Angola has requested support of the International Monetary Fund (IMF) to complement its response to the decline in oil prices, having recognized that the high reliance on the oil sector represents a vulnerability to the public finances and the economy.
Government revenue in the southern African country has declined due to the slump in crude prices since 2014, while the kwanza has declined almost 18 percent against the dollar this year in the country which relies on oil for 95 percent of export earnings. Although efforts to diversify has increased the contribution of the non-oil sector to GDP to 69.1 percent from 40 percent in the mid-8os, oil still accounted for 52 percent of government revenue in 2015. Growth, thus, slowed to 3.5 percent last year from 6.8 percent in 2013.
“The Government is therefore committed to the economic diversification objectives of the National Development Plan 2013-17 and considers preserving macroeconomic stability and moving forward an ambitious structural reform agenda essential elements of the strategy to achieve these goals,” the government said in a statement by the Ministry of Finance.
The Angolan government said it will work with the IMF to design and implement policies and structural reforms aimed at improving macroeconomic and financial stability, including through fiscal discipline.
The IMF confirmed the request.
“We have received a formal request from the Angolan authorities to initiate discussions on an economic program that could be supported by financial assistance from the IMF,” Mr. Min Zhu, Deputy Managing Director of the International Monetary Fund (IMF) said.
He expressed the lender’s readiness to help Angola address the economic challenges it is currently facing. This will be done by supporting a comprehensive policy package to accelerate the diversification of the economy, while safeguarding macroeconomic and financial stability.
Zhu said discussions with the country’s authorities could start during the upcoming Spring Meetings in Washington D.C. and later in Angola on an economic program that could be supported by a three-year Extended Fund Facility (EFF).
On areas of diversification Angola is eyeing, the Finance Ministry said in the statement that focus would be on the agricultural and fisheries, mining, education, financial services, water, sanitation and the health sectors.
However, the government will continue to partner with the World Bank and the African Development Bank (AfDB) to reduce costs of infrastructure projects by strengthening the project appraisal framework and improving the procurement system.