Contents -- Preface -- Acronyms and Abbreviations -- Prefácio -- Sumário Executivo -- Executive Summary -- Introduction -- 1. Country Background: Socio-Economic Realities Before and After Independence -- Socio-Geographic Characteristics -- Living Standards Indicators -- The Transition to Independence -- Policy Choices and Structural Changes -- 2. Macroeconomic Performance in a Time of Transitions -- The Transition to a Market Economy -- More Revenues and Less Inflation -- The Tensions of Transition -- 3. Oil Wealth: Policy Options to Manage the Windfall -- The Characteristics of the Petroleum Sector -- The Legal Framework Governing the Sector -- Governance, Transparency and Institutional Capacity -- Oil Wealth: How Much and for How Long? -- Intergenerational Considerations -- Policy Options To Manage the Windfall -- 4. The Diamond Sector: A Potential Underexploited -- The Characteristics of the Diamond Sector -- Governance: Opaque and Unstable Legislation -- The Business Environment: Not Competitive Enough -- A Three-Pronged Strategy to Unleash the Potential of The Sector -- 5. Private Sector Development and the Business Environment -- The Private Sector in Angola -- Trade Patterns and Regional Integration -- Recent Actions to Improve the Business Environment -- The Way Forward -- 6. Removing Obstacles to Agriculture and Rural Development -- A Sector Facing Daunting Challenges -- Removing Obstacles to Output Growth -- Stimulating Competitiveness through Better Incentives -- Annex I -- Annex II -- 7. Supporting Livelihoods and Improving Service Delivery -- Supporting Livelihood Strategies -- Strengthening Existing Social Programs -- Reaching the Poor with Social Services -- Using Fiscal Savings to Improve Service Delivery -- Statistical Appendix -- References -- Map of Angola -- Endpiece -- LIST OF TABLES.

E.1 A Scorecard to Assess Governance and Transparency in the Oil Sector -- E.2 Summary of Diagnostics and Recommendations -- 1.1 Basic Poverty and Social Indicators -- 1.2 Composition of GDP by Sector, 1966-2004 -- 2.1 Macroeconomic Stabilization Programs Adopted between 1989 and 2000 -- 2.2 Macroeconomic Framework, 2003-07 -- 2.3 International Experiences on Macroeconomic Stabilization Programs -- 3.1 Unit Cost Comparisons for Selected Countries -- 3.2 Fiscal Terms for Petroleum Exploration Contracts in Angola -- 3.3 Sonangol Tax and Profit Oil Liabilities to the Government of Angola -- 3.4 A Scorecard to Assess Governance and Transparency in the Oil Sector -- 3.5 Angola's Petroleum Wealth under Different Price Scenarios -- 3.6 Gross Revenue Scenarios -- 3.7 Total Governance Revenues -- 3.8 Permanent Expenditure Per Capita at Different Assumptions -- 4.1 Fiscal Regimes for Diamond Mining -- 5.1 Government Policies and Behaviors and Investment Decisions -- 5.2 SADC Infrastructure Indicators -- 5.3 Trends in Merchandize Trade -- 5.4 Destination of Angolan Exports (percent) -- 5.5 Sources of Imports (percent) -- 6.1 Production of Selected Farm Products (1961-2003) -- 6.2 Comparative Yields for Key Crops, 2003 -- 7.1 Public Services According to their Perceived Importance (1 = Maximal -- 7 = Minimal -- %) -- 7.2 Satisfaction Rates with Public Services (1 = Maximal -- 7 = Minimal -- %) -- LIST OF FIGURES -- E.1 Association between Resource Concentration and Conflicts -- E.2 Curbing Inflation (Angola: Year on Year Inflation Rate) -- E.3 Government Revenues from Oil under Different Price Scenarios and in the Absence of New Discoveries -- 1.1 Gini Coefficients-Angola and Oil Producing Countries -- 1.2 Evolution of Angola's Real GDP Per Capita, 1960-2004 -- 1.3 Composition of Domestic Expenditure, 1960-2004.

1.4 Total Government Expenditure as a Percent of GDP for Selected Countries -- 2.1 A Snapshot of Inflation and Dollarization -- 2.2 Progress in Macroeconomic Indicators -- 2.3 Curbing Inflation -- 2.4 Foreign Exchange Interventions -- 2.5 Tradable and Nontradable In .ation Rates -- 2.6 Angola-Gross International Reserves -- 2.7 Association between Resource Concentration and Conflict -- 3.1 Oil Reserves: Selected Countries -- 3.2 Angola Oil Production -- 3.3 Total Costs for Selected Project -- 3.4 Comparison of Government Take in Selected Countries -- 3.5 Brent North Sea Oil Price Scenario -- 3.6 Gross Revenue Scenarios -- 3.7 Government Revenue Scenarios -- 3.8 Sonangol Revenues -- 3.9 Sonangol Expenditures -- 3.10 Permanent Expenditure Per Capita -- 4.1 Angola's Official Diamond Exports -- 4.2 Diamond Tax Revenues (1995-2004) -- 5.1 Importance of Informal Employment in the Urban Economy -- 5.2 Breakdown of Applied MFN Duties, 2005 -- 5.3 Governance and Transparency -- 6.1 Estimated Historical Production of Major Crops, (1961-2003) -- 7.1 Annual Expenditures Per Capita in Education by Provinces -- 7.2 Annual Per Capita Expenditure in Health -- LIST OF BOXES -- E.1 Elements of a Revenue Management Framework for Angola -- 3.1 Petroleum Sector Data -- 3.2 Legal and Contractual Framework -- 3.3 The Petroleum Tax Cycle in Angola -- 3.4 The Paradox and Plenty and the Case of Angola -- 3.5 The Quality of Angolan Crude Oil -- 3.6 Elements of a Revenue Management Framework for Angola -- 4.1 Certificates of Origin and the Kimberley Process -- 4.2 The International Experience on Regulating Diamond Production -- 4.3 Corporate Social Responsibility in the Diamond Sector -- 4.4 Time Frame and Actions for Diamond Sector Reform and Development -- 5.1 A Scorecard for Tackling Governance and Corruption -- 6.1 Decentralization Matters: The Mozambican "Proagri".

6.2 Shrinking State Intervention and Soaring Productivity-The Case of Brazil -- 7.1 Existing National Programs Addressing PRS Objectives.