The Executive Board of the International Monetary Fund (IMF) has approved the disbursement of about $487.5 million to Angola.
The COVID-19 pandemic continues to represent a significant challenge to Angola’s economy, and “the authorities’ policy response to the COVID-19 shock remains robust and they remain strongly committed to the economic program under the Extended Fund Facility, with satisfactory implementation.”
‘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),” IMF said in a statement on January 11.
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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 Angola’s 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.
Ms. Antoinette Sayeh, Deputy Managing Director said 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.”
She wrote in a statement: “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.”