By Over the past years Angola faced serious economic challenges, with its currency depreciating leading to increased inflation to its highest level, coupled with a weak oil production and prices in 2023.
The International Monetary Fund (IMF) says Angola has adequate capacity to repay the Fund subject to risks. According to the IMF, Angola’s economy has shown some resilience in the face of significant challenges.
“The authorities’ efforts to follow through on economic reforms started during the EFF 2018–21, including in the areas of fiscal management, revenue mobilization, debt management, monetary policy, and financial stability, have helped enhance the resilience of the Angola economy,” said the IMF.
The Fund says output and growth remained positive at 0.9 percent in 2023, attributed to the recovery of oil production in the fourth fiscal quarter and is expected to stabilise at an average of 3.2 percent in the medium term; aided by the authorities’ continued structural reform and diversification agenda.
The IMF says Angola’s inflation increased to its highest level in recent years, due to currency depreciation and supply constraints. However, inflation is expected to start declining in the second half of 2024 with improved monetary policy transmission and fading supply shocks.
“Spending adjustments helped contain the impact of weaker oil prices and lower production in 2023, though the gains from fiscal consolidation were lower-than-anticipated. The non-oil primary fiscal deficit (NOPFD), estimated at 4.4 percent of GDP in 2024, is expected to steadily decline in the medium-term on modestly improving non-oil revenues, moderately lower current and capital expenditures, and savings from fuel subsidy reform.
Angola’s oil dependence and large external debt continue to pose fiscal risks but targets under the Fiscal Sustainability Law are still projected to be reached. Downside risks to the outlook include (i) a decline in the domestic oil production or a significant fall in the international oil prices; (ii) slippages in the fuel subsidy reform; and (iii) negative spill-overs from international capital markets,” said the IMF.
