Press Release No. 10/91

Press Release No. 10/91
March 16, 2010

A mission of the International Monetary Fund (IMF) led by Mr. Lamin Leigh visited Luanda during March 2-12 for the first review of Angola’s 27-month Stand-By Arrangement (see Press Release No. 09/425). The mission would like to issue the following statement:

"The IMF mission has held constructive discussions with the government’s economic team, representatives of the private sector, and aid donors. The mission reached understandings with the economic team on key measures that are needed to strengthen macroeconomic performance. In the coming weeks, the Angolan authorities and IMF staff will work together to finalize the remaining elements of the package of measures that would provide the basis to complete the first review of the SBA.

“Economic developments since the program was approved have been broadly in line with expectations. Market confidence has improved significantly thanks to prudent implementation of macroeconomic policies, and economic activity in key non-oil sectors has picked up. Inflation in the 12 months to December 2009 was 14 percent, indicating little immediate pass-through effects from the exchange rate depreciation.

“The authorities’ stabilization program, supported by the Stand-By Arrangement, has produced a steady improvement in macroeconomic conditions. The re-introduction of the foreign exchange auction system has allowed a significant and orderly adjustment in the official exchange rate and, together with a modest appreciation of the parallel market rate, has substantially narrowed the spread between the two markets. Fiscal performance has improved in the fourth quarter of 2009 on the back of tight expenditure restraint and higher non-oil revenues. This has also contributed to the stabilization of international reserves and to the improvement in market confidence.

“While the economic outlook is improving, further steps are needed to create a sustainable fiscal position, limit inflation, and rebuild foreign reserves. The current round of discussions focused on shifts in monetary and exchange rate policies to further improve the workings of the exchange market system, development of a government debt management strategy to contain fiscal risks, and improvements in public finance management and fiscal transparency. Measures to achieve these objectives are being incorporated into the design of the authorities’ program.

 “The mission would like to express its gratitude to the authorities for their hospitality and productive discussions.”