IMF aids Angola in quest for economic stability

Angola is transitioning to a new economic program to help the country reach economic stability, according to IMF Angola's resident representative Max Alier.

IMF provided Angola with a disbursement worth $1 billion as part of an Extended Fund Facility arrangement in December 2018. Alier told The Oil & Gas Year (TOGY) that the country was impacted over the last four years by a decline in oil prices.

"Despite an initial adequate reaction in terms of macroeconomic policies, they were insufficient to mitigate the full impact of the shock and major macroeconomic disequilibria built up," Alier said to TOGY. "Economic activity contracted in 2016 and 2017, and most likely in 2018 as well. Inflation significantly increased, reaching over 40 percent in December 2017."

Alier said that authorities requested help from the IMF after the new government took office and put together economic plans that reflected their priorities.

"We negotiated in almost record time and had the program approved in December," Alier said. "Negotiations usually take much longer."

The program is the largest the IMF has ever had with a sub-Saharan African country, Alier told TOGY. He said the program will benefit the government by providing financial resources and international experience.

"We know how economic policies have worked or not worked in other countries," Alier said. "By bringing that knowledge, we enrich the authorities’ program."

The program allows for the resources to be released over time for a total of $3.7 billion over three years. The first $1 billion was released in December and the rest will be dispersed in six-month increments, according to Alier.

Alier told TOGY that Angola has a lot of potential for the future.

"Before independence and before the oil boom, Angola was an important agricultural producer, especially for coffee," Alier said. "Developing agriculture is important not only for economic diversification but for social purposes, as it is labor-intensive and can generate employment."

Alier said fisheries are possible in the future as well and that hydropower generation could be done.

"What is important is the role of the state in creating a level playing field where you can ensure that contracts can be honored and enforced at a relatively low cost," Alier said. "Clean up the bureaucracy and create a business-friendly environment with rules that are expected."