The International Monetary Fund (IMF) on Thursday called on Angola to adopt a policy of “proactive fiscal consolidation”, warning that the pace of reforms needed to attract foreign investment, reduce oil dependence, and accelerate economic diversification has slowed.
“A favourable external environment has contributed to a stronger external position and growth in non-oil activity, better market access, and declining inflation; at the same time, however, it has slowed macroeconomic adjustment and reform momentum, which are critical to reducing Angola’s oil dependence and vulnerabilities,” IMF economists wrote in an assessment conducted under the financial adjustment programme that concluded in 2021.
“Maintaining hard-won macroeconomic stability and productivity gains in this shock-prone world will require proactive fiscal consolidation, prudent monetary policy, and exchange rate flexibility,” the Fund stated in a note signed by Mika Saito, head of the technical team that visited Angola between 24 August and 6 September.
The note, released in Washington, acknowledges that favourable external conditions have contributed to a stronger external position, the strengthening of non-oil activity, improved market access, and a reduction in inflation, which in July recorded a sub-double-digit rate for the second consecutive month.
Despite this progress, Saito cautioned that “further structural reforms to improve the business environment, strengthen governance, attract foreign investment, and diversify the economy will be important for sustainable growth”.
According to the IMF, sustaining the gains achieved will depend on Angola’s ability to continue reinforcing macroeconomic stability and advancing structural reforms, particularly in an international context marked by risks and potential external shocks.
The IMF’s visit to Angola forms part of a Post-Financing Assessment (PFA), an instrument used by the Fund to monitor the macroeconomic trajectory of countries that received financial assistance in previous years.
The assessment examines the economic policies adopted by recipient countries, the coherence of the macroeconomic framework with medium-term sustainability objectives, and the implications of those policies for the capacity to repay loans extended by the IMF.
Source: Diário Económico
Original article: https://www.diarioeconomico.co.mz/?p=539607
