IMF Executive Board Concludes 2022 Article IV Consultation with Angola
IMF News, February 23, 2023
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- Published: February 23, 2023
Economic performance and near-term outlook
- Angola’s economy continued to recover from the COVID-19 pandemic in 2022, supported by higher oil prices, improved oil production, and resilient non-oil activity.
- Non-oil growth was broad-based despite a challenging external environment.
- Growth is estimated at 3.5 percent for 2023.
- Overall growth is expected to continue in 2023 and reach about 4 percent in the medium term, as the authorities’ structural reform agenda supports the non-oil sector.
- Downside risks to the near-term outlook include a larger-than-expected decline in global oil prices, renewed global food price pressures, and adverse weather conditions that impact the agriculture sector.
Inflation and monetary policy
- Headline inflation declined significantly to 13.8 percent y/y at end-December 2022, driven by lower global food prices, a stronger kwanza, and previous efforts by the central bank to tighten monetary policy.
- Inflation should continue its gradually declining path, reaching single digits in 2024.
- Directors commended the Banco Nacional de Angola’s (BNA) decisive actions that resulted in a large disinflation in 2022.
- Directors recommended a wait and see approach to monetary policy actions to support the disinflationary path, noting that inflation remains elevated and risks to price stability persist.
- Directors supported the BNA’s efforts to strengthen policy effectiveness, including by aligning the interbank rate with the policy rate and transitioning toward an inflation targeting framework.
- Directors welcomed the authorities’ commitment to exchange rate flexibility and their plan to eliminate the remaining exchange restrictions.
Fiscal developments and public debt
- The non-oil primary deficit increased in 2022 following higher-than-budgeted capital expenditure and higher-than-expected fuel subsidy costs.
- The public debt-to-GDP ratio fell by an estimated 17.5 percentage points of GDP to an estimated 66.1 percent of GDP, aided by a stronger exchange rate.
- The 2023 budget envisions a resumption of fiscal adjustment, which is necessary to approach the authorities’ twin medium-term fiscal and debt targets and guard against debt vulnerabilities.
- Directors called for ambitious, growth friendly adjustments to achieve medium-term fiscal and debt targets, recommending:
- further mobilization of non-oil revenue,
- strengthening revenue administration and public financial management,
- reforming state owned enterprises,
- spending rationalization to create fiscal space for public investment and targeted social spending,
- commitment to fuel subsidy reforms when conditions allow, and
- faster implementation of the cash transfer program.
- Continued sound debt management is crucial.
Financial sector and governance
- Directors encouraged continued efforts to strengthen financial stability, building on strong previous progress.
- Need to implement the remaining secondary legislation to fully implement the Financial Institutions Law, including for bank recovery and resolution planning.
- Directors emphasized adopting a more comprehensive approach to dealing with problem banks and continuing efforts to address nonperforming loans.
- Directors highlighted the need to bolster human and physical capital, access to private credit, and to strengthen governance, transparency, and the AML/CFT regime to improve the business environment and promote private investment.
- Encouraged publication of the audited COVID expenditure reports and completion of the anti-corruption strategy.
- Directors commended the authorities’ focus on building climate resilience and on fostering gender equality.
Executive Board assessment
- Executive Directors agreed with the thrust of the staff appraisal and welcomed the economic recovery in 2022.
- Given continued vulnerabilities and elevated global uncertainty, Directors encouraged maintaining the reform momentum and diversifying the economy to safeguard macroeconomic stability and ensure inclusive and sustainable growth.
- It is expected that the next Article IV consultation with Angola will be held on the standard 12-month cycle.
Key statistics and projections (selected)
- Real gross domestic product: 2021 = 1.1; 2022 Prel. = 2.8; 2023 Proj. = 3.5
- Oil sector (percent change): 2021 = -11.5; 2022 = 2.0; 2023 = 1.2
- Non-oil sector (percent change): 2021 = 5.3; 2022 = 3.2; 2023 = 4.3
- Nominal gross domestic product (GDP): 2021 = 42.9; 2022 = 19.1; 2023 = 11.4
- GDP deflator: 2021 = 41.4; 2022 = 15.8; 2023 = 7.6
- Non-oil GDP deflator: 2021 = 25.8; 2022 = 21.4; 2023 = 11.7
- Consumer prices (annual average): 2021 = 27.0; 2022 = 13.8; 2023 = 12.3
- Gross domestic product (billions of kwanzas): 2021 = 47,226; 2022 = 56,231; 2023 = 62,625
- Gross domestic product (billions of U.S. dollars): 2021 = 74.8; 2022 = 121.6; 2023 = 118.6
- Gross domestic product per capita (U.S. dollars): 2021 = 2,168; 2022 = 3,405; 2023 = 3,225
- Central government total revenue (percent of GDP): 2021 = 23.3; 2022 = 23.5; 2023 = 21.2
- Total expenditure (percent of GDP): 2021 = 19.5; 2022 = 21.8; 2023 = 21.6
- Overall fiscal balance (percent of GDP): 2021 = 3.8; 2022 = 1.7; 2023 = -0.4
- Non-oil primary fiscal balance (percent of GDP): 2021 = -4.7; 2022 = -7.6; 2023 = -7.2
- Broad money (M2) (end of period, percent change): 2021 = -9.3; 2022 = -4.6; 2023 = 10.3
- Trade balance (percent of GDP): 2021 = 29.1; 2022 = 26.4; 2023 = 21.7
- Exports of goods, f.o.b. (percent of GDP): 2021 = 44.9; 2022 = 39.9; 2023 = 35.9
- Of which: Oil and gas exports (percent of GDP): 2021 = 42.6; 2022 = 38.0; 2023 = 33.8
- Imports of goods, f.o.b. (percent of GDP): 2021 = 13.5
- Terms of trade (percent change): 2021 = 52.4; 2022 = 29.3; 2023 = -13.8
- Current account balance (percent of GDP): 2021 = 11.2; 2022 = 11.0; 2023 = 6.3
- Gross international reserves (end of period, millions of U.S. dollars): 2021 = 14,375; 2022 = 14,479; 2023 = 14,769
- Gross international reserves (months of next year's imports): 2021 = 6.6; 2022 = 6.5; 2023 = 6.4
- Official exchange rate (average, kwanzas per U.S. dollar): 2021 = 631; 2022 = 462
- Official exchange rate (end of period, kwanzas per U.S. dollar): 2021 = 555; 2022 = 504
- Public sector debt (gross) (percent of GDP): 2021 = 83.6; 2022 = 66.1; 2023 = 64.1
- Of which: Central Government debt (percent of GDP): 2021 = 77.6; 2022 = 60.8; 2023 = 59.5
- Oil and gas production (millions of barrels per day): 2021 = 1.252; 2022 = 1.263; 2023 = 1.295
- Oil and gas exports (billions of U.S. dollars): 2021 = 31.8; 2022 = 46.2; 2023 = 40.1
- Angola oil price (average, U.S. dollars per barrel): 2021 = 70.7; 2022 = 97.8; 2023 = 81.6
- Brent oil price (average, U.S. dollars per barrel): 2021 = 70.8; 2022 = 99.6; 2023 = 83.3
IMF Executive Board concludes 2022 Article IV consultation with Angola; Press Release No. 23/52; February 23, 2023.