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IMF Executive Board Concludes 2018 Article IV Consultation with Angola

On May 18, 2018, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation [1] with Angola.

Lower oil prices since mid-2014 placed the Angolan economy under stress. The authorities initially reacted to the oil price shock with significant fiscal tightening and exchange rate adjustments coupled with foreign exchange quantitative restrictions. The policy mix in the run-up to the August 2017 elections—fiscal expansion and pegged exchange rate—led to a further erosion of fiscal and external buffers. The Government of President João Lourenço has focused attention on improving governance and restoring macroeconomic stability. The Government’s macroeconomic stabilization program envisages: upfront fiscal consolidation; greater exchange rate flexibility; reducing the public debt-to-GDP ratio to 60 percent over the medium term; improving the public debt profile; settling domestic payments arrears; and enhancing Angola’s AML/CFT framework.

Executive Board Assessment [2]

Executive Directors agreed with the thrust of the staff appraisal. They welcomed the government’s reform program aimed at addressing its post‑conflict development challenges, restoring macroeconomic stability, and improving the business environment. Directors welcomed the recent improvements in economic conditions and noted that more favorable oil prices present a unique opportunity to address macroeconomic imbalances, including the erosion of fiscal and external buffers, and reduce dependency on oil. In this context, Directors underscored the need for steadfast implementation of the government’s macroeconomic stabilization program and for structural reforms to diversify the economy and support inclusive growth.

Directors supported the fiscal deficit reduction outlined in the 2018 budget and stressed that any revenue windfalls should be used to clear domestic arrears and reduce public debt. With oil prices predicted to decline over the medium term, Directors underscored the need for additional but gradual fiscal consolidation to put public debt on a clear downward path. Directors emphasized that the consolidation should be underpinned by mobilizing additional non‑oil fiscal revenue, including by improving tax compliance and the planned introduction of a VAT, as well as further rationalizing public expenditure and improving the quality of public investment while expanding well‑targeted social programs.

Directors agreed that monetary and exchange rate policies should play a vital role in rebalancing the foreign exchange market and containing inflation. They welcomed the transition to greater exchange rate flexibility and the new monetary policy framework anchored on base money targeting consistent with the inflation objective. Directors stressed the need to gradually phase out direct foreign exchange sales by the central bank, and to set a clear strategy and timetable for eliminating exchange restrictions and multiple currency practices.

Directors stressed the importance of preserving the health of the banking sector, including the need for concrete actions to complete asset quality reviews, and to strengthen crisis management, emergency liquidity assistance, and the AML/CFT frameworks. They supported ongoing efforts to reinforce capital and liquidity buffers while strengthening governance at the state‑owned banks.

Directors noted that the new government’s structural reform agenda is appropriately focused on improving governance, fighting corruption, and improving the weak business environment. They urged concerted efforts to ensure that the reforms are implemented consistently for Angola to reap the expected gains. Directors stressed the need to continue building strong institutions to help ensure that the ongoing reforms have a lasting positive impact on the lives of the Angolan people.

It is expected that the next Article IV consultation with Angola will be held on the standard 12‑month cycle.

Table 1. Angola: Main Economic Indicators, 2010–2019

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Prel.

Prel.

Est.

Proj.

Real economy (percent change, except where noted)

Real gross domestic product

3.5

3.9

5.2

6.8

4.7

3.0

-0.8

1.0

2.2

2.5

Oil sector

2.8

-5.6

4.3

-0.9

-2.6

6.5

-1.7

0.5

2.3

0.1

Non-oil sector

7.6

9.5

5.6

10.8

8.0

1.6

-0.4

1.2

2.1

3.5

Nominal gross domestic product

26.6

28.9

11.2

10.9

3.3

-1.1

26.6

32.4

40.8

18.1

Oil sector

27.8

36.5

7.3

-3.3

-10.7

-33.0

9.6

28.4

82.5

8.9

Non-oil sector

25.7

22.8

14.7

22.8

12.6

15.7

31.8

33.4

30.5

21.3

GDP deflator

22.4

24.1

5.7

3.8

-1.3

-4.0

27.7

31.0

37.8

15.3

Non-oil GDP deflator

16.8

12.2

8.6

10.8

4.3

13.9

32.4

31.8

27.9

17.2

Consumer prices (annual average)

14.5

13.5

10.3

8.8

7.3

10.3

32.4

31.7

27.8

17.1

Consumer prices (end of period)

15.3

11.4

9.0

7.7

7.5

14.3

41.9

26.3

24.7

15.0

Gross domestic product (billions of kwanzas)

7,585

9,780

10,876

12,056

12,458

12,321

15,603

20,656

29,073

34,348

Oil gross domestic product (billions of kwanzas)

3,401

4,641

4,981

4,818

4,304

2,884

3,162

4,061

7,409

8,069

Non-oil gross domestic product (billions of kwanzas)

4,184

5,139

5,895

7,239

8,154

9,436

12,440

16,595

21,664

26,278

Gross domestic product (billions of U.S. dollars)

82.5

104.1

113.9

124.9

126.7

102.6

95.3

124.5

119.1

121.0

Gross domestic product per capita (U.S. dollars)

3,602

4,412

4,687

4,989

4,914

3,863

3,485

4,418

4,102

4,048

Central government (percent of GDP)

Total revenue

43.4

48.8

46.5

40.2

35.3

27.3

18.6

15.8

18.2

18.1

Of which: Oil-related

33.0

39.0

37.7

30.1

23.8

15.4

8.8

8.4

11.7

10.8

Of which: Non-oil tax

7.8

7.3

6.6

8.1

9.1

9.3

7.9

5.8

5.6

6.4

Total expenditure

40.0

40.2

41.8

40.5

41.9

30.6

23.4

21.8

20.2

20.5

Current expenditure

28.6

30.0

29.4

28.5

29.4

24.7

19.2

16.2

16.2

15.6

Capital spending

11.4

10.2

12.5

12.0

12.5

6.0

4.1

5.5

4.0

5.0

Overall fiscal balance

3.4

8.7

4.6

-0.3

-6.6

-3.3

-4.8

-6.0

-2.0

-2.4

Non-oil primary fiscal balance

-26.2

-26.9

-29.5

-28.2

-28.1

-15.9

-10.2

-10.8

-8.8

-8.3

Non-oil primary fiscal balance (Percent of non-oil GDP)

-47.4

-51.1

-54.5

-47.0

-42.9

-20.8

-12.8

-13.4

-11.8

-10.8

Money and credit (end of period, percent change)

Broad money (M2)

11.0

35.7

7.9

14.2

16.1

11.8

14.4

-0.1

14.4

21.3

Percent of GDP

35.3

37.6

35.4

36.5

41.0

46.4

41.8

31.6

25.7

26.3

Velocity (GDP/M2)

2.9

2.7

2.8

2.7

2.4

2.2

2.4

3.2

3.9

3.8

Velocity (non-oil GDP/M2)

1.6

1.4

1.5

1.6

1.6

1.7

1.9

2.5

2.9

2.9

Credit to the private sector (12-month percent change)

19.2

28.8

24.2

15.0

1.1

17.6

-1.8

1.3

27.2

22.8

Balance of payments

Trade balance (percent of GDP)

41.1

45.2

41.6

33.5

24.1

12.2

14.7

13.5

17.4

16.5

Exports of goods, f.o.b. (percent of GDP)

61.3

64.6

62.4

54.6

46.7

32.3

28.9

26.2

33.4

31.0

Of which: Oil and gas exports (percent of GDP)

59.8

63.0

61.2

53.6

45.5

31.1

27.5

25.1

32.2

29.7

Imports of goods, f.o.b. (percent of GDP)

20.2

19.4

20.8

21.1

22.6

20.2

14.2

12.7

16.0

14.5

Terms of trade (percent change)

19.3

24.4

5.6

-1.5

-8.5

-41.5

-14.8

21.7

16.8

-7.4

Current account balance (percent of GDP)

9.1

12.6

12.2

6.7

-3.0

-10.0

-5.1

-4.5

-3.5

-2.5

Gross international reserves (end of period, millions of U.S. dollars)

19,679

27,517

32,156

32,231

27,795

24,419

24,353

17,938

14,338

15,238

Gross international reserves (months of next year's imports)

5.4

7.2

7.8

7.2

8.8

10.7

9.2

6.0

5.2

5.8

Net international reserves (end of period, millions of U.S. dollars)

18,797

26,323

30,828

31,172

27,276

24,266

20,807

13,300

9,700

10,600

Exchange rate

Official exchange rate (average, kwanzas per U.S. dollar)

91.9

93.9

95.5

96.5

98.3

120.1

163.7

165.9

Official exchange rate (end of period, kwanzas per U.S. dollar)

92.6

95.3

95.8

97.6

102.9

135.3

165.9

165.9

Debt (percent of GDP)

Total public sector debt (gross)1

44.3

33.8

29.9

32.9

40.7

64.6

79.8

64.1

72.9

69.9

Of which: Sonangol

9.1

9.5

7.9

10.9

12.5

14.2

9.9

3.9

4.5

4.2

Oil

Oil and gas production (millions of barrels per day)

1.758

1.660

1.730

1.716

1.672

1.780

1.744

1.757

1.798

1.800

Oil and gas exports (billions of U.S. dollars)

49.4

65.6

69.7

66.9

57.6

31.9

26.2

31.2

38.3

36.0

Angola oil price (average, U.S. dollars per barrel)

77.8

108.7

110.9

107.7

96.9

50.0

40.9

51.6

62.5

58.5

Brent oil price (average, U.S. dollars per barrel)

79.6

111.0

112.0

108.8

98.9

52.4

44.0

54.4

64.7

60.7

Crude oil price (average three spot prices, U.S. dollars per barrel)

79.0

104.0

105.0

104.1

96.2

50.8

42.8

52.8

62.3

58.2

Sources: Angolan authorities and IMF staff estimates and projections.

1 Includes debt for the state-oil company, Sonangol, that is not directly guaranteed by the government.


[1] Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country's economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board.

[2] At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country's authorities. An explanation of any qualifiers used in summing up can be found here: http://www.imf.org/external/np/sec/misc/qualifiers.htm.

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