{
  "title": "IMF Executive Board Completes Sixth Review of the Extended Fund Facility Arrangement for Angola and Concludes 2021 Article IV Consultation",
  "publication": "IMF News, December 22, 2021",
  "sourceUrl": "https://www.imf.org/en/news/articles/2021/12/22/pr299-angola",
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  "summary": "The Executive Board completed the sixth review of Angola’s program under an extended arrangement under the Extended Fund Facility (EFF) and concluded the 2021 Article IV consultation.",
  "publishDate": "2021-12-22",
  "sections": [
    {
      "heading": "Overview",
      "content": "- The Executive Board completed the sixth review of Angola’s program under an extended arrangement under the Extended Fund Facility (EFF) and concluded the 2021 Article IV consultation.\n- The Board’s decision allows for an immediate disbursement of SDR 535.1 million (about $748 million).\n- Total disbursements under the arrangement are SDR 3.2134 billion (about $4.5 billion).\n- Waivers of nonobservance were approved for the performance criterion on net international reserves of the Banco Nacional de Angola."
    },
    {
      "heading": "Program background and objectives",
      "content": "- Angola’s three-year extended arrangement was approved on December 7, 2018, in the amount of SDR 2.673 billion (about $3.7 billion at the time of approval).\n- The arrangement aims to:\n  - restore external and fiscal sustainability,\n  - improve governance,\n  - diversify the economy to promote sustainable, private sector-led economic growth.\n- At the time of the third review, access was augmented by SDR 540 million (about $765 million at the time of approval) to support mitigation of COVID-19 impacts and sustain structural reforms."
    },
    {
      "heading": "Economic outlook and recent developments",
      "content": "- The impact of the COVID-19 pandemic on the Angolan economy has begun to abate amid higher oil prices and less disruptive containment measures.\n- Non-oil growth has started to recover and is expected to contribute to a broad stabilization of overall output in 2021.\n- Inflation has reached over 25 percent, driven by supply-side factors.\n- Continued fiscal restraint should deliver a substantial overall surplus in 2021, while higher oil prices are supporting a high current account surplus.\n- Angola’s overall growth is projected to turn positive in 2022 and reach around 4 percent in the medium term, bolstered by planned growth-enhancing structural reforms.\n- Inflation is expected to gradually ease starting in 2022 as global food inflation moderates and the central bank maintains a tight policy stance.\n- A continued prudent fiscal stance, embedded in the 2022 budget plans, will support a rapid decline in the public debt-to-GDP ratio while protecting key health and social spending."
    },
    {
      "heading": "Policy assessment and recommendations (from Ms. Antoinette Sayeh)",
      "content": "- Fiscal policy\n  - The authorities’ disciplined fiscal policy is helping deliver a sharp drop in the public debt-to-GDP ratio in 2021, strengthening debt sustainability while protecting social spending amid the pandemic.\n  - The 2022 budget aims to consolidate the fiscal retrenchment.\n  - Sustaining the reduction in public debt towards the authorities’ medium-term target will require continued fiscal discipline supported by structural fiscal reforms.\n  - Fiscal policy should mitigate the impact of oil-price shocks by saving future windfalls from high oil prices and protecting priority spending in downturns.\n- Monetary policy and exchange rate\n  - The National Bank of Angola (BNA) has appropriately tightened the monetary policy stance to address persistently high inflation, which stems mostly from supply-side factors.\n  - With an increase in the policy rate and restrained money growth, this stance is expected to begin bringing down inflation next year.\n  - The central bank needs to stand ready to further tighten monetary policy should inflation accelerate again, or expectations of high inflation become entrenched.\n  - The BNA’s plans to transition toward an inflation-targeting monetary policy framework and commitment to a flexible exchange rate regime are welcome.\n- Financial sector\n  - Authorities need to continue efforts to ensure the health of the sector, building on substantial progress in financial sector reforms.\n  - Since the start of the program, the sector’s capitalization and the legal framework for regulation and supervision have been reinforced.\n  - Priorities include completing modernization of the regulatory framework and the restructuring and recapitalization of the two largest troubled public banks.\n  - Implementation of plans to address the still high level of non-performing loans is important.\n- Structural reforms and diversification\n  - Diversifying the economy through continued deep structural reforms is essential for achieving inclusive growth and consolidating economic sustainability.\n  - Rapid expansion of non-oil output requires implementation of ongoing reforms to strengthen governance, improve the business environment, promote private investment and trade openness, and develop human capital and infrastructure.\n  - Authorities should promote conditions for faster development of key sectors such as agriculture, telecommunications, and finance."
    },
    {
      "heading": "Key economic indicators (Selected Economic Indicators, 2020-22)",
      "content": "- Real gross domestic product (percent change)\n  - 2020 Actual: -5.2\n  - 2021 Proj: 0.1\n  - 2022 Proj.: 2.9\n- Oil sector (percent change)\n  - 2020 Actual: -8.0\n  - 2021 Proj: -10.6\n  - 2022 Proj.: 1.6\n- Non-oil sector (percent change)\n  - 2020 Actual: -4.0\n  - 2021 Proj: 3.9\n  - 2022 Proj.: 3.4\n- Nominal gross domestic product (GDP)\n  - 2020 Actual: 9.7\n  - 2021 Proj: 39.1\n  - 2022 Proj.: 23.0\n- GDP deflator\n  - 2020 Actual: 15.8\n  - 2021 Proj: 39.0\n  - 2022 Proj.: 19.5\n- Non-oil GDP deflator\n  - 2020 Actual: 22.3\n  - 2021 Proj: 25.7\n  - 2022 Proj.: 22.2\n- Consumer prices (annual average)\n  - 2020 Actual: 25.1\n  - 2021 Proj: 26.8\n  - 2022 Proj.: 18.0\n- Gross domestic product (billions of kwanzas)\n  - 2020 Actual: 33,832\n  - 2021 Proj: 47,071\n  - 2022 Proj.: 57,892\n- Oil gross domestic product (billions of kwanzas)\n  - 2020 Actual: 8,815\n  - 2021 Proj: 14,391\n  - 2022 Proj.: 16,592\n- Non-oil gross domestic product (billions of kwanzas)\n  - 2020 Actual: 25,017\n  - 2021 Proj: 32,680\n  - 2022 Proj.: 41,299\n- Gross domestic product (billions of U.S. dollars)\n  - 2020 Actual: 58.5\n  - 2021 Proj: 73.7\n  - 2022 Proj.: 89.0\n- Gross domestic product per capita (U.S. dollars)\n  - 2020 Actual: 1,885\n  - 2021 Proj: 2,307\n  - 2022 Proj.: 2,704\n- Central government (percent of GDP)\n  - Total revenue\n    - 2020 Actual: 20.8\n    - 2021 Proj: 22.1\n    - 2022 Proj.: 21.6\n  - Of which: Oil-related\n    - 2020 Actual: 10.7\n    - 2021 Proj: 12.8\n    - 2022 Proj.: 12.7\n  - Of which: Non-oil tax\n    - 2020 Actual: 8.8\n    - 2021 Proj: 8.2\n    - 2022 Proj.: 7.8\n  - Total expenditure\n    - 2020 Actual: 22.7\n    - 2021 Proj: 19.3\n    - 2022 Proj.: 19.1\n  - Current expenditure\n    - 2020 Actual: 17.5\n    - 2021 Proj: 15.6\n    - 2022 Proj.: —\n  - Capital spending\n    - 2020 Actual: 5.2\n    - 2021 Proj: 3.7\n    - 2022 Proj.: 3.3\n  - Overall fiscal balance\n    - 2020 Actual: -1.9\n    - 2021 Proj: 2.8\n    - 2022 Proj.: 2.4\n  - Non-oil primary fiscal balance\n    - 2020 Actual: -5.5\n    - 2021 Proj: -4.4\n    - 2022 Proj.: -?\n  - Non-oil primary fiscal balance (percent of non-oil GDP)\n    - 2020 Actual: -7.5\n    - 2021 Proj: -6.3\n    - 2022 Proj.: -7.3\n- Money and credit (end of period, percent change)\n  - Broad money (M2)\n    - 2020 Actual: 24.3\n    - 2021 Proj: 3.0\n    - 2022 Proj.: 12.0\n  - Percent of GDP (M2)\n    - 2020 Actual: 37.5\n    - 2021 Proj: 27.8\n    - 2022 Proj.: 25.3\n  - Velocity (GDP/M2)\n    - 2020 Actual: 2.7\n    - 2021 Proj: 3.6\n    - 2022 Proj.: 4.0\n  - Velocity (non-oil GDP/M2)\n    - 2020 Actual: 2.0\n    - 2021 Proj: 2.5\n  - Credit to the private sector (annual percent change)\n    - 2020 Actual: -7.7\n    - 2021 Proj: 13.0\n    - 2022 Proj.: 12.5\n- Balance of payments\n  - Trade balance (percent of GDP)\n    - 2020 Actual: 27.5\n    - 2021 Proj: 25.0\n    - 2022 Proj.: —\n  - Exports of goods, f.o.b. (percent of GDP)\n    - 2020 Actual: 35.8\n    - 2021 Proj: 43.5\n    - 2022 Proj.: 40.8\n  - Of which: Oil and gas exports (percent of GDP)\n    - 2020 Actual: 33.5\n    - 2021 Proj: 40.9\n    - 2022 Proj.: 38.3\n  - Imports of goods, f.o.b. (percent of GDP)\n    - 2020 Actual: 16.3\n    - 2021 Proj: 15.9\n    - 2022 Proj.: —\n  - Terms of trade (percent change)\n    - 2020 Actual: -36.6\n    - 2021 Proj: 51.2\n    - 2022 Proj.: 5.4\n  - Current account balance (percent of GDP)\n    - 2020 Actual: 1.5\n    - 2021 Proj: 10.8\n    - 2022 Proj.: 9.5\n  - Gross international reserves (end of period, millions of U.S. dollars)\n    - 2020 Actual: 10,978\n    - 2021 Proj: 14,056\n    - 2022 Proj.: 14,756\n  - Gross international reserves (months of next year's imports)\n    - 2020 Actual: 7.4\n    - 2021 Proj: 8.1\n    - 2022 Proj.: —\n  - Net international reserves (end of period, millions of U.S. dollars)\n    - 2020 Actual: 8,379\n    - 2021 Proj: 9,440\n    - 2022 Proj.: 10,140\n- Exchange rate\n  - Official exchange rate (average, kwanzas per U.S. dollar)\n    - 2020 Actual: 578\n    - 2021 Proj: ..\n  - Official exchange rate (end of period, kwanzas per U.S. dollar)\n    - 2020 Actual: 656\n- Public debt (percent of GDP)\n  - Public sector debt (gross)1\n    - 2020 Actual: 135.1\n    - 2021 Proj: 95.9\n    - 2022 Proj.: 78.9\n  - Of which: Central Government debt\n    - 2020 Actual: 125.3\n    - 2021 Proj: 89.5\n    - 2022 Proj.: 72.9\n- Oil\n  - Oil and gas production (millions of barrels per day)\n    - 2020 Actual: 1.388\n    - 2021 Proj: 1.258\n    - 2022 Proj.: 1.282\n  - Oil and gas exports (billions of U.S. dollars)\n    - 2020 Actual: 19.6\n    - 2021 Proj: 30.1\n    - 2022 Proj.: 34.1\n  - Angola oil price (average, U.S. dollars per barrel)\n    - 2020 Actual: 41.3\n    - 2021 Proj: 68.3\n    - 2022 Proj.: 76.0\n  - Brent oil price (average, U.S. dollars per barrel)\n    - 2020 Actual: 42.3\n    - 2021 Proj: 70.2\n    - 2022 Proj.: 77.8\n\nSources: Angolan authorities; and IMF staff estimates and projections.\n\n---\n\n\n References\n\n- Angola and the IMF\n- IMF Policy Advice -- A Factsheet\n- Special Drawing Rights (SDRs) -- A Factsheet\n- Press Releases\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2021/12/22/pr299-angola"
    }
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    "Published: December 22, 2021",
    "The Executive Board completed the sixth review of Angola’s program under an extended arrangement under the Extended Fund Facility (EFF) and concluded the 2021 Article IV consultation.",
    "The Board’s decision allows for an immediate disbursement of SDR 535.1 million (about $748 million).",
    "Total disbursements under the arrangement are SDR 3.2134 billion (about $4.5 billion).",
    "Waivers of nonobservance were approved for the performance criterion on net international reserves of the Banco Nacional de Angola.",
    "Angola’s three-year extended arrangement was approved on December 7, 2018, in the amount of SDR 2.673 billion (about $3.7 billion at the time of approval).",
    "The arrangement aims to:",
    "At the time of the third review, access was augmented by SDR 540 million (about $765 million at the time of approval) to support mitigation of COVID-19 impacts and sustain structural reforms.",
    "The impact of the COVID-19 pandemic on the Angolan economy has begun to abate amid higher oil prices and less disruptive containment measures.",
    "Non-oil growth has started to recover and is expected to contribute to a broad stabilization of overall output in 2021.",
    "Inflation has reached over 25 percent, driven by supply-side factors.",
    "Continued fiscal restraint should deliver a substantial overall surplus in 2021, while higher oil prices are supporting a high current account surplus.",
    "Angola’s overall growth is projected to turn positive in 2022 and reach around 4 percent in the medium term, bolstered by planned growth-enhancing structural reforms.",
    "Inflation is expected to gradually ease starting in 2022 as global food inflation moderates and the central bank maintains a tight policy stance.",
    "A continued prudent fiscal stance, embedded in the 2022 budget plans, will support a rapid decline in the public debt-to-GDP ratio while protecting key health and social spending.",
    "Fiscal policy",
    "Monetary policy and exchange rate",
    "Financial sector",
    "Structural reforms and diversification",
    "Real gross domestic product (percent change)",
    "Oil sector (percent change)",
    "Non-oil sector (percent change)",
    "Nominal gross domestic product (GDP)",
    "GDP deflator",
    "Non-oil GDP deflator",
    "Consumer prices (annual average)",
    "Gross domestic product (billions of kwanzas)",
    "Oil gross domestic product (billions of kwanzas)",
    "Non-oil gross domestic product (billions of kwanzas)",
    "Gross domestic product (billions of U.S. dollars)",
    "Gross domestic product per capita (U.S. dollars)",
    "Central government (percent of GDP)",
    "Money and credit (end of period, percent change)",
    "Balance of payments",
    "Exchange rate",
    "Public debt (percent of GDP)",
    "Oil",
    "[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)",
    "[Special Drawing Rights (SDRs) -- A Factsheet](https://www.imf.org/en/about/factsheets/sheets/2023/special-drawing-rights-sdr)",
    "[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)"
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