## Press Release: IMF Executive Board Approves US$1.4 Billion Stand-By Arrangement with Angola

_IMF News, November 23, 2009_

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## Bibliographic details
- Published: November 23, 2009

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### Arrangement overview
- 27-month Stand-By Arrangement (SBA) approved for Angola.
- Amount: SDR 858.9 million (about US$1.4 billion).
- Purpose: help the country cope with the effects of the global economic crisis and restore macroeconomic balances and international reserves.

### Program objectives and key pillars
- Immediate goal: mitigate repercussions of adverse terms of trade shocks linked to the global crisis.
- Medium-term goal: implement a reform agenda aimed at fostering non-oil sector growth.
- Key pillars:
  - i) A determined fiscal effort to reduce the non-oil primary fiscal deficit significantly in 2010 while providing adequate resources for social spending and vital infrastructure projects.
  - ii) An orderly exchange rate adjustment backed by tight monetary policy to normalize conditions in the foreign exchange market.
  - iii) Measures to safeguard the financial sector.

### Social spending and fiscal framework
- The SBA provides space for 30% of total central government expenditures on social issues over the duration of the program.
- Authorities’ fiscal program provides adequate resources for vital infrastructure projects in 2010.
- Advice from IMF (Takatoshi Kato, Deputy Managing Director and Acting Chair):
  - Conduct a mid-year review of budget developments and make adjustments if necessary to ensure adherence to the fiscal program.
  - Adopt a cautious external borrowing strategy to keep the debt burden manageable.
  - Enhance fiscal transparency, especially in the oil sector.
  - Improve fiscal management over the medium-term, increase non-oil revenues by reforming the tax system, and de-link the fiscal stance from short-term movements in oil revenues.
  - Plan to establish a Sovereign Wealth Fund is welcome.

### Exchange rate, monetary policy, and financial sector
- Resumption of foreign exchange auctions by the National Bank of Angola (BNA) contributed to normalizing foreign exchange market conditions.
- Essential to maintain the auction system, backed by tight monetary conditions, and to accept further movements of the exchange rate.
- Angola’s financial soundness indicators appear to be at comfortable levels, but continued vigilance and measures to strengthen regulatory and supervisory framework are advised.

### Recent economic developments (ANNEX)
- Pre-crisis: extended period of rapid expansion fueled by oil revenues; inflation persisted at low double-digit levels; fiscal policy strongly pro-cyclical.
- Non-oil fiscal deficit increased from 50 percent of non-oil GDP in 2006 to about 70 percent by 2008.
- Official reserves fell by one-third in the first half of 2009.
- Oil and commodity shocks:
  - Spot price for crude oil: average US$97 a barrel in 2008 to US$44 in the first quarter of 2009.
  - OPEC reduced Angola’s quota by about 20 percent.
  - Prices for diamonds fell substantially.
- Economic effects observed through mid/late 2009:
  - Real GDP projected to be broadly flat in 2009; oil production change: -6 percent.
  - Pace of non-oil growth slowed to 6 ¾ percent (down from 19 percent average during 2005–08).
  - Usable reserves fell by US$6 billion to US$10 billion through June 2009 (2¾ months of imports or a ratio of 1 to short-term liabilities).
  - Official exchange rate depreciated in two stages: by 4 percent during the second quarter and then by 10 percent in recent weeks following restoration of the foreign exchange auction.
  - Parallel rate peaked at a 25 percent premium vis-à-vis the official rate by end-September.
  - Inflation picked up to 14 percent in the 12 months through August, from an average level of 12.5 percent in 2008.
- Angola joined the IMF in September 19, 1989; Fund quota: SDR 286.3 million.

### Angola: Selected Economic and Financial Indicators, 2006–14 (highlights)
- Real GDP (percentage change):
  - 2006: 18.6
  - 2007: 20.3
  - 2008: 13.2
  - 2009 (Est.): -0.4
  - 2010 (Prel.): 7.1
  - 2011 (Proj.): 8.3
  - 2012 (Proj.): 6.3
  - 2013 (Proj.): 5.8
- Oil sector (percentage change):
  - 2006: 13.1
  - 2007: 20.4
  - 2008: 11.9
  - 2009: -5.8
  - 2010: 6.1
  - 2011: 2.6
  - 2012: 2.7
  - 2013: 1.4
- Non-oil sector (percentage change):
  - 2006: 27.5
  - 2007: 20.1
  - 2008: 14.8
  - 2009: 6.7
  - 2010: 7.7
  - 2011: 10.0
  - 2012: 9.0
  - 2013: 8.7
  - 2014: 8.5
- GDP per capita (U.S. dollars):
  - 2006: 2,847
  - 2007: 3,629
  - 2008: 5,054
  - 2009: 3,964
  - 2010: 4,688
  - 2011: 5,293
  - 2012: 5,747
  - 2013: 6,327
  - 2014: 6,675
- Consumer price index (annual average):
  - 2006: 13.3
  - 2007: 12.2
  - 2008: 12.5
  - 2009 (Est.): 14.0
  - 2010 (Prel.): 15.0
  - 2011 (Proj.): 9.8
  - 2012 (Proj.): 7.5
  - 2013 (Proj.): 6.0
- Exports, f.o.b. (based on U.S. dollar values, percentage change):
  - 2006: 32.2
  - 2007: 39.3
  - 2008: 44.0
  - 2009: -43.6
  - 2010: 34.9
  - 2011: 11.0
  - 2012: 5.0
  - 2013: 2.2
  - 2014: -1.1
- Oil exports (percentage change):
  - 2006: 33.4
  - 2007: 41.1
  - 2008: 45.2
  - 2009: -44.9
  - 2010: 35.9
  - 2011: 10.9
  - 2012: 4.9
  - 2013: 2.0
  - 2014: -1.7
- Imports, f.o.b. (based on U.S. dollar values, percentage change):
  - 2006: 5.1
  - 2007: 55.6
  - 2008: 53.6
  - 2009: -21.3
  - 2010: 25.2
  - 2011: 5.5
  - 2012: 3.8
  - 2013: 1.9
  - 2014: 3.1
- Non-oil primary fiscal balance (percent of non-oil GDP):
  - 2006: -50.3
  - 2007: -57.2
  - 2008: -70.8
  - 2009: -53.0
  - 2010: -46.8
  - 2011: -40.7
  - 2012: -37.6
  - 2013: -30.2
- Total revenues (percent of GDP):
  - 2006: 46.4
  - 2007: 46.7
  - 2008: 50.5
  - 2009: 35.5
  - 2010: 38.6
  - 2011: 37.6
  - 2012: 41.8
  - 2013: 40.9
- Total expenditures (percent of GDP):
  - 2006: 31.6
  - 2007: 35.2
  - 2008: 41.6
  - 2009: 43.0
  - 2010: 37.1
  - 2011: 34.4
  - 2012: 34.1
  - 2013: 32.3
  - 2014: 31.4
- Overall balance (accrual basis, percent of GDP):
  - 2006: 11.5
  - 2007: 8.8
  - 2008: -7.5
  - 2009: 1.5
  - 2010: 3.2
  - 2011: 9.6
- Gross international reserves (end of period, Millions of U.S. dollars):
  - 2006: 8,609
  - 2007: 11,330
  - 2008: 17,878
  - 2009: 11,940
  - 2010: 14,259
  - 2011: 16,289
  - 2012: 22,330
  - 2013: 29,057
  - 2014: 36,228
- Gross domestic product (millions of U.S. dollar):
  - 2006: 45,168
  - 2007: 59,263
  - 2008: 84,945
  - 2009: 68,632
  - 2010: 83,590
  - 2011: 97,218
  - 2012: 108,710
  - 2013: 123,271
  - 2014: 133,963
- Official exchange rate (kwanzas per U.S. dollar; end-of-period):
  - 2006: 80.2
  - 2007: 75.0
  - 2008: 75.1
- Oil production (thousands of barrels per day):
  - 2006: 1,427
  - 2007: 1,717
  - 2008: 1,900
  - 2009: 1,790
  - 2010: 2,016
  - 2011: 2,069
  - 2012: 1,994
- Price of Angola's oil (U.S. dollars per barrel):
  - 2006: 61.4
  - 2007: 67.0
  - 2008: 89.9
  - 2009: 53.5
  - 2010: 68.5
  - 2011: 71.5
  - 2012: 73.0
  - 2013: 76.8
- External debt (billions of U.S. dollars):
  - 2006: 7.4
  - 2007: 13.5
  - 2008: 15.6
  - 2009: 16.7
  - 2010: 17.8
  - 2011: 20.6
  - 2012: 23.7
  - 2013: 26.8
- External debt-to-GDP ratio:
  - 2006: 16.4
  - 2007: 16.2
  - 2008: 22.8
  - 2009: 20.0
  - 2010: 18.3
  - 2011: 18.9
  - 2012: 20.2

*Source: Press Release No. 09/425, IMF, November 23, 2009.*

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