WITH INCREASING POLITICAL STABILITY, THE ANGOLAN GOVERNMENT IS UNDERTAKING BROAD REFORMS TO STABILIZE THE ECONOMY AND WITH A DRASTIC DROP IN INFLATION AND A RISE IN GDP, THE CLIMATE IS ATTRACTIVE FOR INVESTORS. IN THIS SECOND SPECIAL REPORT ON THE COUNTRY, WE FOCUS ON THE CURRENT ECONOMIC SITUATION AND TAKE A DETAILED LOOK AT FIVE OF ANGOLA'S 18 PROVINCES

While certainly within its grasp, Angola's dream of lasting peace that began with the signing of the Lusaka Protocol of November 1994 has been interrupted on and off by nagging disputes over power sharing between the current democratically-elected government of President José Eduardo dos Santos and the National Union for the Total Independence of Angola (UNITA) rebels led by Jonas Savimbi.
UNITA became the target of strict United Nations sanctions after Savimbi, while at first agreeing to peace, refused to take part in a government of national unity and reconciliation that was to emerge from a U.N. Security Council resolution, instead continuing with sporadic guerrilla warfare that became an economic drain and threatened to split the very nation he had hoped to unite.

Although the Angolan Army has made substantial military gains in its key oil and diamond-producing regions, it still has to gain undisputed control over the whole country.
The respite from all-out war has allowed the government in Luanda, which claims to have control over 90% of the territory, to get back to business and rebuild the country while struggling to meet the end-of-year deadline of International Monetary Fund-backed (IMF) economic reform programs that would provide a much-needed IMF lending package.
Even though Angola itself set the deadline, many feel that the IMF, which has come under fire in recent years for its stringent lending practices to Third World nations, set unreasonably high targets for a country like Angola, whose economy had been decimated by war since independence from Portugal in 1975.

All economic indicators in Angola are moving in the right direction

Those targets included bringing yearly inflation down to 75% by the end of 2001, reducing state spending, establishing greater transparency in public accounting, ending extra-budgetary expenditures, completing an audit of the oil sector, expanding investment in infrastructure, liberalizing foreign trade, accelerating privatizations, adjusting tariffs and revising tax laws.
Progress on these issues has stabilized the country's economy and all economic indicators in Angola are moving in the right direction, with GDP rising and inflation falling.
Statistics from Angola's central bank indicate that inflation has fallen from over 3,000% in 1999 to 305% in September 2000, to 126% by September 2001. By the end of 2001 it is expected to be in double digits, but still too high to meet the 75% target. By the end of 2002 inflation is expected to fall to 50%.
Central bank governor Aguinaldo Jaime is confident that the inflation target can be met during the first half of 2002, and so he is seeking "a certain degree of flexibility".

"We are implementing this program in adverse conditions," explains Mr. Jaime. "Fighting is not over, the transport system is still disrupted. We don’t have entire circulation of people and goods. My hope is that the political will to move ahead on the government’s part will be acknowledged, and if the international community shows a degree of flexibility and the measures, as we are implementing, go ahead, I think we can move on to the next stage."

And there are many reasons to be optimistic about Angola's future. Nearly one-fifth of all U.S. imports from sub-Saharan Africa come from Angola. The U.S. imports more oil from Angola (sub-Saharan Africa's second-largest oil producer and third in the world in new oil discoveries) than it does from Kuwait. Angola also has more untapped diamond-bearing kimberlite pipes than any other country in the world.
As Angola's economic reforms take hold, foreign investors are finding endless business opportunities in the energy, mining, telecommunications, manufacturing, agriculture and fishing sectors, which depicts a positive future if this country is given the chance to develop it deserves.