Abstract
The Angolan government’s efforts to achieve macroeconomic stability to bring inflation and fiscal deficit considerably down are paying off despite high vulnerability to oil revenue shocks. The expected overall growth of up to 7 percent will be contributed to by increased oil production, multiple public investment programs, tax administration reforms, and inflation control. Concentrating on a medium-term fiscal framework, structural transformation and diversification are expected to reinforce the economy. The Executive Board, which welcomed the Stand-By-Arrangement and Financial Sector Assessment Program (FSAP), suggested removing exchange restrictions.
This note is to update the Executive Board on material developments that have occurred since the issuance of the staff report (EBS/12/88).
On July 3, 2012, the Angolan authorities provided staff with a first reconciliation report covering the period 2007-2010, that analyzes the factors contributing to the large residual in the fiscal accounts identified over the course of the recent Stand-By Arrangement. The draft report provides revised data on the domestic and external financing of the budget, along with information on higher spending levels across a range of categories, stemming in the main from the incorporation into the fiscal accounts of previously unaccounted-for quasi-fiscal operations conducted by the state oil company on behalf of the government.
Staff is in the process of discussing the draft report with the authorities, seeking further clarification on the sources for, and accuracy of, some of the revisions. Staff is also examining the implications of these revisions for the assessment of fiscal developments during 2007-2010, discussed in EBS/12/88, Appendix II.
Staff welcomes the production of this draft reconciliation report, which is still work in progress, and looks forward to discussing the finalized report at the time of the second post-program monitoring mission, set for late 2012.