Press Release: Statement at the Conclusion of an IMF Mission to Angola
November 15, 2010Press Release No. 10/436
November 15, 2010
A mission from the International Monetary Fund (IMF), led by Seán Nolan, visited Luanda during November 1–11, 2010 to conduct policy discussions for the fourth review under Angola’s 27-month Stand-By Arrangement (SBA) with the IMF. The SBA was approved by the IMF’s Executive Board on November 23, 2009 and provides for the disbursement of SDR 858.9 million (about US$1.4 billion) over the course of the arrangement (see Press Release No. 09/425).
Following the visit, Mr. Nolan issued this statement:
“The mission has held productive discussions with the government’s economic team, including Planning Minister Lourenço, Finance Minister Lopes, and central bank (BNA) Governor Massano. The discussions focused on the near-term economic outlook and associated policy challenges, the proposed budgetary framework for 2011, and the government’s plans to clear its sizeable domestic payments arrears. The discussions are expected to be concluded in the coming weeks, which would lay the basis for completion of the fourth review of the SBA by the IMF’s Executive Board in early 2011.
“The Angolan economy is gradually recovering from last year’s fiscal and balance of payments crisis: foreign reserves are being rebuilt, the budget has moved into surplus, and the stock of payments arrears has been reduced since mid-year. Higher oil prices have helped to strengthen the government’s financial position, but expenditure restraint has also been a significant contributory factor. GDP growth in 2010, projected at around 2½ percent by the mission, has been adversely affected by temporary production problems in the oil sector and by fiscal retrenchment, but a solid pick-up in the pace of growth is expected for 2011 as these temporary effects unwind.
“Implementation of the government’s stabilization and reform program has been broadly as envisaged. Budgetary outlays have been tightly contained to date, making room for building foreign reserves and paying off outstanding liabilities. Over one-third of the verified payments arrears incurred prior to 2010 have been cleared, with the remainder to be settled in the coming six months. The build-up in accounts payable during 2010 has been contained, and the bulk of these new liabilities are to be cleared within the budget year.
“In setting the 2011 budget, the Angolan authorities face the challenge of balancing the need to increase spending on essential infrastructure throughout the country with the need to further build foreign reserves—Angola’s key safety buffer against oil price volatility—and clear its remaining arrears to domestic firms. The global economic outlook is more than usually uncertain, further complicating policy choices while providing a strong case for proceeding gradually in entering into new spending commitments.
“The government’s reform program for 2011 appropriately gives emphasis to strengthening administrative capacity in the economic ministries, particularly in regard to project appraisal and monitoring and public debt management, and to launching a comprehensive overhaul of the tax system. Vigorous actions to improve the business environment are also warranted, with regulatory reform a particular priority.”