Second Review of the Extended Arrangement Under the Extended Fund Facility, Requests for a Waiver of Nonobservance of Performance Criteria, Modifications of Performance Criteria, and Financing Assurances Review-Press Release; Staff Report; and Statement by the Executive Director for Angola
This 2018 Article IV Consultation highlights that lower oil prices since mid-2014 have 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. 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; and settling domestic payments arrears.
This 2015 Article IV Consultation highlights that the oil price shock is adversely impacting the economy of Angola. While oil production has recovered following the completion of maintenance work, non-oil GDP growth is expected to decelerate to 2.1 percent in 2015. The economic situation in 2016 is likely to remain challenging as international oil prices are not expected to recover and risks are on the downside. Growth is projected to remain stable at 3.5 percent in 2016, with the oil sector growing by about 4 percent. The non-oil sector is expected to show a small improvement.
Mr. Mauro Mecagni, Mr. Juan S Corrales, Mr. Jemma Dridi, Mr. Rodrigo Garcia-Verdu, Patrick A. Imam, Mr. Justin Matz, Ms. Carla Macario, Mr. Rodolfo Maino, Mr. Yibin Mu, Ashwin Moheeput, Mr. Futoshi Narita, Mr. Marco Pani, Mr. Manuel Rosales Torres, Mr. Sebastian Weber, and Mr. Etienne B Yehoue
Dollarization—the use of foreign currencies as a medium of exchange, store of value, or unit of account—is a notable feature of financial development under macroeconomically fragile conditions. It has emerged as a key factor explaining vulnerabilities and currency crises, which have long been observed in Latin America, parts of Asia, and Eastern Europe. Dollarization is also present, prominently, in sub-Saharan Africa (SSA) where it remains significant and persistent at over 30 percent rates for both bank loans and deposits—although it has not increased significantly since 2001. However, progress in reducing dollarization has lagged behind other regions and, in this regard, it is legitimate to ask whether this phenomenon is an important concern in SSA. This study fills a gap in the literature by analyzing these issues with specific reference to the SSA region on the basis of the evidence for the past decade.
This Selected Issues Paper assesses Macedonia’s public debt markets and presents recommendations for their further development. Macedonia’s domestic debt market is in the early stages of development and is small by regional standards. The paper also analyzes the main causes of euroization in Macedonia. It discusses the nature of monetary policy in Macedonia where despite an exchange rate peg owing to imperfect capital mobility, there exists some degree of autonomy in the conduct of monetary policy in the short term.
The Executive Board of the IMF has completed the fifth 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 equal to SDR 85.9 million, bringing total disbursements under the arrangement with Angola to an amount equal to SDR 773.01 million. The Angolan authorities should be commended for strong performance under the IMF-supported stabilization and reform program. The sustained fiscal adjustment, helped by higher oil prices, has fostered reserve accumulation, a stable exchange rate, and declining inflation.
Annamaria Kokenyne, Mr. Jeremy Ley, and Mr. Romain M Veyrune
This paper provides a summary of the key policies that encourage dedollarization. It focuses on cases in which the authorities’ intention is to gain greater control of monetary policy and draws on the experiences of countries that have successfully dedollarized. Unlike previous work on the subject, this paper examines both macroeconomic stabilization policies and microeconomic measures, such as prudential regulation of the financial system. This study is also the first attempt to make extensive use of the foreign exchange regulation data reported in the IMF’s Annual Report on Exchange Arrangements and Exchange Restrictions. The main conclusion is that durable dedollarization depends on a credible disinflation plan and specific microeconomic measures.
This Selected Issues paper and Statistical Appendix on Angola underlie monetary policy framework. Angola has adopted an anti-inflation policy that has led to a sharp decline in inflation. To institute a monetary policy framework, a nominal anchor or constraint on the value of domestic currency must be established. Additional work to fine-tune the measures of currency in circulation, conduct more sophisticated tests to assess the relationship between inflation and the monetary aggregates, and determine how to incorporate the currency measure in monetary operations is needed.
This 2004 Article IV Consultation highlights that Angola’s GDP grew by 11 percent in 2004, following a slowdown in growth in 2003, largely reflecting the profile of oil production, which now accounts for one-half of GDP. The economy outside the extractive sector is currently estimated to be growing by about 9 percent. Despite extensive landmines and devastated infrastructure, agricultural production has recently begun to recover. Progress on structural reform and the implementation of policies to deal systematically with poverty reduction has been limited. The state continues to exercise a heavy influence in many sectors.
This Selected Issues paper on Angola reports that oil production in Angola accounts for about half of GDP and about 75 percent of government revenue. The projections for the government’s fiscal position in the medium term will be crucially dependent on both the value of oil production and the proportion that will accrue to the government. However, in addition to the usual uncertainties associated with projections of the total value of oil output, the government’s share has been subject to volatility.