Angola: 2023 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Angola

IMF Staff Country Reports, March 27, 2024

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Angola’s economic recovery in 2021/22 was nearly halted in 2023 by a double shock in the first half of the year: weakening in the oil sector and the end of the debt moratorium.
Growth is estimated at 0.5 percent for 2023.
The Report covers macroeconomic developments, projections, and policy recommendations for near-term stabilization and medium-term resilience.

2023 aggregate growth: 0.5 percent.
Oil sector in 2023: estimated contraction of 6.1 percent.
Non-oil sector in 2023: softened growth at 2.9 percent.
The near-term outlook: economic growth is projected to recover, supported by improved oil production and recovery in the non-oil sector.

Inflation is expected to remain temporarily elevated in 2024 and to gradually decline thereafter.
Key drivers of elevated inflation: effects of the subsidy removal and the pass-through from nominal exchange rate depreciation.
Policy direction: continued transition toward an inflation-targeting framework and greater exchange rate flexibility is recommended for the BNA.

Recent monetary policy tightening is welcomed by IMF staff.
Remaining operational priorities:
- Align the interbank market interest rate with the announced policy rate.
- Improve monetary operations to ensure the interest rate corridor functions as announced.
- BNA and the ministry of finance should coordinate money market operations to align interbank liquidity conditions with the announced interest rate corridor.
Fiscal domestic financing should be undertaken through medium- to long-term issuances to support monetary objectives.

Continue monetary policy tightening where appropriate to anchor inflation expectations.
Strengthen coordination between the central bank (BNA) and the ministry of finance on money market operations.
Align interbank market interest rates with the announced policy rate and interest rate corridor.
Undertake fiscal domestic financing with medium- to long-term issuances to reduce monetary financing pressures.
Advance the transition toward an inflation-targeting framework and greater exchange rate flexibility.