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Cablegate: Angola - April Economic Roundup

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RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHLU #0473/01 1351233
ZNR UUUUU ZZH
R 151233Z MAY 07
FM AMEMBASSY LUANDA
TO RUEHC/SECSTATE WASHDC 3969
INFO RUCNSAD/SOUTHERN AFRICAN DEVELOPMENT COMMUNITY
RUEHTN/AMCONSUL CAPE TOWN 0327
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS SECTION 01 OF 02 LUANDA 000473

SIPDIS

SENSITIVE
SIPDIS

STATE FOR EB/ESC/IEC/ENR AND AF/S
JOHANNESBURG FOR USFCS
CAPETOWN FOR USFCS

E.O. 12958: N/A
TAGS: EFIN ENRG SENV ELAB ETRD AO
SUBJECT: ANGOLA - APRIL ECONOMIC ROUNDUP


1. (U) Table of Contents:
-- Ministry of Finance Issues Its First Long-Term Debt
-- Kyoto and Cartagena Protocols Ratified
-- New Minimum Wage
-- Luanda,s First Major Shopping Mall Opens
-- Luanda Infrastructure ) Friction vs. Traction
-- Angola-China Trade
-- Portuguese Language Labeling on All Imports
-- Italy Helps with Marble

Ministry of Finance Issues Its First Long-Term Debt
--------------------------------------------- -------
2. (U) Minister of Finance Jose Pedro de Morais signed
agreements for a USD 400 million bond issue subscribed by a
consortium of private banks. The Angola Development Bank
(BFA) the African Investment bank (BAI) and the Savings and
Loan Bank (BPC) subscribed 85 percent of the issue. Smaller
banks will subscribe the remaining 15 percent. This is the
GRA,s first issuance of long-term debt. The bonds mature in
8 to 12 years. Previously, the GRA redeemed all its debt
within one year. The bonds will be used to pay for
infrastructure in Luanda.

3. (SBU) During the signing ceremony, de Morais said the
government expects to spend USD 7 billon on its Public
Investment Program (PIP) in 2007. Comment: The 2007 budget
includes over 1500 PIP projects including clinics and village
elementary schools totaling less than de Morais, figure.
However, the discrepancy may capture the USD 2.3 billion
budgeted for housing, water and urban infrastructure. End
comment.

Kyoto and Cartagena Protocols Ratified
--------------------------------------
4. (SBU) The National Assembly has ratified the Kyoto and
Cartagena protocols and both subsequently have been published
in the official gazette, Diario da Republica. Minister of
Urbanization and Environment Diakumpuna Sita Jose said that
implementing the protocol would nudge Angola toward improving
the environment. Comment: Angolan law requires environmental
impact studies for major construction and development
projects. Depending on the nature of the project, an
environmental impact study is also a requirement for
obtaining a foreign investment license. However, the
capacity to enforce world standards is still very weak. End
Comment.

New Minimum Wage
----------------
5. (U) The Council of Ministers increased the minimum wage by
12 percent to USD 93 per month on April 27, 2007. The
increase directly affects government employees, who make up
the largest category of salaried Angolans. Since 1991,
Angola,s minimum wage has risen from 4,800 Kwanzas (Kz) to
7,420 Kz (USD 60 to USD 93 before the adjustment to the
exchange rate in May 2007). Angola,s formal salary year has
14 months, the Christmas bonus and vacation pay comprising
the additional two months.

Luanda,s First Major Shopping Mall Opens
----------------------------------------
6. (U) President Dos Santos joined other dignitaries for the
formal opening of Belas Shopping Center
(www.belasshopping.com), about four months behind schedule.
The center,s manager said the mall employs 950 people, and
predicts monthly sales of USD 20 million. A joint venture
between Brazil,s Odebrecht construction company and
Angola,s HOGI, the project, including associated commercial,
office and residential complexes, cost USD 100 million. The
new center boasts space for 100 retail outlets including an
multiplex movie theater, supermarket, several restaurants,
book store, outlets for cell phones, designer clothing stores
and more. However, many of spaces remain empty and many
shops appear not yet fully stocked. Belas management
announced plans to build a second phase of the project with
room for 50 additional stores at an undetermined date and
have advertised for a nearby luxury apartment building.
Belas is located in Luanda Sul, an upscale South Luanda
neighborhood of new million-dollar homes.

Luanda Infrastructure ) Friction vs. Traction
---------------------------------------------
7. (U) Although Angola is rebuilding its highways, traffic is
almost constantly clogged in Luanda. Headlines in the
independent weeklies clamored &Worse Than the Congo,8 and

LUANDA 00000473 002 OF 002


&Total Chaos8 of persistent traffic jams caused by bad
roads, traffic lights frequently out due to power cuts, plus
imports of 11,000 additional cars every month, most of them
remaining in Luanda.

8. (U) President Jose Eduardo dos Santos appointed a
commission under the national director for infrastructure at
the Ministry of Public Works (MOP) to coordinate public works
projects in the Luanda area. The commission,s purview
includes street repair, drainage, electricity, water,
telephone service and garbage collection projects. The road
projects are to be completed by the end of 2007.

9. (SBU) Comment: This is becoming a hot-button issue and one
which confronts most Luanda citizens on a daily basis.
Funding is not the issue behind the lack of progress, but
rather an inability to plan and execute the work. The GRA
has slated USD 1 billion from a Brazilian line of credit
(reserved for Brazilian firms) and an equal or greater amount
from the Chinese credit line to pave roads and repair bridges
Despite the readily available funding, there is lttle
evidence of any improvements, especially in Luanda. In
addition, Minister of Public Works (MOP) Higinio Carneiro
announced plans to pave an additional 8,000 kilometers of
open highway by the end of 2009. End Comment.

Angola-China Trade
------------------
10. (U) Angolan trade with China reached USD 11 billion in
2006. Citing Chinese customs figures, the President of the
Chamber of Commerce and Industry, Antonio dos Santos,
announced that over USD 10 billion of that figure was Chinese
imports of Angolan oil. Dos Santos made the announcement
during a visit to Angola by Cheong Chisang, vice president of
the Bank of China and the Macau based International Trade
Association for Portuguese-Speaking Markets.

Portuguese Language Labeling on All Imports
-------------------------------------------
11. (U) The new Commercial Activities Law requires that all
imported goods bear labels in Portuguese. Presently,
products appear in the markets in numerous languages,
including Portuguese. According to one pre-shipment
inspection company, the announcement ends the grace period
when pre-shipment inspectors could notify importers of the
pending requirement. Gomes Cardoso, the head of the Internal
Commerce Department, explained that the new law also governs
store hours and provides for a commercial census (cadastro
commercial).

Italy Helps with Marble
-----------------------
12. (U) Italy has offered to provide Angola technology to
develop and produce decorative stonework (marble and granite)
used in construction. Angola claims to have exported USD 15
million in decorative stone last year, principally from Huila
and Namibe provinces. In early April, the Italian Embassy
brought technical experts to Angola to train Angolan
manufacturers on quarrying and working ornamental stone.
FERNANDEZ

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