BLESSED WITH UNTOLD QUANTITIES OF PETROLEUM, DIAMONDS AND OTHER MINERAL RESOURCES, ANGOLA IS COUNTING ON FOREIGN INVESTMENT AND NEW-FOUND POLITICAL STABILITY TO FOSTER ECONOMIC RECOVERY. IN PART ONE OF THIS REPORT, THE FOCUS IS ON THE COUNTRY'S EFFORTS TO REBUILD AN URBAN AND TELECOMMUNICATIONS INFRASTRUCTURE IN DIRE NEED OF REHABILITATION

AS PEACE becomes more prevalent in the country, Angolans are awakening to the fact that the country's oil and mineral wealth provides not only a short-term safety net, but also serves as the corner-stone for future prosperity and sustained growth. A good deal of the country's hope for the future is based on the fact that Angola is sub-Saharan Africa's largest oil producer after Nigeria and one of the top ten suppliers of quality low-sulfur crude to the United States, which imports Nearly half of all the petroleum Angola can pump.

That optimism has been Fuelled further by there cent military gains that have wrested control of the country's diamond mining areas from UNITA rebels. Having a hold over both the mineral and oil sectors puts the government in a position to make development plans safe in the knowledge that it will get the job done. After checking off a long list of Angolan provinces that are now in government hands, Minister of Territorial Administration Fernando Faustino Muteka looks up from his map with the expression of a man who is ready to get down to business.

"We need tore build bridges, roads and railways to extend our transportation and power systems to various important zones in order to launch the reconstruction and development of Angola now that security conditions Are being guaranteed, "he notes, adding that entrepreneurs from the United States, South Africa and France have shown a willingness to aid in the task. "We are also developing a program aimed at restoring health and education services. We want to provide private companies with qualified people so they can develop their activities," Mr. Muteka explains. Training, he says, will begin with officials at the provincial level through the newly created Administration Cadres Training Institute, which will host a series of workshops to teach governors modern planning and financial management skills. "We have changed the way the provincial government works," Mr. Muteka says

. "Financial management at the provincial level has already been decentralized and we are working at the municipal level to make sure the budget is well managed. The provincial government will then report on how the funds have been allocated to a wide range of development tasks." And as the conflict fades, Development funds become More readily available from the oil and gas sector while production increases under the guidance of Petroleum Minister José Maria Botelho de Vasconcelos. Energy giants like Chevron, Texaco, and Total Fina Elf have been operating in the country for years through licenses awarded by Sonangol,the state oil monopoly.

Last year Sonangol (which is featured later on in this report) lined up nearly US$20billion in foreign oil investment through the year 2004. Those revenues will help realize Mr. Botelho de Vasconcelos' ambitious development plans for both upstream and downstream operations. "We produce, but we also need to refine more and increase exports, "he says. Projects currently underway at his ministry include a three- year plan to extend the use of natural gas throughout the country, in- crease refining capacity by 200,000 barrels per day and integrate Angolan businessmen into the oil sector "because ultimately this sector is the basis for our development," Mr. Botelhode Vasconcelos notes. "But we have always been open to all companies. If you look at the range of oil companies here, not only the larger ones but also the service providers, you will see that most are from the U.S. Any company that wishes to come will be made to feel welcome."

IMF AND WORLD BANK BACK DEVELOPMENT PLANS

ANGOLA'S programs aimed at creating sustainable development and eliminating external debt pressure while improving the standard of living of its citizens have received praise and direct support from multi-lateral lending institutions like the International Monetary Fund (IMF) and the World Bank.

An agreement signed last year between the Angolan government and the IMF will accelerate reforms in place since 1999 and create a foundation for improved social conditions. IMF directors returning from a recent consultation mission in Angola said they welcomed the reform program's focus on the reorientation of public spending towards key social sectors and infrastructure. They also praised the improved transparency within the public sector and government measures to audit the oil sector, the National Bank of Angola and the diamond sector.

Notably, the government will include all receipts in the national budget to guarantee a transparent fiscal analysis. Continued adherence to macroeconomic reform policies will clear the way for further IMF credits and secure international backing for rescheduling some of the c o u n t r y' s US$12-billion foreign debt. The World Bank, meanwhile, has four active projects totalling US$83 million in Angola via the International Development Association.

The most recent was a US$33 million Social Action Fund credit, which will support the government's efforts to facilitate the social and economic recovery of communities while restoring basic social and economic projects for those affected by the civil war.