nngu007
JF-Expert Member
- Aug 2, 2010
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| Thursday, 26 January 2012 21:58 |
WITH AN EAGLE'S EYE A pragmatic racist once commented that hardly can anything good come out of Africa. He was probably right. Angola, which recently offered Portugal a bail-out package heedlessly, is now in the middle of a $32 billion accounting scandal.Before pouring more details let me zero-in on this amount from an African context. This $32 billion, not million, is slightly more than four times the current budget of the government of the United Republic of Tanzania, which is less than $8 billion. The same amount is equivalent to 25 per cent of Angola's Gross Domestic Product (GDP) based on Purchasing Power Parity (PPP), or half of Kenya's GDP. From another perspective, $32 billion is more than 60 times the amount of the loan the International Monetary Fund (IMF) authorized for Kenya in February 2011, which was $508 million. Speaking of Angola, this is slightly more than the government expenditure in 2010, which was $29.5 billion. Luckily though, in 2010 the country enjoyed a budget surplus of 7.1 per cent of its GDP, meaning its budget does not depend on donors. Where did this money come from? Angola exports 1.8 million barrels of oil per day. Interestingly, if a barrel of oil sells for $100, Angola makes $180 million a day. However, an estimated two-thirds of its population of 18 million lives on less than $2 a day. What a paradox? So, who caught them? In 2009 the Angolan government begged for assistance from the IMF and got a deal called a stand-by- agreement which granted Luanda a loan of $1.4 billion to stabilize its balance of payments following an abrupt drop in net foreign reserves from the previous year. That pact opened doors for IMF officials to scrutinize Luanda. So last year the officials discovered something weird, and this month they made it public. The scandal originates from the state oil firm, Sonangol, now dubbed the "quasi-fiscal operations manager" of the government. This amount is the missing funds in Angola's fiscal accounts for year 2007 to 2010. According to Reuters, the IMF said this: "Preliminary data indicate that quasi-fiscal operations undertaken by the state oil company on behalf of the government, financed out of oil revenues but not recorded in the budgetary accounts, can explain a large part of the discrepancy." The Guardian of London said last year that Sonangol runs almost everything in the Angola's economy and noted that back in 2001 when British Petroleum (BP) attempted to publish its oil-related earnings from Angola, President Eduardo dos Santos threatened to expel the oil giant so BP kept quiet. So what is next? The IMF says that the government of Angola will cooperate in the investigation although its officials deny any wrong doing. But Angola's Minister for the Economy, Abrahao Gourgel, has already said the government will not request a new IMF loan when the current agreement expires at the end of the year. Why say that now? That is what Africa's second-largest oil producer is doing. This could easily be another example of the so-called resources curse. Angola's oil revenues represent over 95 per cent of the country's export income and around 45 per cent of GDP but can't even pay down its debt of about $18 billion. Now look at this funny story. In November 2011, Angola News Agency, ANGOP, reported that when Portuguese Prime Minister, Pedro Passos Coelho, toured Angola, President Dos Santos told the press: "We're aware of the difficulties the Portuguese people have faced recently and in such difficult times we must use our trump cards." This is the leader of an under-developed country speaking before his people, completely out of touch with reality. President Santos, whose children are filthy rich, has no idea that many Angolans go to bed hungry on earthen floors. Records show that only 25 per cent of Angolan children are enrolled in primary school and here is their leader promising to bail out an irresponsible country. According to New York-based Mercer Consultants, Luanda is ranked as the most expensive capital city in the world for the second year consecutively. Portugal, under pressure from the IMF wants to dump companies such as the state utility company, Energias de Portugal, the national airline Transportes Aéreos Portugueses, and the distressed bank, Banco Português de Negócios. Guess who is planning to buy them? Banco BIC of Angola, which is part owned by Dos Santos's 38-year-old daughter, Isabel. Isabel, who is worth a minimum of $170 million according to Forbes magazine, is considered to be perhaps Africa's richest woman with numerous business interests in Angola and Europe. How did she become so wealthy? This is Angola, a country that fought a 25-year civil war soon after its independence, practically an unfortunate proxy-war between the West and the East. Why does Angola still want to carry such a disappointing story? What is wrong with Africa? Mr Matinyi is a consultant based in Washington, DC |
