The IMF has concluded its Article IV consultation with Angola, noting a 3.8% GDP growth in 2024 driven by a recovering oil sector. While the outlook is optimistic, the country faces challenges including high inflation, external debts, and political pressures. The IMF emphasizes the urgency of structural reforms and fiscal consolidation to enhance economic stability and growth.
The International Monetary Fund (IMF) has concluded its Article IV consultation with Angola, noting a recovery in the country’s economy driven by the rebounding oil sector. GDP growth for 2024 is projected at 3.8%, surpassing earlier estimates, with improvements extending to the non-oil sector. Despite this recovery, fiscal consolidation efforts have diminished, risking the sustainability of fiscal buffers established during previous support programs.
Inflation remains high, influenced by exchange rate fluctuations and rising food prices, prompting the central bank to increase its policy rate by 150 basis points in 2024. A currency depreciation of over 10% against the U.S. dollar has exacerbated external debt pressures, although the government’s cash and debt management strategies have alleviated some liquidity concerns.
The economic outlook suggests continued growth, projected at 3% in 2025, with inflation expected to decrease as cost-push factors diminish. Challenges include high external debt servicing and a slow recovery in oil production. The political environment, including upcoming elections, poses risks to the timely execution of necessary economic reforms.
The IMF Executive Board acknowledged the favorable economic recovery while underscoring persistent risks tied to oil price fluctuations and the government’s debt position. They stressed the urgent need for structural reforms aimed at enhancing macroeconomic stability, financial management, and promoting inclusive economic growth.
Key recommendations include accelerating fiscal consolidation and fully executing fuel subsidy reforms, alongside efforts to increase non-oil revenue. Investment efficiency must improve, guided by earlier assessments, particularly in public financial management and debt oversight. The authorities were also urged to maintain a tightening monetary policy stance to ensure inflation control and safeguard international reserves.
The IMF’s Article IV report highlights Angola’s economic recovery, supported by a rebound in the oil sector, but warns of ongoing challenges such as high inflation, a depreciating currency, and substantial external debts. To foster sustainable growth, structural reforms, improved fiscal management, and adherence to monetary policies are critical as the nation approaches significant political changes in the coming years.
Original Source: www.miragenews.com
