Slump sends Africa to IMF
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 ballooned.africa’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