IMF Executive Board Completes the First Review Under Angola’s Extended Arrangement and Approves US$248.15 Million Disbursement

IMF News, June 12, 2019

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Canonical URL: IMF Executive Board Completes the First Review Under Angola’s Extended Arrangement and Approves US$248.15 Million Disbursement

On June 12, 2019, the Executive Board of the International Monetary Fund completed the First Review of Angola’s economic program supported by an extended arrangement under the Extended Fund Facility (EFF).
Completion of the review makes available SDR 179 million (about US$248.15 million).
Total disbursements under the extended arrangement are SDR 894 million (about US$1.24 billion).
Angola’s three-year extended arrangement was approved on December 7, 2018, in the amount of SDR 2.673 billion (about US$3.7 billion at the time of approval), the equivalent of 361 percent of Angola’s quota.
The Board approved the authorities’ request for a waiver of nonobservance of the continuous performance criterion on the non-accumulation of external arrears.

The Angolan authorities have demonstrated strong commitment to policies under the Fund-supported program.
A weakened external environment, notably heightened volatility in the international price of crude oil, is posing challenges to reform efforts.
Authorities responded by enacting a conservative supplementary budget for 2019.

Fiscal consolidation will continue in 2019 under the approved supplementary budget.
The supplementary budget is supported by:
- A conservative expenditure envelope that preserves social spending.
- Non-oil revenue mobilization, including the adoption of a value-added tax in mid-2019.
Authorities are committed to:
- Gradually eliminating subsidies.
- Clearing payments arrears.
- Developing a cash-transfer program to mitigate side-effects of reforms on the most vulnerable.
Technical assistance from the IMF and development partners is supporting efforts to:
- Strengthen public financial management.
- Improve the allocation of scarce public resources.
- Strengthen fiscal policy formulation and implementation.
Adherence to the recently published debt management strategy is important to ensure debt sustainability.

Pursuing exchange rate flexibility and eliminating remaining restrictions in foreign exchange markets are still needed to:
- Restore external competitiveness.
- Facilitate market-based price formation.
A tighter monetary policy will help support the flexible exchange rate regime and keep inflation in check.
A revised central bank law is planned to ensure greater central bank autonomy, a stronger mandate, and strict limits on monetary financing of the budget.

Authorities are progressing with structural and governance reforms to:
- Diversify the economy.
- Reduce fiscal risks and the State’s footprint in the economy.
- Foster private sector development.
- Reduce opportunities for corruption.
A Privatization Law has been enacted, providing foundations for the Government to implement its privatization program.
Publication of audited annual reports of the 15 largest state-owned enterprises will resume in the second half of 2019.

SDR 179 million (about US$248.15 million): disbursement made available on completion of the First Review.
SDR 894 million (about US$1.24 billion): total disbursements under the extended arrangement after this review.
SDR 2.673 billion (about US$3.7 billion at approval): size of Angola’s three-year extended arrangement approved December 7, 2018.
361 percent: equivalent of the arrangement relative to Angola’s quota.
June 12, 2019: date Executive Board completed the First Review.
December 7, 2018: date the three-year extended arrangement was approved.
2019: year of the conservative supplementary budget and planned VAT adoption in mid-2019.
12: number of largest banks subject to an asset quality review.
15: number of largest state-owned enterprises whose audited annual reports will resume publication in the second half of 2019.

IMF Press Release No. 19/212, June 12, 2019.