May 10, 2012

Government explains whereabouts of billions of missing funds

Government has provided information on $27.2 billion of an accounting discrepancy in public funds linked to state-owned oil firm Sonangol. However, it had yet to account for another $4.2 billion, the IMF said in a staff report. Accordingly, government denied the funds were missing. It said the problem was due to insufficient record keeping of Sonangol spending on housing, railways and other infrastructure. These operations were financed by Sonangol retaining oil revenues due to the budget, but were not properly recorded in fiscal accounts, the government says. "So far, the authorities have identified $27.2 billion of the total residual of $31.4 billion. This leaves an amount of US$4.2 billion still to be explained," the IMF said.

The discrepancy represents around 25 percent of Angola's gross domestic product in 2011. The IMF had highlighted the discrepancy in Angola's fiscal accounts for 2007-10 in an Oct. 27 report on the country's economic performance. Presented to the IMF board after a final review of Angola's performance under a loan agreement in March, the staff report said the discrepancy in public funds was caused by spending by Sonangol on behalf of the state that was not recorded in fiscal accounts.

Human rights groups have urged the government to give a full explanation of the discrepancy. "The authorities and staff remain committed to continue the reconciliation of fiscal accounts until a full understanding of the relevant transactions is achieved," the IMF added. The IMF board last month approved the release of a final loan disbursement to Angola under the country's $1.4 billion loan agreement made in 2009. The staff report praised the government's macroeconomic policies and reform efforts but urged it to continue building a buffer of foreign exchange reserves to shield the economy from external risks such as the eurozone debt crisis and possible oil price drops. (Angop / Sadocc)


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