Angola: Fifth Review Under the Stand-By Arrangement, Request for Waiver of Applicability of Performance Criteria, and Request for Modification of Performance Criteria
Author:
International Monetary Fund
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Publication Date:
08 Dec 2011
eISBN:
9781463929824
Language:
English
Keywords:
ISCR; CR; revenue; oil company; oil revenue transfer; Executive Board's discussion; government; foreign currency; central bank; financial asset; bank request; broad money; External sector statistics; Government finance statistics; Commercial banks; Balance of payments statistics; CPI data
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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.

Abstract

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.

I—Relations with the Fund

(As of August 31, 2011)

I. Membership Status: Joined September 19, 1989; Article XIV

II. General Resources Account:

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III. SDR Department:

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IV. Outstanding Purchases and Loans:

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V. Latest Financial Arrangements:

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VI. Projected Payments to Fund: (SDR Million)

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VII. Implementation of HIPC Initiative: Not applicable.

VIII. 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 and has taken steps to address the audit qualifications. The assessment confirmed, however, weak governance and transparency practices at the BNA, including lack of timely publication of annual financial statements. The assessment also made recommendations to enhance the legal framework and independence of the central bank, and to strengthen the control framework in the reserves management and internal audit areas. Since this assessment, the BNA has adopted measures to enhance governance and accountability, including the production of its financial statements. The 2009 statements were audited and published together with the auditors’ report; the 2010 audit has been completed and the results will be published on the BNA website mid-October 2011. The Board of the BNA has strengthened its internal audit function, and in January 2011, it reconstituted its Audit Board. It also adopted in December 2010 guidelines for the management of international reserves and in May 2011 conducted a first semi-annual internal audit of their implementation. While IMF staff has received the audited financial statements for 2010, the relevant management letter on internal controls issued by the external auditors for that year has not yet been shared with Fund staff. Provision of this information is required under the safeguards policy.

IX. Exchange Arrangements: Angola’s de facto exchange arrangement has been classified as “other managed” since October 2009. The Banco Nacional de Angola (BNA) intervenes actively in the foreign exchange market in order to sterilize foreign currency inflows in the form of taxes paid by oil companies. Auctions were temporarily suspended from April 20 to October 1, 2009 leading to the establishment of a formal peg. Since the resumption of auctions, the kwanza has depreciated. However, the authorities maintain strong control over the exchange rate, which is the main anchor for the monetary policy. The BNA publishes a daily reference rate, which is computed as the transaction-weighted average of the previous day’s rates negotiated with commercial banks. Banks and exchange bureaus may deal among themselves and with their customers at rates that can be freely negotiated provided they do not exceed the reference rate by more than 4 percent.

Angola continues to avail itself of the transitional arrangements under the provisions of Article XIV, Section 2 and maintains two exchange measures, namely, (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 two exchange restrictions resulting from: (i) limits on the remittances of dividends and profits from foreign investments that do not exceed US$100,000, and (ii) the discriminatory application of the 0.015 percent stamp tax on foreign exchange operations that are subject to approval under Article VIII, Section 2(a). Angola maintains two multiple currency practices (i) arising from the Dutch foreign exchange auction, and (ii) the discriminatory application of the 0.015 stamp tax on foreign exchange operations that are subject to approval under Article VIII, Section 3.

X. Article IV Consultation: Angola is on the 24-month cycle for program countries. The next Article IV Consultation is scheduled to be completed in conjunction with the 6th Review under the Stand-By Arrangement.

XI. Technical Assistance: Angola has received substantial technical assistance since it joined the Fund. Technical assistance activities since 2005 are listed below:

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XII. Resident Representative: Since January 2011 the IMF has a Resident Representative for Angola (Mr. Nicholas Staines).

II—Joint IMF-World Bank Management Action Plan

Implementation Matrix

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III. Statistical Issues

1. Data provision has shortcomings, but is broadly adequate for surveillance and program performance. There are major concerns about data quality and timeliness and efforts are underway to strengthen the statistical base, including through technical assistance from the Fund and the World Bank. The authorities are committed to using the General Data Dissemination System (GDDS) to improve the statistical system. Angola has participated in the GDDS project for Lusophone African countries, and has received technical assistance in this area. Angola started participating in the GDDS in October 2003 and metadata were posted on the IMF’s Dissemination Standards Bulletin Board. The metadata need to be updated.

2. The only regular statistical publication is the quarterly National Bank of Angola (BNA) statistical bulletin, which is often published with a considerable delay. Data postings on the government website (www.minfin.gv.ao), including revenues from the oil sector, have not been as timely as recommended in the GDDS. Government accounts are released when the annual budget is approved.

National accounts and price statistics

3. Official GDP estimates are produced annually and generally only by sector, with no disaggregation by industry and the public sector is under-represented. Annual GDP at constant prices is estimated using 2002 prices. There are no estimates of GDP by expenditure. Apart from oil production, sectoral data are calculated using indicators with weights based on incomplete surveys conducted in 2001 or earlier. A lack of statistical offices in the provinces significantly limits data coverage. The CPI is based on a basket of goods and services for which prices are collected in Luanda. The geographical coverage of price collection was extended to five more provinces and an unofficial quarterly index has been compiled commencing in 2005, but a September 2006 STA CPI Mission did not regard these data as sufficiently reliable for publication. The CPI weights were revised in January 2002 based on a household survey conducted in 2001. CPI data are produced monthly, normally with a lag of two weeks. There are no wholesale or producer price indices.

Monetary and financial statistics

4. Data for the depository corporation survey and the balance sheet of the central bank are timely but based on old report forms. There have been deficiencies in the reporting of foreign exchange reserves and concerns about the quality and timeliness of reports from some commercial banks. A March 2006 STA mission assisted the BNA in starting compilation of monthly monetary statistics using the new standardized report forms (SRFs). The mission made several recommendations for improving monetary statistics and finalizing the SRFs, including the classification of bank holdings of treasury bills and bonds and central bank bills, and the valuation of foreign currency-denominated accounts. Further priorities were to improve accounting procedures in state-owned banks and strengthen the BNA’s internal controls, particularly for external transactions. Implementation of the mission’s recommendations has been incomplete, although there was progress in preparing a new plan of accounts for the other depository corporations, which is expected to be implemented soon.

5. A May 2007 follow-up mission assisted the BNA in finalizing the SRFs for the central bank, but further work is needed to finalize the SRF for the other depository corporations. The mission also focused on the intersectoral consistency of the monetary and the government finance and balance of payments statistics, and provided on-the-job training. Once the link between the SRFs and the new accounting data of the other depository corporations is finalized, the SRFs will be used to derive an integrated monetary database to meet the needs of the BNA, as well as AFR and STA.

Government finance statistics

6. The timeliness and quality of government finance statistics needs to be improved. Budget execution reports reflect liabilities for tax payments as estimated in the budget (budget basis), rather than revenues collected (cash basis); and expenditures reflect only expenditures on a cash basis rather than expenditure on a commitment basis. Data from the SIGFE management information system are still limited in coverage and reliability, and subject to revisions. Monthly government accounts tend to rely on estimates based on the budget rather than on actual execution figures. The MoF does not report a significant number of series for government finance data for publication in the GFS Yearbook or in International Financial Statistics.

External sector statistics

7. The balance of payments and international investment position are compiled in line with the recommendations of the fifth edition of the IMF’s Balance of Payments Manual. These statistics are compiled and disseminated annually, with a lag of nine months after the reference period. A technical assistance mission on external sector statistics was conducted in July 2010. It noted that few of the recommendations made by the previous missions had been implemented and that little progress had been made in strengthening the compilation framework, the technical units are understaffed and there are problems of non-compliance with data reporting requirements by resident enterprises. A thorough review of the balance of payments and IIP for 2008 and 2009 was conducted. Progress was noticed, in comparison to the previous mission, regarding the methodological soundness of classification of balance of payments transactions. Nonetheless, some inconsistencies have been found, especially regarding the classification of transactions involving arrears and SDRs. The IIP showed important inconsistencies with the balance of payments and the external debt statement. Coverage and timeliness of source data remain a major shortcoming. The development of the BNA’s International Transactions Reporting System (ITRS), known as SIOBE, was halted due both to lack of staff and the uncertainty regarding its replacement by a similar ITRS being developed by the BNA.

8. In addition, the mission also noted that the continued improvement in the quality of statistics depends on: (1) an increase in the rate of response to the surveys, including the adoption of administrative measures to curb noncompliance with reporting requirements; (2) implementation of tools and mechanisms for the organization, analysis and validation of ITRS data; (3) compliance with commitments in the agreements signed with the National Statistics Institute, and the MoF for access to their databases; and (4) integration of more data sources.

Angola: Table of Common Indicators Required for Surveillance

(As of September 26, 2011)

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Includes reserve assets pledged or otherwise encumbered as well as net derivative positions.

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.

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

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

1

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

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Cover IMF Staff Country Reports
Angola: Fifth Review Under the Stand-By Arrangement, Request for Waiver of Applicability of Performance Criteria, and Request for Modification of Performance Criteria: Staff Report; Supplement; Press Release on the Executive Board Discussion; and Statement by the Executive Director for Angola.
Author:
International Monetary Fund
Volume/Issue:
Volume 2011: Issue 346
Publisher:
International Monetary Fund
ISBN:
9781463929824
ISSN:
1934-7685
Pages:
71
DOI:
https://doi.org/10.5089/9781463929824.002