Tuesday, October 14, 2008

Angola Government to Embrace Bold Spending Agenda

Angola government to embrace bold spending agenda

Tue 14 Oct 2008, 9:30 GMT
By Henrique Almeida

LUANDA, Oct 14 (Reuters) - Angola's ruling MPLA, flush from a landslide victory in a parliamentary poll, will set out an ambitious plan on Wednesday to lift millions out of poverty and spur continued economic growth in the oil-rich African nation.

The MPLA (Movement for the Popular Liberation of Angola), in power since independence from Portugal in 1975, won 191 of the 220 seats in a September poll, the first since the end of a 27-year civil war in 2002.

The main opposition UNITA party will hold 16 seats when parliament convenes on Wednesday.

Investors expect the new government to continue with the pro-business policies that many credit for an oil-fueled boom that has made the southwestern African nation one of the fastest growing economies in the world.

Angola's economy grew by 20 percent last year. The World Bank has forecast that growth will be between 15 and 18 percent this year.

"They are business friendly," said a foreign businessmen whose company has invested almost $1 billion in Angola.

"I think this government has people with the experience and the knowledge to contribute to the rapid development of the country," he said on condition of anonymity.

But there is growing pressure on President Jose Eduardo dos Santos and his ministers to deliver on their promises to improve the lives of Angola's 16.5 million people, many of whom live in squalid shantytowns without running water or electricity.

Most of the population earns less than $2 a day, hardly enough to afford a handful of bread rolls.

A meal at one of Luanda's fashionable restaurants, where a dish of grilled prawns can cost an average worker about a week's wages, is an inconceivable luxury for all but a small elite connected to the government and state-run corporations.

Dos Santos, a former Marxist who has ruled since 1979, has acknowledged that more needed to be done to tackle the glaring social problems.

In a speech earlier this month, the Angolan leader said the battle against hunger and poverty was a top priority.

His government has announced it will build one million new homes for the poor at a cost of $50 billion during the next four years. Parliament will vote on the 2009 budget on Oct. 31.


Buoyed by rising oil production and billions in foreign investment, much of it from China, Angola is largely immune from the impact of the global credit crunch and has the cash to fund new spending.

But there could be a backlash if the government drags its feet on the pledge to raise living standards, as it has been accused of doing in the past by the opposition.

"The MPLA should not become complacent on their victory," said Alex Vines, the head of London-based think-tank Chatham House's Africa programme.

"Angolans seek accountability of their leaders and President dos Santos is right in that there needs to be better delivery in combating poverty."

There are also concerns that the size of the MPLA majority will allow the party to steamroll over a token opposition, damaging the fragile democracy and leading to a weakening of the judiciary and other institutions.

The ruling party already has announced that it intends to change the constitution but it has not spelled out what changes are in the offing. There is speculation that the powers of the presidency will be strengthened.

"The political climate gives the MPLA a chance to reform and implement new legislation virtually unchallenged," said Fernando Macedo, a law professor and political analyst at Luanda's Lusiada University.

"However, it will also make the newly-elected government totally responsible for any shortfalls during the four-year mandate."

Dos Santos is expected to run in a presidential election in 2009.

(Editing by Paul Simao and Angus MacSwan)

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