20091218

WASHINGTON (Reuters) - Narrowing Angola's non-oil related fiscal deficit in Angola will help the southern African country tame rampant inflation and ease the burden on monetary policy, the International Monetary Fund said on Thursday.

IMF Deputy Managing Director Takatoshi Kato said in a statement at the end of a visit to Luanda that such measures would also create scope for a sustainable private sector growth.

"Prudent fiscal policy that aims to reduce the non-oil primary fiscal deficit and strengthen public financial management, including through the government's Sovereign Wealth Fund should help improve the management of the oil wealth," Kato said.

The IMF last month approved a $1.4 billion loan to Angola following a commitment to increase transparency, especially in the country's oil sector.

Angola, which rivals Nigeria as Africa's biggest oil producer, is battling double-digit inflation, which the government has blamed on the country's heavy dependence on imports following a 27-year civil war that devastated its once-properous farming sector.

The IMF would also continue working with the National Bank of Angola to advance reforms in the foreign exchange market, Kato said.

"While the road ahead will invariably involve difficult choices, I look forward to rapid advances toward economic stability and public financial management which will contribute to the effective use of oil revenues," he said.

"With adequate will and effort, we will succeed in our shared goal of stabilizing the macroeconomy and laying the foundation for the development of the non-oil sector as a source of sustained growth for Angola in the years to come."