Washington, DC:
The Executive Board of the International Monetary Fund (IMF) today
completed the fourth review of Angola’s economic program supported by an
extended arrangement under the Extended Fund Facility (EFF). The Board’s
decision allows for an immediate disbursement of SDR 338.5 million - about
$487.5 million, bringing total disbursements under the arrangement to SDR
2,143.2 million (about $3 billion).
Angola’s three-year extended arrangement was approved by the
Executive Board on December 7, 2018
, in the amount of SDR 2.673 billion (about $3.7 billion at the time of
approval). It aims to restore external and fiscal sustainability, improve
governance, and diversify the economy to promote sustainable, private
sector-led economic growth. At the time of the third review, the
Executive Board also approved the authorities’ request for an
augmentation of access
of SDR 540 million (about $765 million at the time of approval) to support
the authorities’ efforts to mitigate the impact of COVID-19 and sustain
structural reform implementation.
The multifaceted nature of the COVID-19 shock continues to negatively
impact Angola’s economy and population. Oil production and prices remain
weak, and the health and social impacts of the pandemic continue to be
felt. The authorities have maintained a robust policy response in the face
of these challenges and remain resolutely committed to the program. The
authorities achieved a prudent fiscal adjustment in 2020 that included
non-oil revenue gains and restraint in non-essential expenditure, while
preserving essential spending on health and social safety nets. The passage
of the 2021 budget in December consolidates these gains. The authorities
have also allowed the exchange rate to act as a shock absorber and have
begun to implement a gradual shift towards monetary tightening to address
rising price pressures.
The Executive Board also approved today the authorities’ request for
waivers of applicability and nonobservance of performance criteria and
modification of some performance criteria, indicative targets, and
structural benchmarks.
Following the Executive Board’s discussion on Angola, Ms. Antoinette Sayeh,
Deputy Managing Director and Acting Chair, issued the following statement:
“Despite the challenges from the ongoing COVID-19 pandemic, the Angolan
authorities have demonstrated a strong commitment to sound policies under
the IMF-supported arrangement. The authorities’ robust policy response has
enabled Angola to weather large external shocks, most notably lower oil
revenues, and mitigate their macroeconomic impact while protecting the most
vulnerable.
“The stabilization of public finances remains the cornerstone of the
authorities’ strategy. The authorities achieved strong fiscal adjustment in
2020. Their 2021 budget consolidates the non-oil revenue gains and
expenditure restraint of the 2020 budget, while protecting priority health
and social spending. These achievements help reduce the budget’s dependence
on oil revenues.
“The implementation of debt reprofiling agreements and extension of the
Debt Service Suspension Initiative through end-June 2021 will provide
significant debt-service relief and help reduce risks related to debt
sustainability. Given Angola’s sensitivity to oil price shocks, it is
important that the authorities remain vigilant in managing these risks.
“After having eased the monetary stance to mitigate the COVID-19 shock, the
National Bank of Angola (BNA) started to address rising inflationary
pressures by tightening monetary policy. Further gradual tightening is
needed to reduce inflation. Exchange rate flexibility has served as a
valuable shock absorber during the crisis. Efforts are ongoing to develop a
liberalized foreign exchange market.
“Continuing progress in financial sector reforms is critical, particularly
completing the restructuring of the two troubled public banks. Timely
adoption of both the revised BNA Law and the revised Financial Institutions
Law is key to continuing this progress.
“The authorities also need to maintain momentum in other structural reforms
that support stronger diversified growth, enhance governance, and combat
corruption.”
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