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Angola: Staff Report for the 2016 Article IV Consultation—Informational Annex

Author(s):
International Monetary Fund. African Dept.
Published Date:
February 2017
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Fund Relations

(As of November 30, 2016)

Membership Status: Joined September 19, 1989; Article XIV

General Resources Account:SDR MillionPercent of Quota
Quota740.10100.00
Fund holdings of currency (holdings rate)648.1287.57
Reserve tranche position113.6115.35
SDR Department:SDR MillionPercent of Allocation
Net cumulative allocation273.01100.00
Holdings228.1383.56
Outstanding Purchases and Loans:SDR MillionPercent of Quota
Stand-By Arrangements21.472.90

Latest Financial Arrangements:

TypeDate ofExpirationAmountAmount
ArrangementDateApprovedDrawn
(SDR Million)(SDR Million)
Stand-ByNov 23, 2009Mar 30, 2012858.90858.90
Arrangement

Projected Payments to Fund

(SDR Million; based on existing use of resources and present holdings of SDRs):

Forthcoming
20162017201820192020
Principal10.7410.74
Charges/Interest0.190.110.110.11
Total10.7410.930.110.110.11

Implementation of HIPC Initiative: Not Applicable

Implementation of Multilateral Debt Relief Initiative (MDRI): Not Applicable

Implementation of Catastrophe Containment and Relief (CCR): Not Applicable

Safeguards Assessments:1 The first-time safeguards assessment, which was finalized in May 2010, found that the National Bank of Angola (BNA) is subject to annual external audits by a reputable firm, but the audit opinions were qualified. The assessment confirmed weak governance and transparency practices at the BNA, including lack of timely publication of annual financial statements. The assessment made recommendations to strengthen the control framework in the reserves management and internal audit areas, and to enhance the legal framework and independence of the central bank. Some progress has been made in addressing recommendations. Outstanding key recommendations include: (i) amending the BNA Law to align it with best international practices; (ii) implementing International Financial Reporting Standards (IFRS); and (iii) resolving remaining audit qualifications. The audited 2015 financial statements have yet to be published, as stipulated under the Safeguards Policy.

Exchange Arrangements: The de jure exchange rate arrangement is floating. The de facto exchange rate arrangement has been classified as ‘other managed’ since June 2015. However, the kwanza has been re-pegged to the U.S. dollar since mid-April 2016. The BNA closely monitors exchange rate fluctuations to maintain price stability in the economy and frequently intervenes in the foreign exchange market by holding foreign exchange auctions and direct sales. The BNA receives foreign currency from taxes paid by oil companies to the government, and also buys foreign exchange from oil companies who make payments to residents for services provided to them in kwanza. The BNA then sells the foreign currency to the market, with special focus on the oil and other priority sectors. The official exchange rate of the kwanza vis-à-vis the U.S. dollar has declined by more than 40 percent since September 2014. International reserves have been used to smooth the depreciation, declining by US$6⅔ billion since September 2014, to US$20⅓ billion in November 2016 on a net basis. The BNA publishes the auction results and respective reference rates.

Angola continues to maintain restrictions on the making of payments and transfers for current international transactions under the transitional arrangements of Article XIV, Section 2. The measures maintained pursuant to Article XIV are: (i) limits on the availability of foreign exchange for invisible transactions, such as travel, medical or educational allowances; and (ii) limits on unrequited transfers to foreign-based individuals and institutions. In addition, Angola maintains three exchange restrictions subject to Fund jurisdiction under Article VIII, Section 2(a) resulting from (i) the discriminatory application of the 0.015 percent stamp tax on foreign exchange operations; (ii) the operation of the priority list for access to U.S. dollars at the official exchange rate; and (iii) a special tax of 10% on transfers to non-residents under contracts for foreign technical assistance or management services.2 Angola also maintains three multiple currency practices that are subject to approval under Article VIII, Section 3 arising from the lack of a mechanism to prevent potential spreads in excess of 2 percent emerging (i) between successful bids within the BNA’s foreign exchange auction; and (ii) for transactions that take place at the reference rate in place and the rate at which transactions take place in the foreign exchange auction on that day, and (iii) the discriminatory application of the 0.015 stamp tax on foreign exchange operations.

Article IV Consultation: Angola is on the standard 12-month cycle. The next Article IV Consultation is scheduled to be completed by January 2018.

Technical Assistance: Technical assistance activities since 2013 are listed below:

Monetary and Capital Markets (MCM)Year of Delivery
Technical Assistance on Correspondent Banking Relationships2016
AFRITAC South: Liquidity Management (various missions)2015, 2016
AFRITAC South: Inflation Forecasting Framework (various missions)2015, 2016
AFRITAC South: Macro-Prudential Analysis2016
Capital Account Liberalization Workshop2015
Technical Assistance Needs Assessment2014
Technical Assistance Following the FSAP2013
AFRITAC South: Risk-Based Supervision Framework2013
Fiscal Affairs Department (FAD)
VAT Implementation2016
AFRITAC South: Customs Administration2016
Medium-Term Fiscal Framework2016
Public Investment Management2015
Designing Fiscal Rules to Manage Oil Revenues and Strengthen the
Medium Term Fiscal Framework2015
Subsidy Reform2014
AFRITAC South: Medium-Term Fiscal Framework (various missions)2013, 2014
AFRITAC South: Expenditure control and arrears (various missions)2013, 2014
AFRITAC South: Fiscal Responsibility Law and Fiscal Rules2014
Statistics Department (STA)
AFRITAC South: Export and Import Prices2016
AFRITAC South: National Accounts (various missions)2012, 2015, 2016
External Sector Statistics2015
Monetary and Financial Statistics (various mission)2014, 2016
Institute for Capacity Development (ICD)
Financial Programming and Policies for Angolan Officials2014

Resident Representative: Mr. Max Alier has been the IMF Resident Representative in Angola since May 2015.

Joint IMF-World Bank Management Action Plan

Implementation Matrix
TitleProductsTimingDelivery Date
A. Mutual Information on Relevant Work Programs
Bank work program in next 12 monthsWater Sector Institutional Development Project-2February 2017
Support to business environment reformJune 2017
Financial Sector Development StrategyDecember 2016
Financial Sector Advisory ServiceOngoing
Money Laundering Advisory ServiceJune 2017
Fiscal Management Programmatic DPF IIJune 2017
1st Public Expenditure ReviewJanuary 2017
2nd Public Expenditure ReviewDecember 2017
Statistical Development Technical AssistanceDecember 2016
Commercial Agriculture ProjectApril 2017
Health Sector Reform ProjectOctober 2017
IMF work program in next 12 monthsStaff VisitMarch 2017
Article IV MissionOctober 2017
B. Request for Work Program Inputs
Fund request to BankRegular briefings on the implementation of the DPL conditionality.Ongoing
Bank request to FundCollaboration on providing full set of macroeconomic framework and tablesOngoing
C. Agreement on Joint Programs and Missions
Joint products in next 12 monthsContinuous dialogue on economic forecasting and macroeconomic modeling issuesContinuous
Exchange of information and consultations on macroeconomic developmentsContinuous

Statistical Issues

Angola—Statistical Issues AppendixAs of November 30, 2016
I. Assessment of Data Adequacy for Surveillance
General: Data provision has shortcomings, but is broadly adequate for surveillance. There are concerns about data quality and timeliness and efforts are underway to strengthen the statistical base, including through technical assistance from the Fund and World Bank.
Angola now has several regular and informative statistical publications, reflecting significant progress in the provision of data and transparency in statistical reporting. Progress has been the strongest in the BNA and recently in the National Institute of Statistics (INE). Both now provide and publish much more extensive data on a timely basis. Data delivery and publication from the Ministry of Finance could be significantly improved. Data postings on the Ministry of Finance website include detailed revenues from the oil sector and diamond and reports on public finances with a certain lag.
National Accounts: INE has released the national accounts for Angola for 2002-13. This is the first issuance of national accounts for Angola and includes annual data on output, expenditures, and income. The national accounts include annual GDP in current prices and volumes using chained-linking based on 2002 benchmarks. The Ministry of Planning is expected to continue issuing preliminary estimates and projections of annual GDP (output). A quarterly GDP series is in production and is expected to be finalized and published in 2017. Other important data bulletins are published by INE, including quarterly bulletins on business confidence, industrial production, and on merchandize trade. INE completed a national census count for 2014. This was the first census in the four decades since independence. The census questionnaire covered a substantial collection of information, mostly of a demographic and social nature.
Price Statistics: INE publishes monthly reports on consumer and wholesale price indices. The CPI index was expanded to include consumer prices in all 18 provinces of the country. INE has started to develop import and export price indices.
Government Finance Statistics: The timeliness and quality of government finance statistics needs to be substantially improved. Revenue and expenditures are correctly recorded on accrual basis but some issues persist when operations above- and below-the-line are reconciled. Of the utmost importance is that consolidated and detailed fiscal data are published regularly (at least quarterly) in electronic format at the Ministry of Finance web page. It would also be important to publish the data in excel—currently published in PDF, rendering it difficult for analysis—and in nominal values (rather than percentage changes) and updating the numbers as they are revised. Information on oil revenues is published monthly with great detail but it would be more useful for analysts and stakeholders if it is published as a spreadsheet instead of PDF images. A detailed report on the evolution of oil revenues is published on a quarterly basis but with some lag. It would be important to start publishing data on non-oil revenue on a monthly basis. Thus far, the Ministry of Finance reports on a “modified” GFSM 1986 by using an adjustor to reconcile numbers above the line (registered on an accrual basis) with those below the line (registered on cash basis). The Ministry of Finance compiles annual and monthly data according to GFSM 2001 standard.
Monetary and Financial Statistics: Data for the depository corporation survey and the balance sheet of the BNA have been revised with the help of STA technical assistance. The data are now based on the new standardized report forms. The BNA delivers data to the IMF on a timely basis. It also publishes comprehensive data on its webpage on a monthly basis. The BNA also publishes other reports. These include a quarterly inflation report as well as its annual report (summarizing monetary and macroeconomic as well as inflation developments), and a six-monthly financial stability report (assessing the stability of the financial system) but those publications are published with a long lag.
Financial Sector Surveillance: BNA data on financial soundness indicators are published on a monthly basis. The quality of financial soundness indicators should be improved along with the recommendations from STA technical assistance. The usefulness of the BNA’s Financial Stability Report could be enhanced by being more up to date, as the last report was published in early 2015.
External Sector Statistics: The balance of payments and international investment position are compiled in line with the recommendations of the sixth edition of the IMF’s Balance of Payments Manual. These statistics are compiled and disseminated annually, with a lag of about nine months after the reference period. A technical assistance mission from STA on external sector statistics was conducted in November 2015. It reviewed the implementation of the recommendations of previous TA missions and found that progress has been made, especially regarding the automatization of the compilation process. The mission made recommendations on the compilation procedures and the coverage and quality of the series to improve the consistency between flows and stocks. The mission also confirmed the availability of quarterly information already collected by the BNA for the great majority of the elements of the balance of payments. Data coverage and timeliness remain major shortcomings. Also, coordination among statistical agencies and source data suppliers needs to be addressed.
II. Data Standards and Quality
The authorities are committed to using the General Data Dissemination System (GDDS) to improve the statistical system. Angola started participating in the GDDS in January 29, 2004 and metadata were posted on the IMF’s Dissemination Standards Bulletin Board.
Table of Common Indicators Required for Surveillance
Date of latest observation

(mm/dd/yy)
Date receivedFrequency

of Data7
Frequency of

Reporting7
Frequency of Publication7
Exchange Rates11/30/1611/30/16DDD
International Reserve Assets and Reserve Liabilities of the Monetary Authorities110/1611/16MMM
Reserve/Base Money10/1611/16MMM
Broad Money10/1611/16MMM
Central Bank Balance Sheet10/1611/16MMM
Consolidated Balance Sheet of the Banking System10/1611/16MMM
Interest Rates211/30/1612/09/16WWW
Consumer Price Index11/1612/16MMM
Revenue, Expenditure, Balance and Composition of Financing3 – General Government4NANANANANA
Revenue, Expenditure, Balance and Composition of Financing3 – Central Government09/1611/16QQQ
Stocks of Central Government and Central Government-Guaranteed Debt512/1511/16AAA
External Current Account Balance12/2015 (est.)11/16AAA
Exports and Imports of Goods and Services12/2015 (est.)11/16AAA
GDP/GNP12/2015 (est.)11/16AAA
Gross External Debt12/1511/16AAA
International Investment Position612/1511/16AIA

Any reserve assets that are pledged or otherwise encumbered should be specified separately. Also, data should comprise short-term liabilities linked to a foreign currency but settled by other means as well as the notional values of financial derivatives to pay and to receive foreign currency, including those linked to a foreign currency but settled by other means.

Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.

Foreign, domestic bank, and domestic nonbank financing.

The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.

Including currency and maturity composition.

Includes external gross financial asset and liability positions vis-à-vis nonresidents.

Daily (D); weekly (W); monthly (M); quarterly (Q); annually (A); irregular (I); and not available (NA).

Any reserve assets that are pledged or otherwise encumbered should be specified separately. Also, data should comprise short-term liabilities linked to a foreign currency but settled by other means as well as the notional values of financial derivatives to pay and to receive foreign currency, including those linked to a foreign currency but settled by other means.

Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.

Foreign, domestic bank, and domestic nonbank financing.

The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.

Including currency and maturity composition.

Includes external gross financial asset and liability positions vis-à-vis nonresidents.

Daily (D); weekly (W); monthly (M); quarterly (Q); annually (A); irregular (I); and not available (NA).

For a description of the IMF Safeguards Assessment framework, see http://www.imf.org/external/np/exr/facts/safe.htm.

See IMF Country Report No. 15/301.

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