## IMF Executive Board Approves US$3.7 Billion Extended Arrangement Under the Extended Fund Facility for Angola

_IMF News, December 7, 2018_

## Source details

**Canonical URL:** [IMF Executive Board Approves US$3.7 Billion Extended Arrangement Under the Extended Fund Facility for Angola](https://www.imf.org/en/news/articles/2018/12/07/pr18463imf-executive-board-approves-extended-arrangement-under-the-extended-fund-facility-for-angola)

## Other formats

- [Markdown version](/en/news/articles/2018/12/07/pr18463imf-executive-board-approves-extended-arrangement-under-the-extended-fund-facility-for-angola/index.md)
- [Structured JSON version](/en/news/articles/2018/12/07/pr18463imf-executive-board-approves-extended-arrangement-under-the-extended-fund-facility-for-angola/index.json)
- [Bundle manifest](/en/news/articles/2018/12/07/pr18463imf-executive-board-approves-extended-arrangement-under-the-extended-fund-facility-for-angola/bundle-manifest.json)

## Bibliographic details
- Published: December 7, 2018

---

### Executive Board decision and financing
- On December 7, 2018, the Executive Board approved a three-year EAEFF in an amount of SDR 2.673 billion (about US$3.7 billion or 361 percent of Angola’s quota).
- The Decision allows an amount of SDR715 million (about US$990.7 million) to be immediately made available to Angola.
- The remaining amount will be phased in over the duration of the program, subject to semi-annual reviews.

### Program objectives and critical pillars
- Purpose: support Angola’s economic reform program to restore external and fiscal sustainability and lay foundations for sustainable, private-sector-led economic diversification.
- Critical pillars of the program include:
  - Fiscal consolidation to bring debt to safer levels.
  - Increased exchange rate flexibility to regain competitiveness.
  - Supportive monetary policy to reduce inflation.
  - Strengthening the banking system.
  - Enabling a better business environment.
  - Updating the AML/CFT legal framework.
  - Improving governance.

### Fiscal policy measures and recommendations
- Fiscal consolidation is identified as a core element of the program.
- Authorities’ planned measures include:
  - Increase non-oil revenue, including by introducing a value added tax.
  - Eliminate subsidies.
  - Clear domestic arrears.
- Protecting the poor and most vulnerable is emphasized; sequencing of reforms and putting in place off-setting measures will be important.
- Strengthening public financial management is expected to improve allocation of scarce public resources and strengthen policy formulation and implementation.
- Upfront fiscal consolidation in 2018 and gradual consolidation in the medium term is described as necessary to place public debt on a downward trajectory and create space for infrastructure and social spending.
- Strengthened debt management and transparency is critical to address debt-related risks.
- Sound policy implementation can mitigate risks from international oil prices.

### Exchange rate regime and monetary policy
- Exchange rate depreciation and commitment to a market-determined exchange rate are described as critical steps toward eliminating foreign exchange shortages and restoring external competitiveness.
- The liberalized exchange rate regime will be supported by tight monetary policy to anchor inflation expectations and allow accumulation of international reserves.

### Financial sector stability
- Safeguarding financial sector stability is identified as critical for the success of the program.
- Authorities’ plans include:
  - Improve governance and credit-risk management at public banks.
  - Conduct an asset quality review for largest banks to inform possible recapitalization and restructuring needs.
  - Reexamine policies that create foreign exchange mismatches in bank balance sheets to promote financial sector stability.
  - Mitigate pressures on correspondent banking relationships by submitting a new AML/CFT law to Parliament.

### Structural reforms and governance
- Structural reforms under the program aim to diversify the economy to reduce fiscal risks and foster private sector development.
- Planned structural measures include:
  - Restructuring state-owned enterprises.
  - Improving the business climate.
  - Strengthening economic governance.
  - Continuing to fight corruption.

### Statement by Mr. Tao Zhang, Deputy Managing Director and Acting Chair
- Summarizes the Macroeconomic Stabilization Program focus: strengthening fiscal sustainability, reducing inflation, promoting a more flexible exchange rate regime and improving financial sector stability.
- Notes implementation of a National Development Plan for 2018–22 to address structural bottlenecks and promote human development, public sector reform, diversification and inclusive growth.
- Reiterates emphasis on governance improvements and anti-corruption efforts.
- Highlights sequencing and offsetting measures to protect vulnerable populations and the role of strengthened fiscal and debt management.

*IMF Communications Department — Press Release No. 18/463*

---


## References

- [https://www.imf.org/-/media/images/imf/bios/imfboard.jpg](https://www.imf.org/-/media/images/imf/bios/imfboard.jpg)
- [The Executive Board](https://www.imf.org/external/np/sec/memdir/eds.aspx)
- [Angola and the IMF](http://www.imf.org/external/country/AGO/index.htm)
- [Press Releases](https://www.imf.org/en/news/searchnews)
- [PRESS CENTER](http://presscenter.imf.org/)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2018/12/07/pr18463imf-executive-board-approves-extended-arrangement-under-the-extended-fund-facility-for-angola_