Angola is to get an additional USD 765 million from the International Monetary Fund (IMF), to assist in dealing with economic and health crises, compounded by the decline in oil prices due to the country´s dependence on oil exports.
Meeting on Wednesday, the Executive Board of the IMF completed the third review of Angola’s economic program supported by an extended arrangement under the Extended Fund Facility (EFF), unlocking access to USD 1 billion, and approved the authorities’ request for an additional USD 765 million under the EFF arrangement.
According to the IMF, the additional ammount will “support authorities’ efforts to control the spread of COVID-19 pandemic, mitigate its economic impact, and persevere with the implementation of structural reforms”.
Angola’s three-year extended arrangement was approved by the IMF Executive Board on December 2018, in the amount of about USD 3.7 billion, of which USD 2.5 billion have now been disbursed.
“Angola’s economy has been hit hard by a triple, COVID-19-induced external shock. The shock led to economic and health crises, compounded by the decline in oil prices in view of Angola’s dependence on oil exports. In response, the authorities have adopted decisive measures to tackle the impact of the shock, and they remain strongly committed to the program, including the fight against corruption”, the IMF says.
“On the fiscal front, the National Assembly adopted a conservative supplementary budget, which includes non-oil revenue measures and compression of non-essential expenditure, while creating space for essential spending on health and the social safety net. On the monetary front, the central bank has adopted several measures to ease liquidity and credit constraints to help the private sector cope with the crises”, it adds.
The IMF Executive Board also approved the authorities’ request for waivers of nonobservance and applicability of performance criteria and modification of some performance criteria, indicative targets, and structural benchmarks.
Earlier this month, the Paris Club Creditor Countries deemed Angola eligible for a suspension of debt service due from 1st May to 31st December 2020, under the Debt service suspension Initiative (DSSI) also endorsed by the G20.
Following the IMF Executive Board’s discussion on Angola, Antoinette Sayeh, Deputy Managing Director and Acting Chair, said the Angolan Government has “taken swift and decisive action, in response to lower oil exports and revenue, consistent with broad program objectives”.
“The authorities have secured debt reprofiling agreements from several large creditors to reduce risks related to debt sustainability. Continued vigilance in managing public debt is critical to mitigate such risks in the context of heightened oil-price volatility”, Sayeh added. “Pursuing structural reforms is critical to diversify the economy and lay the foundations for private sector-led economic growth. The Government will need to remain steadfast in enhancing the business environment, strengthening governance, and fighting corruption”
According to a Paris Club note on Angola´s access to the DSSI, the country is “eligible to benefit from the (DSSI) initiative” and the country´s Government “is committed to devote the resources freed by this initiative to increase spending in order to mitigate the health, economic and social impact of the COVID19-crisis”.