"Fiscal consolidation efforts have slowed and the buffers built during the Extended Financing Programme from 2018 to 2021 are being eroded by budgetary slippages stemming from higher capital expenditures and slower fuel subsidy reform," reads the Fund's analysis of Angola's economy.
The return to a path of fiscal consolidation "is essential to strengthen budgetary buffers and create space for development needs", which is why the fund stresses "the importance of fully implementing fuel subsidy reforms, accompanied by mitigation measures aimed at protecting the most vulnerable and intensifying efforts to mobilize non-oil revenues".
In Article IV, IMF directors welcomed last year's economic recovery but "highlighted persistent risks from oil price volatility and debt vulnerabilities" and emphasized "the urgency of accelerating structural reforms to reinforce macroeconomic and financial stability and promote diversified and inclusive growth."
In the annual analysis of all IMF member countries by the fund's economists, it is said that the kwanza fell 10 percent last year against the dollar and that "adverse market expectations and high external debt service continue to weigh on the exchange rate."
After an economic expansion of 3.8 percent last year, the IMF expects Angola to slow growth to 3 percent, driven mainly by the non-oil sector, and inflation to fall to an average of 21 percent this year.
Oil production is expected to improve slightly to 1.262 million barrels per day in 2024 from 1.266 million this year, but it is the price of oil that will hurt public finances the most, as the IMF forecasts the country will collect 31.5 billion dollars this year, down from 35.4 billion dollars last year.
"High external debt service limits development spending and dependence on oil continues to be an obstacle to sustainable growth," IMF economists warn again, also warning that "liquidity risks could intensify if financing conditions deteriorate, further reducing social spending and putting pressure on the exchange rate."
