Washington, DC
:
The Executive Board of the International Monetary Fund (IMF) today
completed the sixth review of Angola’s economic program supported by an
extended arrangement under the Extended Fund Facility (EFF) and concluded
the Article IV consultation
[1]
with Angola. The Board’s decision allows for an immediate disbursement of
SDR 535.1 million (about $748 million), bringing total disbursements under
the arrangement to SDR 3.2134 billion (about $4.5 billion). In completing
the review, the Executive Board also approved waivers of nonobservance of
the performance criterion on net international reserves of the Banco
Nacional de Angola.
Angola’s three-year extended arrangement was approved by the Executive
Board on December 7, 2018, in the amount of SDR 2.673 billion (about $3.7
billion at the time of approval). It aims to restore external and fiscal
sustainability, improve governance, and diversify the economy to promote
sustainable, private sector-led economic growth. At the time of the third
review, the Executive Board also approved the authorities’ request for an
augmentation of access of SDR 540 million (about $765 million at the time
of approval) to support the authorities’ efforts to mitigate the impact of
COVID-19 and sustain structural reform implementation.
The impact of the COVID-19 pandemic on the Angolan economy has begun to
abate amid higher oil prices and less disruptive containment measures.
Non-oil growth has started to recover and is expected to contribute to a
broad stabilization of overall output in 2021. Inflation has reached over
25 percent, driven by supply-side factors. Continued fiscal restraint
should deliver a substantial overall surplus in 2021, while higher oil
prices are supporting a high current account surplus.
Angola’s overall growth is projected to turn positive in 2022 and reach
around 4 percent in the medium term, bolstered by the implementation of
planned growth-enhancing structural reforms. Inflation should gradually
ease starting in 2022 as global food inflation moderates and the central
bank maintains a tight policy stance. A continued prudent fiscal stance,
embedded in the 2022 budget plans, will support a rapid decline in the
public debt-to-GDP ratio, while protecting key health and social spending.
At the conclusion of the Executive Board’s discussion, Ms. Antoinette
Sayeh, Deputy Managing Director and Acting Chair, made the following
statement:
“The Angolan authorities’ prudent policies have contributed to
strengthening stability and sustainability under the program, despite
difficult economic conditions. Aided recently by higher oil prices, this
policy discipline and commitment to reforms, have also begun to improve
economic performance, placing Angola on a path to recovery from the
multiple shocks and multi-year recession it has endured.
“The authorities’ disciplined fiscal policy is helping deliver a sharp
drop in the public debt-to-GDP ratio in 2021, strengthening debt
sustainability while protecting social spending amid the pandemic. The
2022 budget aims to consolidate the fiscal retrenchment. Sustaining the
reduction in public debt towards the authorities’ medium-term target
will require continued fiscal discipline supported by structural fiscal
reforms. Fiscal policy will also need to mitigate the impact of
oil-price shocks. This could be achieved by saving future windfalls
from high oil prices and protecting priority spending in downturns.
“The National Bank of Angola (BNA) has appropriately tightened the
monetary policy stance to address persistently high inflation, which
stems mostly from supply-side factors. With an increase in the policy
rate and restrained money growth, this stance is expected to begin
bringing down inflation next year. Nevertheless, going forward, the
central bank needs to stand ready to further tighten monetary policy
should inflation accelerate again, or expectations of high inflation
become entrenched. The BNA’s plans to transition toward an
inflation-targeting monetary policy framework and commitment to a
flexible exchange rate regime are welcome.
“Building on substantial progress on financial sector reforms, the
authorities need to continue their efforts to ensure the health of the
sector. Since the start of the program, they have reinforced the
sector’s capitalization, as well as the legal framework for its
regulation and supervision. They now need to complete both the
modernization of the regulatory framework and the restructuring and
recapitalization of the two largest troubled public banks.
Implementation of plans to address the still high level of
non-performing loans is also important.
“Diversifying the economy through continued deep structural reforms is
essential for achieving inclusive growth and consolidating economic
sustainability. Rapid expansion of non-oil output requires the
implementation of ongoing reforms to strengthen governance, improve the
business environment, and to promote private investment and trade
openness, as well as the development of human capital and
infrastructure. The authorities should also promote the conditions for
faster development of key economic sectors, such as agriculture,
telecommunications, and finance.”
[1]
Under Article IV of the IMF's Articles of Agreement, the IMF holds
bilateral discussions with members, usually every year. A staff
team visits the country, collects economic and financial
information, and discusses with officials the country's economic
developments and policies. On return to headquarters, the staff
prepares a report, which forms the basis for discussion by the
Executive Board.
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Angola: Selected Economic Indicators, 2020-22
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2020
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2021
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2022
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Actual
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Proj
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Proj.
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Real economy
(percent change, except where otherwise indicated)
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Real gross domestic product
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-5.2
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0.1
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2.9
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Oil sector
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-8.0
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-10.6
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1.6
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Non-oil sector
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-4.0
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3.9
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3.4
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Nominal gross domestic product (GDP)
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9.7
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39.1
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23.0
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Oil sector
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-7.4
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63.3
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15.3
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Non-oil sector
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17.4
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30.6
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26.4
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GDP deflator
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15.8
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39.0
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19.5
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Non-oil GDP deflator
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22.3
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25.7
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22.2
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Consumer prices (annual average)
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22.3
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25.7
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22.2
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Consumer prices (end of period)
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25.1
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26.8
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18.0
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Gross domestic product (billions of kwanzas)
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33,832
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47,071
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57,892
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Oil gross domestic product (billions of kwanzas)
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8,815
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14,391
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16,592
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Non-oil gross domestic product (billions of kwanzas)
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25,017
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32,680
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41,299
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Gross domestic product (billions of U.S. dollars)
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58.5
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73.7
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89.0
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Gross domestic product per capita (U.S. dollars)
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1,885
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2,307
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2,704
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Central government
(percent of GDP)
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Total revenue
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20.8
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22.1
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21.6
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Of which:
Oil-related
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10.7
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12.8
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12.7
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Of which:
Non-oil tax
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8.8
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8.2
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7.8
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Total expenditure
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22.7
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19.3
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19.1
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Current expenditure
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17.5
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15.6
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15.8
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Capital spending
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5.2
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3.7
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3.3
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Overall fiscal balance
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-1.9
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2.8
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2.4
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Non-oil primary fiscal balance
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-5.5
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-4.4
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-5.2
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Non-oil primary fiscal balance (percent of non-oil GDP)
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-7.5
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-6.3
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-7.3
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Money and credit
(end of period, percent change)
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Broad money (M2)
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24.3
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3.0
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12.0
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Percent of GDP
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37.5
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27.8
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25.3
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Velocity (GDP/M2)
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2.7
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3.6
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4.0
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Velocity (non-oil GDP/M2)
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2.0
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2.5
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2.8
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Credit to the private sector (annual percent change)
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-7.7
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13.0
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12.5
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Balance of payments
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Trade balance (percent of GDP)
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19.5
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27.5
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25.0
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Exports of goods, f.o.b. (percent of GDP)
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35.8
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43.5
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40.8
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Of which
: Oil and gas exports (percent of GDP)
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33.5
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40.9
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38.3
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Imports of goods, f.o.b. (percent of GDP)
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16.3
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15.9
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15.8
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Terms of trade (percent change)
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-36.6
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51.2
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5.4
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Current account balance (percent of GDP)
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1.5
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10.8
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9.5
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Gross international reserves (end of period, millions of
U.S. dollars)
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10,978
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14,056
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14,756
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Gross international reserves (months of next year's
imports)
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7.4
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8.1
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8.1
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Net international reserves (end of period, millions of U.S.
dollars)
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8,379
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9,440
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10,140
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Exchange rate
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Official exchange rate (average, kwanzas per U.S. dollar)
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578
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..
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..
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Official exchange rate (end of period, kwanzas per U.S.
dollar)
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656
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..
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..
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Public debt
(percent of GDP)
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Public sector debt (gross)1
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135.1
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95.9
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78.9
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Of which
: Central Government debt
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125.3
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89.5
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72.9
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Oil
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Oil and gas production (millions of barrels per day)
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1.388
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1.258
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1.282
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Oil and gas exports (billions of U.S. dollars)
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19.6
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30.1
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34.1
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Angola oil price (average, U.S. dollars per barrel)
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41.3
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68.3
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76.0
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Brent oil price (average, U.S. dollars per barrel)
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42.3
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70.2
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77.8
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Sources: Angolan authorities; and IMF staff estimates and
projections.
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