Washington, DC: The Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Angola.

Angola’s economic recovery in 2021/22 was nearly halted in 2023 by a double shock in the first half of the year, as the oil sector weakened, and the debt moratorium ended. Growth is estimated at 0.5 percent for 2023, with an estimated contraction in the oil sector of 6.1 percent and softened non-oil growth at 2.9 percent. Headline inflation increased significantly in 2023, to 20.0 percent y/y at end-December, driven by the depreciation of the kwanza and cuts in fuel subsidy in mid-2023.

In response to the shock, the authorities tightened their fiscal stance in the second half of 2023, by cutting capital spending and related goods and services, and implementing the first phase of their fuel subsidy reform in June 2023. These policy measures resulted in overall and non-oil primary fiscal balances of -0.1 percent of GDP and -6.3 percent of GDP, respectively. Meanwhile, public debt-to-GDP is projected to have increased by 19 p.p. to about 84 percent of GDP in 2023, mainly driven by a significantly weaker exchange rate. The depreciation of the kwanza in June 2023 helped the economy adjust to lower oil exports and preserve international reserves, which remained at about 7 months of import coverage. The exchange rate has remained broadly stable since then.

Economic growth is projected to recover in the near-term, supported by improved oil production and the recovery in the non-oil sector. Inflation is expected to remain temporarily elevated in 2024 and to gradually decline thereafter, as the effects of the subsidy removal and the pass-through from nominal exchange rate depreciation diminish. Meanwhile, the primary fiscal balance is expected to improve and remain positive given the expected continuation of fuel subsidy reform; lower debt service starting in 2024; and the expected recovery in growth. Downside risks to the near-term outlook include a larger-than-expected decline in global oil prices and/or domestic oil production as well as a delayed implementation of the fuel subsidy reform. Upside risks would mainly stem from higher-than-expected oil prices.

Executive Board Assessment

Executive Directors agreed with the thrust of the staff appraisal. They recognized that Angola’s economic recovery was nearly halted in 2023, as the oil sector weakened, and the debt moratorium ended. At the same time, risks to the outlook remain high, including heavy dependence on the oil sector, debt and banking sector vulnerabilities, and uncertain market access. Against this background, Directors emphasized the need for continued fiscal consolidation and structural reforms, supported by technical assistance from the Fund and other development partners, to maintain macroeconomic stability and foster diversified, resilient, and inclusive growth.

Directors agreed that continued fiscal consolidation and reforms are critical to strengthen fiscal and public debt sustainability. They welcomed the continued reduction of fuel subsidies in the 2024 budget and stressed the importance of sound implementation accompanied by timely and effective communication and well‑targeted mitigation measures. Directors also urged the authorities to accelerate the implementation of fiscal structural reforms to enhance budget credibility and contingency planning, as well as to strengthen revenue mobilization, expenditure prioritization, and debt management.

Directors agreed on the need to maintain a tight monetary policy stance to contain exchange rate and inflationary pressures. While welcoming that most of the recommendations from the safeguards assessment have been implemented, they stressed the need to further strengthen the monetary policy implementation framework to enhance monetary policy transmission, including by improving liquidity management, central bank communications, and coordination with the Ministry of Finance. Directors also supported the continued efforts to transition towards an inflation‑targeting framework, improve FX market functioning, develop rule‑based FXI policy under the IMF’s Integrated Policy Framework, and ensure exchange rate flexibility as a key buffer against shocks.

Directors urged the authorities to continue their efforts to strengthen financial stability, building on strong previous progress. They noted the importance of effectively implementing the new supervisory regulations and operationalizing the bank resolution framework. Efforts to increase financial intermediation and credit to the private sector should also continue.

Directors highlighted the need for successful implementation of the National Development Plan to achieve a more diversified and resilient growth. Priorities should focus on enhancing human capital, notably through reductions in gender gaps, backed by effective social and public investment spending; improving the business environment and access to finance; strengthening climate adaptation and resilience; and sustaining efforts to address issues related to AML/CFT, governance, and corruption. Directors noted that efforts on all these fronts are macro‑critical for Angola.

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

[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 summings up can be found here: http://www.IMF.org/external/np/sec/misc/qualifiers.htm.

                             Angola: Selected Economic Indicators, 2022-24

Real economy (percent change, except where otherwise indicated)
Real gross domestic product3.00.52.6
Oil sector0.5-6.11.2
Non-oil sector4.22.93.0
Nominal gross domestic product (GDP)20.113.927.7
Oil sector5.85.833.8
Non-oil sector26.416.925.7
GDP deflator16.513.424.5
Non-oil GDP deflator21.413.622.0
Consumer prices (annual average)21.413.622.0
Consumer prices (end of period)13.820.018.0
Gross domestic product (billions of kwanzas)56,76964,67882,591
Oil gross domestic product (billions of kwanzas)15,32216,20621,680
Non-oil gross domestic product (billions of kwanzas)41,44748,47260,911
Gross domestic product (billions of U.S. dollars)122.894.492.4
Gross domestic product per capita (U.S. dollars)3,4392,5662,438
Central government(percent of GDP)
Total revenue23.220.020.8
Of which: Oil-related13.612.112.8
Of which: Non-oil tax7.96.76.7
Total expenditure22.520.118.2
Current expenditure16.416.415.2
Capital spending6.13.83.0
Overall fiscal balance0.7-0.12.6
Non-oil primary fiscal balance-8.5-6.3-4.5
Non-oil primary fiscal balance (percent of non-oil GDP)-11.6-8.4-6.1
Money and credit (end of period, percent change)
Broad money (M2)-1.423.819.1
Percent of GDP20.021.720.3
Velocity (GDP/M2)
Velocity (non-oil GDP/M2)
Credit to the private sector (annual percent change)-4.812.812.7
Balance of payments
Trade balance (percent of GDP)26.723.425.1
Exports of goods, f.o.b. (percent of GDP)40.738.239.6
Of which: Oil and gas exports (percent of GDP)38.735.436.5
Imports of goods, f.o.b. (percent of GDP)14.114.814.6
Terms of trade (percent change)35.2-21.5-2.1
Current account balance (percent of GDP)
Gross international reserves (end of period, millions of U.S. dollars)14,66114,73315,141
Gross international reserves (months of next year’s imports)
Exchange rate
Official exchange rate (average, kwanzas per U.S. dollar)462
Official exchange rate (end of period, kwanzas per U.S. dollar)504
Public debt (percent of GDP)
Public sector debt (gross)164.884.569.5
Of which: Central Government debt60.578.165.6
Oil and gas production (millions of barrels per day)1.2501.2051.241
Oil and gas exports (billions of U.S. dollars)47.533.433.7
Angola oil price (average, U.S. dollars per barrel)100.381.078.7
Brent oil price (average, U.S. dollars per barrel)99.082.780.1
Sources: Angolan authorities; and IMF staff estimates and projections.
Includes debt of the Central Government, external debt of state oil company Sonangol and state airline company TAAG, and guaranteed debt.

SOURCE : https://www.imf.org/en/News/Articles/2024/03/09/pr2481-imf-executive-board-concludes-2023-article-iv-consultation-with-angola