Press Release No. 11/18

Press Release: IMF Executive Board Completes Fourth Review Under Stand-By Arrangement with Angola and Approves US$178.2 Million Disbursement

January 24, 2011

The Executive Board of the International Monetary Fund (IMF) today completed the fourth review of Angola’s economic performance under a program supported by the Stand-By Arrangement. The Board’s decision enables the immediate disbursement of an amount of SDR 114.52 million (about US$178.2 million), bringing total disbursements under the arrangement to Angola to SDR 687.12 million (about US$1.07 billion).

In completing the program review, the Executive Board approved waivers for the nonobservance of the end-December 2010 performance criteria concerning the ceilings on arrears accumulation, on central bank credit extended, and on banking system credit to government and. The Executive Board also approved the modification of the performance criteria relating to domestic arrears and to central bank credit.

At the conclusion of the Executive Board's discussion on Angola, Mr. Naoyuki Shinohara, Deputy Managing Director and Acting Chair, stated:

“The Angolan authorities’ economic and financial program achieved significant progress towards macroeconomic stability as a result of the solid implementation of key program measures, supported by a rebound in oil prices. Foreign reserves are being rebuilt and the fiscal position is improving, aided by expenditure adjustment.

“Spending restraint and recovering oil prices created space for clearance of much of the domestic payments arrears built up in 2008-09. The authorities plan to settle the remainder of these arrears by end-March 2011.

“The 2011 budget balances the need to rebuild reserves with the need to boost capital outlays, which were cut significantly as part of the fiscal adjustment in 2009-10. The effective implementation of quarterly financing plans for line ministries, matching spending commitments with available financial resources, will be a welcome development.

“Monetary policy is appropriately geared to gradually reducing inflation towards single-digit levels. With eased pressures in the currency market, the central bank should rely exclusively on market-based measures to manage exchange rate movements.

“Looking ahead, the authorities’ intention to develop fiscal policy guidelines that would smooth spending levels over the oil price cycle and prevent arrears accumulation will be useful. The multi-year overhaul of the non-oil tax system will also contribute to ensuring fiscal stability over the medium-term.

“Improving transparency in the public sector is a critical goal; publication of externally-audited financial statements of public entities is an essential measure in this regard. The central bank’s implementation of its organizational reform agenda will strengthen its internal governance structures,” Mr. Shinohara said.