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Business and Economics > Public Finance

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Cover IMF Staff Country Reports
Angola: 2024 First Post-Financing Assessment-Press Release; and Staff Report
International Monetary Fund. African Dept.
This paper presents Post Financing Assessment (PFA) Consultation with Angola. Angola’s capacity to repay the IMF is adequate though subject to risks. Angola remained resilient in the face of significant challenges in 2023, including weaker oil production and prices. Spending adjustments helped contain the impact of weaker oil prices and lower production in 2023, though the gains from fiscal consolidation were lower-than-anticipated. The nonoil primary fiscal deficit (NOPFD), estimated at 4.4 percent of gross domestic product (GDP) in 2024, is expected to steadily decline in the medium term on modestly improving non-oil revenues, moderately lower current and capital expenditures, and savings from fuel subsidy reform. Continued efforts on enhancing the monetary policy framework are needed to reduce inflation and support non-oil medium-term growth. Implementing broad ranging structural reforms is vital to improve business environment and maintain growth in the context of a long-term decline of the oil sector. Addressing issues related to governance, gender, and climate change remains critical to achieving economic diversification and sustainable growth.
Keywords:
anchor inflation expectation; private sector borrowing costs; oil price shock; Angola economy; inflation reduction; oil dependence; Oil prices; Oil production; Energy subsidies; Global
Cover IMF Staff Country Reports
Angola: 2023 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Angola
International Monetary Fund. African Dept.
The 2023 Article IV Consultation discusses that 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. 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. The recent monetary policy tightening is welcomed, while further improvements to monetary operations are required, including aligning the interbank market interest rate with the announced policy rate. The central bank (BNA) and the ministry of finance should coordinate money market operations to align interbank liquidity conditions with the announced interest rate corridor while fiscal domestic financing is undertaken through medium- to long-term issuances. The BNA should also continue its transition toward an inflation-targeting framework and greater exchange rate flexibility.
Keywords:
asset declaration regime; policy priority; reducing government's footprint; inflation pressure; AFRITAC South; policy coherence; Energy subsidies; Oil prices; Global
Cover IMF Staff Country Reports
Angola: Discussões sobre a primeira avaliação pós-financiamento-Comunicado de imprensa; Relatório da Equipa Técnica
International Monetary Fund. African Dept.
No seguimento da estabilidade macroeconómica alcançada num contexto especialmente difícil em 2020, a recuperação que teve início em 2021 prosseguiu em 2022 favorecida pelos elevados preços do petróleo. O segundo mandato do Presidente João Lourenço, – iniciado no ano passado – centra-se na promoção da diversificação e do crescimento não petrolífero. Porém, Angola enfrenta desafios significativos em 2023, designadamente o agravamento das perspectivas para os preços do petróleo, a diminuição da produção petrolífera, um contexto externo altamente incerto e a necessidade de reverter a grande flexibilização orçamental do ano passado. Esta última será apoiada pela conclusão integral da reforma dos subsídios aos combustíveis, anunciada pelo governo em 1 de junho de 2023. A capacidade de reembolso de Angola ao FMI é adequada, embora sujeita a riscos elevados. No caso de se materializar um cenário adverso que envolva um choque prolongado dos preços do petróleo, os indicadores de reembolso deteriorar-se-ão, mas permanecerão adequados.
Keywords:
fuel subsidy reform; oil price shock; diversification plan; diversification agenda; public finance; IMF's transparency policy; Oil prices; Energy subsidies; Oil sector; Global; Southern Africa; East Africa
Cover IMF Staff Country Reports
Angola: First Post-Financing Assessment Discussions-Press Release
International Monetary Fund. African Dept.
This paper highlights first post financing assessment discussions in Angola. Successful reforms coupled by firmed oil prices supported the Angola’s economic recovery in 2021–22; however, declined oil production has led to significant challenges to the economy. Towards the end of 2022 and the first half of 2023, the oil sector weakened due to the extension of temporary maintenance operations. With declines of both oil prices and production in the first half of 2023, exports and oil revenues declined, resulting in a weakness in the fiscal and external sectors, and a significant depreciation in the nominal exchange rate in June 2023. Continued efforts are needed to bolster financial stability. Ongoing prudential reforms should continue to improve banking sector oversight and health. Maintaining focus on medium-term structural reforms is critical to maintaining growth in the context of a declining oil production. Lessening the dependence on the oil sector is critical and should remain the authorities’ medium-term focus, to reduce vulnerabilities arising from the increased volatility of this sector.
Keywords:
fuel subsidy reform; oil price shock; diversification plan; diversification agenda; public finance; IMF's transparency policy; Oil prices; Energy subsidies; Oil sector; Global; Southern Africa; East Africa
Cover IMF Staff Country Reports
Angola: Consulta de 2022 ao Abrigo do Artigo IV-Comunicado de Imprensa; Relatório da Equipa Técnica; Anexo Informativo; e Declaração do Director Executivo para Angola
International Monetary Fund. African Dept.
Angola alcançou a estabilização macroeconómica num contexto de grande adversidade em 2020. O crescimento começou a recuperar em 2021. A recuperação acelerou em 2022, apoiada pelos elevados preços do petróleo. O Presidente João Lourenço foi reeleito em agosto de 2022. Angola continua a enfrentar enormes desafios, desde as vulnerabilidades da dívida até à necessidade de diversificar a economia, num cenário de declínio da produção petrolífera a longo prazo. A agenda de reformas das autoridades, nomeadamente o próximo Plano Nacional de Desenvolvimento de 2023–27, centra-se nestes desafios.
Keywords:
staff BOP projection; staff appraisal; asset declaration regime; governance reform; reform agenda; Oil prices; Credit; Global
Cover IMF Staff Country Reports
Angola: Selected Issues
International Monetary Fund. African Dept.
This Selected Issues paper explores development planning, sustainable development goals (SDG) progress, and fiscal space in Angola. Economic diversification and poverty reduction in Angola will require more and better-quality spending on human and physical capital and, thus, greater fiscal space. Spending in these areas has historically been lower relative to lower middle-income country peers, although broadly in line with other SSA countries, and with weak outcomes. Boosting human and physical capital with the goal of economic diversification and poverty reduction in mind will likely be a primary focus of the authorities’ 2023-27 National Development Plan. This paper finds that achieving those goals, as benchmarked by the SDGs, will entail greater and more targeted investment, with the largest spending needs falling around education and health. As such, creating additional fiscal space, following through on the structural fiscal reform agenda, and attracting private investment will all be critical components of improving the level and quality of development spending in Angola.
Keywords:
SDG progress; D. SDG performance; financing framework; growth disorder; guarantee scheme; Credit; Sustainable Development Goals (SDG); Health care spending; Total expenditures; Global
Cover IMF Staff Country Reports
Angola: 2022 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Angola
International Monetary Fund. African Dept.
The 2022 Article IV Consultation discusses that Angola’s economy continued to recover from the coronavirus disease 2019 pandemic in 2022, supported by higher oil prices, improved oil production, and resilient non-oil activity. Non-oil growth was broad based despite a challenging external environment. Growth is estimated at 3.5 percent for 2023. The non-oil primary deficit increased in 2022 following higher-than-budgeted capital expenditure and higher-than-expected fuel subsidy costs. Nonetheless, the public debt-to-gross domestic product (GDP) ratio fell by an estimated 17.5 percentage points of GDP to an estimated 66.1 percent of GDP, aided by a stronger exchange rate. The current account is estimated to have remained in a large surplus in 2022, while foreign currency reserve coverage remained adequate. Overall growth is expected to continue in 2023 and reach about 4 percent in the medium term, as the authorities’ structural reform agenda supports the non-oil sector. Inflation should continue its gradually declining path, reaching single digits in 2024. The 2023 budget envisions a resumption of fiscal adjustment, which is necessary to approach the authorities’ twin medium-term fiscal and debt targets and guard against debt vulnerabilities.
Keywords:
staff BOP projection; staff appraisal; asset declaration regime; governance reform; reform agenda; Oil prices; Credit; Global
Cover IMF Staff Country Reports
Angola: Temas Seleccionados
International Monetary Fund. African Dept.
Temas Seleccionados
Keywords:
SDG progress; D. SDG performance; financing framework; growth disorder; guarantee scheme; Credit; Sustainable Development Goals (SDG); Health care spending; Total expenditures; Global
Cover IMF Working Papers
Public Debt and Real GDP: Revisiting the Impact
Constance de Soyres
,
Reina Kawai
, and
Mengxue Wang
This paper provides new empirical evidence of the impact of an unanticipated change in public debt on real GDP. Using public debt forecast errors, we identify exogenous changes in public debt to assess the impact of a change in the debt to GDP ratio on real GDP. By analyzing data on gross public debt for 178 countries over 1995-2020, we find that the impact of an unanticipated increase in public debt on the real GDP level is generally negative and varies depending on other fundamental characteristics. Specifically, an unanticipated increase in the public debt to GDP ratio hurts real GDP level for countries that have (i) a high initial debt level or (ii) a rising debt trajectory over the five preceding years. On the contrary, an unanticipated increase in public debt boosts real GDP for countries that have (iii) a low-income level or (iv) completed the HIPC debt relief initiative.
Keywords:
Sovereign Debt; Growth; IMF predictions; public debt shock; GDP ratio; public debt trajectory; evolution of public debt; level classification; Debt relief; Global
Cover IMF Staff Country Reports
Angola: 2021 Article IV Consultation and Six Review under the Extended Arrangement of the Extended Fund Facility and Request for a Waiver of Nonobservance of a Performance Criterion; Press Release; Staff Report; and Statement by the Executive Director for Angola
International Monetary Fund. African Dept.
Policies since 2018 have stabilized the economy in a very difficult environment. Yet many challenges remain for sustainable development, especially high debt and oil dependency. The authorities remain committed to continued reforms.
Keywords:
national bank of Angola; minority stake; monetary policy stance; state reform; EFF arrangement; Oil prices; Inflation; Global