IMF Okays $487.5m for Angola, Backs Plan to Cut Public Debt

By Adedapo Adesanya

The International Monetary Fund (IMF) has approved the disbursement of $487.5 million to Angola and reiterated its confidence to help it cut public debt to sustainable levels.

This brought about the total disbursements under the arrangement with the Bretton Wood institution supported by an extended arrangement under the Extended Fund Facility (EFF) and have decided to approve an immediate disbursement.

The IMF Executive Board also approved the Angolan authorities’ request for waivers of applicability, modification and non-observance of some performance criteria, indicative targets, and structural benchmarks.

The second-largest oil producer in Africa has felt the various effects of the COVID-19 pandemic which has continued to negatively impact Angola’s economy and population. Oil production and prices are still weak, and the social impacts of the crisis are layered.

IMF expressed that despite these ongoing challenges, the Angolan government has demonstrated a strong commitment to sound policies under the IMF-supported-arrangement with robust policy responses and strong fiscal adjustments in 2020.

The facility will enable the nation to weather the crisis and mitigate its macroeconomic impact while protecting the most vulnerable in the country.

Initially approved at $3.7 billion by the IMF Executive Board on December 7, 2018, Angola’s three-year extended arrangement aims to restore external and fiscal sustainability, improve governance, and diversify the economy to promote sustainable, private sector-led economic growth.

The IMF in October forecast Angola’s gross domestic product will grow 3.2 per cent in 2021, after contracting for five straight years. The Angolan government sees a much slower recovery, with the economy expected to record no growth this year.

As part of the IMF program, Angola has pledged to sell 195 businesses or stakes, including partial holdings in national oil company Sonangol and diamond firm Endiama, to boost its public finances and reduce the role of the state in the economy.

The government also aims to remove fuel subsidies and increase public transport tariffs once the pandemic subsides, the IMF said in its last review of Angola’s program in September.