IMF Executive Board Completes Second and Third Reviews Under Stand-by Arrangement with Angola and Approves US$353.1 Million DisbursementPress Release No. 10/358
September 27, 2010
The Executive Board of the International Monetary Fund (IMF) approved on September 24, 2010 the second and third reviews of Angola’s performance under an economic program supported by the Stand-by Arrangement (SBA). The approval enables the disbursement of SDR 229.04 million (about US$353.1 million), bringing total disbursements under the arrangement to SDR 572.6 million (US$882.9 million) The Executive Board also granted waivers of non-observance for the quantitative performance criteria on the accumulation of new domestic payments arrears and the accumulation of new external payments arrears.
The 27-month SBA for SDR 858.9 million (about US$1.32 billion) with Angola was approved on November 23, 2009 (Press Release No. 09/425) to help the country cope with the effects of the global economic crisis.
Following the Executive Board’s discussion on Angola, Mr. Murilo Portugal, Deputy Managing Director and Acting Chair, stated:
“The Angolan authorities are making progress in implementing their stabilization and reform program. The macroeconomic situation continues to improve and reforms are beginning to bear fruit, but there remains a substantial reform agenda ahead to address remaining macroeconomic difficulties, strengthen macroeconomic management capacity, and limit Angola’s vulnerability to oil price fluctuations.
“The authorities’ intention to further reduce the non-oil primary deficit in 2011, bringing it closer to sustainable levels while maintaining priority investment and social spending, is welcome. Early action to specify the road-map for implementing proposed tax reforms is warranted, given the importance of increasing non-oil revenues over the medium term.
“The accumulation of domestic arrears has created difficulties in both the real economy and the financial system. The authorities need to implement vigorously their arrears resolution program, aimed at clearing the bulk of the arrears by end-year, and to strengthen expenditure control and budget financing to avoid incurring new arrears.
“Plans to establish a sovereign wealth fund are welcome, given the need to smooth the spending of oil revenues over time. The proposed fund will need a sound institutional framework with clear accountability, well-specified linkages to fiscal policy, and a conservative asset management strategy.
“The recent technical reforms of the foreign exchange auction system are welcome. It is important that the National Bank of Angola use the “outlier” policy sparingly in order to allow the exchange rate to move to its market clearing level. Strengthening fiscal-monetary policy coordination and enhancing the tools for monetary management will increase the effectiveness of monetary policy.
“The authorities are encouraged to complete their planned reform measures, including regular publication of budget execution reports and reports on state-owned enterprise financial performance and the reform measures aimed at strengthening internal governance and institutional practices at the National Bank of Angola,” Mr. Portugal added.