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Cablegate: Finance Minister Requests U.S Department Of

P 141139Z NOV 08
FM AMEMBASSY LUANDA
TO SECSTATE WASHDC PRIORITY 5165
INFO SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
DEPT OF TREASURY WASHDC

UNCLAS LUANDA 000907


E.O. 12958: N/A
TAGS: EFIN EAID ECON AO
SUBJECT: FINANCE MINISTER REQUESTS U.S DEPARTMENT OF
TREASURY ASSISTANCE IN THREE KEY AREAS

REF: LUANDA 532

1. Summary: Angola's new Finance Minister made a strong push
for the placement of a U.S. Treasury Resident Advisor in
Luanda. The Minister told the Ambassador the GRA requires
urgent technical assistance with tax reform, budgeting, and
debt management. End Summary.

2. During a November 6 call by Ambassador Mozena, newly
installed Finance Minister Eduardo Severim de Morias (no
relation to his predecessor with the same surname) made a
strong push for the placement of a U.S. Treasury Resident
Advisor in Luanda. De Morais said the GRA urgently needs
assistance in three key areas: comprehensive tax reform,
budgeting, and debt management. The Minister told the
Ambassador the GRA would welcome the visit of a U.S. Treasury
team later this year or early next to evaluate the
possibility of placing a Resident Advisor here. A visit in
January would enable the Treasury team to observe Angola's
IMF Article IV review as well, he added.

3. De Morais explained that Angola's tax code is based on a
series of antiquated rules and regulations dating back to
colonial times. He said taxes are hard to calculate,
collect, and pay. In 2009, de Morais said a fiscal reform
committee including representatives of the Ministry of
Finance, the Central Bank, and civil society (representing
taxpayers) will review the possibilities of a new revenue
system to tax assets, income, and/or the value added on goods
and services. De Morais added that tax offices must be
rebuilt and agents must be trained to enforce the new code.
He said the GRA plans to introduce tax reform legislation by
the end of 2009. De Morais envisioned a Resident Advisor
playing an important role in this tax reform effort.

4. De Morais told the Ambassador that GRA officials lack
adequate training in the preparation and execution of
budgets. He said the problem is pervasive across all levels
of government, and it affects Angola's ability to efficiently
spend public funds. As the GRA expands its decentralization
program through the allocation of USD 5 million to each of
Angola's municipalities, de Morais said training of local
officials on budget preparation, implementation, and
monitoring is an urgent need.

5. As Angola's economy rapidly expands, de Morais said,
efficient, effective, and transparent debt management is a
key firewall against inflation. Expanding debt management
expertise among Ministry officials is an urgent short term
goal, according to the Minister. De Morais expressed concern
that regional training resources for mid-senior level
officials are conducted in English. The Minister said Angola
is considering participation with Portugal and Brazil in the
creation of a Portuguese language version of the
Macroeconomic Financing Institute of Eastern and Southern
Africa.

6. De Morais raised the issue of expanding English training
for GRA officials. He said Angola needs more English
speakers, and that the training should begin as early as
possible. He was very supportive of the Ambassador's
suggestion that Peace Corps volunteers could be deployed to
Angola to expand English language instruction to secondary
schools, this helping to strengthen English at the foundation
level.

7. Comment: De Morais presented a strong case describing the
needs of his ministry that could be addressed by a U.S.
Department of Treasury Resident Advisor. His special
invitation for a USG team to observe the IMF consultations in
January is a clear indication of the GRA's commitment to
expanding our bilateral relationship in this key strategic
area.


MOZENA

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