming unit in the
Ministry of Finance and has provided training to the national
Bank of Angola (BNA) to improve oversight of the financial
sector. Although the BNA accepted the offer of an advisor
from Treasury's Office of Technical Assistance, we have not
yet been able to offer an advisor because Treasury was unable
to commit resources to the program. The European Union and
the World Bank are also working with Finance and BNA, which
have shown strong interest in raising the quality of public
finance in Angola. In 2007, the Government of Angola
announced that it would not enter into a formal program with
the International Monetary Fund, but did agree to continue
Article IV consultations with the IMF.
MOZENA