Slump sends Africa to IMF

Lesotho Times - - Business -

JO­HAN­NES­BURG — Fall­ing com­mod­ity prices have pushed sev­eral African coun­tries back into the em­brace of the In­ter­na­tional Mon­e­tary Fund (IMF), which has an op­por­tu­nity to push for re­forms and in­ject trans­parency into opaque economies.

Top of the list is An­gola, Africa’s sec­ond-big­gest crude pro­ducer and third largest econ­omy, which has not bor­rowed from the IMF since 2009 and just a few years ago had the fund all but turn­ing a blind eye to miss­ing bil­lions.

It is hardly alone, with de­pressed prices for com­modi­ties rang­ing from oil to cop­per sap­ping the bud­gets of African govern­ments and send­ing them to the IMF, the “lender of last re­sort” that typ­i­cally im­poses tough con­di­tions for as­sis­tance.gas-rich Mozam­bique and gold and oil pro­ducer Ghana, hard hit by the sour com­mod­ity cy­cle, both inked fi­nan­cial ar­range­ments with the IMF in 2015, their first in six years, ac­cord­ing to the fund’s web­site.

Ghana’s was a three-year, $918m as­sis­tance deal signed as its fis­cal and cur­rent ac­count deficits bal­’s sec­ond-largest cop­per pro­ducer, Zam­bia, started talks in March on an aid pro­gramme. Lusaka last signed a fi­nan­cial ar­range­ment with the IMF in 2008.SA may also be forced to turn to the IMF if the country’s credit rat­ing is down- graded to junk.

China this week of­fered Nige­ria a loan of $6bn to fund in­fras­truc­ture projects but Africa’s top oil pro­ducer is ex­pected to also seek as­sis­tance from the IMF for the first time in al­most two decades.

An­gola oil blues A lot of the at­ten­tion is fo­cused on An­gola, which re­lies on oil for more than 95% of for­eign rev­enue and is em­blem­atic of the IMF’S in­volve­ment in the re­gion.

“The IMF should use the lever­age it has to ex­tract se­ri­ous con­ces­sions and tan­gi­ble re­forms from the govern­ment. The last time ( be­tween 2009 and 2012) it merely gave this au­thor­i­tar­ian govern­ment a free ride with­out any quid pro quo,” said Ri­cardo Soares de Oliveira, an An­gola ex­pert at Ox­ford Univer­sity.a 2011 IMF staff re­port found that $32bn, equal to 25% of gross do­mes­tic prod­uct (GDP), could not be ac­counted for be­tween 2007 and 2010, but barely chided the govern­ment.

“Bear­ing in mind the scale of the rev­enues that An­gola has re­ceived in the 14 years since the end of its civil war, we are prob­a­bly talk­ing about half a tril­lion dol­lars. The IMF should be very cau­tious about who it lends money to and un­der what terms,” Mr Soares de Oliveira said.

An­gola, which opened talks with the IMF this week, has said it will work with the fund on re­forms aimed at im­prov­ing fis­cal dis­ci­pline, sim­pli­fy­ing taxes and in­creas­ing pub­lic fi­nance trans­parency.

Fi­nance Min­is­ter Ar­mando Manuel said last week that An­gola was not seek­ing a res­cue pack­age from the IMF but the fund said in a state­ment that it could lead to a three­year ex­tended fund fa­cil­ity, a life­line for economies with se­ri­ous bal­ance of pay­ments prob­lems.

An ex­tended fund fa­cil­ity is sig­nif­i­cantly dif­fer­ent to the standby ar­range­ment Luanda signed up for in 2009 as it has a stronger fo­cus on struc­tural re­forms and could force An­gola to be­gin clean­ing up its act. — Reuters

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