{
  "title": "Public Information Notice: IMF Concludes 2003 Article IV Consultation with Angola",
  "publication": "IMF News, September 10, 2003",
  "sourceUrl": "https://www.imf.org/en/news/articles/2015/09/28/04/53/pn03115",
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  "summary": "Each Public Information Notice contains a background section, a table of selected economic indicators, and an Executive Board assessment.",
  "publishDate": "2003-09-10",
  "sections": [
    {
      "heading": "Background",
      "content": "- Civil war ended on April 4, 2002, with agreement between Angolan armed forces and UNITA after 27 years of conflict.\n- Rapid demobilization and resettlement of ex-combatants followed, supported by government-led initiatives and various UN agencies and the World Bank.\n- 2002 economic context:\n  - Economy grew by 15 percent driven by a booming energy sector.\n  - Non-oil economy lagged; Angola reliant on imports and food aid for about half of its cereals requirements.\n  - Poverty: more than 65 percent of the urban population living below the poverty line; poverty reportedly far deeper in rural areas.\n  - Inflation: 12-month inflation remained above 100 percent throughout 2002.\n  - Currency: real effective appreciation of about 7 percent in 2002 on top of cumulative appreciation of 42 percent in 2000-01.\n  - Exchange market spread: average spread between official and parallel market exchange rate was 4 percent.\n  - External debt: by end-December 2002, about half of Angola's external debt was arrears."
    },
    {
      "heading": "Fiscal and monetary developments",
      "content": "- Fiscal deficits and quasi-fiscal operations:\n  - General government fiscal deficit (accrual basis) more than doubled between 2001 and 2002, reaching the equivalent of 9 percent of GDP.\n  - Non-oil fiscal deficit averaged 38 percent of GDP in 2001-02.\n  - Estimated 31 percent of total government expenditures executed outside the regular budgetary system.\n  - Financing of the 2002 fiscal deficit depleted oil-bonus off-shore account balances, led to costly borrowing from international commercial banks, and expanded central bank net credit to the government by 3.6 percent of GDP.\n- Monetary expansion and banking intermediation:\n  - Reserve money expanded by 110 percent during 2002 due to central bank financing of the fiscal deficit and the central bank's operational deficit.\n  - High inflation led commercial banks to hold excess reserves at the BNA and foreign assets rather than lend domestically.\n  - By end-2002, only 30 percent of bank deposits had been intermediated to domestic borrowers."
    },
    {
      "heading": "External sector and reserves",
      "content": "- Current account:\n  - Turned from a surplus of 9 percent of GDP in 2000 to deficits of about 15 percent and 6 percent of GDP in 2001 and 2002, respectively.\n  - Deterioration due to widening current account deficit of the oil sector from declining oil prices and surging services payments to international oil companies.\n- Foreign direct investment and access to financing:\n  - Foreign direct investments into the oil sector remained buoyant.\n  - Built-up official external arrears hampered public sector access to external financing on favorable terms.\n- Reserves:\n  - Gross international reserves at end-2002 amounted to $375 million, less than the equivalent of one month of imports of goods and services."
    },
    {
      "heading": "Structural reforms and governance",
      "content": "- Limited structural reforms in 2002; notable actions include:\n  - Angola signed the free trade agreement with SADC in March 2003.\n  - Continued reforms of customs administration.\n  - Very little progress on privatization of public banks and nonfinancial enterprises.\n- Governance and transparency issues highlighted as central to improving outcomes, especially in public institutions and the oil sector."
    },
    {
      "heading": "Executive Board assessment — findings and recommendations",
      "content": "- Commendations and overall view:\n  - Directors welcomed the end of the civil war and commended authorities for commitment to reconstruction, restoring financial stability, re-establishing market structures, and reducing widespread poverty.\n  - Noted that the magnitude of challenges requires a bold and comprehensive approach.\n- Fiscal policy and public expenditure:\n  - Urged authorities to significantly narrow the fiscal deficit in 2003 through revenue increases and spending cuts.\n  - Emphasized strengthening tax revenues, especially the non-oil component, and improving administration of oil revenues.\n  - Recommended allocating more resources to health, education, and other social services, rebuilding infrastructure (power, water supply, transport), and phasing out consumer price subsidies.\n  - Endorsed authorities' proposed 2003 budget revisions to consolidate quasi-fiscal operations of Sonangol and other extrabudgetary expenditure into central government operations.\n  - Encouraged implementation of public expenditure management reforms following World Bank and Fund technical assistance to ensure spending consistency with the legislated budget.\n- Debt and borrowing:\n  - Urged a more prudent foreign borrowing policy to avoid worsening external debt burden, much of which is in arrears.\n  - Emphasized phasing out foreign commercial borrowing, including loans collateralized by future oil revenues.\n  - Stressed need to develop a medium-term debt strategy supported by Fund technical assistance.\n- Monetary and exchange-rate policy:\n  - Fiscal consolidation needed to facilitate prudent monetary policies, rebuild foreign reserves, and reduce risk of further real exchange rate appreciation.\n  - Called to remove divergence between official and parallel market exchange rates and to phase out exchange rate controls and restrictions.\n  - Advised abiding by central bank law restricting lending to the government and full implementation of the protocol regulating central bank–treasury relations to increase autonomy and transparency.\n- Transparency, oil sector, and governance:\n  - Emphasized enhancing transparency in oil industry; commended decisions to disclose oil-related financial information, audit Sonangol, and publish executive summary of private-sector oil study; encouraged publication of full oil industry report.\n  - Viewed tackling corruption within an appropriate legal framework as essential to enhancing growth potential.\n  - Welcomed Tribunal of Contas' more proactive auditing of public expenditure.\n- Structural reforms and private sector:\n  - Stressed decisive structural reforms beyond oil to foster economic diversification, employment creation, and productivity in non-oil economy.\n  - Promoted agriculture and restoration of critical infrastructure; welcomed passage of private investment legislation.\n  - Supported strengthening banking system via improved supervisory and regulatory frameworks and privatization of state-owned banks.\n  - Encouraged speeding up privatization of public enterprises and reducing government role in diamond marketing.\n  - Acknowledged customs reform progress and emphasized phasing out export duties and reducing import duties consistent with international trade obligations.\n- Data, statistics, and external relations:\n  - Highlighted importance of completing compilation of basic macroeconomic statistics, particularly external debt statistics.\n  - Stressed that transparent and comprehensive statistical data and a medium-term macroeconomic framework are essential for normalizing relations with international financial community, including the Paris Club.\n  - Encouraged initiation of discussions with creditors to resolve external debt arrears to facilitate access to grants and longer-term concessional financing.\n  - Welcomed progress on a Poverty Reduction Strategy Paper (PRSP) and looked forward to development of a full program using a broad participatory approach supported by a medium-term framework.\n- Path toward engagement with the IMF:\n  - Welcomed authorities' willingness to continue policy dialogue and to prepare a path toward a new staff-monitored program (SMP).\n  - Stressed that strengthened governance, transparency, full implementation of fiscal–monetary protocol, and improved fiscal and external debt data are most important steps toward an SMP.\n  - Noted that successful completion of an SMP could be the basis for an eventual Fund-supported program."
    },
    {
      "heading": "Selected economic indicators (1999–2002)",
      "content": "- Real GDP (annual percentage change):\n  - 1999: 3.3\n  - 2000: 3.0\n  - 2001: 3.2\n  - 2002: 15.3\n- Oil sector (annual percentage change):\n  - 1999: 1.0\n  - 2000: 0.4\n  - 2001: -1.0\n  - 2002: 22.1\n- Non-oil sector (annual percentage change):\n  - 1999: 4.8\n  - 2000: 6.8\n  - 2001: 9.6\n  - 2002: 7.6\n- Consumer prices (end of period, annual percentage change):\n  - 1999: 329\n  - 2000: 268\n  - 2001: 116\n  - 2002: 106\n- Real effective exchange Rate (end of period, 1/; positive denotes appreciation):\n  - 1999: -50\n  - 2000: 29\n  - 2001: 13\n  - 2002: 7\n- Broad money (annual percentage change):\n  - 1999: 533\n  - 2000: 304\n  - 2001: 163\n  - 2002: 158\n- Interest rate (for three-month time deposits, annual percent):\n  - 1999: 36\n  - 2000: 46\n  - 2001: 56\n  - 2002: 41\n- Fiscal accounts (percent of GDP):\n  - Total revenue:\n    - 1999: 46.8\n    - 2000: 51.8\n    - 2001: 42.6\n    - 2002: 39.0\n  - Of which: oil:\n    - 1999: 41.1\n    - 2000: 46.2\n    - 2001: 33.9\n    - 2002: 29.9\n  - Total expenditure:\n    - 1999: 82.4\n    - 2000: 60.4\n    - 2001: 46.3\n    - 2002: 48.0\n  - Overall balance (on a commitment basis, excluding grants):\n    - 1999: -35.5\n    - 2000: -8.6\n    - 2001: -3.7\n    - 2002: -9.0\n- External sector:\n  - Current account balance (including transfers, percent of GDP):\n    - 1999: -28.1\n    - 2000: 9.0\n    - 2001: -15.1\n    - 2002: -5.8\n  - Public debt service-to-exports ratio:\n    - 1999: 44.4\n    - 2000: 36.3\n    - 2001: 41.2\n    - 2002: 26.4\n- Levels (in millions of U.S. dollars, unless otherwise indicated):\n  - Gross domestic product (current prices):\n    - 1999: 6,088\n    - 2000: 8,864\n    - 2001: 9,472\n    - 2002: 11,204\n  - Gross national income per person (U.S. dollars):\n    - 1999: 364\n    - 2000: 538\n    - 2001: 576\n    - 2002: 685\n  - Oil production (thousands of barrels per day):\n    - 1999: 746\n    - 2000: 748\n    - 2001: 740\n    - 2002: 903\n  - Price of Angola's oil (U.S. dollars per barrel):\n    - 1999: 17.6\n    - 2000: 27.2\n    - 2001: 24.2\n    - 2002: 24.3\n  - Gross international reserves (end of period):\n    - 1999: 496\n    - 2000: 1,198\n    - 2001: 732\n    - 2002: 375\n  - Equivalent in months of imports:\n    - 1999: 2.1\n    - 2000: 1.1\n    - 2001: 0.5\n    - 2002: (not listed)\n\nPublic Information Notice: IMF Concludes 2003 Article IV Consultation with Angola (September 10, 2003).\n\n---\n\n Content in this bundle\n\n- Cr03291pdf (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\n References\n\n- Angola and the IMF\n- Public Information Notices\n- Article IV\n- Adobe Acrobat Reader\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2015/09/28/04/53/pn03115"
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    "Published: September 10, 2003",
    "Civil war ended on April 4, 2002, with agreement between Angolan armed forces and UNITA after 27 years of conflict.",
    "Rapid demobilization and resettlement of ex-combatants followed, supported by government-led initiatives and various UN agencies and the World Bank.",
    "2002 economic context:",
    "Fiscal deficits and quasi-fiscal operations:",
    "Monetary expansion and banking intermediation:",
    "Current account:",
    "Foreign direct investment and access to financing:",
    "Reserves:",
    "Limited structural reforms in 2002; notable actions include:",
    "Governance and transparency issues highlighted as central to improving outcomes, especially in public institutions and the oil sector.",
    "Commendations and overall view:",
    "Fiscal policy and public expenditure:",
    "Debt and borrowing:",
    "Monetary and exchange-rate policy:",
    "Transparency, oil sector, and governance:",
    "Structural reforms and private sector:",
    "Data, statistics, and external relations:",
    "Path toward engagement with the IMF:",
    "Real GDP (annual percentage change):",
    "Oil sector (annual percentage change):",
    "Non-oil sector (annual percentage change):",
    "Consumer prices (end of period, annual percentage change):",
    "Real effective exchange Rate (end of period, 1/; positive denotes appreciation):",
    "Broad money (annual percentage change):",
    "Interest rate (for three-month time deposits, annual percent):",
    "Fiscal accounts (percent of GDP):",
    "External sector:",
    "Levels (in millions of U.S. dollars, unless otherwise indicated):",
    "[Cr03291pdf (PDF)](/-/media/websites/imf/imported/external/pubs/ft/scr/2003/_cr03291pdf.pdf){rel=\"external\" type=\"application/pdf\"}",
    "[Angola and the IMF](http://www.imf.org/external/country/AGO/index.htm)",
    "[Public Information Notices](https://www.imf.org/en/news/searchnews)",
    "[Article IV](https://www.imf.org/external/pubs/ft/aa/aa04.htm)",
    "[Adobe Acrobat Reader](https://www.imf.org/adobe)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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