{
  "title": "IMF Executive Board Concludes 2016 Article IV Consultation with Angola",
  "publication": "IMF News, January 24, 2017",
  "sourceUrl": "https://www.imf.org/en/news/articles/2017/01/24/pr1721-angola-imf-executive-board-concludes-2016-article-iv-consultation",
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  "summary": "On January 23, 2017, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Angola.",
  "publishDate": "2017-01-24",
  "sections": [
    {
      "heading": "Summary of recent developments",
      "content": "- On January 23, 2017, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Angola.\n- The oil price shock that started in mid-2014 has substantially reduced fiscal revenue and exports; growth was estimated to come to a halt in 2016.\n- The non-oil sector contracted by ½ percent, dragged down by the industrial, construction, and services sectors.\n- Annual inflation was estimated to reach 45 percent by end 2016—the highest rate in over a decade—reflecting higher domestic fuel prices, a weaker kwanza, and the lagged effects of loose monetary conditions until the first half of the year.\n- Non-oil primary balance in 2015-16 showed an improvement of 18 percent of GDP mainly through spending rationalization.\n- The current account deficit, which peaked at 10 percent of GDP in 2015, is projected to be halved in 2016-17, as imports continue adjusting to limited availability of foreign exchange.\n- International reserves are declining but remain relatively comfortable; a wide spread between the parallel and primary market exchange rates remains, pointing to a significant imbalance in the foreign exchange market."
    },
    {
      "heading": "Executive Board assessment and policy guidance",
      "content": "- Directors commended the authorities for steps taken to mitigate the shock but urged further measures to stabilize macroeconomic conditions and diversify the economy away from oil dependence.\n- Fiscal policy\n  - Welcomed the significant non-oil primary fiscal consolidation to date, but stressed continued fiscal adjustment is needed to put public debt on a clear downward path while supporting medium-term growth.\n  - Urged concerted efforts to contain the growth of the wage bill.\n  - Recommended improving the quality of public investment.\n  - Advised continuing to streamline subsidies while expanding well-targeted social assistance for the poor.\n  - Emphasized strengthening nonoil revenue, including by implementing a VAT in due course.\n  - Emphasized clearing domestic payments arrears and welcomed plans to restructure state-owned enterprises.\n  - Noted that adopting a medium-term fiscal framework would help reduce pro-cyclicality of public spending and improve investment planning.\n- Monetary and exchange rate policy\n  - Underscored that monetary and exchange rate policies should play a central role in rebalancing the foreign exchange market.\n  - Welcomed recent measures taken by the central bank to tighten liquidity conditions, but saw a need to enhance the monetary policy framework to better anchor inflation expectations and facilitate a transition to greater exchange rate flexibility.\n  - Stressed that a more flexible exchange rate coupled with supportive monetary and fiscal policies will be crucial in addressing foreign exchange market imbalances while containing inflation.\n  - Urged the phased elimination of the exchange restrictions and multiple currency practices.\n- Financial sector and correspondent banking\n  - Emphasized the need to preserve the health of the banking sector.\n  - Supported authorities’ efforts to strengthen bank supervision and resolution frameworks.\n  - Recommended conducting rigorous asset quality reviews, and welcomed actions to ensure that weaker banks are recapitalized.\n  - Noted the plan to restructure and recapitalize the systemically-important state-owned BPC bank is an important step.\n  - Stressed the need to address the effects of the loss of U.S. dollar correspondent banking relationships (CBRs).\n  - Welcomed high-level dialogue with home authorities of global correspondent banks; recommended the central bank step up data collection and analysis, develop contingency plans to mitigate risks from the loss of CBRs, and further strengthen prudential and AML/CFT frameworks.\n- Structural reforms and governance\n  - Welcomed the authorities’ reform agenda to tackle constraints to economic diversification, including infrastructure and human capital development.\n  - Emphasized these measures should be complemented by enhancing the business environment and strengthening governance, including efforts to address corruption-related risks, to foster private investment and inclusive growth.\n- Data and statistics\n  - Encouraged the authorities to address remaining gaps in the production of economic data."
    },
    {
      "heading": "Key quantitative indicators (selected)",
      "content": "- Real gross domestic product: 0.0 percent (2016, estimated); 1.3 percent (2017, projected).\n- Non-oil sector: -½ percent (2016, contraction).\n- Annual inflation (end of period): 45.0 percent (end 2016, estimated); 20.0 percent (end 2017, projected).\n- Non-oil primary fiscal balance: improvement of 18 percent of GDP in 2015-16.\n- Current account balance: peak deficit of 10 percent of GDP in 2015; projected to be halved in 2016-17.\n- Gross international reserves (end of period, millions of U.S. dollars): 24,419 (2015); 22,448 (2016); 19,433 (2017, projected).\n- Net international reserves (end of period, millions of U.S. dollars): 24,266 (2015); 20,416 (2016); 17,416 (2017, projected).\n- Official exchange rate (end of period, kwanzas per U.S. dollar): 135.3 (2015).\n- Total public sector debt (gross): 65.4 percent of GDP (2015); 71.6 percent of GDP (2016); 62.8 percent of GDP (2017, projected).\n- Oil production (millions of barrels per day): 1.780 (2015); 1.789 (2016); 1.821 (2017, projected).\n- Angola oil price (average, U.S. dollars per barrel): 50.0 (2015); 46.0 (2016); 47.9 (crude oil average three spot prices, referenced).\n- Exports of goods, f.o.b. (percent of GDP): 32.2 (2015); 26.1 (2016).\n- Imports of goods, f.o.b. (percent of GDP): 20.1 (2015); 14.6 (2016).\n\nIMF Press Release: IMF Executive Board Concludes 2016 Article IV Consultation with Angola, January 24, 2017.\n\n---\n\n Content in this bundle\n\n- Pr1721p (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\n References\n\n- The Executive Board\n- Angola and the IMF\n- IMF Policy Advice -- A Factsheet\n- Press Releases\n- PRESS CENTER\n- http://www.imf.org/external/np/sec/misc/qualifiers.htm\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2017/01/24/pr1721-angola-imf-executive-board-concludes-2016-article-iv-consultation"
    }
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    "Published: January 24, 2017",
    "On January 23, 2017, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Angola.",
    "The oil price shock that started in mid-2014 has substantially reduced fiscal revenue and exports; growth was estimated to come to a halt in 2016.",
    "The non-oil sector contracted by ½ percent, dragged down by the industrial, construction, and services sectors.",
    "Annual inflation was estimated to reach 45 percent by end 2016—the highest rate in over a decade—reflecting higher domestic fuel prices, a weaker kwanza, and the lagged effects of loose monetary conditions until the first half of the year.",
    "Non-oil primary balance in 2015-16 showed an improvement of 18 percent of GDP mainly through spending rationalization.",
    "The current account deficit, which peaked at 10 percent of GDP in 2015, is projected to be halved in 2016-17, as imports continue adjusting to limited availability of foreign exchange.",
    "International reserves are declining but remain relatively comfortable; a wide spread between the parallel and primary market exchange rates remains, pointing to a significant imbalance in the foreign exchange market.",
    "Directors commended the authorities for steps taken to mitigate the shock but urged further measures to stabilize macroeconomic conditions and diversify the economy away from oil dependence.",
    "Fiscal policy",
    "Monetary and exchange rate policy",
    "Financial sector and correspondent banking",
    "Structural reforms and governance",
    "Data and statistics",
    "Real gross domestic product: 0.0 percent (2016, estimated); 1.3 percent (2017, projected).",
    "Non-oil sector: -½ percent (2016, contraction).",
    "Annual inflation (end of period): 45.0 percent (end 2016, estimated); 20.0 percent (end 2017, projected).",
    "Non-oil primary fiscal balance: improvement of 18 percent of GDP in 2015-16.",
    "Current account balance: peak deficit of 10 percent of GDP in 2015; projected to be halved in 2016-17.",
    "Gross international reserves (end of period, millions of U.S. dollars): 24,419 (2015); 22,448 (2016); 19,433 (2017, projected).",
    "Net international reserves (end of period, millions of U.S. dollars): 24,266 (2015); 20,416 (2016); 17,416 (2017, projected).",
    "Official exchange rate (end of period, kwanzas per U.S. dollar): 135.3 (2015).",
    "Total public sector debt (gross): 65.4 percent of GDP (2015); 71.6 percent of GDP (2016); 62.8 percent of GDP (2017, projected).",
    "Oil production (millions of barrels per day): 1.780 (2015); 1.789 (2016); 1.821 (2017, projected).",
    "Angola oil price (average, U.S. dollars per barrel): 50.0 (2015); 46.0 (2016); 47.9 (crude oil average three spot prices, referenced).",
    "Exports of goods, f.o.b. (percent of GDP): 32.2 (2015); 26.1 (2016).",
    "Imports of goods, f.o.b. (percent of GDP): 20.1 (2015); 14.6 (2016).",
    "[Pr1721p (PDF)](/external/lang/portuguese/np/sec/pr/2017/pr1721p.pdf){rel=\"external\" type=\"application/pdf\"}",
    "[The Executive Board](http://www.imf.org/external/np/sec/memdir/eds.aspx)",
    "[Angola and the IMF](http://www.imf.org/external/country/AGO/index.htm)",
    "[IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)",
    "[Press Releases](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[http://www.imf.org/external/np/sec/misc/qualifiers.htm](http://www.imf.org/external/np/sec/misc/qualifiers.htm)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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