WASHINGTON, April 17 (Reuters) - Angola is seeking a budget support loan from the African Development Bank, its finance minister told Reuters, as the government pushes to shield vulnerable citizens from the fallout from the war in the Middle East and manage debt costs. 

The country is in talks with the AfDB for $165 million and is considering tapping bilateral lending and international markets for the remaining roughly $1 billion in external financing Angola is targeting this year.

"This is a work in progress," Finance Minister Vera Daves de Sousa told Reuters about the AfDB loan on the sidelines of the IMF and World Bank spring meetings in Washington. 

The loan, she said, would require policy measures that Angola is still working to implement before it can go to the AfDB board for approval. She did not give an indication of when this would happen.

The West African oil-producing nation will get a windfall from higher crude prices due to the war. Its 2026 budget used a reference price of $61 per barrel, but Brent crude is currently trading at just under $100. [O/R]

DEBT COSTS

Debt payments consumed almost half of Angola's initial 2026 budget projections and the government has been working to lower this cost. 

The country, though, was not currently seeking an IMF lending programme. 

"We stand ready if needed. But for now, that decision was not made," Daves de Sousa said. 

The government is instead receiving technical assistance from the Fund to improve tax revenue, analyse expenditures and determine other necessary reforms.

Last month, the World Bank signed off on a guarantee for a "debt-for-education" swap that the government is seeking to pay for new schools. Daves de Sousa said it aims to complete the swap by June. 

Angola has secured $2.9 billion of the $3.8 billion it is seeking in external funding this year, she said. The remainder could come from bilateral lending and international markets, though the government is reviewing revenue expectations to see if it could borrow less. 

OIL SHIELDS GROWTH FROM DOWNGRADE

Daves de Sousa said this year's economic growth could remain at the forecast level of around 4% as expansion in the oil sector outweighed a slowdown elsewhere due to turmoil from the war, with central bank officials expected to release revised projections in coming days. 

"We are working on scenarios, looking at mitigation measures," Daves de Sousa said. "We are an oil exporting country, we expect to see some windfall and to see how we can use that windfall to speed up some expenditures that are beneficial to our citizens."

The country has scaled back fuel subsidies, and removed them entirely for jet fuel, but is still considering the best moment to further reduce them.

(Reporting by Libby George, editing by Karin Strohecker, Kirsten Donovan)

By Libby George