IMF Executive Board Completes the Third Review of Angola’s Extended Arrangement Under the Extended Fund Facility and Augments Disbursement to Address the Impact of COVID-19

IMF News, September 16, 2020

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Canonical URL: IMF Executive Board Completes the Third Review of Angola’s Extended Arrangement Under the Extended Fund Facility and Augments Disbursement to Address the Impact of COVID-19

Immediate disbursement unlocked: SDR 731.7 million (about US$1 billion).
Total disbursements under the extended arrangement after the review: SDR 1,804.7 million (about US$2.5 billion).
Original three-year extended arrangement approved on December 7, 2018: SDR 2.673 billion (about US$3.7 billion at the time of approval).
Augmentation of access approved: 72 percent of Angola’s quota (SDR 540 million or about US$765 million).

Angola hit by a triple, COVID-19-induced external shock, including:
- Economic and health crises from the COVID-19 pandemic.
- Decline in oil prices, compounded by Angola’s dependence on oil exports.
Authorities described as having adopted timely and decisive measures and remaining strongly committed to the program, including the fight against corruption.

National Assembly adopted a conservative supplementary budget for 2020 that:
- Includes non-oil revenue measures.
- Compresses non-essential expenditure.
- Creates space for essential spending on health and the social safety net.
Fiscal consolidation to continue despite the crisis, while creating space for adequate health and social spending.
Authorities to persevere with measures to strengthen public financial management.

Central Bank (National Bank of Angola, BNA) measures to ease liquidity and credit constraints to help the private sector cope with the crises.
BNA has continued to reform the exchange rate regime, including migrating the bulk of foreign exchange transactions to an electronic platform.
Guidance: Efforts should continue to remove constraints toward reaching a market-clearing exchange rate.
Monetary stance eased to counteract the COVID-19 pandemic and oil-price shock; however, there is little room for further monetary easing and the BNA should be ready to keep inflationary pressures in check.

Timely implementation of banking sector recapitalization and restructuring is essential to address financial sector risks.
Completed asset quality reviews identified shortfalls; authorities are preparing to address capital deficiencies and enhance credit risk management frameworks.
Authorities need to advance the restructuring of two public banks.
Forthcoming BNA and Financial Institutions Laws expected to support stronger bank supervision and resolution.

Authorities have secured debt reprofiling agreements from several large creditors to reduce risks related to debt sustainability.
Continued vigilance in managing public debt is critical in the context of heightened oil-price volatility.

Executive Board completed the third review of Angola’s program under the Extended Fund Facility (EFF).
Board approved waivers of nonobservance and applicability of performance criteria and modification of some performance criteria, indicative targets, and structural benchmarks.
Program aims at restoring external and fiscal sustainability, improving governance, and diversifying the economy to promote sustainable, private sector-led economic growth.
The authorities remain broadly satisfactorily implementing the program.

Press Release No. 20/294 — September 16, 2020 — IMF Communications Department