The IMF staff's assessment of the program is contained in a report, released on Wednesday night, following the approval on June 9 of the fifth review, which allowed for the immediate disbursement of US$772 million.
"Although the risks remain high, the authorities' commitment to the program remains strong", assesses the IMF team, which values the commitment to the "stability" of the program's macroeconomic policies and goals.
The IMF team supports the authorities' request to modify targets related to nominal interest rates, "add COVID-related adjusters" to the non-oil primary budget deficit, social spending targets and change the timing of the related performance criterion with the oil-backed foreign debt.
"The program continues to provide a solid anchor for the authorities' reform agenda and a catalyst for official funding," the report said.
In an annex to the document, dated 7 June, the IMF team said that the authorities "recently accumulated external debt payments temporarily delayed, namely 4.1 million dollars owed to an external financial institution between 17-26 May and 12 .5 million euros owed to an official export financing agency between 14 May and June.
"Both sets of delays have now been fully compensated for and came first due to technical issues," the document says.
The temporary accumulation of late payment of debts "represents a continuous breach of the performance criterion", which is zero arrears for the Central Government and central bank, but the accumulation was due to technical problems and was "quickly corrected", so the team supports the authorities' request for non-compliance with the criterion.
The annex includes a letter from the Minister of State for Economic Coordination, Manuel José Nunes Júnior, to the Director General of the IMF, Kristalina Georgieva, confirming the non-compliance "due to technical issues, for a short period".
The financial adjustment program was agreed with the IMF in December 2018, in the amount of 3.7 billion dollars, which was increased in September to around 4.5 billion dollars, of which around 3 billion dollars have already been delivered, to which adds the amount announced in June, totaling 3.9 billion dollars and lasts until the end of this year.
The approval of the fifth revision of the financial adjustment program, which increases the total already disbursed so far, comes at the same time that Angola announced that it requested the extension of the moratorium on the bilateral debt service until the end of the year.
In the overall assessment of the program's progress, the IMF team says that Angola "is starting a gradual recovery from the multifaceted shock" of the pandemic, benefiting from higher oil prices and a more stable kwanza, which have improved the budget situation and reduced pressure on debt dynamics.
However, he notes, risks to the projections "remain significant", including "a reversal in oil prices or global economic recovery and, internally, a resurgence of the pandemic or weaker-than-expected production (for the oil sector or not petroleum)".
"The program remains on track, with strong fiscal performance continuing that preserves debt sustainability. The authorities' fiscal stance tightened in 2020 despite the continued recession. The 2021 budget provides for further adjustments, and the The decision to save most of the oil windfall this year is a welcome example of fiscal discipline, which should continue in the future," the IMF team said.
Monetary policy, he says, needs to maintain a "restrictive posture, given the high inflation, whose reduction is now "the focus of the National Bank of Angola".
The IMF said the authorities must complete the remaining reforms to protect the stability of the financial sector, being "critical to finalize the pending restructuring plan of one of the two large public banks in difficulties, facing the existing shortage of capital".
