Credit: Wikipedia / Angola, one of the largest producers of crude in Africa, is facing economic hardship amid slump in oil prices and the COVID-19 pandemic

By Gary Raynaldo    DIPLOMATIC TIMES

The International Monetary Fund (IMF)  Wednesday approved a disbursement of US$1 Billion to Southern African nation Angola under the Rapid Credit Facility (RCF) to address the economic hardships caused by the COVID-19  pandemic.  Angola’s economy has been hit hard by a multifaceted shock stemming from the COVID  pandemic and the decline in oil prices. The Executive Board of the IMF completed the third review of Angola’s economic program supported by an extended arrangement under the Extended Fund Facility (EFF).  Completion of this review unlocks access to SDR 731.7 million (about US$1 billion), bringing total disbursements under the extended arrangement to SDR 1,804.7 million (about US$2.5 billion).  Angola reached an agreement with the IMF in December 2018 on a $3.7 billion Extended Fund Facility. The latest disbursement brings to $2.5 billion the total released.

“The Angolan authorities remain committed to sound policies under the IMF-supported program despite a deteriorated external environment due to the COVID-19 pandemic, including negative impacts on public health, social protection, the budget, and public debt. The authorities have taken swift and decisive action, in response to lower oil exports and revenue, consistent with broad program objectives. The authorities adopted a conservative supplementary budget for 2020, taking measures to increase non-oil revenue, and reining in non-essential expenditure. Despite the crisis, fiscal consolidation will continue, while creating space for adequate spending on health and social safety nets. The authorities will also persevere with implementing measures to strengthen public financial management.”

-Antoinette Sayeh, Deputy Managing Director and Acting Chair of IMF

Sayeh added that the Angolan authorities have secured debt reprofiling agreements from several large creditors to reduce risks related to debt sustainability. She said that continued vigilance in managing public debt is critical to mitigate such risks in the context of heightened oil-price volatility.

“The National Bank of Angola (BNA) has continued to reform the exchange rate regime, including migrating the bulk of foreign exchange transactions to an electronic platform. Efforts should continue to remove constraints toward reaching a market-clearing exchange rate. The monetary stance has been eased to help counteract the impact of the COVID-19 pandemic and the oil-price shock. However, there is little room for further monetary easing and the BNA should stand ready to keep inflationary pressures in check,” Sayeh stated.

“The Government will need to remain steadfast in enhancing the business environment, strengthening governance, and fighting corruption.” – Sayeh.