Require Detailed Explanation of $32 Billion Accounting Gap
The IMF should insist that the government account for those funds before disbursing another $130 million. Giving the government millions more in financing when it hasn’t publicly accounted for billions sends the wrong message.
(Washington, DC) – The International Monetary Fund (IMF) should withhold a scheduled $130 million loan disbursement to the government of Angola until Angolan authorities fully and publicly justify a US$32 billion discrepancy in Angola’s public accounts, Human Rights Watch and the Revenue Watch Institute said in a letter to the IMF released today.
The IMF’s executive board is scheduled to meet on March 28, 2012, in Washington, DC, to discuss the final review of Angola’s progress under a $1.4 billion 2009 loan known as a Stand-by Arrangement. The IMF had already issued most of the funds to the Angolan government when the major accounting gap for the period from 2007 to 2010 was revealed in a December 2011 IMF report.
“It is very troubling that the government of Angola spent $32 billion without properly accounting for it,” said Arvind Ganesan, business and human rights director at Human Rights Watch. “Angolan authorities need to fully and publicly explain what they did with those billions in taxpayer funds before getting another cent from the IMF.”
The IMF should continue to press the Angolan government to increase transparency and accountability regarding its use of public funds, the groups said. The IMF should require Angola to take meaningful steps to combat corruption and mismanagement, and make social spending that benefits the poor a priority.
In their letter to IMF managing director Christine Lagarde and the executive board of directors, Human Rights Watch and Revenue Watch urged the IMF not to provide further funds to Angola until it can verify that Angola’s government has:
- Clearly disclosed to the IMF and the Angolan people how and for what purpose the $32 billion was used;
- Explained why it apparently bypassed proper financial oversight processes when it spent these funds and demonstrated that the spending was in the public interest; and
- Put in place key safeguards to combat corruption and mismanagement, including in connection with the state oil company, Sonangol.
“The IMF should insist that the government account for those funds before disbursing another $130 million,” said Karin Lissakers, president of Revenue Watch. “Giving the government millions more in financing when it hasn’t publicly accounted for billions sends the wrong message.”
The Angolan government publicly acknowledged the accounting discrepancy in January, after repeated calls on it to address the matter. In a statement issued through state media, the government emphatically denied that any funds were “missing” and said that, although an investigation was under way, it believes the discrepancy “results mainly from insufficient record[s] of the uses of oil revenues.”
Human Rights Watch and Revenue Watch acknowledged that the Angolan government has taken steps to improve transparency and management of its oil sector in recent years. The $32 billion discrepancy came to light because of improved government monitoring, for example.
However, the groups said that the Angolan government’s public explanations for how it used the funds were not persuasive and that additional reforms were needed to improve public financial management practices so that Angola’s oil wealth benefits the population.
Although Angola’s government earns high oil revenues, development indicators remain low and access to social services is limited. The country ranked 148 out of 187 countries in the United Nations Human Development Index and 168 out of 182 countries in Transparency International’s Corruption Perception Index in 2011.