Angola: Technical Assistance Report-Strengthening the Forecasting and Policy Analysis System on the Transition to Inflation Targeting

Technical Assistance Reports, February 21, 2025

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At the request of the Banco Nacional de Angola (BNA), a technical assistance (TA) mission from the Monetary and Capital Markets (MCM) Department visited Luanda, Angola from May 20 to May 24, 2024.
Mission objectives:
- Review the forecasting and policy analysis system (FPAS).
- Propose enhancements to modeling and forecasting procedures.
- Introduce fiscal channels into the core forecasting model to better characterize the dynamics of the Angolan economy.

The BNA had made impressive progress in improving its FPAS in recent years.
The current FPAS only partially met the conditions for inflation targeting.
Further progress is needed in:
- Using FPAS models for forecasting.
- Using FPAS models for policy advising.
- Improving monetary policy communication.

Facilitate the transition to full inflation targeting through targeted reforms to FPAS.
Enhance analytical capacity within the BNA to support inflation-targeting operations.
Introduce and operationalize fiscal channels within the core forecasting model to capture fiscal–monetary interactions more effectively.
Strengthen modeling and forecasting procedures to increase the FPAS’s utility for policy analysis and communication.

Subjects: Exchange rates, Fiscal policy, Fiscal stance, Foreign exchange, Inflation, Inflation targeting, Monetary policy, National accounts, Prices, Return on investment
Keywords: Angola., BNA authority, BNA official, Department mission, Exchange rates, Fiscal Channels, Fiscal stance, Forecasting and Policy Analysis System, Global, IMF AFRITAC, IMF's Monetary, Inflation, Inflation Targeting, Monetary Policy, Quarterly Projection Model, Return on investment, South representative