Ver Angola

Economy

IMF and Government discuss alternatives after end of financial assistance program

The International Monetary Fund is analyzing with the Government alternatives that can be adopted by the country after the conclusion of the financial assistance program, in December 2021, not ruling out the possibility of a new loan.

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"There are several alternatives that we have already presented to the authorities, be it a new program with disbursement, without disbursement, a precautionary program. (Among) the modalities that we have, the authorities are considering the various alternatives to see what makes the most sense" , told Lusa the IMF representative in Angola, Marcos Souto, asked about a possible new loan after the end of the current program, in December.

"We're not driving one way or the other, we're offering the alternatives we have, presenting the advantages and disadvantages, (we don't know) whether they're going to want a continuation of the current program or a new program. I think in the coming months , as we get closer to the end date of the current program this discussion will move forward, but there is still nothing concrete", he detailed, adding that, taking into account the level of exposure in Angola, if the IMF is not requested, it will move to a post-program evaluation phase.

The International Monetary Fund (IMF) recently approved the fifth review of Angola's financial adjustment program, allowing for the immediate disbursement of US$772 million, underlining the authorities' positive vision and commitment to the program's policies.

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 is added the last value announced, and will last until the end of this year.

Asked about the fact that Angola is in the pre-election period and possible concerns about additional spending, Marcos Souto stressed that the Angolan authorities seem committed "with regard to the path of prudence of public finances", taking into account the measures that have been adopted in terms of budget or indebtedness.

"We have no indication of an expressive moment of spending suggested for an election year, but discussions for the budget will start soon and then we will have more visibility to see how much of a barrel of oil will be used in the budget and how they want to use the resources ", he indicated.

The IMF, he added, has appealed to the Angolan government to insist on "a prudent path" and "on a path of rapid decline in public debt to free resources that are not directed towards servicing the debt".

The IMF representative also pointed out the need to consider debt sustainability when contracting new credit lines.

"What appears has to be guaranteed in a context of debt planning, in terms of debt sustainability and reduction of financing risk, especially in the case of Angola whose debt capacity is very limited", he stressed.

He also pointed out the need for good management of public resources, as the available resources "are limited" and there is a need to be very concerned with the economic return, looking for projects that maximize this return, such as water access infrastructure or projects that enhance economic diversification.