## IMF Executive Board Concludes First Post Financing Assessment Discussions with Angola _IMF News, September 5, 2023_ ## Source details **Canonical URL:** [IMF Executive Board Concludes First Post Financing Assessment Discussions with Angola](https://www.imf.org/en/news/articles/2023/09/05/pr23303-angola-imf-executive-board-concludes-first-post-financing-discussion-with-angola) ## Other formats - [Markdown version](/en/news/articles/2023/09/05/pr23303-angola-imf-executive-board-concludes-first-post-financing-discussion-with-angola/index.md) - [Structured JSON version](/en/news/articles/2023/09/05/pr23303-angola-imf-executive-board-concludes-first-post-financing-discussion-with-angola/index.json) - [Bundle manifest](/en/news/articles/2023/09/05/pr23303-angola-imf-executive-board-concludes-first-post-financing-discussion-with-angola/bundle-manifest.json) ## Bibliographic details - Published: September 5, 2023 --- ### Context and recent developments - Successful reforms coupled by firmed oil prices supported Angola’s economic recovery in 2021–22, however, declined oil production has led to significant challenges to the economy. - Towards the end of 2022 and the first half of 2023, the oil sector weakened due to the extension of temporary maintenance operations. - With declines of both oil prices and production in the first half of 2023, exports and oil revenues declined, resulting in a weakness in the fiscal and external sectors, and a significant depreciation in the nominal exchange rate in June 2023. - Following the strong nominal exchange rate depreciation and the partial removal of fuel subsidies, inflation increased in June, to 11.3 percent (from 10.6 percent); for the first time in 15 consecutive months; whereby the BNA (Banco Nacional de Angola) responded by tightening liquidity conditions. - On August 29, 2023, the Executive Board concluded the Post Financing Assessment (PFA) and endorsed the Staff Appraisal on a lapse-of-time basis. ### Executive Board assessment summary - Angola’s capacity to repay the Fund is adequate, despite elevated risks. - Angola’s economic recovery in the near term remains dependent on the oil sector and is largely dependent on the materialization of the diversification plans in the medium term. - Despite the weaker outturns for oil production in 2023 H1, growth momentum is expected to continue once temporary maintenance operations are complete. - Risks to the outlook remain high, given the continued high reliance on the oil sector; the medium term is largely dependent on the recovery of the non-oil sector and the authorities’ progress with the diversification plan. - Under the baseline, projected repayments to the Fund will increase over the medium term but would peak in 2026 at broadly comfortable levels. - Under a significant and prolonged shock scenario, the projected capacity to repay indicators would remain manageable. - Steps to mitigate shocks include allowing the exchange rate to function as a shock absorber and rationalization of some expenditure. ### Growth, inflation, and outlook - Growth is expected to slow down to 0.9 percent in 2023, before stabilizing at around 3.4 percent in the medium term, aided by the authorities’ structural reform and diversification agenda. - Inflation is expected to increase temporarily in 2023/24 due to higher energy prices related to the fuel subsidy reform, and to ease thereafter. - Downside risks to the outlook include a larger-than-expected decline in global oil prices, continued weakness of oil production and failure to fully implement the planned fuel subsidy reform in 2024. ### Fiscal policy and public finances - A moderate fiscal adjustment is expected in 2023, in line with the budget, with a more significant adjustment expected in 2024 with the planned fuel subsidy reform. - Although the near-term fiscal outlook has worsened since the Article IV, the authorities would reach their medium-term fiscal targets under the baseline with a full implementation of their subsidy reform. - Fiscal slippage has reduced buffers and a sustained adjustment is required to mitigate risks. - The authorities should continue to act swiftly to reverse the large fiscal slippage of 2022. - Critical actions: - Fully implement the subsidy reform announced on June 1, with mitigation measures to support the vulnerable population. - Pursue tax policy measures to mobilize non-oil domestic revenue. - Make further progress on fiscal structural agenda, including public financial management and public investment management reforms. ### Financial sector stability - Continued efforts are needed to bolster financial stability. - Ongoing prudential reforms should continue to improve banking sector oversight and health. - To safeguard market confidence and reduce contingent fiscal risks, the DGF needs to strengthen its financial and operational capacity. - The BNA should prepare for the decisive resolution or liquidation of problem banks, as necessary, while protecting only small depositors. ### Structural reforms and diversification - Maintaining focus on medium-term structural reforms is critical to maintaining growth in the context of a declining oil production. - Lessening dependence on the oil sector is critical and should remain the authorities’ medium-term focus. - Continued efforts are needed to strengthen governance, improve the business environment, and promote private investment, guided by the authorities’ diversification plans and the new National Development Plan (2023–27). ### Key economic indicators (selected, 2022–24) - Real gross domestic product: 3.0 (2022), 0.9 (2023 Proj.), 3.1 (2024 Proj.) - Oil sector (real percent change): 0.5 (2022), -6.1 (2023 Proj.), — (2024 value shown as 1.234 in oil production section) - Non-oil sector (real percent change): 4.2 (2022), 3.4 (2023 Proj.), 3.8 (2024 Proj.) - Nominal gross domestic product (GDP): 20.1 (2022), 12.5 (2023 Proj.), 27.0 (2024 Proj.) - GDP deflator: 16.6 (2022), 11.5 (2023 Proj.), 23.2 (2024 Proj.) - Non-oil GDP deflator: 21.4 (2022), 14.6 (2023 Proj.), 22.3 (2024 Proj.) - Consumer prices (annual average): 13.8 (2022), 18.8 (2023 Proj.), 25.6 (2024 Proj.) - Gross domestic product (billions of kwanzas): 56,778 (2022), 63,851 (2023 Proj.), 81,078 (2024 Proj.) - Oil GDP (billions of kwanzas): 15,330 (2022), 14,732 (2023 Proj.), 18,687 (2024 Proj.) - Non-oil GDP (billions of kwanzas): 41,447 (2022), 49,119 (2023 Proj.), 62,391 (2024 Proj.) - Gross domestic product (billions of U.S. dollars): 122.8 (2022), 96.9 (2023 Proj.), 94.6 (2024 Proj.) - GDP per capita (U.S. dollars): 3,438 (2022), 2,635 (2023 Proj.), 2,497 (2024 Proj.) - Total revenue (central government, percent of GDP): 21.8 (2022), 21.5 (2023 Proj.), — (2024 entry present) - Of which: Oil-related revenue (percent of GDP): 13.6 (2022), 11.8 (2023 Proj.), 11.3 (2024 Proj.) - Of which: Non-oil tax (percent of GDP): 7.9 (2022), 7.8 (2023 Proj.), — (2024 entry present) - Total expenditure (percent of GDP): 22.5 (2022), 23.9 (2023 Proj.), 20.7 (2024 Proj.) - Current expenditure (percent of GDP): 16.4 (2022), 19.0 (2023 Proj.), 16.5 (2024 Proj.) - Capital spending (percent of GDP): 6.1 (2022), 4.9 (2023 Proj.), — (2024 entry present) - Overall fiscal balance (percent of GDP): 0.7 (2022), -2.1 (2023 Proj.), 0.8 (2024 Proj.) - Non-oil primary fiscal balance: -8.5 (2022), -8.3 (2023 Proj.), -5.4 (2024 Proj.) - Non-oil primary fiscal balance (percent of non-oil GDP): -11.6 (2022), -10.8 (2023 Proj.), -7.0 (2024 Proj.) - Broad money (M2, end of period percent change): -1.4 (2022), 24.7 (2023 Proj.) - Broad money (percent of GDP): 20.0 (2022), 19.6 (2023 Proj.) - Velocity (GDP/M2): 5.0 (2022), 5.1 (2023 Proj.) - Velocity (non-oil GDP/M2): 3.6 (2022), 3.9 (2023 Proj.) - Credit to the private sector (annual percent change): -4.8 (2022), 6.3 (2023 Proj.) - Trade balance (percent of GDP): 26.7 (2022), 21.7 (2023 Proj.), 22.2 (2024 Proj.) - Exports of goods, f.o.b. (percent of GDP): 40.8 (2022), 36.2 (2023 Proj.), 36.4 (2024 Proj.) - Of which: Oil and gas exports (percent of GDP): 38.7 (2022), 33.5 (2023 Proj.), 33.3 (2024 Proj.) - Imports of goods, f.o.b. (percent of GDP): 14.1 (2022), 14.5 (2023 Proj.), 14.2 (2024 Proj.) - Terms of trade (percent change): 35.6 (2022), -27.0 (2023 Proj.), -6.0 (2024 Proj.) - Current account balance (percent of GDP): 9.6 (2022), 2.3 (2023 Proj.), 3.2 (2024 Proj.) - Gross international reserves (end of period, millions of U.S. dollars): 14,661 (2022), 13,701 (2023 Proj.), 14,034 (2024 Proj.) - Gross international reserves (months of next year's imports): 7.2 (2022), 7.1 (2023 Proj.), 7.0 (2024 Proj.) - Official exchange rate (average, kwanzas per U.S. dollar): 462 (2022), … - Official exchange rate (end of period, kwanzas per U.S. dollar): 504 (2022 entry shown) - Public sector debt (gross, percent of GDP): 65.2 (2022), 83.2 (2023 Proj.), 75.6 (2024 Proj.) - Of which: Central Government debt (percent of GDP): 60.8 (2022), 77.1 (2023 Proj.), 71.7 (2024 Proj.) - Oil and gas production (millions of barrels per day): 1.250 (2022), 1.206 (2023 Proj.), 1.234 (2024 Proj.) - Oil and gas exports (billions of U.S. dollars): 47.5 (2022), 32.5 (2023 Proj.), 31.5 (2024 Proj.) - Angola oil price (average, U.S. dollars per barrel): 100.3 (2022), 76.7 (2023 Proj.), 72.1 (2024 Proj.) - Brent oil price (average, U.S. dollars per barrel): 99.0 (2022), 78.4 (2023 Proj.), 73.6 (2024 Proj.) *Source: IMF Executive Board press release, "IMF Executive Board Concludes First Post Financing Assessment Discussions with Angola", September 5, 2023.* --- ## References - [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/) - [Post Financing Assessment](https://www.imf.org/en/About/Factsheets/Sheets/2023/Post-Financing-Assessment-PFA) - [IMF lending program](https://www.imf.org/en/About/Factsheets/IMF-Lending) - [https://www.imf.org/en/home](https://www.imf.org/en/home) _Source: https://www.imf.org/en/news/articles/2023/09/05/pr23303-angola-imf-executive-board-concludes-first-post-financing-discussion-with-angola_